Document:

REGISTRATION
RIGHTS AGREEMENT

     

    THIS
REGISTRATION RIGHTS AGREEMENT (“Agreement”) made as
of this 16th day of December, 2010, by and among SRKP 20, Inc., a Delaware
corporation (the “Company”); Immense
Fortune Holdings Limited, a British Virgin Islands corporation and upon the
Closing Date (as defined below) a 100%-owned subsidiary of the Company ("Immense Fortune");
and the undersigned (each a “Holder” and together
the “Holders”).

     

    WHEREAS,
the Company, Immense Fortune, Legend Media Holdings HK Limited, a Hong Kong
corporation and a wholly-owned subsidiary of Immense Fortune (“Legend”), Feigeda
Electronic (SZ) Co., Ltd., a company organized under the laws of the People’s
Republic of China and a wholly-owned subsidiary of Legend (“Feigeda” and together
with Immense Fortune and Legend, the “Immense Fortune
Entities”), and Finest Day Limited, a British Virgin Islands corporation
and sole shareholder of Immense Fortune (the “Shareholder”) are
parties to a certain Amended and Restated Share Exchange Agreement dated as of
December 6, 2010 (the “Exchange Agreement”),
pursuant to which Immense Fortune will become a 100%-owned subsidiary of the
Company and 100% of the outstanding securities of Immense Fortune will be
exchanged for securities in the Company (the “Share
Exchange”);

     

    WHEREAS,
immediately after the closing of the Share Exchange (the “Closing Date”), the
Company will assume the business and operations of Immense Fortune;

     

    WHEREAS,
as set forth in Section 9.1 of the Exchange Agreement, and as a condition to the
closing of the Share Exchange, the Company agreed to enter into a registration
rights agreement requiring the Company to file with the Securities and Exchange
Commission (the “SEC”), within the
time periods as set forth herein, a registration statement covering the resale
of shares of Common Stock of the Company, as set forth on Schedule I hereof
(the “Shares”),
held by those persons (and/or their designees) that are stockholders of the
Company immediately prior to the Closing Date (“Holders”).

     

    NOW,
THEREFORE, for and in consideration of the promises and the mutual covenants
hereinafter set forth, the parties hereto do hereby agree as
follows:

     

    1.           Registration
Rights

     

    1.1         Registration
Requirement.  Subject to the terms and limitations hereof, the
parties hereto agree and acknowledge that the Company shall prepare and file a
registration statement (the “Registration
Statement”) on Form S-1 or other appropriate registration document under
the Securities Act of 1933, as amended (the “Act”) for resale of
the Shares (the “Registrable
Securities”) and shall use its reasonable best efforts to maintain the
Registration Statement effective for a period of twelve (12) months at the
Company’s expense (the “Effectiveness
Period”).  The Company shall file such Registration Statement
no later than the tenth (10th) day
after the end of the six (6) month period that immediately follows the filing
date of any  Registration Statement (the “Initial Registration
Statement”) required to be filed by the Company in connection with the next
offering of common stock by the Company with gross proceeds of at least $2.0
million (the “Required
Filing Date”), provided that if such day is not a Business Day, then the
Required Filing Date shall be the next business day thereafter.  The
Company shall use reasonable best efforts to cause such Registration Statement
to become effective within one hundred fifty (150) days after the Required
Filing Date or the actual filing date, whichever is earlier, or one hundred
eighty (180) days after the Required Filing Date or the actual filing date,
whichever is earlier, if the Registration Statement is subject to a full review
by the SEC (the “Required Effectiveness
Date”).  If the Company fails to file the Registration
Statement by the Required Filing Date or if the Registration Statement does not
become effective on or before the Required Effectiveness Date due to the failure
of the Company to fulfill its obligations hereunder, the Company shall be
required to issue, as liquidated damages, to each of the Holders shares (the
“Penalty
Shares”) equal to a total of 0.0333% of their respective Shares for each
calendar day that the Registration Statement has not been filed or declared
effective by the SEC (and until the Registration Statement is filed with or
declared effective by the SEC), as applicable.

     

    
      
        
        

      

      
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    1.2         Limitation to Registration
Requirement.  Notwithstanding the foregoing, no Penalty Shares
shall be due to the Holders if the Company is using its best efforts to cause
the Registration Statement to be filed and declared effective in a timely
manner.  In addition, the Company shall not be obligated to effect any
registration of the Registrable Securities or take any other action pursuant to
this Section 1: (i) in any particular jurisdiction in which the Company would be
required to execute a general consent to service of process in effecting such
registration, qualification or compliance unless the Company is already subject
to service in such jurisdiction and except as may be required by the Act; or
(ii) during any period in which the Company suspends the rights of a Holder
after giving the Holder written notification of a Potential Material Event
(defined below) pursuant to Section 1.6 hereof.

     

    1.3         Expenses of
Registration.  Except as otherwise expressly set forth herein,
the Company shall bear all expenses incurred by the Company in compliance with
the registration obligation of the Company, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel for the Company incurred in connection with any registration,
qualification or compliance pursuant to this Agreement and all underwriting
discounts, selling commissions and expense allowances applicable to the sale of
any securities by the Company for its own account in any
registration.  All underwriting discounts, selling commissions and
expense allowances applicable to the sale by a Holder of Registrable Securities
and all fees and disbursements of counsel for a Holder shall be borne by the
Holder.

     

    
      
        
        

      

      
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    1.4         Indemnification.

    (a)           To
the extent permitted by law the Company will indemnify each Holder, each of its
officers, directors, agents, employees and partners, and each person controlling
such Holder, with respect to each registration, qualification or compliance
effected pursuant to this Agreement, and each underwriter, if any, and each
person who controls any underwriter, and their respective counsel against all
claims, losses, damages and liabilities (or actions, proceedings or settlements
in respect thereof) arising out of or based on (i) any untrue statement (or
alleged untrue statement) of a material fact contained in any prospectus,
offering circular or other document prepared by the Company (including any
related registration statement, notification or the like) incident to any such
registration, qualification or compliance, or (ii) any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or any violation by the
Company of the Act or any rule or regulation thereunder applicable to the
Company and relating to action or inaction required of the Company in connection
with any such registration, qualification or compliance, and subject to the
provisions of Section 1.4(c) below, will reimburse each such Holder, each of its
officers, directors, agents, employees and partners, and each person controlling
such Holder, each such underwriter and each person who controls any such
underwriter, for any legal and any other expenses as they are reasonably
incurred in connection with investigating and defending any such claim, loss,
damage, liability or action, provided that the Company will not be liable in any
such case to the extent that any such claim, loss, damage, liability or expense
arises out of or is based on any untrue statement (or alleged untrue statement)
or omission (or alleged omissions) based upon written information furnished to
the Company by (or on behalf of) such Holder or underwriter, or if the person
asserting any such loss, claim, damage or liability (or action or proceeding in
respect thereof) did not receive a copy of an amended preliminary prospectus or
the final prospectus (or the final prospectus as amended and supplemented) at or
before the written confirmation of the sale of such Registrable Securities to
such person because of the failure of the Holder or underwriter to so provide
such amended preliminary or final prospectus (or the final prospectus as amended
and supplemented); provided, however,
that the indemnity agreement contained in this subsection shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld), nor shall the Company be liable in any such
case for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by the Holder, any such partner, officer, director,
employee, agent or controlling person of such Holder, or any such underwriter or
any person who controls any such underwriter; provided, however, that the
obligations of the Company hereunder shall be limited to an amount equal to the
portion of net proceeds represented by the Registrable Securities pursuant to
this Agreement.

     

    (b)           To
the extent permitted by law, each Holder whose Registrable Securities are
included in any registration, qualification or compliance effected pursuant to
this Agreement will indemnify the Company, and its directors, officers, agents,
employees and each underwriter, if any, of the Company’s securities covered by
such a registration statement, each person who controls the Company or such
underwriter within the meaning of the Act and the rules and regulations
thereunder, each other such Holder and each of their officers, directors,
partners, agents and  employees, and each person controlling such
Holder, and their respective counsel against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any such registration statement, prospectus, offering circular or other
document, or any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse the Company and such Holders, directors,
officers, partners, persons, underwriters or control persons for any legal or
any other expenses as they are reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action, in
each case to the extent, but only to the extent, that such untrue statement (or
alleged untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information furnished to the
Company by such Holder; provided, however, that the
obligations of any Holder hereunder shall be limited to an amount equal to the
net proceeds to such Holder from Registrable Securities sold under such
registration statement, prospectus, offering circular or other document as
contemplated herein; provided, further, that the indemnity agreement contained
in this subsection shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Holder, which consent shall not be unreasonably withheld or
delayed.
 

    
      
         

      

      
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    (c)           Each
party entitled to indemnification under this Section (the “Indemnified Party”)
shall give notice to the party required to provide indemnification (the “Indemnifying Party”)
promptly after such Indemnified Party has actual knowledge of any claim as to
which indemnity may be sought, and shall permit the Indemnifying Party to assume
the defense of any such claim or any litigation resulting therefrom, provided
that counsel for the Indemnifying Party, who shall conduct the defense of such
claim or any litigation resulting therefrom, shall be approved by the
Indemnified Party (whose approval shall not unreasonably be withheld or
delayed), and the Indemnified Party may participate in such defense at such
party’s expense; and provided further that if any Indemnified Party reasonably
concludes that there may be one or more legal defenses available to it that are
not available to the Indemnifying Party, or that such claim or litigation
involves or could have an effect on matters beyond the scope of this Agreement,
then the Indemnified Party may retain its own counsel at the expense of the
Indemnifying Party; and provided further that the failure of any Indemnified
Party to give notice as provided herein shall not relieve the Indemnifying Party
of its obligations under this Agreement unless and only to the extent that such
failure to give notice results in material prejudice to the Indemnifying
Party.  No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.  Each Indemnified Party shall furnish such information
regarding itself or the claim in question as an Indemnifying Party may
reasonably request in writing and as shall be reasonably required in connection
with defense of such claim and litigation resulting therefrom.

     

    (d)           If
the indemnification provided for in this Section is held by a court of competent
jurisdiction to be unavailable to an Indemnified Party with respect to any loss,
liability, claim, damage or expense referred to herein, then the Indemnifying
Party, in lieu of indemnifying such Indemnified Party hereunder, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such loss, liability, claim, damage or expense in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party on the one
hand and of the Indemnified Party on the other in connection with the statements
or omissions which resulted in such loss, liability, claim, damage or expense as
well as any other relevant equitable considerations.  The relative
fault of the Indemnifying Party and of the Indemnified Party shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact relates to
information supplied by the Indemnifying Party or by the Indemnified Party and
the parties’ relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission.
 

    
      
         

      

      
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    1.5         Transfer or Assignment of
Registration Rights. The Registrable Securities, and any related benefits
to the Holder hereunder may be transferred or assigned by the Holder to a
permitted transferee or assignee, provided that the Company is given written
notice of such transfer or assignment, stating the name and address of said
transferee or assignee and identifying the Registrable Securities with respect
to which such registration rights are being transferred or assigned; provided
further that the transferee or assignee of such Registrable Securities shall be
deemed to have assumed the obligations of the Holder under this Agreement by the
acceptance of such assignment and shall, upon request from the Company, evidence
such assumption by delivery to the Company of a written agreement assuming such
obligations of the Holder.

     

    1.6         Registration
Procedures.  In the case of the registration effected by the
Company pursuant to this Agreement, the Company will keep the Holder advised in
writing as to the initiation of each registration and as to the completion
thereof.  The Company will:

     

    (a)           Prepare
and file with the SEC such amendments and supplements to such registration
statement and the prospectus used in connection with such registration statement
as may be necessary to comply with the provisions of the Act with respect to the
disposition of securities covered by such registration statement;

     

    (b)           Respond
as promptly as reasonably practicable to any comments received from the SEC with
respect to a registration statement or any amendment thereto;

     

    (c)           Notify
the Holders as promptly as reasonably practicable and (if requested by any such
persons) confirm such notice in writing no later than one trading day following
the day (i) when a prospectus or any prospectus supplement or post-effective
amendment to a registration statement is proposed to be filed and (ii) with
respect to a registration statement or any post-effective amendment, when the
same has become effective;

     

    (d)           Furnish
such number of prospectuses and other documents incident thereto, including
supplements and amendments, as the Holders may reasonably request;

     

    (e)           Furnish
to the Holders, upon request, a copy of all documents filed with and all
correspondence from or to the SEC in connection with any such registration
statement other than non-substantive cover letters and the like;

     

    (f)           Use
its reasonable best efforts to avoid the issuance of, or, if issued, obtain the
withdrawal of (i) any order suspending the effectiveness of a registration
statement, or (ii) any suspension of the qualification (or exemption from
qualification) of any of the Registrable Securities for sale in any
jurisdiction, at the earliest practicable moment; and

     

    (g)           Use
its reasonable best efforts to comply with all applicable rules and regulations
of the SEC.

     

    Notwithstanding
the foregoing, if at any time or from time to time after the date hereof, the
Company notifies the Holders in writing of the existence of an event or
circumstance that is not disclosed in the Registration Statement and that may
have a material effect on the Company or its business (a “Potential Material
Event”), the Holders shall not offer or sell any Registrable Securities,
or engage in any other transaction involving or relating to the Registrable
Securities, from the time of the giving of notice with respect to a Potential
Material Event until the Company notifies the Holders that such Potential
Material Event either has been added to the Registration Statement by amendment
or supplement or no longer constitutes a Potential Material Event; provided, that the
Company may not so suspend the right of Holders for more than one hundred twenty
(120) days in the aggregate.
 

    
      
         

      

      
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    1.7         Statement of Beneficial
Ownership.  The Company may require each Holder to furnish to
the Company a certified statement as to the number of shares of Common Stock
beneficially owned, including derivative instruments underlying Common
Stock,  by such Holder and the controlling person thereof and any
other such information regarding the Holder, the Registrable Securities held by
the Holder and the intended method of disposition of such securities as shall be
reasonably required with respect to the registration of the Holder’s Registrable
Securities.  Each Holder hereby understands and agrees that the
Company may, in its sole discretion, exclude the Holder’s shares of Common Stock
from the Registration Statement in the event that the Holder fails to provide
such information requested by the Company within the time period reasonably
specified by the Company or is required to do so by law or the SEC.

     

    1.8         Compliance.  Each
Holder covenants and agrees that he, she or it will comply with the prospectus
delivery requirements of the Act as applicable to such Holder in connection with
sales of Registrable Securities pursuant to the registration statement required
hereunder.

     

    1.9         Piggy-Back
Registrations.  If at any time during the Effectiveness Period
there is not an effective registration statement covering all of the Registrable
Securities and the Company shall determine to prepare and file with the SEC a
registration statement relating to an offering for its own account or the
account of others under the Act of any of its Common Stock, other than an
offering of securities issued pursuant to a Strategic Issuance (as defined
below) and other than a Form S-4 or Form S-8 registration statement (each as
promulgated under the Act or their then equivalents relating to equity
securities to be issued solely in connection with any business combination
transaction, acquisition of any entity or business or equity securities issuable
in connection with stock option or other employee benefit plans), then the
Company shall send to the  Holders (together with any other holders of
its Common Stock possessing “piggyback registration rights” comparable to those
granted to the Holders hereunder (“Rightsholders”))
written notice of such determination and, if within fifteen (15) days after
receipt of such notice, a Holder shall so request in writing, the Company shall
include in such registration statement all or any part of such Registrable
Securities such Holder requests to be registered; provided that the Company
shall not be required to register any Registrable Securities pursuant to this
Section that are eligible for resale pursuant to Rule 144 promulgated under the
Act; and provided further that the Company may, without the consent of the
Holder, withdraw such registration statement before its becoming effective if
the Company or other stockholders have elected to abandon the proposal to
register the securities proposed to be registered thereunder.  If the
registration statement is being filed for an underwritten public offering, a
Holder must timely execute and deliver the usual and customary agreement among
the Company, such Holder and the underwriters relating to the
registration.  If the registration statement is being filed for an
underwritten offer and sale by the Company of securities for its own account and
the managing underwriters advise the Company in writing that in their opinion
the offering contemplated by the registration statement cannot be successfully
completed if the Company were to also register the Registrable Shares of the
Holders requested to be included in such registration statement, then the
Company will include in the registration: (i) first, any securities the Company
proposes to sell, (ii) second, any securities of any person whose securities are
being registered as a result of the exercise of a demand registration right, and
(iii) third, that portion of the aggregate number of shares being requested for
inclusion in the registration statement by (X) the Holders and (Y) all other
Rightsholders, which in the opinion of such managing underwriters can
successfully be sold, such number of shares to be taken pro rata from the
Rightsholders on the basis of the total number of shares being requested for
inclusion in the registration statement by each Rightsholder.  “Strategic Issuance”
shall mean an issuance of securities: (i) in connection with a “corporate
partnering” transaction or a “strategic alliance” (as determined by the Board of
Directors of the Company in good faith); (ii) in connection with any financing
transaction in respect of which the Company is a borrower; or (iii) to a vendor,
lessor, lender, or customer of the Company, or a research, manufacturing or
other commercial collaborator of the Company, in a transaction approved by the
Board of Directors, provided in any case, that such issuance is not being made
primarily for the purpose of avoiding compliance with this
Agreement.
 

    
      
         

      

      
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    2.           Miscellaneous

     

    2.1         Any
notice or other communication given hereunder shall be deemed sufficient if in
writing and sent by registered or certified mail, return receipt requested,
addressed to the Company, at Immense Fortune Holdings Limited, c/o Feigeda
Electronic (SZ) Co., Ltd., Building 66, Longwangmiao Industrial Park, Baishixia,
Fuyong Street, Bao’an District, Shenzhen City, Guangdong Province, P. R.
China  518102 with a
copy to (which shall not constitute notice) K&L Gates LLP, 10100
Santa Monica Blvd., Seventh Floor, Los Angeles, California 90067, Attention:
Thomas J. Poletti, Esq., and to the Holders at their respective addresses
indicated on Schedule
I attached hereto.  Notices shall be deemed to have been given
three (3) business days after the date of mailing, except notices of change of
address, which shall be deemed to have been given when received.

     

    2.2         This
Agreement may only be amended through a written instrument signed by the
Holders, Immense Fortune and the Company.

     

    2.3         This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and to their respective heirs, legal representatives, successors and
assigns.  This Agreement sets forth the entire agreement and
understanding between the parties as to the subject matter hereof and merges and
supersedes all prior discussions, agreements and understandings of any and every
nature among them.

     

    2.4         Notwithstanding
the place where this Agreement may be executed by any of the parties hereto, the
parties expressly agree that all the terms and provisions hereof shall be
construed in accordance with and governed by the laws of the State of
Delaware.

     

    2.5         This
Agreement may be executed in counterparts. Upon the execution and delivery of
this Agreement, this Agreement shall become a binding obligation of the parties
hereto.  This Agreement may be executed and delivered by
facsimile.

     

    2.6         The
holding of any provision of this Agreement to be invalid or unenforceable by a
court of competent jurisdiction shall not affect any other provision of this
Agreement, which shall remain in full force and effect.

     

    2.7         It
is agreed that a waiver by either party of a breach of any provision of this
Agreement shall not operate, or be construed, as a waiver of any subsequent
breach by that same party.

     

    2.8         The
parties agree to execute and deliver all such further documents, agreements and
instruments and take such other and further action as may be necessary or
appropriate to carry out the purposes and intent of this
Agreement.
 

    
      
         

      

      
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    2.9           The
Company agrees not to disclose the names, addresses or any other information
about the Holders, except as required by law, provided that the Company may
provide information relating to the Holders as required in any registration
statement under the Act that may be filed by the Company pursuant to the
requirements of this Agreement.

     

    2.10           The
obligation of each Holder hereunder is several and not joint with the
obligations of any other Holders (the “Other Holders”), and
each Holder shall not be responsible in any way for the performance of the
obligations of any Other Holders.  Nothing contained herein or in any
other agreement or document delivered at the Closing, and no action taken by a
Holder pursuant hereto, shall be deemed to constitute the Holder and the Other
Holders as a partnership, an association, a joint venture or any other kind of
entity, or create a presumption that the Holder and the Other Holders are in any
way acting in concert with respect to such obligations or the transactions
contemplated by this Agreement.  Each Holder shall be entitled to
protect and enforce the Holder’s rights, including without limitation the rights
arising out of this Agreement, and it shall not be necessary for any Other
Holder to be joined as an additional party in any proceeding for such
purpose.  The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent, and no rules of
strict construction will be applied against any party.  No Holder is
acting as part of a “group” (as that term is used in Section 13(d) of the
Securities Exchange Act of 1934, as amended) in negotiating and entering into
this Agreement or purchasing the Shares or acquiring, disposing of or voting any
of the underlying shares of Common Stock.  The Company hereby confirms
that it understands and agrees that the Holders are not acting as part of any
such group.

     

    [SIGNATURE
PAGE FOLLOWS]

    
      
         

      

      
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    IN
WITNESS WHEREOF, the parties have executed this Agreement as of the day and year
first written above.

     

    SRKP
20, INC.

     

    
      
        
          
            	
                    By

                  	
                    /s/ Richard Rappaport

                  	 
      
	
                    Name:
      Richard Rappaport

                  	 
      
	
                    Title:
      President

                  	 
      

          

           

          
            IMMENSE
FORTUNE HOLDINGS LIMITED

            

            
              
                
                  	
                          By

                        	
                          /s/ Wu Zuxi

                        	 
      
	
                          Name:
      Wu Zuxi

                        	 
      
	
                          Title:
      President

                        	 
      

                

              

            

          

           

        

      

    

    
      
        
          
            	
                    STOCKHOLDERS

                  	 
      	 
      
	 
      	 
      	 
      
	
                    /s/ Debbie Schwartzberg

                  	 
      	
                    /s/ Richard
      Rappaport

                  
	
                    Debbie
      Schwartzberg

                  	 
      	
                    

                      Richard
      Rappaport

                    

                  
	 
      	 
      	 
      
	
                    /s/ Debbie Schwartzberg

                  	 
      	
                    /s/ Richard Rappaport

                  
	
                    The
      Julie Schwartzberg Trust dated 2/9/2000

                  	 
      	
                    Amanda
      Rappaport Trust

                  
	
                    By:  Debbie
      Schwartzberg

                  	 
      	
                    By:  Richard
      Rappaport

                  
	
                    Its:  Trustee

                  	 
      	
                    Its:
      Trustee

                  
	 
      	 
      	 
      
	
                    /s/ Debbie Schwartzberg

                  	 
      	
                    /s/ Richard Rappaport

                  
	
                    The
      David N. Sterling Trust dated 2/3/2000

                  	 
      	
                    Kailey
      Rappaport Trust

                  
	
                    By:  Debbie
      Schwartzberg

                  	 
      	
                    By:  Richard
      Rappaport

                  
	
                    Its:  Trustee

                  	 
      	
                    Its:
      Trustee

                  
	 
      	 
      	 
      
	
                    /s/ Janine Frisco

                  	 
      	
                    /s/ Kevin DePrimio

                  
	
                    Janine
      Frisco

                  	 
      	
                    Kevin
      DePrimio

                  
	 
      	 
      	 
      
	
                    /s/ Richard Rappaport

                  	 
      	
                    /s/ Jason Stern

                  
	
                    WestPark
      Capital Financial Services, LLC

                  	 
      	
                    Jason
      Stern

                  
	
                    By:  Richard
      Rappaport

                  	 
      	 
      
	
                    Its:  Chief
      Executive Officer

                  	 
      	 
      
	 
      	 
      	 
      
	
                    /s/ Xingrong
      Zhang

                  	 
      	
                    /s/ Anthony
      Pintsopoulos

                  
	
                    

                      Xingrong
      Zhang

                    

                  	 
      	
                    

                      Anthony
      Pintsopoulos

                    

                  
	 
      	 
      	 
      
	
                    /s/
      Zhou
      Chen

                  	 
      	
                    /s/ HaiLan
      Zhang

                  
	

                    Zhou
      Chen 

                  	 	

                    HaiLan
      Zhang 

                  

          

        

      

    

     

    
      
        
           

        

        
          9

          
            

          

        

        
           

        

      

    

     

    SCHEDULE
I

     

    HOLDERS
AND REGISTRABLE SECURITIES

     

    
      
        	 
      	
                
                   

                  HOLDER

                

              	 	
                
                  NO. OF SHARES

                  OUTSTANDING

                  BEING REGISTERED

                

              	 	 	
                
                  NO. OF SHARES BEING

                  REGISTERED THAT ARE

                  ISSUABLE UPON

                  EXERCISE OF

                  OUTSTANDING

                  WARRANTS

                

              	 
	
                1.

              	
                Richard
      Rappaport

                1900
      Avenue of the Stars, Suite 310

                Los
      Angeles, CA 90067

              	 	 	470,399	 	 	 	155,040
    	 
	
                2.

              	
                Anthony  Pintsopoulos

                c/o
      SRKP 20, Inc.

                4737
      North Ocean Drive, Suite 207

                Lauderdale
      by the Sea, FL 33308

              	 	 	294,000	 	 	 	96,900	 
	
                3.

              	
                Kevin
      DePrimio

                1900
      Avenue of the Stars, Suite 310

                Los
      Angeles, CA 90067

              	 	 	102,900	 	 	 	33,915	 
	
                4.

              	
                Jason
      Stern

                1900
      Avenue of the Stars, Suite 310

                Los
      Angeles, CA 90067

              	 	 	58,800	 	 	 	19,380	 
	
                5.

              	
                Amanda
      Rappaport Trust

                1900
      Avenue of the Stars, Suite 310

                Los
      Angeles, CA 90067

              	 	 	132,300	 	 	 	43,605	 
	
                6.

              	
                Kailey
      Rappaport Trust

                1900
      Avenue of the Stars, Suite 310

                Los
      Angeles, CA 90067

              	 	 	132,300	 	 	 	43,605	 
	
                7.

              	
                WestPark
      Capital Financial Services, LLC

                1900
      Avenue of the Stars, Suite 310

                Los
      Angeles, CA 90067

              	 	 	1,878,919	 	 	 	1,415,135	 
	
                8.

              	
                Debbie
      Schwartzberg

                785
      5th Avenue, Apt 10C

                New
      York, NY 10022

              	 	 	414,295	 	 	 	136,548	 
	
                9.

              	
                The
      Julie Schwartzberg Trust dated 2/9/2000

                785
      5th Avenue, Apt 10C

                New
      York, NY 10022

              	 	 	41,430	 	 	 	13,655	 
	
                10.

              	
                The
      David N. Sterling Trust dated 2/3/2000

                785
      5th Avenue, Apt 10C

                New
      York, NY 10022

              	 	 	41,430	 	 	 	13,655	 
	
                11.

              	
                Janine
      Frisco

                200
      Oceangate, Suite 1500

                Long
      Beach, CA 90802-4302

              	 	 	102,900	 	 	 	33,915	 
	
                12.

              	
                Xingrong
      Zhang

                TianLai
      17 Block, Zheng Zhong Golf

                Long
      Gong District, Shenzhen, China

              	 	 	198,282	 	 	 	96,056	 
	
                13.

              	
                Zhou
      Chen

                TianLai
      17 Block, Zheng Zhong Golf

                Long
      Gong District, Shenzhen, China

              	 	 	198,282	 	 	 	96,055	 
	
                14.

              	
                HaiLan
      Zhang

                TianLai
      17 Block, Zheng Zhong Golf

                Long
      Gong District, Shenzhen, China

              	 	 	198,282	 	 	 	96,055	 
	 
      	 
      	 	 	 	 	 	 	 	 
	 
      	
                        TOTALS

              	 	 	4,264,519	 	 	 	2,293,519	 

      

    
 

    
      
         

      

      
        10ENERGY
XXI GULF COAST, INC.

     

    AND EACH
OF THE GUARANTORS PARTY HERETO

     

    9.25%
SENIOR NOTES DUE 2017

     

      
        

      

    

    

    INDENTURE

     

    Dated as
of December 17, 2010

     

      
        

      

    

    

    Wells
Fargo Bank, National Association,

     

    as
Trustee

     

    
      
        

      

    

    
       

      
        

      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    CROSS-REFERENCE
TABLE*

     

    
      	
              Trust
      Indenture

              Act
      Section

            	
              Indenture
      Section

            
	
              310(a)(1)

            	
              7.10

            
	
                    (a)(2)

            	
              7.10

            
	
                    (a)(3)

            	
              N.A.

            
	
                    (a)(4)

            	
              N.A.

            
	
                    (a)(5)

            	
              7.10

            
	
                    (b)

            	
              7.10

            
	
                    (c)

            	
              N.A.

            
	
              311(a)

            	
              7.11

            
	
                    (b)

            	
              7.11

            
	
                    (c)

            	
              N.A.

            
	
              312(a)

            	
              2.05

            
	
                    (b)

            	
              11.03

            
	
                    (c)

            	
              11.03

            
	
              313(a)

            	
              7.06

            
	
                    (b)(1)

            	
              N.A.

            
	
                    (b)(2)

            	
              7.06;
      7.07

            
	
                    (c)

            	
              7.06;
      11.02

            
	
                    (d)

            	
              7.06

            
	
              314(a)

            	
              4.03;
      4.04; 11.02; 11.05

            
	
                    (b)

            	
              N.A.

            
	
                    (c)(1)

            	
              11.04

            
	
                    (c)(2)

            	
              11.04

            
	
                    (c)(3)

            	
              N.A.

            
	
                    (d)

            	
              N.A.

            
	
                    (e)

            	
              11.05

            
	
                    (f)

            	
              N.A.

            
	
              315(a)

            	
              7.01

            
	
                    (b)

            	
              7.05;
      11.02

            
	
                    (c)

            	
              7.01

            
	
                    (d)

            	
              7.01

            
	
                    (e)

            	
              6.11

            
	
              316(a)
      (last sentence)

            	
              2.09

            
	
                    (a)(1)(A)

            	
              6.05

            
	
                    (a)(1)(B)

            	
              6.04

            
	
                    (a)(2)

            	
              N.A.

            
	
                    (b)

            	
              6.07

            
	
                    (c)

            	
              2.12;
      9.04

            
	
              317(a)(1)

            	
              6.08

            
	
                    (a)(2)

            	
              6.09

            
	
                    (b)

            	
              2.04

            
	
              318(a)

            	
              11.01

            
	
                    (b)

            	
              N.A.

            
	
                    (c)

            	
              11.01

            

    

    

    N.A.
means not applicable.

    *  This
Cross Reference Table is not part of this Indenture.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    TABLE OF
CONTENTS

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              	 
      	
                                      Page

                                    
	 
      	 
      
	
                                      ARTICLE
      1

                                    	 
      
	
                                      DEFINITIONS
      AND INCORPORATION

                                    	 
      
	
                                      BY
      REFERENCE

                                    	 
      
	 	 
	
                                      Section
      1.01

                                    	
                                      Definitions.

                                    	
                                      1

                                    
	
                                      Section
      1.02

                                    	
                                      Other
      Definitions.

                                    	
                                      25

                                    
	
                                      Section
      1.03

                                    	
                                      Incorporation
      by Reference of Trust Indenture Act.

                                    	
                                      25

                                    
	
                                      Section
      1.04

                                    	
                                      Rules
      of Construction.

                                    	
                                      26

                                    
	 
      	 
      
	
                                      ARTICLE
      2

                                    	 
      
	
                                      THE
      NOTES

                                    	 
      
	 
      	 
      	 
      
	
                                      Section
      2.01

                                    	
                                      Form
      and Dating.

                                    	
                                      26

                                    
	
                                      Section
      2.02

                                    	
                                      Execution
      and Authentication.

                                    	
                                      27

                                    
	
                                      Section
      2.03

                                    	
                                      Registrar
      and Paying Agent.

                                    	
                                      28

                                    
	
                                      Section
      2.04

                                    	
                                      Paying
      Agent to Hold Money in Trust.

                                    	
                                      28

                                    
	
                                      Section
      2.05

                                    	
                                      Holder
      Lists.

                                    	
                                      28

                                    
	
                                      Section
      2.06

                                    	
                                      Transfer
      and Exchange.

                                    	
                                      28

                                    
	
                                      Section
      2.07

                                    	
                                      Replacement
      Notes.

                                    	
                                      36

                                    
	
                                      Section
      2.08

                                    	
                                      Outstanding
      Notes.

                                    	
                                      36

                                    
	
                                      Section
      2.09

                                    	
                                      Treasury
      Notes.

                                    	
                                      37

                                    
	
                                      Section
      2.10

                                    	
                                      Temporary
      Notes.

                                    	
                                      37

                                    
	
                                      Section
      2.11

                                    	
                                      Cancellation.

                                    	
                                      37

                                    
	
                                      Section
      2.12

                                    	
                                      Defaulted
      Interest.

                                    	
                                      37

                                    
	 
      	 
      
	
                                      ARTICLE
      3

                                    	 
      
	
                                      REDEMPTION
      AND PREPAYMENT

                                    	 
      
	 
      	 
      	 
      
	
                                      Section
      3.01

                                    	
                                      Notices
      to Trustee.

                                    	
                                      38

                                    
	
                                      Section
      3.02

                                    	
                                      Selection
      of Notes to Be Redeemed or Purchased.

                                    	
                                      38

                                    
	
                                      Section
      3.03

                                    	
                                      Notice
      of Redemption.

                                    	
                                      38

                                    
	
                                      Section
      3.04

                                    	
                                      Effect
      of Notice of Redemption.

                                    	
                                      39

                                    
	
                                      Section
      3.05

                                    	
                                      Deposit
      of Redemption or Purchase Price.

                                    	
                                      39

                                    
	
                                      Section
      3.06

                                    	
                                      Notes
      Redeemed or Purchased in Part.

                                    	
                                      40

                                    
	
                                      Section
      3.07

                                    	
                                      Optional
      Redemption.

                                    	
                                      40

                                    
	
                                      Section
      3.08

                                    	
                                      Mandatory
      Redemption.

                                    	
                                      41

                                    
	
                                      Section
      3.09

                                    	
                                      Offer
      to Purchase by Application of Excess Proceeds.

                                    	
                                      41

                                    
	 
      	 
      
	
                                      ARTICLE
      4

                                    	 
      
	
                                      COVENANTS

                                    	 
      
	 
      	 
      	 
      
	
                                      Section
      4.01

                                    	
                                      Payment
      of Notes.

                                    	
                                      43

                                    
	
                                      Section
      4.02

                                    	
                                      Maintenance
      of Office or Agency.

                                    	
                                      43

                                    
	
                                      Section
      4.03

                                    	
                                      Reports.

                                    	
                                      43

                                    
	
                                      Section
      4.04

                                    	
                                      Compliance
      Certificate.

                                    	
                                      44

                                    
	
                                      Section
      4.05

                                    	
                                      Taxes.

                                    	
                                      45

                                    
	
                                      Section
      4.06

                                    	
                                      Stay,
      Extension and Usury Laws.

                                    	
                                      45

                                    
	
                                      Section
      4.07

                                    	
                                      Restricted
      Payments.

                                    	
                                      45

                                    
	
                                      Section
      4.08

                                    	
                                      Dividend
      and Other Payment Restrictions Affecting Subsidiaries.

                                    	
                                      48

                                    
	
                                      Section
      4.09

                                    	
                                      Incurrence
      of Indebtedness and Issuance of Preferred Stock.

                                    	
                                      49

                                    
	
                                      Section
      4.10

                                    	
                                      Asset
      Sales.

                                    	
                                      52

                                    

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    
      
         

      

      
        i

        
          

        

      

      
         

      

    

    

    
      
        
          
            
              
                
                  
                    	 
      	 
      	
                            Page

                          
	 
      	 
      	 
      
	
                            Section
      4.11

                          	
                            Transactions
      with Affiliates.

                          	
                            53

                          
	
                            Section
      4.12

                          	
                            Liens.

                          	
                            55

                          
	
                            Section
      4.13

                          	
                            Business
      Activities.

                          	
                            55

                          
	
                            Section
      4.14

                          	
                            Corporate
      Existence.

                          	
                            55

                          
	
                            Section
      4.15

                          	
                            Offer
      to Repurchase Upon Change of Control.

                          	
                            56

                          
	
                            Section
      4.16

                          	
                            Payments
      for Consent.

                          	
                            57

                          
	
                            Section
      4.17

                          	
                            Additional
      Guarantees.

                          	
                            57

                          
	
                            Section
      4.18

                          	
                            Designation
      of Restricted and Unrestricted Subsidiaries.

                          	
                            57

                          
	
                            Section
      4.19

                          	
                            Sale
      and Leaseback Transactions

                          	
                            58

                          
	
                            Section
      4.20

                          	
                            Suspended
      Covenants

                          	
                            59

                          
	 
      	 
      	 
      
	
                            ARTICLE
      5

                          	 
      
	
                            SUCCESSORS

                          	 
      
	 
      	 
      	 
      
	
                            Section
      5.01

                          	
                            Merger,
      Consolidation, or Sale of Assets.

                          	
                            59

                          
	
                            Section
      5.02

                          	
                            Successor
      Corporation Substituted.

                          	
                            60

                          
	 
      	 
      
	
                            ARTICLE
      6

                          	 
      
	
                            DEFAULTS
      AND REMEDIES

                          	 
      
	 
      	 
      
	
                            Section
      6.01

                          	
                            Events
      of Default.

                          	
                            60

                          
	
                            Section
      6.02

                          	
                            Acceleration.

                          	
                            62

                          
	
                            Section
      6.03

                          	
                            Other
      Remedies.

                          	
                            62

                          
	
                            Section
      6.04

                          	
                            Waiver
      of Past Defaults.

                          	
                            62

                          
	
                            Section
      6.05

                          	
                            Control
      by Majority.

                          	
                            63

                          
	
                            Section
      6.06

                          	
                            Limitation
      on Suits.

                          	
                            63

                          
	
                            Section
      6.07

                          	
                            Rights
      of Holders of Notes to Receive Payment.

                          	
                            63

                          
	
                            Section
      6.08

                          	
                            Collection
      Suit by Trustee.

                          	
                            63

                          
	
                            Section
      6.09

                          	
                            Trustee
      May File Proofs of Claim.

                          	
                            64

                          
	
                            Section
      6.10

                          	
                            Priorities.

                          	
                            64

                          
	
                            Section
      6.11

                          	
                            Undertaking
      for Costs.

                          	
                            65

                          
	 
      	 
      
	
                            ARTICLE
      7

                          	 
      
	
                            TRUSTEE

                          	 
      
	 
      	 
      
	
                            Section
      7.01

                          	
                            Duties
      of Trustee.

                          	
                            65

                          
	
                            Section
      7.02

                          	
                            Rights
      of Trustee.

                          	
                            66

                          
	
                            Section
      7.03

                          	
                            Individual
      Rights of Trustee.

                          	
                            67

                          
	
                            Section
      7.04

                          	
                            Trustee’s
      Disclaimer.

                          	
                            67

                          
	
                            Section
      7.05

                          	
                            Notice
      of Defaults.

                          	
                            67

                          
	
                            Section
      7.06

                          	
                            Reports
      by Trustee to Holders of the Notes.

                          	
                            67

                          
	
                            Section
      7.07

                          	
                            Compensation
      and Indemnity.

                          	
                            67

                          
	
                            Section
      7.08

                          	
                            Replacement
      of Trustee.

                          	
                            68

                          
	
                            Section
      7.09

                          	
                            Successor
      Trustee by Merger, etc.

                          	
                            69

                          
	
                            Section
      7.10

                          	
                            Eligibility;
      Disqualification.

                          	
                            69

                          
	
                            Section
      7.11

                          	
                            Preferential
      Collection of Claims Against Company.

                          	
                            69

                          
	 
      	 
      
	
                            ARTICLE
      8

                          	 
      
	
                            LEGAL
      DEFEASANCE AND COVENANT DEFEASANCE

                          	 
      
	 
      	 
      
	
                            Section
      8.01

                          	
                            Option
      to Effect Legal Defeasance or Covenant Defeasance.

                          	
                            70

                          
	
                            Section
      8.02

                          	
                            Legal
      Defeasance and Discharge.

                          	
                            70

                          
	
                            Section
      8.03

                          	
                            Covenant
      Defeasance.

                          	
                            70

                          
	
                            Section
      8.04

                          	
                            Conditions
      to Legal or Covenant Defeasance.

                          	
                            71

                          

                  

                

              

            

          

        

      

    

    
      
         

      

      
        ii

        
          

        

      

      
         

      

    

    

    
      
        
          
            
              
                
                  
                    
                      	 
      	 
      	
                              Page

                            
	 
      	 
      	 
      
	
                              Section
      8.05

                            	
                              Deposited
      Money and Government Securities to be Held in Trust; Other Miscellaneous
      Provisions.

                            	
                              72

                            
	
                              Section
      8.06

                            	
                              Repayment
      to Company.

                            	
                              72

                            
	
                              Section
      8.07

                            	
                              Reinstatement.

                            	
                              73

                            
	 
      	 
      
	
                              ARTICLE
      9

                            	 
      
	
                              AMENDMENT,
      SUPPLEMENT AND WAIVER

                            	 
      
	 
      	 
      
	
                              Section
      9.01

                            	
                              Without
      Consent of Holders of Notes.

                            	
                              73

                            
	
                              Section
      9.02

                            	
                              With
      Consent of Holders of Notes.

                            	
                              74

                            
	
                              Section
      9.03

                            	
                              Compliance
      with Trust Indenture Act.

                            	
                              75

                            
	
                              Section
      9.04

                            	
                              Revocation
      and Effect of Consents.

                            	
                              75

                            
	
                              Section
      9.05

                            	
                              Notation
      on or Exchange of Notes.

                            	
                              75

                            
	
                              Section
      9.06

                            	
                              Trustee
      to Sign Amendments, etc.

                            	
                              75

                            
	 
      	 
      
	
                              ARTICLE
      10

                            	 
      
	
                              SATISFACTION
      AND DISCHARGE

                            	 
      
	 
      	 
      
	
                              Section
      10.01

                            	
                              Satisfaction
      and Discharge.

                            	
                              75

                            
	
                              Section
      10.02

                            	
                              Application
      of Trust Money.

                            	
                              76

                            
	 
      	 
      
	
                              ARTICLE
      11

                            	 
      
	
                              MISCELLANEOUS

                            	 
      
	 
      	 
      
	
                              Section
      11.01

                            	
                              Trust
      Indenture Act Controls.

                            	
                              77

                            
	
                              Section
      11.02

                            	
                              Notices.

                            	
                              77

                            
	
                              Section
      11.03

                            	
                              Communication
      by Holders of Notes with Other Holders of Notes.

                            	
                              78

                            
	
                              Section
      11.04

                            	
                              Certificate
      and Opinion as to Conditions Precedent.

                            	
                              78

                            
	
                              Section
      11.05

                            	
                              Statements
      Required in Certificate or Opinion.

                            	
                              78

                            
	
                              Section
      11.06

                            	
                              Rules
      by Trustee and Agents.

                            	
                              79

                            
	
                              Section
      11.07

                            	
                              No
      Personal Liability of Directors, Officers, Employees and
      Stockholders.

                            	
                              79

                            
	
                              Section
      11.08

                            	
                              Governing
      Law.

                            	
                              79

                            
	
                              Section
      11.09

                            	
                              No
      Adverse Interpretation of Other Agreements.

                            	
                              79

                            
	
                              Section
      11.10

                            	
                              Successors.

                            	
                              79

                            
	
                              Section
      11.11

                            	
                              Severability.

                            	
                              79

                            
	
                              Section
      11.12

                            	
                              Counterpart
      Originals.

                            	
                              79

                            
	
                              Section
      11.13

                            	
                              Table
      of Contents, Headings, etc.

                            	
                              80

                            
	
                              Section
      11.14

                            	
                              Patriot
      Act.

                            	
                              80

                            
	 
      	 
      	 
      
	
                              ARTICLE
      12

                            	 
      
	
                              GUARANTEES

                            	 
      
	 
      	 
      
	
                              Section
      12.01

                            	
                              Guarantee.

                            	
                              80

                            
	
                              Section
      12.02

                            	
                              Limitation
      on Guarantor Liability.

                            	
                              81

                            
	
                              Section
      12.03

                            	
                              Execution
      and Delivery of Guarantee.

                            	
                              81

                            
	
                              Section
      12.04

                            	
                              Guarantors
      May Consolidate, etc., on Certain Terms.

                            	
                              82

                            
	
                              Section
      12.05

                            	
                              Releases.

                            	
                              83

                            
	 
      	 
      
	
                              EXHIBITS

                            	 
      
	 
      	 
      
	
                              Exhibit
      A

                            	
                              FORM
      OF NOTE

                            	 
      
	
                              Exhibit
      B

                            	
                              FORM
      OF CERTIFICATE OF TRANSFER

                            	 
      
	
                              Exhibit
      C

                            	
                              FORM
      OF CERTIFICATE OF EXCHANGE

                            	 
      
	
                              Exhibit
      D

                            	
                              FORM
      OF NOTATION OF GUARANTEE

                            	 
      
	
                              Exhibit
      E

                            	
                              FORM
      OF SUPPLEMENTAL INDENTURE

                            	 
      

                    

                  

                

              

            

          

        

      

    

    
      
         

      

      
        iii

        
          

        

      

      
         

      

    

    INDENTURE
dated as of December 17, 2010 among Energy XXI Gulf Coast, Inc., a Delaware
corporation, the Guarantors (as defined herein) and Wells Fargo Bank, National
Association and any and all successors thereto, as trustee (the “Trustee”).

     

    The
Company, the Guarantors and the Trustee agree as follows for the benefit of each
other and for the equal and ratable benefit of the Holders (as defined) of the
9.25% Senior Notes due 2017 (the “Notes”):

     

    ARTICLE
1

    DEFINITIONS
AND INCORPORATION

    BY
REFERENCE

     

    Section
1.01        Definitions.

     

    “ACNTA” (Adjusted Consolidated
Net Tangible Assets) means (without duplication), as of the date of
determination:

     

    (1)         the
sum of:

     

    (a) 
discounted future net revenue from proved crude oil and natural gas
reserves of the Company and its Restricted Subsidiaries calculated in accordance
with SEC guidelines before any state or federal income taxes, as estimated in a
reserve report prepared as of the end of the Company’s most recently completed
fiscal year, which reserve report is prepared or reviewed or audited by an
independent petroleum engineer as to reserves accounting for at least 80% of all
such discounted future net revenue and by the Company’s petroleum engineers with
respect to any other such reserves covered by such report, as increased by, as
of the date of determination, the discounted future net revenue
from:

     

    (1)           estimated
proved crude oil and natural gas reserves of the Company and its Restricted
Subsidiaries attributable to acquisitions consummated since the date of such
year-end reserve report, and

     

    (2)           estimated
crude oil and natural gas reserves of the Company and its Restricted
Subsidiaries attributable to extensions, discoveries and other additions and
upward determinations of estimates of proved crude oil and natural gas reserves
(including previously estimated development costs incurred during the period and
the accretion of discount since the prior year end) due to exploration,
development or exploitation, production or other activities which reserves were
not reflected in such year-end reserve report,

     

    in each
case calculated in accordance with SEC guidelines (utilizing the prices utilized
in such year-end reserve report), and decreased by, as of the date of
determination, the discounted future net revenue attributable to

     

    (3)           estimated
proved crude oil and natural gas reserves of the Company and its Restricted
Subsidiaries reflected in such year-end reserve report produced or disposed of
since the date of such year-end reserve report and

     

    (4)           reductions
in the estimated proved crude oil and natural gas reserves of the Company and
its Restricted Subsidiaries reflected in such year-end reserve report since the
date of such year-end reserve report attributable to downward determinations of
estimates of proved crude oil and natural gas reserves due to exploration,
development or exploitation, production or other activities conducted or
otherwise occurring since the date of such year-end reserve
report,

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    in each
case calculated in accordance with SEC guidelines (utilizing the prices utilized
in such year-end reserve report); provided, however, that, in the case of
each of the determinations made pursuant to clauses (1) through (4), such
increases and decreases shall be as estimated by the Company’s petroleum
engineers, except that if as a result of such acquisitions, dispositions,
discoveries, extensions or revisions, there is a Material Change, then such
increases and decreases in the discounted future net revenue shall be confirmed
in writing by an independent petroleum engineer;

     

    (b)  the
capitalized costs that are attributable to crude oil and natural gas properties
of the Company and its Restricted Subsidiaries to which no proved crude oil and
natural gas reserves are attributed, based on the Company’s books and records as
of a date no earlier than the date of the Company’s latest annual or quarterly
financial statements;

     

    (c)  the Net
Working Capital on a date no earlier than the date of the Company’s latest
annual or quarterly financial statements; and

     

    (d)  the
greater of (I) the net book value on a date no earlier than the date of the
Company’s latest annual or quarterly financial statements and (II) the appraised
value, as estimated by independent appraisers, of other tangible assets of the
Company and its Restricted Subsidiaries as of a date no earlier than the date of
the Company’s latest audited financial statements;

     

    (2)         minus,
to the extent not otherwise taken into account in the immediately preceding
clause (1), the sum of:

     

    (a)  minority
interests;

     

    (b)  any net
gas balancing liabilities of the Company and its Restricted Subsidiaries
reflected in the Company’s latest audited financial statements;

     

    (c)  the
discounted future net revenue, calculated in accordance with SEC guidelines
(utilizing the same prices utilized in the Company’s year-end reserve report),
attributable to reserves subject to participation interests, overriding royalty
interests or other interests of third parties, pursuant to participation,
partnership, vendor financing or other agreements then in effect, or which
otherwise are required to be delivered to third parties;

     

    (d)  the
discounted future net revenue, calculated in accordance with SEC guidelines
(utilizing the same prices utilized in the Company’s year-end reserve report),
attributable to reserves that are required to be delivered to third parties to
fully satisfy the obligations of the Company and its Restricted Subsidiaries
with respect to Volumetric Production Payments on the schedules specified with
respect thereto; and

     

    (e)  the
discounted future net revenue, calculated in accordance with SEC guidelines,
attributable to reserves subject to Dollar-Denominated Production Payments that,
based on the estimates of production included in determining the discounted
future net revenue specified in the immediately preceding clause (1)(a)
(utilizing the same prices utilized in the Company’s year-end reserve report),
would be necessary to satisfy fully the obligations of the Company and its
Restricted Subsidiaries with respect to Dollar-Denominated Production Payments
on the schedules specified with respect thereto.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    If the
Company changes its method of accounting for its oil and gas properties from the
full cost method to the successful efforts method or a similar method of
accounting, ACNTA will continue to be calculated as if the Company were still
using the full cost method of accounting.

     

    For the avoidance of doubt, for
purposes of this definition, “the Company’s year-end end reserve report” shall
mean the Company’s most recent reserve report or reports prepared by one or more
of the Company’s independent petroleum engineers as of the last date of the
Company’s most recent fiscal year.

     

    “Acquired Debt” means, with
respect to any specified Person:

     

    (1)           Indebtedness
of any other Person existing at the time such other Person is merged with or
into or became a Subsidiary of such specified Person, whether or not such
Indebtedness is incurred in connection with, or in contemplation of, such other
Person merging with or into, or becoming a Subsidiary of, such specified Person;
and

     

    (2)           Indebtedness
secured by a Lien encumbering any asset acquired by such specified
Person.

     

    “Additional Assets”
means:

     

    (1)           any
assets used or useful in the Oil and Gas Business;

     

    (2)           the
Capital Stock of a Person that becomes a Restricted Subsidiary as a result of
the acquisition of such Capital Stock by the Company or another Restricted
Subsidiary; or

     

    (3)           Capital
Stock constituting a minority in any Person that at such time is a Restricted
Subsidiary;

     

    provided, however, that any
such Restricted Subsidiary described in clause (2) or (3) is primarily
engaged in the Oil and Gas Business.

     

    “Additional Notes” means
Notes (other than the Initial Notes, Exchange Notes issued in exchange for the
Initial Notes and Notes issued pursuant to Sections 2.06, 2.07, 2.10, 3.06 or
9.05) issued after the Issue Date under this Indenture in accordance with
Sections 2.02 and 4.09 hereof, as part of the same class as the Initial
Notes.

     

    “Affiliate” of any specified
Person means any other Person directly or indirectly controlling or controlled
by or under direct or indirect common control with such specified Person. 
For purposes of this definition, “control,” as used with respect to any Person,
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that beneficial
ownership of 10% or more of the Voting Stock of a Person will be deemed to be
control.  For purposes of this definition, the terms “controlling,”
“controlled by” and “under common control with” have correlative meanings. 
For the avoidance of doubt, the Parent and any of its existing or future
Subsidiaries in addition to the Company and its Restricted Subsidiaries will be
considered Affiliates of the Company.

     

    “Agent” means any Registrar,
co-registrar, Paying Agent or additional paying agent.

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    “Applicable Premium” means,
with respect to a Note at any redemption date, the greater of (x) 1.0% of the
principal amount of such Note and (y) the excess of (A) the present value at
such time of (1) the redemption price of such Note set forth in Section 3.07(a)
as of December 15, 2014 (without regard to accrued and unpaid interest) plus (2)
all required interest payments due on such Note through December 15, 2014,
computed using a discount rate equal to the Treasury Rate plus 50 basis points,
over (B) the principal amount of such Note.

     

    “Applicable Procedures”
means, with respect to any transfer or exchange of or for beneficial interests
in any Global Note, the rules and procedures of the Depositary, Euroclear and
Clearstream that apply to such transfer or exchange.

     

    “Asset Sale”
means:

     

    (1)           the
sale, lease, conveyance or other disposition of any properties or assets
(including by way of a Production Payment, sale and leaseback transaction,
merger, consolidation or otherwise); provided that the disposition of all or
substantially all of the properties or assets of the Company and its Restricted
Subsidiaries taken as a whole will be governed by Section 4.15 hereof, and/or
Section 5.01 hereof, and not by Section 4.10 hereof; and

     

    (2)           the
issuance of Equity Interests in any of the Company’s Restricted Subsidiaries or
the sale of Equity Interests in any of its Restricted Subsidiaries.

     

    Notwithstanding
the preceding, the following items will not be deemed to be Asset
Sales:

     

    (1)           any
single transaction or series of related transactions that involves properties or
assets having a Fair Market Value of less than $5.0 million;

     

    (2)           a
transfer of assets between or among any of the Company and its Restricted
Subsidiaries,

     

    (3)           an
issuance or sale of Equity Interests by a Restricted Subsidiary to the Company
or to another Restricted Subsidiary;

     

    (4)           the
sale, lease or other disposition of hydrocarbons, equipment, inventory, accounts
receivable or other properties or assets in the ordinary course of business,
including, without limitation, any abandonment, farm-in, farm-out, lease or
sublease of any oil and gas properties or the forfeiture or other disposition of
such properties pursuant to standard form operating agreements, in each case in
a manner customary in the Oil and Gas Business;

     

    (5)           the
sale or other disposition of cash or Cash Equivalents;

     

    (6)           a
Restricted Payment that is permitted in accordance with Section 4.07 or a
Permitted Investment;

     

    (7)           any
trade or exchange by the Company or any Restricted Subsidiary of oil and gas
properties or other properties or assets for oil and gas properties or other
properties or assets owned or held by another Person, provided that the Fair
Market Value of the properties or assets traded or exchanged by the Company or
such Restricted Subsidiary (together with any cash) is reasonably equivalent to
the Fair Market Value of the properties or assets (together with any cash) to be
received by the Company or such Restricted Subsidiary, and provided further that any net
cash received must be applied in accordance with Section 4.10.

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    (8)           the
creation or perfection of a Lien and the exercise by any Person in whose favor a
Permitted Lien is granted of any rights in respect of that Permitted Lien
(including the sale or other disposition of the properties or assets subject to
such Permitted Lien) in each case provided that such Lien is permitted by this
Indenture; and

     

    (9)           surrender
or waiver of contract rights or the settlement, release or surrender of
contract, tort or other claims of any kind.

     

    “Attributable Debt”
means, in
respect of a sale and leaseback transaction, at the time of determination, the
present value of the obligation of the lessee for net rental payments during the
remaining term of the lease included in such sale and leaseback transaction
including any period for which such lease has been extended or may, at the
option of the lessor, be extended.  Such present value shall be calculated
using a discount rate equal to the rate of interest implicit in such
transaction, determined in accordance with GAAP.

     

    “Bankruptcy Law” means Title
11, U.S. Code or any similar federal or state law for the relief of
debtors.

     

    “Beneficial Owner” has the
meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange
Act, except that in calculating the beneficial ownership of any particular
“person” (as that term is used in Section 13(d)(3) of the Exchange Act), such
“person” will be deemed to have beneficial ownership of all securities that such
“person” has the right to acquire by conversion or exercise of other securities,
whether such right is currently exercisable or is exercisable only upon the
occurrence of a subsequent condition.  The terms “Beneficially Owns” and
“Beneficially Owned” have correlative meanings.

     

    “Board of Directors”
means:

     

    (1)           with
respect to a corporation, the board of directors of the
corporation;

     

    (2)           with
respect to a partnership, the board of directors of the general partner of the
partnership; and

     

    (3)           with
respect to any other Person, the board or committee of such Person serving a
similar function.

     

    “Business Day” means any day
other than a Saturday, Sunday, or any day on which banks in Houston, Texas or in
New York, New York are authorized or required by law to close.

     

    “Capital Lease Obligation”
means, at the time any determination is to be made, the amount of the liability
in respect of a capital lease that would at that time be required to be
capitalized on a balance sheet prepared in accordance with GAAP.

     

    “Capital Stock”
means:

     

    (1)           in
the case of a corporation, corporate stock;

     

    (2)           in
the case of an association or business entity, any and all shares, interests,
participations, rights or other equivalents (however designated) of corporate
stock;

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    (3)           in
the case of a partnership or limited liability company, partnership interests
(whether general or limited) or membership interests; and

     

    (4)           any
other interest or participation that confers on a Person the right to receive a
share of the profits and losses of, or distributions of assets of, the issuing
Person.

     

    “Cash Equivalents”
means:

     

    (1)           United
States dollars;

     

    (2)           securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality of the United States government
(provided that the full
faith and credit of the United States is pledged in support of those securities)
having maturities of not more than six months from the date of
acquisition;

     

    (3)           certificates
of deposit and eurodollar time deposits with maturities of six months or less
from the date of acquisition, bankers’ acceptances with maturities not exceeding
six months and overnight bank deposits, in each case, with any lender party to
the Credit Agreement or with any domestic commercial bank having capital and
surplus in excess of $250.0 million and a Thomson Bank Watch Rating of “B” or
better;

     

    (4)           repurchase
obligations with a term of not more than seven days for underlying securities of
the types described in clauses (2) and (3) above entered into with any financial
institution meeting the qualifications specified in clause (3)
above;

     

    (5)           commercial
paper having one of the two highest ratings obtainable from Moody’s Investors
Service, Inc. or Standard & Poor’s Ratings Services and, in each case,
maturing within one year after the date of acquisition; and

     

    (6)           money
market funds at least 95% of the assets of which constitute Cash Equivalents of
the kinds described in clauses (1) through (5) of this definition.

     

    “Change of Control” means the
occurrence of any of the following:

     

    (1)           the
direct or indirect sale, lease, transfer, conveyance or other disposition (other
than by way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the properties or assets (including
Capital Stock) of (a) the Parent and its Subsidiaries taken as a whole, (b) the
Company or (c) the Company’s Restricted Subsidiaries taken as a whole, to any
“person” (as that term is used in Section 13(d)(3) of the Exchange
Act);

     

    (2)           the
adoption of a plan relating to the liquidation or dissolution of the Parent or
the Company;

     

    (3)           the
consummation of any transaction (including, without limitation, any merger or
consolidation) the result of which is that any “person” or “group” (as that term
is used in Section 13(d)(3) of the Exchange Act) becomes the Beneficial Owner,
directly or indirectly, of more than 50% of the Voting Stock of the Parent or
the Company, measured by voting power rather than number of shares, other than
beneficial ownership by the Parent or any Subsidiary thereof, directly or
indirectly, of Voting Stock of the Company; or

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    (4)           the
Parent or the Company (or any parent thereof) consolidates with, or merges with
or into, any Person, or any Person consolidates with, or merges with or into the
Parent or the Company (or any parent thereof) in any such event pursuant to a
transaction in which any of the outstanding Voting Stock of the Parent or the
Company (or any parent thereof), as the case may be, is converted into or
exchanged for cash, securities or other property, other than any such
transaction where the Voting Stock of the Company (or any parent thereof)
outstanding immediately prior to such transaction is converted into or exchanged
for Voting Stock (other than Disqualified Stock) of the surviving or transferee
Person (or any parent thereof) constituting a majority of the outstanding shares
of such Voting Stock of such surviving or transferee Person (or any parent
thereof) immediately after giving effect to such issuance; provided, however, that the
consolidation or merger of any Subsidiary of the Parent (other than the Company
and its Subsidiaries) shall not constitute a Change of Control if the Voting
Stock of the Company continues to be owned directly or indirectly (through one
or more Subsidiaries) by the Parent.

     

    “Clearstream” means
Clearstream Banking, S.A. or any successor securities clearing
agency.

     

    “Commission” means the
Securities and Exchange Commission.

     

    “Company” means Energy XXI
Gulf Coast, Inc., a Delaware corporation, and any and all successors
thereto.

     

    “Consolidated Cash Flow”
means, with respect to any specified Person for any period, the Consolidated Net
Income of such Person for such period plus:

     

    (1)           provision
for taxes based on income or profits of such Person and its Restricted
Subsidiaries for such period, to the extent that such provision for taxes was
deducted in computing such Consolidated Net Income; plus

     

    (2)           Fixed
Charges of such Person and its Restricted Subsidiaries for such period; plus

     

    (3)           depreciation,
depletion and amortization (including amortization of intangibles but excluding
amortization of prepaid cash expenses that were paid in a prior period),
impairment, exploration expense, and other non-cash expenses (excluding any such
non-cash expense to the extent that it represents an accrual of or reserve for
cash expenses in any future period or amortization of a prepaid cash expense
that was paid in a prior period) of such Person and its Restricted Subsidiaries
for such period to the extent that such depreciation, depletion and
amortization, impairment and other non-cash expenses were deducted in computing
such Consolidated Net Income; plus

     

    (4)           accretion
of asset retirement obligations in accordance with SFAS No. 143, Accounting for
Asset Retirement Obligations, and any similar accounting in prior periods; plus

     

    (5)           unrealized
non-cash losses resulting from foreign currency balance sheet adjustments
required by GAAP to the extent such losses were deducted in computing such
Consolidated Net Income; minus

     

    (6)           non-cash
items increasing such Consolidated Net Income for such period, other than items
that were accrued in the ordinary course of business; and minus

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    (7)           to
the extent included in determining Consolidated Net Income, the sum of (x) the
amount of deferred revenues that are amortized during such period and are
attributable to reserves that are subject to Volumetric Production Payments and
(y) amounts recorded in accordance with GAAP as repayments of principal and
interest pursuant to Dollar-Denominated Production Payments,

     

    in each
case, on a consolidated basis and determined in accordance with
GAAP.

     

    “Consolidated Net Income”
means, with respect to any specified Person for any period, the aggregate of the
Net Income of such Person and its Restricted Subsidiaries for such period, on a
consolidated basis, determined in accordance with GAAP; provided
that:

     

    (1)           the
Net Income (but not loss) of any Person that is not a Restricted Subsidiary or
that is accounted for by the equity method of accounting will be excluded,
except to the extent of the amount of dividends or distributions paid in cash to
the specified Person or a Restricted Subsidiary of the Person;

     

    (2)           the
Net Income of any Restricted Subsidiary will be excluded to the extent that the
declaration or payment of dividends or similar distributions by that Restricted
Subsidiary of that Net Income is not at the date of determination permitted
without any prior governmental approval (that has not been obtained) or,
directly or indirectly, by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Restricted Subsidiary or its stockholders,
partners or members;

     

    (3)           the
cumulative effect of a change in accounting principles will be
excluded;

     

    (4)           income
resulting from transfers of assets (other than cash) between the Company or any
of its Restricted Subsidiaries, on the one hand, and an Unrestricted Subsidiary,
on the other hand, will be excluded;

     

    (5)           any
write-downs of non-current assets will be excluded; provided that any ceiling
limitation write-downs under Commission guidelines shall be treated as
capitalized costs, as if such write-downs had not occurred;

     

    (6)           any
unrealized non-cash gains or losses or charges in respect of hedge or non-hedge
derivatives (including those resulting from the application of SFAS 133) will be
excluded;

     

    (7)           any
non-cash compensation charge arising from any grant of stock, stock options or
other equity- based awards will be excluded;

     

    (8)           any
item classified as an extraordinary, unusual or nonrecurring gain, loss or
charge will be excluded;

     

    (9)           all
deferred financing costs written off and premiums paid or other charges in
connection with any early extinguishment of Indebtedness will be
excluded;

     

    (10)         any
net after-tax income or loss from disposed, abandoned, transferred, closed or
discontinued operations and any net after-tax gain or loss on disposed,
abandoned, transferred, closed or discontinued operations will be excluded;
and

     

    (11)         all
Permitted Payments to Parent will be excluded.

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    “Corporate Trust Office of the
Trustee” will be at the address of the Trustee specified in Section 11.02
hereof or such other address as to which the Trustee may give notice to the
Company.

     

    “Credit Agreement” means the
Amended and Restated First Lien Credit Agreement entered into as of June 8, 2007
among the Company, as borrower, the various lenders named therein, The Royal
Bank of Scotland plc, RBS Securities Inc. and BNP Paribas, providing for
revolving credit borrowings, including any related notes, guarantees, collateral
documents, instruments and agreements executed in connection therewith, and in
each case as amended, restated, modified, renewed, refunded, replaced or
refinanced from time to time.

     

    “Credit Facilities” means one
or more debt facilities (including, without limitation, the Credit Agreement),
commercial paper facilities or capital markets financings, in each case with
banks or other institutional lenders or institutional investors providing for
revolving credit loans, term loans, receivables financing (including through the
sale of receivables to such lenders or to special purpose entities formed to
borrow from (or sell receivables to) such lenders against such receivables),
letters of credit or capital markets financings, in each case, as amended,
restated, modified, renewed, refunded, replaced or refinanced (including
refinancing with any capital markets transaction) in whole or in part from time
to time.

     

    “Default” means any event
that is, or with the passage of time or the giving of notice or both would be,
an Event of Default.

     

    “Definitive Note” means a
certificated Note registered in the name of the Holder thereof and issued in
accordance with Section 2.06 hereof, substantially in the form of Exhibit A
hereto, except that such Note shall not bear the Global Note Legend and shall
not have the “Schedule of Exchanges of Interests in the Global Note” attached
thereto.

     

    “Depositary” means, with
respect to the Notes issuable or issued in whole or in part in global form, the
Person specified in Section 2.03 hereof as the Depositary with respect to the
Notes, and any and all successors thereto appointed as depositary hereunder and
having become such pursuant to the applicable provision of this
Indenture.

     

    “Disqualified Stock” means
any Capital Stock that, by its terms (or by the terms of any security into which
it is convertible, or for which it is exchangeable, in each case, at the option
of the holder of the Capital Stock), or upon the happening of any event, matures
or is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, or redeemable at the option of the holder of the Capital Stock, in
whole or in part, on or prior to the date that is 91 days after the date on
which the Notes mature.  Notwithstanding the preceding sentence, any
Capital Stock that would constitute Disqualified Stock solely because the
holders of the Capital Stock have the right to require the Company to repurchase
or redeem such Capital Stock upon the occurrence of a change of control or an
asset sale will not constitute Disqualified Stock if the terms of such Capital
Stock provide that the Company may not repurchase or redeem any such Capital
Stock pursuant to such provisions unless such repurchase or redemption complies
with Section 4.07 hereof.

     

    “Dollar-Denominated Production
Payments” means production payment obligations recorded as liabilities in
accordance with GAAP, together with all undertakings and obligations in
connection therewith.

     

    “Domestic Subsidiary” means
any Restricted Subsidiary of the Company other than a Foreign
Subsidiary.

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    “Equity Interests” means
Capital Stock and all warrants, options or other rights to acquire Capital Stock
(but excluding any debt security that is convertible into, or exchangeable for,
Capital Stock).

     

     “Equity Offering” means
any public or private sale of Capital Stock (other than Disqualified Stock) made
for cash on a primary basis by the Company after the Issue Date.

     

    “Euroclear” means Euroclear
Bank S.A./N.V., or any successor securities clearing agency.

     

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

     

    “Exchange Notes” means Notes
issued pursuant to this Indenture in exchange for Initial Notes or Additional
Notes pursuant to an exchange offer effected pursuant to the Registration Rights
Agreement (or a similar agreement entered into with respect to Additional
Notes).

     

    “Existing Indebtedness” means
the aggregate principal amount of Indebtedness of the Company and its Restricted
Subsidiaries (other than Indebtedness under the Credit Agreement which is
considered incurred under Section 4.09(b)(1)) in existence on the Issue Date,
until such amounts are repaid, including, without limitation, the Existing
Unsecured Notes and the Existing Secured Notes.

     

    “Existing Secured Notes” means
the Company’s 16% Second Lien Junior Secured Notes due 2014 outstanding on the
Issue Date, together with any additional notes of such class issued in respect
of interest thereon.

     

    “Existing Unsecured Notes”
means the Company’s 10% Senior Notes due 2013.

     

    “Fair Market Value” means the
value that would be paid by a willing buyer to an unaffiliated willing seller in
a transaction not involving distress or necessity of either party, as such price
is determined in good faith by the Company (unless otherwise provided in this
Indenture).

     

    “Fixed Charge Coverage Ratio“
means with respect to any specified Person for any four-quarter reference
period, the ratio of the Consolidated Cash Flow of such Person for such period
to the Fixed Charges of such Person for such period. In the event that the
specified Person or any of its Restricted Subsidiaries incurs, assumes,
guarantees, repays, repurchases or redeems any Indebtedness (other than ordinary
working capital borrowings) or issues, repurchases or redeems preferred stock
subsequent to the commencement of the applicable four-quarter reference period
and on or prior to the date on which the event for which the calculation of the
Fixed Charge Coverage Ratio is made (the “Calculation Date”), then the Fixed
Charge Coverage Ratio will be calculated giving pro forma effect to such
incurrence, assumption, guarantee, repayment, repurchase or redemption of
Indebtedness, or such issuance, repurchase or redemption of preferred stock, and
the use of the proceeds therefrom as if the same had occurred at the beginning
of such period.

     

    In
addition, for purposes of calculating the Fixed Charge Coverage
Ratio:

     

    (1)           acquisitions
that have been made by the specified Person or any of its Restricted
Subsidiaries, including through mergers or consolidations and including any
related financing transactions, subsequent to the commencement of the applicable
four-quarter reference period and on or prior to the Calculation Date will be
given pro forma effect as if they had occurred on the first day of such period,
including any Consolidated Cash Flow, provided that any cost savings or
operating improvements may be given such pro forma effect only if they are
permitted by Regulation S-X promulgated under the Securities Act or any other
regulation or policy of the Commission related thereto);

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    (2)           the
Consolidated Cash Flow attributable to discontinued operations, as determined in
accordance with GAAP, and assets, operations or businesses disposed of prior to
the Calculation Date, will be excluded; and

     

    (3)           the
Fixed Charges attributable to discontinued operations, as determined in
accordance with GAAP, and assets, operations or businesses disposed of prior to
the Calculation Date, will be excluded, but only to the extent that the
obligations giving rise to such Fixed Charges will not be obligations of the
specified Person or any of its Restricted Subsidiaries following the Calculation
Date.

     

    “Fixed Charges” means, with
respect to any specified Person for any period, the sum, without duplication,
of:

     

    (1)           the
consolidated interest expense of such Person and its Restricted Subsidiaries for
such period, whether paid or accrued, including, without limitation,
amortization of debt issuance costs (excluding, however, prepayment penalties
associated with repayment of debt from the proceeds of the sale of the Notes)
and original issue discount, non-cash interest payments, the interest component
of any deferred payment obligations, the interest component of all payments
associated with Capital Lease Obligations, imputed interest with respect to
Attributable Debt, commissions, discounts and other fees and charges incurred in
respect of letter of credit or bankers’ acceptance financings, and net of the
effect of all payments made or received pursuant to Hedging Obligations in
respect of interest rates; plus

     

    (2)           the
consolidated interest expense of such Person and its Restricted Subsidiaries
that was capitalized during such period; plus

     

    (3)           any
interest expense on Indebtedness of another Person that is guaranteed by such
Person or one of its Restricted Subsidiaries or secured by a Lien on assets of
such Person or one of its Restricted Subsidiaries, whether or not such guarantee
or Lien is called upon; plus

     

    (4)           the
product of (a) all dividends, whether paid or accrued and whether or not in
cash, on any series of preferred stock of such Person or any of its Restricted
Subsidiaries, other than dividends on Equity Interests payable solely in Equity
Interests of the Company (other than Disqualified Stock) or to the Company or a
Restricted Subsidiary of the Company, times (b) a fraction, the
numerator of which is one and the denominator of which is one minus the then
current combined federal, state and local statutory tax rate of such Person,
expressed as a decimal,

     

    
      in each
case, determined on a consolidated basis in accordance with
GAAP.

    

     

    “Foreign Subsidiary” means
any Restricted Subsidiary of the Company that was not formed under the laws of
the United States or any state of the United States or the District of Columbia
and that conducts substantially all of its operations outside the United
States.

     

    “GAAP” means generally
accepted accounting principles in the United States, which are in effect from
time to time.

     

    “Global Note Legend” means
the legend set forth in Section 2.06(f)(2) hereof, which is required to be
placed on all Global Notes issued under this Indenture.

     

    “Global Notes” means and
includes each Note deposited with or on behalf of and registered in the name of
the Depository or its nominee, substantially in the form of Exhibit A hereto and
that bears the Global Note Legend and that has the “Schedule of Exchanges of
Interests in the Global Note” attached thereto, issued in accordance with
Sections 2.01 and 2.06 hereof.

    
      
         

      

      
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    “Government Securities” means
direct obligations of, or obligations guaranteed by, the United States of
America, and the payment for which the United States pledges its full faith and
credit.

     

    “guarantee” means a guarantee
other than by endorsement of negotiable instruments for collection in the
ordinary course of business, direct or indirect, in any manner including,
without limitation, by way of a pledge of assets or through letters of credit or
reimbursement agreements in respect thereof, of all or any part of any
Indebtedness.  When used as a verb, “guarantee” has a correlative
meaning.

     

    “Guarantee” means the
Guarantee by each Guarantor of the Company’s obligations under this Indenture
and the Notes, executed pursuant to the provisions of this
Indenture.

     

    “Guarantors” means the Parent
and each Restricted Subsidiary of the Company that executes this Indenture as an
initial Guarantor or that becomes a Guarantor in accordance with the provisions
of this Indenture, in each case, together with their respective successors and
assigns.

     

    “Hedging Obligations” means,
with respect to any specified Person, the obligations of such Person incurred in
the normal course of business and consistent with past practices and not for
speculative purposes under:

     

    (1)         interest
rate swap agreements, interest rate cap agreements and interest rate collar
agreements entered into with one of more financial institutions and designed to
protect the Person or any of its Restricted Subsidiaries entering into the
agreement against fluctuations in interest rates with respect to Indebtedness
incurred;

     

    (2)         foreign
exchange contracts and currency protection agreements entered into with one of
more financial institutions and designed to protect the Person or any of its
Restricted Subsidiaries entering into the agreement against fluctuations in
currency exchanges rates with respect to Indebtedness incurred;

     

    (3)         any
commodity futures contract, commodity option or other similar agreement or
arrangement designed to protect against fluctuations in the price of oil,
natural gas or other commodities used, produced, processed or sold by that
Person or any of its Restricted Subsidiaries at the time; and

     

    (4)         other
agreements or arrangements designed to protect such Person or any of its
Restricted Subsidiaries against fluctuations in interest rates, commodity prices
or currency exchange rates.

     

    “Holder” means a Person in
whose name a Note is registered.

     

     “Indebtedness“ means, with
respect to any specified Person, without duplication,

     

    (1)         all
obligations of such Person, whether or not contingent, in respect
of:

     

    (a)  the
principal of and premium, if any, in respect of outstanding (A) Indebtedness of
such Person for money borrowed and (B) Indebtedness evidenced by notes,
debentures, bonds or other similar instruments for the payment of which such
Person is responsible or liable;

    
      
         

      

      
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    (b)  all
Capital Lease Obligations of such Person and all Attributable Debt in respect of
sale and leaseback transactions entered into by such Person;

     

    (c)  the
deferred purchase price of property, which purchase price is due more than six
months after the date of taking delivery of title to such property, including
all obligations of such Person for the deferred purchase price of property under
any title retention agreement, but excluding accrued expenses and trade accounts
payable arising in the ordinary course of business; and

     

    (d)  the
reimbursement obligation of any obligor for the principal amount of any letter
of credit, banker’s acceptance or similar transaction (excluding obligations
with respect to letters of credit securing obligations (other than obligations
described in clauses (a) through (c) above) entered into in the ordinary course
of business of such Person to the extent such letters of credit are not drawn
upon or, if and to the extent drawn upon, such drawing is reimbursed no later
than the tenth Business Day following receipt by such Person of a demand for
reimbursement following payment on the letter of credit);

     

    (2)         all
net obligations in respect of Hedging Obligations except to the extent such net
obligations are otherwise included in this definition;

     

    (3)         all
liabilities of others of the kind described in the preceding clause (1) or (2)
that such Person has Guaranteed or that are otherwise its legal
liability;

     

    (4)         with
respect to any Production Payment, any warranties or guaranties of production or
payment by such Person with respect to such Production Payment but excluding
other contractual obligations of such Person with respect to such Production
Payment;

     

    (5)         Indebtedness
(as otherwise defined in this definition) of another Person secured by a Lien on
any asset of such Person, whether or not such Indebtedness is assumed by such
Person, the amount of such obligations being deemed to be the lesser
of

     

    (a)  the full
amount of such obligations so secured, and

     

    (b)  the fair
market value of such asset as determined in good faith by such specified
Person;

     

    (6)         Disqualified
Stock of such Person or a Restricted Subsidiary in an amount equal to the
greater of the maximum mandatory redemption or repurchase price (not including,
in either case, any redemption or repurchase premium) or the liquidation
preference thereof;

     

    (7)         the
aggregate preference in respect of amounts payable on the issued and outstanding
shares of preferred stock of any of the Company’s Restricted Subsidiaries that
are not Guarantors in the event of any voluntary or involuntary liquidation,
dissolution or winding up (excluding any such preference attributable to such
shares of preferred stock that are owned by such Person or any of its Restricted
Subsidiaries; provided,
that if such Person is the Company, such exclusion shall be for such preference
attributable to such shares of preferred stock that are owned by the Company or
any of its Restricted Subsidiaries); and

    
      
         

      

      
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    (8)           any
and all deferrals, renewals, extensions, refinancings and refundings (whether
direct or indirect) of, or amendments, modifications or supplements to, any
liability of the kind described in any of the preceding clauses (1), (2), (3),
(4), (5), (6), (7) or this clause (8), whether or not between or among the same
parties.

     

    Subject
to clause (4) of the preceding sentence, Production Payments shall not be deemed
to be Indebtedness.

     

    “Indenture” means this
Indenture, as amended or supplemented from time to time.

     

    “Indirect Participant” means
a Person who holds a beneficial interest in a Global Note through a
Participant.

     

    “Initial Notes” means the
first $750,000,000 aggregate principal amount of Notes issued under this
Indenture on the date hereof.

     

    “Investment Grade Rating”
means a rating equal to or higher than Baa3 (or the equivalent) by Moody’s and
BBB- (or the equivalent) by S&P, or any equivalent rating by any other
Rating Agency.

     

    “Investments” means, with
respect to any Person, all direct or indirect investments by such Person in
other Persons (including Affiliates) in the forms of loans (including Guarantees
or other obligations), advances or capital contributions (excluding trade
receivables and commission, travel expenses and similar advances to officers and
employees made in the ordinary course of business, purchases or other
acquisitions for consideration of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP.  If the
Company or any Restricted Subsidiary of the Company sells or otherwise disposes
of any Equity Interests of any direct or indirect Restricted Subsidiary of the
Company such that, after giving effect to any such sale or disposition, such
Person is no longer a Restricted Subsidiary of the Company, the Company will be
deemed to have made an Investment on the date of any such sale or disposition
equal to the Fair Market Value of the Equity Interests of such Restricted
Subsidiary that were not sold or disposed of in an amount determined as provided
in Section 4.07(c) hereof.

     

    “Issue Date” means the date
on which Notes are first issued under this Indenture.

     

    “Lien” means, with respect to
any asset, any mortgage, lien, pledge, charge, security interest or encumbrance
of any kind in respect of such asset, whether or not filed, recorded or
otherwise perfected under applicable law, including any conditional sale or
other title retention agreement, any lease in the nature thereof, any option or
other agreement to sell or give a security interest in and any filing of or
agreement to give any financing statement under the Uniform Commercial Code (or
equivalent statutes) of any jurisdiction other than a precautionary financing
statement not intended as a security agreement.

     

    “Material Change” means an
increase or decrease (excluding changes that result solely from changes in
prices and changes resulting from the incurrence of previously estimated future
development costs) of more than 25% during a fiscal quarter in the discounted
future net revenues from proved crude oil and natural gas reserves of the
Company and its Restricted Subsidiaries, calculated in accordance with clause
(1)(a) of the definition of ACNTA; provided, however, that the following
will be excluded from the calculation of Material Change:

     

    (1)           any
acquisitions during the fiscal quarter of oil and gas reserves that have been
estimated by a nationally recognized firm of independent petroleum engineers and
with respect to which a report or reports of such engineers exist;
and

    
      
         

      

      
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    (2)           any
disposition of properties existing at the beginning of such fiscal quarter that
have been disposed of in compliance with the Section 4.10 hereof.

     

    “Material Domestic Subsidiary”
means any Domestic Subsidiary that is not a Guarantor, when taken
together with all other Domestic Subsidiaries that are not Guarantors, that at
the time of determination has either assets or quarterly revenues in excess of
5.0% of the consolidated assets or quarterly revenues of the Company and its
Restricted Subsidiaries, in each case based upon the most recent quarterly
financial statements available to the Company.

     

    “Moody’s” means Moody’s
Investors Service, Inc. or any successor thereof.

     

    “Net Income” means, with
respect to any specified Person, the net income (loss) of such Person,
determined in accordance with GAAP and before any reduction in respect of
preferred stock dividends, excluding, however:

     

    (1)           any
gain (but not loss), together with any related provision for taxes on such gain
(but not loss), realized in connection with (a) any Asset Sale or (b) the
disposition of any securities by such Person or any of its Subsidiaries or the
extinguishment of any Indebtedness of such Person or any of its Subsidiaries;
and

     

    (2)           any
extraordinary gain (but not loss), together with any related provision for taxes
on such extraordinary gain (but not loss).

     

    “Net Proceeds” means the
aggregate cash proceeds received by the Company or any of its Restricted
Subsidiaries in respect of any Asset Sale (including, without limitation, any
cash received upon the sale or other disposition of any non-cash consideration
received in any Asset Sale), net of, without duplication:

     

    (1)           the
direct costs relating to such Asset Sale, including, without limitation, legal,
accounting and investment banking fees, and sales commissions, and any
relocation expenses incurred as a result of the Asset Sale,

     

    (2)           taxes
paid or payable as a result of the Asset Sale, in each case, after taking into
account any available tax credits or deductions and any tax sharing
arrangements,

     

    (3)           amounts
required to be applied to the repayment of Indebtedness, other than under the
Credit Facilities, secured by a Lien on the properties or assets that were the
subject of such Asset Sale, and

     

    (4)           any
reserve for adjustment in respect of the sale price of such properties or assets
established in accordance with GAAP.

     

    “Net Working Capital”
means:

     

    (1)           all
current assets of the Company and its Restricted Subsidiaries, except current
assets from commodity price risk management activities arising in the ordinary
course of business, minus

     

    (2)           all
current liabilities of the Company and its Restricted Subsidiaries, except (i)
current liabilities included in Indebtedness and (ii) current liabilities from
commodity price risk management activities arising in the ordinary course of
business;

    
      
         

      

      
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    in each
case, on a consolidated basis and determined in accordance with
GAAP.

     

    “Non-Recourse Debt” means
Indebtedness:

     

    (1)           as
to which neither the Company nor any of its Restricted Subsidiaries (a) provides
credit support of any kind (including any undertaking, agreement or instrument
that would constitute Indebtedness), (b) is directly or indirectly liable as a
guarantor or otherwise, or (c) constitutes the lender;

     

    (2)           no
default with respect to which (including any rights that the holders of the
Indebtedness may have to take enforcement action against an Unrestricted
Subsidiary) would permit upon notice, lapse of time or both any holder of any
other Indebtedness (other than the Notes) of the Company or any of its
Restricted Subsidiaries to declare a default on such other Indebtedness or cause
the payment of the Indebtedness to be accelerated or payable prior to its Stated
Maturity; and

     

    (3)           the
explicit terms of which provide there is no recourse to the stock or assets of
the Company or any of its Restricted Subsidiaries.

     

    “Non-U.S. Person” means a
Person who is not a U.S. Person as defined under Regulation S of the Securities
Act.

     

    “Notes” has the meaning
assigned to it in the preamble to this Indenture.  The Initial Notes,
Exchange Notes and the Additional Notes shall be treated as a single class for
all purposes under this Indenture, and unless the context otherwise requires,
all references to the “Notes” shall include the Initial Notes, any Additional
Notes and any Exchange Notes.

     

    “Notes Custodian” means the
custodian with respect to the Notes in global form, as appointed by the
Depositary, or any successor entity thereto and shall initially be the
Trustee.

     

    “Obligations” means any
principal, premium, if any, interest (including interest accruing on or after
the filing of any petition in bankruptcy or for reorganization, whether or not a
claim for post-filing interest is allowed in such proceeding) penalties, fees,
charges, expenses, indemnifications, reimbursements, damages, guarantees and
other liabilities or amounts payable under the documentation governing any
Indebtedness or in respect thereto.

     

    “Offering Memorandum” means
the offering memorandum of the Company dated December 3, 2010 relating to the
offering of the Initial Notes.

     

    “Officer” means, with respect
to any Person, the Chairman of the Board, the Chief Executive Officer, the
President, the Chief Operating Officer, the Chief Financial Officer, the
Treasurer, any Assistant Treasurer, the Controller, the Secretary or any
Vice-President of such Person.

     

    “Officers’ Certificate” means
a certificate signed on behalf of the Company by two Officers of the Company,
one of whom must be the principal executive officer, the principal financial
officer, the treasurer or the principal accounting officer of the Company, that
meets the requirements of Section 11.05 hereof.

    
      
         

      

      
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    “Oil and Gas Business”
means:

     

    (1)           the
acquisition, exploration, development, operation and disposition of interests in
oil, natural gas and other hydrocarbon properties;

     

    (2)           the
gathering, marketing, treating, processing (but not refining), storage, selling
and transporting of any production from those interests, including any hedging
activities related thereto; and

     

    (3)           any
activity necessary, appropriate, incidental or reasonably related to the
activities described above.

     

    “Opinion of Counsel” means an
opinion from legal counsel who is reasonably acceptable to the Trustee, that
meets the requirements of Section 11.05 hereof.  The counsel may be an
employee of or counsel to the Company, any Subsidiary of the Company or the
Trustee.

     

    “Parent” means Energy XXI
(Bermuda) Limited, a Bermuda company, the ultimate parent company of the
Company, and any and all successors thereto.

     

    “Participant” means, with
respect to the Depositary, Euroclear or Clearstream, a Person who has an account
with the Depositary, Euroclear or Clearstream, respectively (and, with respect
to DTC, shall include Euroclear and Clearstream).

     

    “Permitted Business
Investments”  means Investments made in the ordinary course of,
and of a nature that is or shall have become customary in, the Oil and Gas
Business, including through agreements, transactions, interests or arrangements
that permit one to share risk or costs, comply with regulatory requirements
regarding local ownership or satisfy other objectives customarily achieved
through the conduct of the Oil and Gas Business jointly with third parties,
including without limitation:

     

    (1)           direct
or indirect ownership of crude oil, natural gas, other related hydrocarbon and
mineral properties or any interest therein or gathering, transportation,
processing, storage or related systems; and

     

    (2)           the
entry into operating agreements, joint ventures, processing agreements, working
interests, royalty interests, mineral leases, farm-in agreements, farm-out
agreements, development agreements, production sharing agreements, area of
mutual interest agreements, contracts for the sale, transportation or exchange
of crude oil and natural gas and related hydrocarbons and minerals, unitization
agreements, pooling arrangements, joint bidding agreements, service contracts,
partnership agreements (whether general or limited), or other similar or
customary agreements, transactions, properties, interests or arrangements and
Investments and expenditures in connection therewith or pursuant thereto, in
each case made or entered into in the ordinary course of the Oil and Gas
Business, excluding, however, Investments in corporations and publicly traded
limited partnerships.

     

    “Permitted Investments”
means:

     

    (1)           any
Investment in the Company or in a Restricted Subsidiary of the
Company;

     

    (2)           any
Investment in Cash Equivalents;

     

    (3)           any
Investment by the Company or any Restricted Subsidiary of the Company in a
Person, if as a result of such Investment:

    
      
         

      

      
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    (a)  such
Person becomes a Restricted Subsidiary of the Company; or

     

    (b)  such
Person is merged, consolidated or amalgamated with or into, or transfers or
conveys substantially all of its properties or assets to, or is liquidated into,
the Company or a Restricted Subsidiary of the Company;

     

    (4)         any
Investment made as a result of the receipt of non-cash consideration from an
Asset Sale that was made pursuant to and in compliance with Section 4.10
hereof;

     

    (5)         any
Investment in any Person, solely in exchange for the issuance of Equity
Interests (other than Disqualified Stock) of the Company;

     

    (6)         any
Investments received in compromise of obligations of trade creditors or
customers that were incurred in the ordinary course of business, including
pursuant to any plan of reorganization or similar arrangement upon the
bankruptcy or insolvency of any trade creditor or customer;

     

    (7)         Investments
represented by Hedging Obligations permitted pursuant to and in compliance with
Section 4.09;

     

    (8)         Permitted
Business Investments; and

     

    (9)         other
Investments in any Person having an aggregate Fair Market Value (measured on the
date such Investment was made and without giving effect to subsequent changes in
value), when taken together with all other Investments under this clause (9),
that are at the time outstanding, not exceeding 2.0% of ACNTA.

     

    “Permitted Liens”
means:

     

    (1)         Liens
on any property or assets of the Company or any Guarantor securing Indebtedness
and other Obligations under the Credit Facilities that are permitted under this
Indenture;

     

    (2)         Liens
in favor of the Company or the Guarantors;

     

    (3)         Liens
on any property or assets of the Company or any Guarantor securing (a)
Indebtedness and other Obligations under the Existing Secured Notes and all
documents relating thereto or (b) the notes and the Guarantees;

     

    (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 property or assets existing at the time of acquisition of the property or
assets 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;

    
      
         

      

      
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    (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 or assets 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 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 under Section
4.09;

     

    (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;

     

    (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)         Liens
to secure Indebtedness represented by Capital Lease Obligations permitted by
Section 4.09(b)(4) of this Indenture;

     

    (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 $20.0
million at any one time outstanding;

    
      
         

      

      
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    (16)         judgment
Liens not giving rise to an Event of Default so long as any appropriate legal
proceedings that may have been duly initiated for the review of such judgment
shall not have been finally terminated or the period within which such legal
proceedings may be initiated shall not have expired;

     

    (17)         Liens
on Capital Stock of an Unrestricted Subsidiary that secure Indebtedness or other
obligations of such Unrestricted Subsidiary;

     

    (18)         Liens
to secure a defeasance trust;

     

    (19)         Liens
on monies deposited pursuant to the terms of an agreement to acquire assets used
in or Persons engaged in the Oil and Gas Business; and

     

    (20)         Liens
securing insurance premium financing arrangements, provided that any such Lien
is limited to the applicable insurance contracts.

     

    “Permitted Parent Business”
means:

     

    (1)           the
ownership of Capital Stock or Indebtedness of Parent’s existing Subsidiaries as
of the Issue Date and any activities directly related to such ownership, in each
case as otherwise permitted by this Indenture;

     

    (2)           the
performance of its obligations under and in connection with its Guarantee of the
Notes and any existing and future Credit Facilities and the performance of
similar obligations with respect to any Credit Facilities or other items of
Indebtedness of future direct subsidiaries of Parent, in each case otherwise
permitted to be incurred under Section 4.09 hereof;

     

    (3)           the
undertaking of any actions required by law, regulation or order, including to
maintain its existence; and

     

    (4)           directly
engaging in the Oil and Gas Business or the ownership of the Capital Stock or
Indebtedness of other Persons that are corporations or limited liability
companies or other Persons consisting of limited partnership interests in
limited partnerships, in each case, engaged in the Oil and Gas
Business.

     

    “Permitted Payments to Parent
Companies” means:

     

    (1)           payments
to the Parent or any of its Subsidiaries to permit them to pay their reasonable
accounting, legal and administrative expenses when due, in an aggregate amount
not to exceed $3.5 million per annum; and

     

    (2)           for
so long as the Company is a member of a group filing a consolidated or combined
tax return with Parent or any Subsidiary thereof, payments to Parent or any
Subsidiary thereof in respect of an allocable portion of the tax liabilities of
such group that is attributable to the Company and its Subsidiaries (“Tax Payments”); provided that
the Tax Payments do not exceed the amount of the relevant tax (including any
penalties and interest) that the Company would owe if the Company were filing a
separate tax return (or a separate consolidated or combined return with its
Subsidiaries that are members of the consolidated or combined group), taking
into account any carryovers and carrybacks of tax attributes (such as net
operating losses) of the Company and such Subsidiaries from other taxable
years.  Any Tax Payments received from the Company shall be paid over to
the appropriate taxing authority within 30 days of Parents’ receipt of such Tax
Payments or refunded to the Company.

    
      
         

      

      
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    “Permitted Refinancing
Indebtedness” means any Indebtedness of the Company or any of its
Restricted Subsidiaries issued in exchange for, or the net proceeds of which are
used to extend, renew, refund, refinance, replace, defease or discharge other
Indebtedness of the Company or any of its Restricted Subsidiaries (other than
intercompany Indebtedness); provided that:

     

    (1)           the
principal amount (or accreted value, if applicable) of such Permitted
Refinancing Indebtedness does not exceed the principal amount (or accreted
value, if applicable) of the Indebtedness extended, renewed, refunded,
refinanced, replaced, defeased or discharged (plus all accrued interest on the
Indebtedness and the amount of all fees and expenses, including premiums,
incurred in connection therewith);

     

    (2)           such
Permitted Refinancing Indebtedness has a final maturity date later than the
final maturity date of, and has a Weighted Average Life to Maturity equal to or
greater than the Weighted Average Life to Maturity of, the Indebtedness being
extended, renewed, refunded, refinanced, replaced, defeased or
discharged;

     

    (3)           if
the Indebtedness being extended, renewed, refunded, refinanced, replaced,
defeased or discharged is subordinated in right of payment to the Notes, such
Permitted Refinancing Indebtedness is subordinated in right of payment to, the
Notes on terms at least as favorable to the Holders as those contained in the
documentation governing the Indebtedness being extended, renewed, refunded,
refinanced, replaced, defeased or discharged; and

     

    (4)           such
Indebtedness is not incurred by a Restricted Subsidiary of the Company if the
Company is the obligor on the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; provided, however, that a
Restricted Subsidiary that is also a Guarantor may guarantee Permitted
Refinancing Indebtedness incurred by the Company, whether or not such Restricted
Subsidiary was an obligor or guarantor of the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded.

     

    “Person” means any
individual, corporation, partnership, joint venture, association, joint-stock
company, trust, unincorporated organization, limited liability company or
government or other entity.

     

    “Private Placement Legend”
means the legend set forth in Section 2.06(f)(1) hereof to be placed on all
Notes issued under this Indenture except where otherwise permitted by the
provisions of this Indenture.

     

    “Production Payments” means,
collectively, Dollar-Denominated Production Payments and Volumetric Production
Payments.

     

    “QIB” means a “qualified
institutional buyer” as defined in Rule 144A.

     

    “QIB Global Note” means a
Global Note substantially in the form of Exhibit A hereto bearing the Global
Note Legend and the Private Placement Legend and deposited with or on behalf of,
and registered in the name of, the Depositary or its nominee that will be issued
in a denomination equal to the outstanding principal amount of the Notes sold to
QIBs.

     

    “Rating Agency” means each of
S&P and Moody’s, or if S&P or Moody’s or both shall not make a rating on
the Notes publicly available, a nationally recognized statistical rating agency
or agencies, as the case may be, selected by the Company (as certified by a
resolution of the Board of Directors of the Company) which shall be substituted
for S&P or Moody’s, or both, as the case may be.

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

     

    “Registration Rights
Agreement” means the Registration Rights Agreement to be dated as of the
Issue Date among Parent, the Company, the Subsidiary Guarantors and the
Purchasers.

     

    “Regulation S” means
Regulation S promulgated under the Securities Act.

     

    “Regulation S Global Note”
means a Regulation S Temporary Global Note or Regulation S Permanent Global
Note, as appropriate.

     

    “Regulation S Permanent Global
Note” means a permanent Global Note in the form of Exhibit A hereto
bearing the Global Note Legend and the Private Placement Legend and deposited
with or on behalf of and registered in the name of the Depositary or its
nominee, issued in a denomination equal to the outstanding principal amount of
the Regulation S Temporary Global Note upon expiration of the Restricted
Period.

     

    “Regulation S Temporary Global
Note” means a temporary Global Note in the form of Exhibit A hereto and
bearing the legend referred to in Section 2.06(f)(3) deposited with or on behalf
of and registered in the name of the Depositary or its nominee, issued in a
denomination equal to the outstanding principal amount of the Notes initially
sold in reliance on Rule 903 of Regulation S.

     

    “Responsible Officer,” when
used with respect to the Trustee, means any officer within the Corporate Trust
Administration of the Trustee (or any successor group of the Trustee) or any
other officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and also means, with respect
to a particular corporate trust matter, any other officer to whom such matter is
referred because of his knowledge of and familiarity with the particular
subject.

     

    “Restricted Definitive Note”
means a Definitive Note bearing the Private Placement Legend.

     

    “Restricted Global Note”
means a Global Note bearing the Private Placement Legend.

     

    “Restricted Investment” means
an Investment other than a Permitted Investment.

     

    “Restricted Period” means the
40-day distribution compliance period as defined in Regulation S.

     

    “Restricted Subsidiary” of a
Person means any Subsidiary of the referent Person that is not an Unrestricted
Subsidiary.

     

    “Rule 144” means Rule 144
promulgated under the Securities Act.

     

    “Rule 144A” means Rule 144A
promulgated under the Securities Act.

     

    “Rule 903” means Rule 903
promulgated under the Securities Act.

     

    “Rule 904” means Rule 904
promulgated under the Securities Act.

     

    “S&P” means Standard
& Poor’s Rating Services, a division of McGraw-Hill, Inc., or any successor
thereof.

     

    “SEC” means the Securities
and Exchange Commission.

    
      
         

      

      
        22

        
          

        

      

      
         

      

    

     

     “Securities Act” means
the Securities Act of 1933, as amended.

     

    “Significant Restricted
Subsidiary” is any Restricted Subsidiary that is a Significant
Subsidiary.

     

    “Significant Subsidiary”
means any Subsidiary that would be a “significant subsidiary” as defined in
Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities
Act, as such Regulation is in effect on the Issue Date.

     

    “Special Interest” means
liquidated damages in the form of additional cash interest, if any, accruing
pursuant to Section 4 of the Registration Rights Agreement relating to the
Initial Notes or any similar provisions of a registration rights agreement with
respect to Additional Notes.

     

    “Stated Maturity” means, with
respect to any installment of interest or principal on any series of
Indebtedness, the date on which the payment of interest or principal was
scheduled to be paid in the original documentation governing such Indebtedness,
and will not include any contingent obligations to repay, redeem or repurchase
any such interest or principal prior to the date originally scheduled for the
payment thereof.

     

    “Subordinated Indebtedness”
means any Indebtedness that is subordinated in right of payment to the Notes or
any Guarantee.

     

    “Subsidiary” means, with
respect to any specified Person:

     

    (1)           any
corporation, association or other business entity (other than a partnership) of
which more than 50% of the total voting power of Voting Stock is at the time
owned or controlled, directly or indirectly, by that Person or one or more of
the other Subsidiaries of that Person (or a combination thereof);
and

     

    (2)           any
partnership (a) the sole general partner or the managing general partner of
which is such Person or a Subsidiary of such Person or (b) the only general
partners of which are that Person or one or more Subsidiaries of that Person (or
any combination thereof), or (c) as to which such Person and its Subsidiaries
are entitled to receive more than 50% of the assets of such partnership upon its
dissolution.

     

    “TIA” means the Trust
Indenture Act of 1939, as amended (15 U.S.C. §§ 77aaa-77bbbb).

     

    “Treasury Rate” means, with
respect to the Notes as of any redemption date, the yield to maturity at the
time of computation of United States Treasury securities with a constant
maturity (as compiled and published in the most recent Federal Reserve
Statistical Release H.15 (519) that has become publicly available at least two
Business Days prior to the redemption date (or, if such Statistical Release is
no longer published, any publicly available source or similar market data)) most
nearly equal to the period from the redemption date to December 15, 2014; provided, however, that if
the period from the redemption date to December 15, 2014 is not equal to the
constant maturity of a United States Treasury security for which a weekly
average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the weekly
average yields of United States Treasury securities for which such yields are
given, except that if the period from the redemption date to the final maturity
of the Notes is less than one year, the weekly average yield on actually traded
United States Treasury securities adjusted to a constant maturity of one year
shall be used.  The Company will (a) calculate the Treasury Rate on the
second Business Day preceding the applicable redemption date and (b) prior to
such redemption date file with the Trustee an Officer’s Certificate setting
forth the Applicable Premium and the Treasury Rate and showing the calculation
of each in reasonable detail.

    
      
         

      

      
        23

        
          

        

      

      
         

      

    

     

    “Trustee” means Wells Fargo
Bank, National Association until a successor replaces it in accordance with the
applicable provisions of this Indenture and thereafter means the successor
serving hereunder.

     

    “Unrestricted Subsidiary”
means any Subsidiary of the Company that is designated by the Board of Directors
of the Company as an Unrestricted Subsidiary pursuant to a resolution of the
Board of Directors of the Company, but only to the extent that such
Subsidiary:

     

    (1)           has
no Indebtedness other than Non-Recourse Debt;

     

    (2)           is
not party to any agreement, contract, arrangement or understanding with the
Company or any Restricted Subsidiary of the Company unless the terms of any such
agreement, contract, arrangement or understanding are no less favorable to the
Company or such Restricted Subsidiary than those that might be obtained at the
time from Persons who are not Affiliates of the Company;

     

    (3)           is
a Person with respect to which neither the Company nor any of its Restricted
Subsidiaries has any direct or indirect obligation (a) to subscribe for
additional Equity Interests or (b) to maintain or preserve such Person’s
financial condition or to cause such Person to achieve any specified levels of
operating results; and

     

    (4)           has
not guaranteed or otherwise directly or indirectly provided credit support for
any Indebtedness of the Company or any of its Restricted
Subsidiaries.

     

    “U.S. Person” means a U.S.
Person as defined in Rule 902(k) promulgated under the Securities
Act.

     

    “Volumetric Production Payments”
means production payment obligations recorded as deferred revenue in
accordance with GAAP, together with all related undertakings and
obligations.

     

    “Voting Stock” of any
specified Person as of any date means the Capital Stock of such Person that is
at the time entitled (without regard to the occurrence of any contingency) to
vote in the election of the Board of Directors of such Person.

     

    “Weighted Average Life to
Maturity” means, when applied to any Indebtedness at any date, the number
of years obtained by dividing:

     

    (1)           the
sum of the products obtained by multiplying (a) the amount of each then
remaining installment, sinking fund, serial maturity or other required payments
of principal, including payment at final maturity, in respect of the
Indebtedness, by (b) the number of years (calculated to the nearest one-twelfth)
that will elapse between such date and the making of such payment; by

     

    (2)           the
then outstanding principal amount of such Indebtedness.

    
      
         

      

      
        24

        
          

        

      

      
         

      

    

    Section
1.02          Other
Definitions.

     

    
      
        
          
            	 
      	 	
                    Defined
      in

                  
	
                    Term

                  	 	
                    Section

                  
	
                    “Affiliate
      Transaction”

                  	 	
                    4.11

                  
	
                    “Asset
      Sale Offer”

                  	 	
                    3.09

                  
	
                    “Authentication
      Order”

                  	 	
                    2.02

                  
	
                    “Change
      of Control Offer”

                  	 	
                    4.15

                  
	
                    “Change
      of Control Payment”

                  	 	
                    4.15

                  
	
                    “Change
      of Control Purchase Date”

                  	 	
                    4.15

                  
	
                    “Covenant
      Defeasance”

                  	 	
                    8.03

                  
	
                    “Covenant
      Suspension Period”

                  	 	
                    4.20

                  
	
                    “DTC”

                  	 	
                    2.03

                  
	
                    “Event
      of Default”

                  	 	
                    6.01

                  
	
                    “Excess
      Proceeds”

                  	 	
                    4.10

                  
	
                    “incur”

                  	 	
                    4.09

                  
	
                    “Interest
      Payment Date”

                  	 	
                    Exhibit
      A

                  
	
                    “Legal
      Defeasance”

                  	 	
                    8.02

                  
	
                    “Offer
      Amount”

                  	 	
                    3.09

                  
	
                    “Offer
      Period”

                  	 	
                    3.09

                  
	
                    “Paying
      Agent”

                  	 	
                    2.03

                  
	
                    “Payment
      Default”

                  	 	
                    6.01

                  
	
                    “Permitted
      Debt”

                  	 	
                    4.09

                  
	
                    “Purchase
      Date”

                  	 	
                    3.09

                  
	
                    “Record
      Date”

                  	 	
                    Exhibit
      A

                  
	
                    “Registrar”

                  	 	
                    2.03

                  
	
                    “Reinstatement
      Date”

                  	 	
                    4.20

                  
	
                    “Restricted
      Payments”

                  	 	
                    4.07

                  
	
                    “Services”

                  	 	
                    4.11

                  
	
                    “Suspended
      Covenants”

                  	 	
                    4.20

                  
	
                    “Trustee”

                  	 	
                    Preamble

                  

          

        

      

    

     

    Section
1.03          Incorporation by Reference of Trust
Indenture Act.

     

    Whether
or not qualified under the TIA, this Indenture is deemed to be subject to the
provisions of the TIA that are applicable to all indentures qualified
thereunder, such provisions being incorporated by reference in and made a part
of this Indenture.  Whenever this Indenture refers to a provision of the
TIA, the provision is incorporated by reference in and made a part of this
Indenture.

     

    The
following TIA terms used in this Indenture have the following
meanings:

     

    “indenture securities” means
the Notes;

     

    “indenture security Holder”
means a Holder of a Note;

     

    “indenture to be qualified”
means this Indenture;

     

    “indenture trustee” or “institutional trustee” means
the Trustee; and

     

    “obligor” on the Notes and
the Guarantees means the Company and the Guarantors, respectively, and any
successor obligor upon the Notes and the Guarantees, respectively.

     

    All other
terms used in this Indenture that are defined by the TIA, defined by TIA
reference to another statute or defined by SEC rule under the TIA have the
meanings so assigned to them.

    
      
         

      

      
        25

        
          

        

      

      
         

      

    

     

    Section
1.04        Rules of
Construction.

     

    Unless
the context otherwise requires:

     

    (1)           a
term has the meaning assigned to it;

     

    (2)           an
accounting term not otherwise defined has the meaning assigned to it in
accordance with GAAP, and references to Statements of Financial Accounting
Standards of the Financial Accounting Standards Board (FASB) do not reflect
nomenclature resulting from the FASB’s codification of such Statements in its
Accounting Standards Codification, but are deemed to include the codified
Statements under their current nomenclature;

     

    (3)           “or”
is not exclusive;

     

    (4)           “including”
means “including without limitation”, whether or not so indicated;

     

    (5)           words
in the singular include the plural, and in the plural include the
singular;

     

    (6)           “will”
shall be interpreted to express a command;

     

    (7)           provisions
apply to successive events and transactions; and

     

    (8)           references
to sections of or rules under the Securities Act or the Exchange Act will be
deemed to include substitute, replacement or successor sections or rules adopted
by the SEC from time to time.

     

    ARTICLE
2

    THE
NOTES

     

    Section
2.01        Form and Dating.

     

    (a)           General.  The Notes and
the Trustee’s certificate of authentication will be substantially in the form of
Exhibit A hereto.  The Notes may have other notations, legends or
endorsements required by law, stock exchange rule or usage.  Each Note will
be dated the date of its authentication.  The Notes shall be in
denominations of $2,000 and integral multiples of $1,000 in excess
thereof.

     

    The terms
and provisions contained in the Notes will constitute, and are hereby expressly
made, a part of this Indenture and the Company, the Guarantors and the Trustee,
by their execution and delivery of this Indenture, expressly agree to such terms
and provisions and to be bound thereby.  However, to the extent any
provision of any Note conflicts with the express provisions of this Indenture,
the provisions of this Indenture shall govern and be controlling.

     

    (b)           Global Notes.  Notes
issued in global form will be substantially in the form of Exhibit A hereto
(including the Global Note Legend thereon and the “Schedule of Exchanges of
Interests in the Global Note” attached thereto).  Notes issued in
definitive form will be substantially in the form of Exhibit A hereto (but
without the Global Note Legend thereon and without the “Schedule of Exchanges of
Interests in the Global Note” attached thereto).  Each Global Note will
represent such aggregate principal amount of the outstanding Notes as will be
specified therein and each shall provide that it represents the aggregate
principal amount of outstanding Notes from time to time endorsed thereon and
that the aggregate principal amount of outstanding Notes represented thereby may
from time to time be reduced or increased, as appropriate, to reflect exchanges,
repurchases, transfers of interests and redemptions.  Any endorsement of a
Global Note to reflect the amount of any increase or decrease in the aggregate
principal amount of outstanding Notes represented thereby will be made by the
Trustee or the Notes Custodian, at the direction of the Trustee, in accordance
with instructions given by the Holder thereof as required by Section 2.06
hereof.  Notes initially offered and sold to QIBs in the United States in
reliance on Rule 144A shall be issued in the form of one or more QIB Global
Notes, duly executed by the Company and the Guarantors and authenticated by the
Trustee as hereinafter provided.

    
      
         

      

      
        26

        
          

        

      

      
         

      

    

     

    (c)           Temporary Global Notes. 
Notes offered and sold in reliance on Regulation S will be issued
initially in the form of the Regulation S Temporary Global Note, which will be
deposited on behalf of the purchasers of the Notes represented thereby with the
Trustee, as custodian for the Depositary, and registered in the name of the
Depositary or the nominee of the Depositary for the accounts of designated
agents holding on behalf of Euroclear or Clearstream, duly executed by the
Company and the Guarantors and authenticated by the Trustee as hereinafter
provided.

     

    Following
the termination of the Restricted Period and receipt by the Registrar of any
certificates required by Rule 903 of Regulation S, beneficial interests in the
Regulation S Temporary Global Note will be exchanged for beneficial interests in
the Regulation S Permanent Global Note pursuant to the Applicable
Procedures.  Simultaneously with the authentication of the Regulation S
Permanent Global Note, the Trustee will cancel the Regulation S Temporary Global
Note.  The aggregate principal amount of the Regulation S Temporary Global
Note and the Regulation S Permanent Global Note may from time to time be
increased or decreased by adjustments made on the records of the Trustee and the
Depositary or its nominee, as the case may be, in connection with transfers of
interest as hereinafter provided.

     

    (d)           Euroclear and Clearstream Procedures
Applicable.  The procedures of Euroclear and Clearstream will be
applicable to transfers of beneficial interests in the Regulation S Temporary
Global Note and the Regulation S Permanent Global Note that are held by
Participants through Euroclear or Clearstream.

     

    Section
2.02          Execution and
Authentication.

     

    At least
one Officer must sign the Notes for the Company by manual or facsimile
signature.

     

    If an
Officer whose signature is on a Note no longer holds that office at the time a
Note is authenticated, the Note will nevertheless be valid.

     

    A Note
will not be valid until authenticated by the manual signature of the
Trustee.  The signature will be conclusive evidence that the Note has been
authenticated under this Indenture.

     

    The
Trustee will authenticate and deliver: (i) Initial Notes for original issue in
an aggregate principal amount of $750 million, (ii) if and when issued,
Additional Notes and (iii) Exchange Notes for issue only in a registered
exchange offer pursuant to the Registration Rights Agreement, and only in
exchange for Initial Notes or Additional Notes of an equal principal amount, in
each case upon receipt of a written order of the Company signed by two Officers
of the Company (an “Authentication Order”). 
Such order shall specify the amount of the Notes to be authenticated and the
date on which the original issue of Notes is to be authenticated and whether the
Notes are to be in the form of Initial Notes or Exchange Notes.  The
Company may issue Additional Notes under this Indenture subsequent to the Issue
Date, subject to Section 4.09 of this Indenture.  The aggregate principal
amount of Notes outstanding at any time may not exceed the aggregate principal
amount of Notes authorized for issuance by the Company pursuant to one or more
Authentication Orders, except as provided in Section 2.07
hereof.

    
      
         

      

      
        27

        
          

        

      

      
         

      

    

     

    The
Trustee may appoint an authenticating agent acceptable to the Company to
authenticate Notes.  An authenticating agent may authenticate Notes
whenever the Trustee may do so.  Each reference in this Indenture to
authentication by the Trustee includes authentication by such
agent.

     

    Section
2.03          Registrar and Paying
Agent.

     

    The
Company will maintain an office or agency in the United States where Notes may
be presented for registration of transfer or for exchange (the “Registrar”) and an office or
agency where Notes may be presented for payment (the “Paying Agent”) which, if any
Definitive Notes are outstanding, will be in the State of New York.  The
Registrar will keep a register of the Notes and of their transfer and
exchange.  The Company may appoint one or more co-registrars and one or
more additional paying agents.  The term “Registrar” includes any
co-registrar and the term “Paying Agent” includes any additional paying
agent.  The Company may change any Paying Agent or Registrar without notice
to any Holder.  The Company will notify the Trustee in writing of the name
and address of any Agent not a party to this Indenture.  If the Company
fails to appoint or maintain another entity as Registrar or Paying Agent, the
Trustee shall act as such.  The Company or any of its Domestic Subsidiaries
may act as Paying Agent.

     

    The
Company initially appoints The Depository Trust Company (“DTC”) to act as Depositary
with respect to the Global Notes.

     

    The
Company initially appoints the Trustee to act as the Registrar and Paying Agent
and to act as Notes Custodian with respect to the Global Notes.

     

    Section
2.04          Paying Agent to Hold Money in
Trust.

     

    The
Company will require each Paying Agent other than the Trustee to agree in
writing that the Paying Agent will hold in trust for the benefit of Holders or
the Trustee all money held by the Paying Agent for the payment of principal,
premium, if any, or interest on the Notes, and will notify the Trustee of any
default by the Company in making any such payment.  While any such default
continues, the Trustee may require a Paying Agent to pay all money held by it to
the Trustee.  The Company at any time may require a Paying Agent to pay all
money held by it to the Trustee.  Upon payment over to the Trustee, the
Paying Agent (if other than the Company or a Subsidiary) will have no further
liability for the money.  If the Company or a Subsidiary acts as Paying
Agent, it will segregate and hold in a separate trust fund for the benefit of
the Holders all money held by it as Paying Agent.  Upon any bankruptcy or
reorganization proceedings relating to the Company, the Trustee will serve as
Paying Agent for the Notes.

     

    Section
2.05          Holder Lists.

     

    The
Trustee will preserve in as current a form as is reasonably practicable the most
recent list available to it of the names and addresses of all Holders and shall
otherwise comply with TIA § 312(a).  If the Trustee is not the
Registrar, the Company will furnish to the Trustee at least seven Business Days
before each interest payment date and at such other times as the Trustee may
request in writing, a list in such form and as of such date as the Trustee may
reasonably require of the names and addresses of the Holders, and the Company
shall otherwise comply with TIA § 312(a).

     

    Section
2.06          Transfer and
Exchange.

     

    (a)           Transfer and Exchange of Global
Notes.  A Global Note may not be transferred except as a whole by
the Depositary to a nominee of the Depositary, by a nominee of the Depositary to
the Depositary or to another nominee of the Depositary, or by the Depositary or
any such nominee to a successor Depositary or a nominee of such successor
Depositary.  All Global Notes will be exchanged by the Company for
Definitive Notes if:

    
      
         

      

      
        28

        
          

        

      

      
         

      

    

     

    (1)           the
Company delivers to the Trustee notice from the Depositary that it is unwilling
or unable to continue to act as Depositary or that it is no longer a clearing
agency registered under the Exchange Act and, in either case, a successor
Depositary is not appointed by the Company within 90 days after the date of such
notice from the Depositary;

     

    (2)           the
Company in its sole discretion determines that the Global Notes (in whole but
not in part) should be exchanged for Definitive Notes and delivers a written
notice to such effect to the Trustee; provided that in no event
shall the Regulation S Temporary Global Note be exchanged by the Company for
Definitive Notes prior to (A) the expiration of the Restricted Period and (B)
the receipt by the Registrar of any certificates required pursuant to Rule
903(b)(3)(ii)(B) under the Securities Act; or

     

    (3)           there
has occurred and is continuing a Default or Event of Default with respect to the
Notes.

     

    Upon the
occurrence of either of the preceding events in (1) or (2) above, Definitive
Notes shall be issued in such names as the Depositary shall instruct the
Trustee.  Global Notes also may be exchanged or replaced, in whole or in
part, as provided in Sections 2.07 and 2.10 hereof.  Every Note
authenticated and delivered in exchange for, or in lieu of, a Global Note or any
portion thereof, pursuant to this Section 2.06 or Section 2.07 or 2.10 hereof,
shall be authenticated and delivered in the form of, and shall be, a Global
Note.  A Global Note may not be exchanged for another Note other than as
provided in this Section 2.06(a), however, beneficial interests in a Global Note
may be transferred and exchanged as provided in Section 2.06(b) or (c)
hereof.

     

    Upon the
occurrence of an exchange offer pursuant to the Registration Rights Agreement,
the Company and the Guarantors shall execute and issue and, upon receipt of an
Authentication Order in accordance with Section 2.02, the Trustee shall
authenticate: (i) one or more Global Notes without the Private Placement Legend
in an aggregate principal amount equal to the principal amount of the beneficial
interests in the Restricted Global Notes tendered for acceptance by Persons that
certify in the applicable letters of transmittal or via the Depositary’s
book-entry system to the effect required by the applicable Registration Rights
Agreement and SEC interpretations, and accepted for exchange in such exchange
offer and (ii) one or more Definitive Notes without the Private Placement Legend
in an aggregate principal amount equal to the principal amount of any Restricted
Definitive Notes tendered by Persons who make the foregoing certifications and
accepted for exchange in the Registered Exchange Offer.  Concurrently with
the issuance of such Global Notes, the Registrar shall cause the aggregate
principal amount of the applicable Restricted Global Notes to be reduced
accordingly.

     

    (b)           Transfer and Exchange of Beneficial
Interests in the Global Notes.  The transfer and exchange of
beneficial interests in the Global Notes will be effected through the
Depositary, in accordance with the provisions of this Indenture and the
Applicable Procedures.  Beneficial interests in the Restricted Global Notes
will be subject to restrictions on transfer comparable to those set forth herein
to the extent required by the Securities Act.  Transfers of beneficial
interests in the Global Notes also will require compliance with either
subparagraph (1) or (2) below, as applicable, as well as one or more of the
other following subparagraphs, as applicable:

    
      
         

      

      
        29

        
          

        

      

      
         

      

    

    (1)           Transfer of Beneficial Interests in
the Same Global Note.  Beneficial interests in any Restricted Global
Note may be transferred to Persons who take delivery thereof in the form of a
beneficial interest in the same Restricted Global Note in accordance with the
transfer restrictions set forth in the Private Placement Legend; provided, however, that prior
to the expiration of the Restricted Period, transfers of beneficial interests in
the Regulation S Temporary Global
Note may not be made to a U.S. Person or for the account or benefit of a U.S.
Person.  No written orders or instructions shall be required to be
delivered to the Registrar to effect the transfers described in this Section
2.06(b)(1).

     

    (2)           All Other Transfers and Exchanges of
Beneficial Interests in Global Notes.  In connection with all
transfers and exchanges of beneficial interests that are not subject to Section
2.06(b)(1) above, the transferor of such beneficial interest must deliver to the
Registrar either:

     

    (A)         both:

     

    (1)           a
written order from a Participant or an Indirect Participant given to the
Depositary in accordance with the Applicable Procedures directing the Depositary
to credit or cause to be credited a beneficial interest in another Global Note
in an amount equal to the beneficial interest to be transferred or exchanged;
and

     

    (2)           instructions
given in accordance with the Applicable Procedures containing information
regarding the Participant account to be credited with such increase;
or

     

    (B)          both:

     

    (1)           a
written order from a Participant or an Indirect Participant given to the
Depositary in accordance with the Applicable Procedures directing the Depositary
to cause to be issued a Definitive Note in an amount equal to the beneficial
interest to be transferred or exchanged; and

     

    (2)           instructions
given by the Depositary to the Registrar containing information regarding the
Person in whose name such Definitive Note shall be registered to effect the
transfer or exchange referred to in (1) above;

     

    provided that in no event
shall Definitive Notes be issued upon the transfer or exchange of beneficial
interests in the Regulation S Temporary Global Note prior to (A) the expiration
of the Restricted Period and (B) the receipt by the Registrar of any
certificates required pursuant to Rule 903 under the Securities
Act.

     

    Upon
satisfaction of all of the requirements for transfer or exchange of beneficial
interests in Global Notes contained in this Indenture and the Notes or otherwise
applicable under the Securities Act, the Trustee shall adjust the principal
amount of the relevant Global Note(s) pursuant to Section 2.06(h)
hereof.

     

    (3)           Transfer of Beneficial Interests to
Another Restricted Global Note.  A beneficial interest in any
Restricted Global Note may be transferred to a Person who takes delivery thereof
in the form of a beneficial interest in another Restricted Global Note if the
transfer complies with the requirements of Section 2.06(b)(2) above and the
Registrar receives the following:

     

    (A)           If
the transferee will take delivery in the form of a beneficial interest in the
QIB Global Note, then the transferor must deliver a certificate in the form
of  Exhibit B hereto, including the certifications in item (1)
thereof; and

    
      
         

      

      
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    (B)          if
the transferee will take delivery in the form of a beneficial interest in the
Regulation S Temporary Global Note or the Regulation S Permanent Global Note,
then the transferor must deliver a certificate in the form of Exhibit B hereto,
including the certifications in item (2) thereof.

     

    (c)         Transfer or Exchange of Beneficial
Interests for Definitive Notes.

     

    (1)         Beneficial Interests in Restricted
Global Notes to Restricted Definitive Notes.  If in accordance with
Section 2.06(a) a beneficial interest in a Restricted Global Note is to be
exchanged for a Restricted Definitive Note or transferred to a Person who takes
delivery thereof in the form of a Restricted Definitive Note, then, upon receipt
by the Registrar of the following documentation:

     

    (A)        
if the holder of such beneficial interest in a Restricted Global Note
proposes to exchange such beneficial interest for a Restricted Definitive Note,
a certificate from such holder in the form of Exhibit C hereto, including the
certifications in item (1)(a) thereof;

     

    (B)          if
such beneficial interest is being transferred to a QIB in accordance with Rule
144A, a certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (1) thereof;

     

    (C)          if
such beneficial interest is being transferred to a Non-U.S. Person in an
offshore transaction in accordance with Rule 903 or Rule 904, a certificate to
the effect set forth in Exhibit B hereto, including the certifications in item
(2) thereof;

     

    (D)          if
such beneficial interest is being transferred pursuant to an exemption from the
registration requirements of the Securities Act in accordance with Rule 144, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(a) thereof;

     

    (E)           if
such beneficial interest is being transferred pursuant to an exemption from the
registration requirements of the Securities Act other than Regulation S or Rule
144, a certificate to the effect set forth in Exhibit B hereto, including the
certifications in item 3(d) thereof, provided that the Company or
the Trustee shall be entitled to require a legal opinion or other certification
to confirm that such transfer is being made pursuant to such an
exemption;

     

    (F)           if
such beneficial interest is being transferred to the Company or any of its
Subsidiaries, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(b) thereof; or

     

    (G)           if
such beneficial interest is being transferred pursuant to an effective
registration statement under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item (3)(c)
thereof,

    
      
         

      

      
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    the
Trustee shall cause the aggregate principal amount of the applicable Global Note
to be reduced accordingly pursuant to Section 2.06(h) hereof, and the Company
shall execute and the Trustee shall authenticate and deliver to the Person
designated in the instructions a Definitive Note in the appropriate principal
amount.  Any Definitive Note issued in exchange for a beneficial interest
in a Restricted Global Note pursuant to this Section 2.06(c) shall be registered
in such name or names and in such authorized denomination or denominations as
the holder of such beneficial interest shall instruct the Registrar through
instructions from the Depositary and the Participant or Indirect
Participant.  The Trustee shall deliver such Definitive Notes to the
Persons in whose names such Notes are so registered.  Any Definitive Note
issued in exchange for a beneficial interest in a Restricted Global Note
pursuant to this Section 2.06(c)(1) shall bear the Private Placement Legend and
shall be subject to all restrictions on transfer contained therein.

     

    (2)         Beneficial Interests in Regulation S
Temporary Global Note to Definitive Notes.  Notwithstanding Sections
2.06(c)(1)(A) and (C) hereof, a beneficial interest in the Regulation S
Temporary Global Note may not be exchanged for a Definitive Note or transferred
to a Person who takes delivery thereof in the form of a Definitive Note prior to
(A) the expiration of the Restricted Period and (B) the receipt by the Registrar
of any certificates required pursuant to Rule 903(b)(3)(ii)(B) under the
Securities Act, except in the case of a transfer pursuant to an exemption from
the registration requirements of the Securities Act other than Rule 903 or Rule
904.

     

    (d)         Transfer
and Exchange of Definitive Notes for Beneficial Interests.

     

    (1)         Restricted Definitive Notes to
Beneficial Interests in Restricted Global Notes.  If any Holder of a
Restricted Definitive Note proposes to exchange such Note for a beneficial
interest in a Restricted Global Note or to transfer such Restricted Definitive
Notes to a Person who takes delivery thereof in the form of a beneficial
interest in a Restricted Global Note, then, upon receipt by the Registrar of the
following documentation:

     

    (A)          if
the Holder of such Restricted Definitive Note proposes to exchange such Note for
a beneficial interest in a Restricted Global Note, a certificate from such
Holder in the form of Exhibit C hereto, including the certifications in item
(2)(b) thereof;

     

    (B)           if
such Restricted Definitive Note is being transferred to a QIB a certificate to
the effect set forth in Exhibit B hereto, including the certifications in item
(1) thereof;

     

    (C)           if
such Restricted Definitive Note is being transferred to a Non-U.S. Person in an
offshore transaction in accordance with Rule 903 or Rule 904, a certificate to
the effect set forth in Exhibit B hereto, including the certifications in item
(2) thereof;

     

    (D)           if
such Restricted Definitive Note is being transferred pursuant to an exemption
from the registration requirements of the Securities Act in accordance with Rule
144, a certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(a) thereof;

     

    (E)           if
such Restricted Definitive Note is being transferred to the Company or any of
its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(b) thereof; or

     

    (F)           if
such Restricted Definitive Note is being transferred pursuant to an effective
registration statement under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item (3)(c)
thereof,

     

    the
Trustee will cancel the Restricted Definitive Note, increase or cause to be
increased the aggregate principal amount of, in the case of clause (A) above,
the appropriate Restricted Global Note, in the case of clause (B) above, the QIB
Global Note, and in the case of clause (C) above, the Regulation S Global
Note.

    
      
         

      

      
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    (e)         Transfer and Exchange of Definitive
Notes for Definitive Notes.  Upon request by a Holder of Definitive
Notes and such Holder’s compliance with the provisions of this Section 2.06(e),
the Registrar will register the transfer or exchange of Definitive Notes. 
Prior to such registration of transfer or exchange, the requesting Holder must
present or surrender to the Registrar the Definitive Notes duly endorsed or
accompanied by a written instruction of transfer in form satisfactory to the
Registrar duly executed by such Holder or by its attorney, duly authorized in
writing.  In addition, the requesting Holder must provide any additional
certifications, documents and information, as applicable, required pursuant to
the following provisions of this Section 2.06(e).

     

    (1)         Restricted Definitive Notes to
Restricted Definitive Notes.  Any Restricted Definitive Note may be
transferred to and registered in the name of Persons who take delivery thereof
in the form of a Restricted Definitive Note if the Registrar receives the
following:

     

    (A)         If
the transfer will be made pursuant to Rule 144A, then the transferor must
deliver a certificate in the form of Exhibit B hereto, including the
certifications in item (1) thereof;

     

    (B)          if
the transfer will be made pursuant to Rule 903 or Rule 904, then the transferor
must deliver a certificate in the form of Exhibit B hereto, including the
certifications in item (2) thereof; and

     

    (C)          if
the transfer will be made pursuant to any other exemption from the registration
requirements of the Securities Act, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the certifications in
item 3(d) thereof, provided that the Company or
the Trustee shall be entitled to require a legal opinion or other certification
to confirm that such transfer is being made pursuant to such an
exemption.

     

    (f)         Legends.  The following
legends will appear on the face of all Global Notes and Definitive Notes issued
under this Indenture unless specifically stated otherwise in the applicable
provisions of this Indenture.

     

    (1)         Private
Placement Legend.

     

    (A)         Except
as permitted by this Section 2.06, each Global Note and each Definitive Note
(and all Notes issued in exchange therefor or substitution thereof) shall bear
the legend in substantially the following form:

    
      
         

      

      
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    “THIS
NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM
REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”) AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER MAY BE
RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT
PROVIDED BY RULE 144A THEREUNDER.  THE HOLDER OF THIS NOTE HEREBY AGREES ON
ITS OWN BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HOLDS THIS
NOTE, FOR THE BENEFIT OF THE ISSUER, THAT (A) THIS NOTE MAY BE RESOLD, PLEDGED
OR OTHERWISE TRANSFERRED, ONLY (1)(a) INSIDE THE UNITED STATES TO A PERSON THE
SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A UNDER THE SECURITIES ACT, (b) OUTSIDE THE UNITED
STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 903
OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (c) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF APPLICABLE) OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF
COUNSEL ACCEPTABLE TO THE ISSUER IF THE ISSUER SO REQUESTS), (2) TO THE ISSUER
OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE OF THE
RESALE RESTRICTIONS SET FORTH IN CLAUSE (A) ABOVE. NO REPRESENTATION CAN BE MADE
AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 FOR RESALE OF THIS
NOTE.”

     

    (2)           Global Note Legend. 
Each Global Note will bear a legend in substantially the following
form:

     

    “THIS
GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THIS INDENTURE GOVERNING
THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS
HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT
THAT (1) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT
TO SECTION 2.06 OF THIS INDENTURE, (2) THIS GLOBAL NOTE MAY BE EXCHANGED IN
WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06 OF THIS INDENTURE, (3) THIS
GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION
2.11 OF THIS INDENTURE AND (4) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A
SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF ENERGY XXI GULF COAST,
INC.

     

    UNLESS
AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, THIS
NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF
THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER
NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.  UNLESS
THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (“DTC”), TO THE COMPANY OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.”

    
      
         

      

      
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    (3)           Regulation S Temporary Global Note
Legend.  The Regulation S Temporary Global Note will bear a Legend
in substantially the following form:

     

    “THE
RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE CONDITIONS
AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS SPECIFIED
IN THIS INDENTURE (AS DEFINED HEREIN).”

     

    (g)         Cancellation and/or Adjustment of
Global Notes.  At such time as all beneficial interests in a
particular Global Note have been exchanged for Definitive Notes or a particular
Global Note has been redeemed, repurchased or canceled in whole and not in part,
each such Global Note will be returned to or retained and canceled by the
Trustee in accordance with Section 2.11 hereof.  At any time prior to such
cancellation, if any beneficial interest in a Global Note is exchanged for or
transferred to a Person who will take delivery thereof in the form of a
beneficial interest in another Global Note or for Definitive Notes, the
principal amount of Notes represented by such Global Note will be reduced
accordingly and an endorsement will be made on such Global Note by the Registrar
or by the Depositary at the direction of the Registrar to reflect such
reduction; and if the beneficial interest is being exchanged for or transferred
to a Person who will take delivery thereof in the form of a beneficial interest
in another Global Note, such other Global Note will be increased accordingly and
an endorsement will be made on such Global Note by the Registrar or by the
Depositary at the direction of the Trustee to reflect such
increase.

     

    (h)         General
Provisions Relating to Transfers and Exchanges.

     

    (1)           To
permit registrations of transfers and exchanges, the Company will execute and
the Trustee will authenticate Global Notes and Definitive Notes upon receipt of
an Authentication Order in accordance with Section 2.02 hereof or at the
Registrar’s request.

     

    (2)           No
service charge will be made to a Holder of a beneficial interest in a Global
Note or to a Holder of a Definitive Note for any registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
transfer tax or similar governmental charge payable in connection therewith
(other than any such transfer taxes or similar governmental charge payable upon
exchange or transfer pursuant to Sections 2.10, 3.06, 3.09, 4.10, 4.15 and 9.05
hereof).

     

    (3)           All
Global Notes and Definitive Notes issued upon any registration of transfer or
exchange of Global Notes or Definitive Notes will be the valid obligations of
the Company, evidencing the same debt, and entitled to the same benefits under
this Indenture, as the Global Notes or Definitive Notes surrendered upon such
registration of transfer or exchange.

    
      
         

      

      
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    (4)         Neither
the Registrar nor the Company will be required:

     

    (A)          to
issue, to register the transfer of or to exchange any Notes during a period
beginning at the opening of business 15 days prior to the mailing of a notice of
redemption;

     

    (B)           to
register the transfer of or to exchange any Note selected for redemption in
whole or in part, except the unredeemed portion of any Note being redeemed in
part; or

     

    (C)           to
register the transfer of or to exchange a Note between a record date and the
next succeeding interest payment date.

     

    (5)         Prior
to due presentment for the registration of a transfer of any Note, the Trustee,
any Agent and the Company may deem and treat the Person in whose name any Note
is registered as the absolute owner of such Note for the purpose of receiving
payment of principal of and interest on such Notes and for all other purposes,
and none of the Trustee, any Agent or the Company shall be affected by notice to
the contrary.

     

    (6)         The
Trustee will authenticate Global Notes and Definitive Notes in accordance with
the provisions of Section 2.02 hereof.

     

    (7)         All
certifications, certificates and Opinions of Counsel required to be submitted to
the Registrar pursuant to this Section 2.06 to effect a registration of transfer
or exchange may be submitted by facsimile.

     

    Section
2.07        Replacement
Notes.

     

    If any
mutilated Note is surrendered to the Registrar or the Company and the Registrar
receives evidence to its satisfaction of the destruction, loss or theft of any
Note, the Company will issue and the Trustee, upon receipt of an Authentication
Order, will authenticate a replacement Note (accompanied by a notation of any
Guarantees duly endorsed) if the Registrar’s requirements are met.  If
required by the Registrar or the Company, an indemnity bond must be supplied by
the Holder that is sufficient in the judgment of the Registrar, the Trustee and
the Company to protect the Company, the Trustee, any Agent and any
authenticating agent from any loss that any of them may suffer if a Note is
replaced.  The Company may charge for its expenses in replacing a
Note.

     

    Every
replacement Note is an additional obligation of the Company and will be entitled
to all of the benefits of this Indenture equally and proportionately with all
other Notes duly issued hereunder.

     

    Section
2.08        Outstanding
Notes.

     

    The Notes
outstanding at any time are all the Notes authenticated by the Trustee except
for those canceled by it, those delivered to it for cancellation, those
reductions in the interest in a Global Note effected by the Trustee in
accordance with the provisions hereof, and those described in this Section 2.08
as not outstanding.  Except as set forth in Section 2.09 hereof, a Note
does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note; however, Notes held by the Company or a Subsidiary of
the Company shall not be deemed to be outstanding for purposes of Section
3.07(b) hereof.

     

    If a Note
is replaced pursuant to Section 2.07 hereof, it ceases to be outstanding unless
the Trustee receives proof satisfactory to it that the replaced Note is held by
a protected purchaser.

    
      
         

      

      
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    If the
principal amount of any Note is considered paid under Section 4.01 hereof, it
ceases to be outstanding and interest on it ceases to accrue.

     

    If the
Paying Agent (other than the Company, a Subsidiary or an Affiliate of any
thereof) holds, on a redemption date or maturity date, money sufficient to pay
Notes payable on that date, then on and after that date such Notes will be
deemed to be no longer outstanding and will cease to accrue
interest.

     

    Section
2.09          Treasury Notes.

     

    In
determining whether the Holders of the required principal amount of Notes have
concurred in any direction, waiver or consent, Notes owned by the Company or any
Guarantor, or by any Person directly or indirectly controlling or controlled by
or under direct or indirect common control with the Company or any Guarantor,
will be considered as though not outstanding, except that for the purposes of
determining whether the Trustee will be protected in relying on any such
direction, waiver or consent, only Notes that a Responsible Officer knows are so
owned will be so disregarded.

     

    Section
2.10          Temporary Notes.

     

    Until
definitive Notes are ready for delivery, the Company may prepare and the
Trustee, upon receipt of an Authentication Order, will authenticate temporary
Notes.  Temporary Notes will be substantially in the form of certificated
Notes but may have variations that the Company considers appropriate for
temporary Notes and as may be reasonably acceptable to the Trustee. 
Without unreasonable delay, the Company will prepare and the Trustee will
authenticate definitive Notes in exchange for temporary Notes.

     

    Holders
of temporary Notes will be entitled to all of the benefits of this
Indenture.

     

    Section
2.11          Cancellation.

     

    The
Company at any time may deliver Notes to the Trustee for cancellation.  The
Registrar and Paying Agent will forward to the Trustee any Notes surrendered to
them for registration of transfer, exchange or payment.  The Trustee and no
one else will cancel all Notes surrendered for registration of transfer,
exchange, payment, replacement or cancellation and will dispose of the canceled
Notes in accordance with its normal procedures (subject to the record retention
requirement of the Exchange Act).  Certification of the disposition of all
canceled Notes will be delivered to the Company upon written request.  The
Company may not issue new Notes to replace Notes that it has paid or that have
been delivered to the Trustee for cancellation.

     

    Section
2.12          Defaulted
Interest.

     

    The
Company will pay interest (including post-petition interest in any proceeding
under any Bankruptcy Law) on overdue principal and premium at the rate equal to
the then applicable interest rate on the Notes to the extent lawful; it will pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest (without regard to any
applicable grace period) at the same rate to the extent lawful, to the Persons
who are Holders on a subsequent special record date.  The Company will
notify the Trustee in writing of the amount of defaulted interest proposed to be
paid on each Note and the date of the proposed payment.  The Company will
fix or cause to be fixed (or upon the Company’s failure to do so, the Trustee
shall fix pursuant to a written instruction of Holders of at least a majority in
principal amount of outstanding Notes) each such special record date and payment
date; provided that no
such special record date may be less than 10 days prior to the related payment
date for such defaulted interest.  At least 15 days before the special
record date, the Company (or, upon the written request of the Company, the
Trustee in the name and at the expense of the Company) will mail or cause to be
mailed to Holders a notice that states the special record date, the related
payment date and the amount of such interest to be paid.

    
      
         

      

      
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    ARTICLE
3

    REDEMPTION
AND PREPAYMENT

     

    Section
3.01        Notices to
Trustee.

     

    If the
Company elects to redeem Notes pursuant to the optional redemption provisions of
Section 3.07 hereof, it must furnish to the Trustee, at least 30 days but not
more than 60 days before a redemption date, an Officers’ Certificate setting
forth:

     

    (1)           the
clause of this Indenture pursuant to which the redemption shall
occur;

     

    (2)           the
redemption date;

     

    (3)           the
principal amount of Notes to be redeemed; and

     

    (4)           the
redemption price.

     

    Section
3.02        Selection of Notes to Be Redeemed or
Purchased.

     

    If less
than all of the Notes are to be redeemed or purchased in an offer to purchase at
any time, the Trustee will select Notes for redemption or purchase on a pro rata basis unless
otherwise required by law or applicable stock exchange
requirements.

     

    In the
event of partial redemption or purchase by lot, the particular Notes to be
redeemed or purchased will be selected, unless otherwise provided herein, not
less than 30 nor more than 60 days prior to the redemption or purchase date by
the Trustee from the outstanding Notes not previously called for redemption or
purchase.

     

    The
Trustee will promptly notify the Company in writing of the Notes selected for
redemption or purchase and, in the case of any Note selected for partial
redemption or purchase, the principal amount thereof to be redeemed or
purchased.  Notes and portions of Notes selected will be in amounts of
$2,000 or whole multiples of $1,000 in excess of $2,000; except that if all of
the Notes of a Holder are to be redeemed or purchased, the entire outstanding
amount of Notes held by such Holder, even if not a multiple of $1,000 in excess
of $2,000, shall be redeemed or purchased.  Except as provided in the
preceding sentence, provisions of this Indenture that apply to Notes called for
redemption or purchase also apply to portions of Notes called for redemption or
purchase.

     

    Section
3.03        Notice of
Redemption.

     

    Subject
to the provisions of Section 3.09 hereof, at least 30 days but not more than 60
days before a redemption date, the Company will mail or cause to be mailed, by
first class mail, a notice of redemption to each Holder whose Notes are to be
redeemed at its registered address, except that redemption notices may be mailed
more than 60 days prior to a redemption date if the notice is issued in
connection with a defeasance of the Notes or a satisfaction and discharge of
this Indenture pursuant to Articles 8 or 10 hereof.  Notices of redemption
may be conditional.

    
      
         

      

      
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    The
notice will identify the Notes to be redeemed and will state:

     

    (1)           the
redemption date;

     

    (2)           the
redemption price;

     

    (3)           if
any Note is being redeemed in part, the portion of the principal amount of such
Note to be redeemed and that, after the redemption date upon surrender of such
Note, a new Note or Notes in principal amount equal to the unredeemed portion
will be issued in the name of the Holder upon cancellation of the original
Note;

     

    (4)           the
name and address of the Paying Agent;

     

    (5)           that
Notes called for redemption must be surrendered to the Paying Agent to collect
the redemption price;

     

    (6)           that,
unless the Company defaults in making such redemption payment or any condition
to the redemption set forth in the notice therefor shall not have been
satisfied, interest on Notes called for redemption ceases to accrue on and after
the redemption date;

     

    (7)           the
paragraph of the Notes and/or Section of this Indenture pursuant to which the
Notes called for redemption are being redeemed;

     

    (8)           that
no representation is made as to the correctness or accuracy of the CUSIP or ISIN
number, if any, listed in such notice or printed on the Notes; and

     

    (9)           a
description of any conditions to the Company’s obligation to complete the
redemption.

     

    If any of
the Notes to be redeemed is in the form of a Global Note, then the Company shall
modify such notice to the extent necessary to accord with the procedures of the
Depositary applicable to redemption.

     

    At the
Company’s request, the Trustee will give the notice of redemption in the
Company’s name and at its expense; provided, however, that the
Company has delivered to the Trustee, at least 45 days prior to the redemption
date, an Officers’ Certificate requesting that the Trustee give such notice and
setting forth the information (or a shorter period as agreed to by the Trustee)
to be stated in such notice as provided in this Section 3.03 above.

     

    Section
3.04        Effect of Notice of
Redemption.

     

    Once
notice of redemption is mailed in accordance with Section 3.03 hereof, Notes (or
portions thereof) called for redemption become irrevocably due and payable on
the applicable redemption date at the applicable redemption price unless any
condition to the redemption set forth in the notice therefor shall not have been
satisfied.

     

    Section
3.05        Deposit of Redemption or Purchase
Price.

     

    No later
than 10:00 Eastern Time on the redemption or purchase date, the Company will
deposit with the Paying Agent (or, if the Company or its Domestic Subsidiary is
the Paying Agent, will segregate and hold in trust) money sufficient to pay the
redemption or purchase price of and accrued interest on all Notes to be redeemed
or purchased on that date.  The Paying Agent will promptly return to the
Company any money deposited with the Paying Agent by the Company in excess of
the amounts necessary to pay the redemption or purchase price of, and accrued
interest on, all Notes to be redeemed or purchased.

    
      
         

      

      
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    If the
Company complies with the provisions of the preceding paragraph, on and after
the redemption or purchase date, interest will cease to accrue on the Notes or
the portions of Notes called for redemption or purchase.  If a Note is
redeemed or purchased on or after an interest record date but on or prior to the
related interest payment date, then any accrued and unpaid interest shall be
paid to the Person in whose name such Note was registered at the close of
business on such record date.  If any Note called for redemption or
purchase is not so paid upon surrender for redemption or purchase because of the
failure of the Company to comply with the preceding paragraph, interest shall be
paid on the unpaid principal, from the redemption or purchase date until such
principal is paid, and to the extent lawful on any interest not paid on such
unpaid principal, in each case at the rate provided in the Notes and in Section
2.12 hereof.

     

    Section
3.06          Notes Redeemed or Purchased in
Part.

     

    Upon
surrender of a Note that is redeemed or purchased in part, the Company will
issue and, upon receipt of an Authentication Order, the Trustee will
authenticate for the Holder at the expense of the Company a new Note equal in
principal amount to the unredeemed or unpurchased portion of the Note
surrendered.

     

    Section
3.07          Optional
Redemption.

     

    (a)           Except
as set forth in clauses (b) and (c) of this Section 3.07, the Notes shall not be
redeemable at the option of the Company prior to December 15, 2014. 
Beginning on December 15, 2014, the Company may redeem all or a portion of the
Notes, at once or over time, after giving the notice required pursuant to
Section 3.03 hereof, at the redemption prices (expressed as percentages of
principal amount) set forth below, plus accrued and unpaid interest on the Notes
redeemed, to the applicable redemption date (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 redemption date), if redeemed during the
twelve-month periods beginning on December 15 of the years set forth
below:

     

    
      
        
          
            	
                    Period

                  	 	
                    Percentage

                  	 
	 
      	 	 	 
	
                    2014

                  	 	 	104.625	%
	 
      	 	 	 	 
	
                    2015

                  	 	 	102.313	%
	 
      	 	 	 	 
	
                    2016
      and thereafter.

                  	 	 	100.000	%

          

        

      

    

    

    (b)           At
any time and from time to time prior to December 15, 2013, the Company may on
any one or more occasions redeem up to 35% of the aggregate principal amount of
the Notes issued under this Indenture at a redemption price (expressed as a
percentage of principal amount) equal to 109.25% of the principal amount
thereof, plus accrued and unpaid interest, if any, on the Notes to the
redemption date (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 redemption date) with the net cash proceeds of one or more Equity
Offerings by the Company, provided, however, that (i) at least
65% of the aggregate principal amount of the Notes (including Additional Notes
issued under this Indenture) remains outstanding immediately after giving effect
to such redemption; and (ii) any such redemption shall be made within 90 days of
the date of closing of such Equity Offering.

    
      
         

      

      
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    (c)           At
any time prior to December 15, 2014, the Company may at its option redeem the
Notes in whole or in part, at once or over time, after giving the notice
required pursuant to Section 3.03 hereof, at a redemption price equal to 100% of
the principal amount of the notes redeemed plus the Applicable Premium as of,
and accrued and unpaid interest, if any, to the date of redemption (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 redemption
date).

     

    (d)           Any
redemption pursuant to this Section 3.07 shall be made pursuant to the
provisions of Sections 3.01 through 3.06 hereof.

     

    Section
3.08          Mandatory
Redemption.

     

    The
Company is not required to make mandatory redemption or sinking fund payments
with respect to the Notes.

     

    Section
3.09          Offer to Purchase by Application of
Excess Proceeds.

     

    In the
event that, pursuant to Section 4.10 hereof, the Company shall be required to
commence an offer to all Holders to purchase Notes (an “Asset Sale Offer”), it will
follow the procedures specified below and in Sections 4.10(c), (d), (e) and
(f):

     

    (a)           The
Asset Sale Offer shall be made to all Holders 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.

     

    (b)           The
Asset Sale Offer will remain open for a period of at least 20 Business Days
following its commencement and not more than 30 Business Days, except to the
extent that a longer period is required by applicable law (the “Offer Period”).

     

    (c)           No
later than three Business Days after the termination of the Offer Period (the
“Purchase Date”), the
Company will apply all Excess Proceeds (the “Offer Amount”) to the
purchase of Notes and such other pari passu Indebtedness (on a
pro rata basis, if
applicable) or, if less than the Offer Amount has been tendered, all Notes and
other Indebtedness tendered in response to the Asset Sale Offer.  Payment
for any Notes so purchased will be made in the same manner as interest payments
are made.

     

    (d)           If
the Purchase Date is on or after an interest Record Date and on or before the
related Interest Payment Date, any accrued and unpaid interest will be paid to
the Person in whose name a Note is registered at the close of business on such
Record Date.

     

    (e)           Upon
the commencement of an Asset Sale Offer, the Company will send, by first class
mail, a notice to each of the Holders, with a copy to the Trustee.  The
notice will contain all instructions and materials necessary to enable such
Holders to tender Notes pursuant to the Asset Sale Offer.  The notice,
which will govern the terms of the Asset Sale Offer, will state:

     

    (1)           that
the Asset Sale Offer is being made pursuant to this Section 3.09 and Section
4.10 hereof and the length of time the Asset Sale Offer will remain
open;

     

    (2)           the
Offer Amount, the purchase price and the Purchase Date;

     

    (3)           that
any Note not tendered or accepted for payment will continue to accrue
interest;

    
      
         

      

      
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    (4)           that,
unless the Company defaults in making such payment, any Note accepted for
payment pursuant to the Asset Sale Offer will cease to accrue interest after the
Purchase Date;

     

    (5)           that
Holders electing to have a Note purchased pursuant to an Asset Sale Offer may
elect to have Notes purchased in denominations of $2,000 or integral multiples
of $1,000 in excess thereof only;

     

    (6)           that
Holders electing to have Notes purchased pursuant to any Asset Sale Offer will
be required to surrender the Note, with the form entitled “Option of Holder to
Elect Purchase” attached to the Notes completed, or transfer by book-entry
transfer, to the Company, a Depositary, if appointed by the Company, or a Paying
Agent at the address specified in the notice at least three days before the
Purchase Date;

     

    (7)           that
Holders will be entitled to withdraw their election if the Company, the
Depositary or the Paying Agent, as the case may be, receives, not later than the
expiration of the Offer Period, a telegram, telex, facsimile transmission or
letter setting forth the name of the Holder, the principal amount of the Note
the Holder delivered for purchase and a statement that such Holder is
withdrawing his election to have such Note purchased;

     

    (8)           that,
if the aggregate principal amount of Notes and other pari passu Indebtedness
surrendered by holders thereof exceeds the Offer Amount, the Company will select
the Notes and other pari
passu Indebtedness to be purchased on a pro rata basis based on the
principal amount of Notes and such other pari passu Indebtedness
surrendered (with such adjustments as may be deemed appropriate by the Company
so that only Notes in denominations of $2,000, or integral multiples of $1,000
in excess thereof, will be purchased); and

     

    (9)           that
Holders whose Notes were purchased only in part will be issued new Notes equal
in principal amount to the unpurchased portion of the Notes surrendered (or
transferred by book-entry transfer).

     

    If any of
the Notes to be redeemed pursuant to an Asset Sale Offer is in the form of a
Global Note, then the Company shall modify such notice to the extent necessary
to accord with the procedures of the Depositary applicable to
redemption.

     

    On or
before the Purchase Date, the Company will, to the extent lawful, accept for
payment, on a pro rata
basis to the extent necessary, the Offer Amount of Notes or portions thereof
tendered pursuant to the Asset Sale Offer, or if less than the Offer Amount has
been tendered, all Notes tendered, and will deliver or cause to be delivered to
the Trustee the Notes properly accepted together with an Officers’ Certificate
stating that such Notes or portions thereof were accepted for payment by the
Company in accordance with the terms of this Section 3.09 and Section
4.10.  The Company, the Depositary or the Paying Agent, as the case may be,
will promptly (but in any case not later than five days after the Purchase Date)
mail or deliver to each tendering Holder an amount equal to the purchase price
of the Notes tendered by such Holder and accepted by the Company for purchase,
and the Company will promptly issue a new Note, and the Trustee, upon written
request from the Company, will authenticate and mail or deliver (or cause to be
transferred by book entry) such new Note to such Holder, in a principal amount
equal to any unpurchased portion of the Note surrendered.  Any Note not so
accepted shall be promptly mailed or delivered by the Company to the Holder
thereof.  The Company will publicly announce the results of the Asset Sale
Offer on the Purchase Date.

     

    Other
than as specifically provided in this Section 3.09, any purchase pursuant to
this Section 3.09 shall be made pursuant to the provisions of Sections 3.01
through 3.06 hereof.

    
      
         

      

      
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    The
Company will comply with the requirements of Rule 14e-1 under the Exchange Act
and any other securities laws and regulations thereunder to the extent those
laws and regulations are applicable in connection with each repurchase of Notes
pursuant to an Asset Sale Offer. To the extent that the provisions of any
securities laws or regulations conflict with the Asset Sale provisions of this
Indenture, the Company will comply with the applicable securities laws and
regulations and will not be deemed to have breached its obligations under
Section 4.10 of this Indenture by virtue of such conflict.

     

    ARTICLE
4

    COVENANTS

     

    Section
4.01          Payment of
Notes.

     

    The
Company will pay or cause to be paid the principal of, premium, if any, and
interest on, the Notes on the dates and in the manner provided in this Indenture
and the Notes.  Principal, premium, if any, and interest will be considered
paid on the date due if the Paying Agent, if other than the Company or a
Subsidiary thereof, holds as of 10:00 a.m. Eastern Time on the due date money
deposited by the Company in immediately available funds and designated for and
sufficient to pay all principal, premium, if any, and interest then due. 
The Company shall pay Special Interest, if any, in the same manner, on the dates
and in the amounts set forth in the Registration Rights Agreement, the Notes and
in this Indenture.  All references in this Indenture, the Notes or the
Guarantees to interest shall be deemed to include Special Interest, unless the
context indicates otherwise.

     

    Section
4.02          Maintenance of Office or
Agency.

     

    The
Company will maintain an office or agency (which may be an office of the Trustee
or an affiliate of the Trustee, Registrar or co-registrar) where Notes may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be
served.  The Company will give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency.  If at
any time the Company fails to maintain any such required office or agency or
fails to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee.

     

    The
Company may also from time to time designate one or more other offices or
agencies where the Notes may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations.  The Company
will give prompt written notice to the Trustee of any such designation or
rescission and of any change in the location of any such other office or
agency.

     

    The
Company hereby designates the Corporate Trust Office of the Trustee as one such
office or agency of the Company in accordance with Section 2.03
hereof.

     

    Section
4.03          Reports.

     

    (a)           Whether
or not required by the Commission, so long as any notes are outstanding, the
Parent will file with the Commission for public availability within the time
periods specified in the Commission’s rules and regulations (unless the
Commission will not accept such a filing), and the Parent will furnish to the
Trustee and, upon its request, to any of the Holders, within five Business Days
of filing, or attempting to file, the same with the Commission:

    
      
         

      

      
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    (1)           all
quarterly and annual financial and other information with respect to the Parent
and its Subsidiaries that would be required to be contained in a filing with the
Commission on Forms 10-Q and 10-K if the Parent were required to file such
Forms, including a “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” and, with respect to the annual information only, a
report on the annual financial statements by the Parent’s certified independent
accountants;

     

    (2)           all
current reports that would be required to be filed with the Commission on Form
8-K if the Parent were required to file such reports; and

     

    (3)           unaudited
quarterly and audited annual financial statements of the Company and its
Subsidiaries.

     

    (b)         If
the Company has designated any of its Subsidiaries as Unrestricted Subsidiaries,
then the quarterly and annual financial information required by paragraph (a) of
this Section 4.03 will include a reasonably detailed presentation, either on the
face of the financial statements or in the footnotes thereto, and in
Management’s Discussion and Analysis of Financial Condition and Results of
Operations, of the financial condition and results of operations of the Company
and its Restricted Subsidiaries separate from the financial condition and
results of operations of the Unrestricted Subsidiaries of the
Company.

     

    (c)         In
addition, the Company and the Guarantors agree that, for so long as any Notes
remain outstanding, they will furnish to the Holders of Notes and to securities
analysts and prospective investors, upon their request, the information required
to be delivered pursuant to Rule 144A(d)(4) under the Securities
Act.

     

    (d)         The
availability of the materials specified in items (a) through (c) above on the
Commission’s website shall be deemed to satisfy the foregoing delivery
obligations.

     

    (e)         Delivery
of reports, information and documents to the Trustee under this Section 4.03 is
for informational purposes only, and the Trustee’s receipt of the foregoing
shall not constitute constructive notice of any information contained therein or
determinable from information contained therein.

     

    Section
4.04        Compliance
Certificate.

     

    (a)         The
Company and each Guarantor (to the extent that such Guarantor is so required
under the TIA) shall deliver to the Trustee, within 90 days after the end of
each fiscal year, an Officers’ Certificate stating that a review of the
activities of the Company and its Subsidiaries during the preceding fiscal year
has been made under the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed and fulfilled its
obligations under this Indenture, and further stating, as to each such Officer
signing such certificate, that to the best of his or her knowledge the Company
has kept, observed, performed and fulfilled each and every covenant contained in
this Indenture and is not in default in the performance or observance of any of
the terms, provisions and conditions of this Indenture (or, if a Default or
Event of Default has occurred, describing all such Defaults or Events of Default
of which he or she may have knowledge and what action the Company is taking or
proposes to take with respect thereto) and that to the best of his or her
knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any, on the Notes is
prohibited or if such event has occurred, a description of the event and what
action the Company is taking or proposes to take with respect
thereto.

     

    (b)         So
long as any of the Notes are outstanding, the Company will deliver to the
Trustee, forthwith upon any Officer becoming aware of any Default or Event of
Default, an Officers’ Certificate specifying such Default or Event of Default
and what action the Company is taking or proposes to take with respect
thereto.

    
      
         

      

      
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    Section
4.05        Taxes.

     

    The
Company will pay, and will cause each of its Subsidiaries to pay, prior to
delinquency, all material taxes, assessments, and governmental levies except
such as are contested in good faith and by appropriate proceedings or where the
failure to effect such payment is not adverse in any material respect to the
Holders of the Notes.

     

    Section
4.06        Stay, Extension and Usury
Laws.

     

    The
Company and each of the Guarantors covenants (to the extent that it may lawfully
do so) that it will not at any time insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay, extension or
usury law wherever enacted, now or at any time hereafter in force, that may
affect the covenants or the performance of this Indenture; and the Company and
each of the Guarantors (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not, by resort to any such law, hinder, delay or impede the execution of
any power herein granted to the Trustee, but will suffer and permit the
execution of every such power as though no such law has been
enacted.

     

    Section
4.07        Restricted
Payments.

     

    (a)         The
Company shall not, and shall not permit any of its Restricted Subsidiaries to,
directly or indirectly:

     

    (1)           declare
or pay any dividend or make any other payment or distribution on account of the
Company’s or any of its Restricted Subsidiaries’ Equity Interests (including,
without limitation, any payment in connection with any merger or consolidation
involving the Company or any of its Restricted Subsidiaries) or to the direct or
indirect holders of the Company’s or any of its Restricted Subsidiaries’ Equity
Interests in their capacity as such (other than dividends or distributions
payable in Equity Interests (other than Disqualified Stock) of the Company or
payable to the Company or a Restricted Subsidiary of the Company);

     

    (2)           purchase,
redeem or otherwise acquire or retire for value (including, without limitation,
in connection with any merger or consolidation involving the Company) any Equity
Interests of the Company or any direct or indirect parent of the
Company;

     

    (3)           make
any payment on or with respect to, or purchase, redeem, defease or otherwise
acquire or retire for value any Subordinated Indebtedness except a payment of
interest or principal at the Stated Maturity thereof; or

     

    (4)           make
any Restricted Investment (all such payments and other actions set forth in
these clauses (1) through (4) above being collectively referred to as “Restricted
Payments”),

     

    unless,
at the time of and after giving effect to such Restricted Payment:

     

    (1)           no
Default or Event of Default has occurred and is continuing or would occur as a
consequence of such Restricted Payment;

    
      
         

      

      
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    (2)         the
Company would, at the time of such Restricted Payment and after giving pro forma
effect thereto as if such Restricted Payment had been made at the beginning of
the applicable four-quarter period, have been permitted to incur at least $1.00
of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set
forth in Section 4.09(a) hereof; and

     

    (3)         such
Restricted Payment, together with the aggregate amount of all other Restricted
Payments made by the Company and its Restricted Subsidiaries after the Issue
Date (excluding Restricted Payments permitted by clauses (2), (3), (4), (6),
(7), (8), (9), (10) and (12) of paragraph (b) of this Section 4.07), is less
than the sum, without duplication, of:

     

    (A)         50%
of the Consolidated Net Income of the Company for the period (taken as one
accounting period) from the beginning of the full fiscal quarter during which
the Issue Date falls to the end of the Company’s most recently ended fiscal
quarter for which internal financial statements are available at the time of
such Restricted Payment (or, if such Consolidated Net Income for such period is
a deficit, less 100% of such deficit), plus

     

    (B)          100%
of the aggregate net cash proceeds received by the Company (and the Fair Market
Value of any Additional Assets to the extent acquired in consideration of Equity
Interests of the Company (other than Disqualified Stock)) after the Issue Date
as a contribution to its common equity capital or from the issue or sale of
Equity Interests of the Company (other than Disqualified Stock) or from the
issue or sale of convertible or exchangeable Disqualified Stock or convertible
or exchangeable debt securities of the Company that have been converted into or
exchanged for such Equity Interests (other than Equity Interests (or
Disqualified Stock or debt securities) sold to a Subsidiary of the Company),
plus

     

    (C)          to
the extent that any Restricted Investment that was made after the Issue Date is
sold for cash or otherwise liquidated or repaid for cash, the lesser of (i) the
cash return of capital with respect to such Restricted Investment (less the cost
of disposition, if any) and (ii) the initial amount of such Restricted
Investment, plus

     

    (D)          to
the extent that any Unrestricted Subsidiary of the Company designated as such
after the Issue Date is redesignated as a Restricted Subsidiary after the Issue
Date, the lesser of (i) the Fair Market Value of the Company’s Investment in
such Subsidiary as of the date of such redesignation or (ii) such Fair Market
Value as of the date on which such Subsidiary was originally designated as an
Unrestricted Subsidiary.

     

    (b)         So
long as no Default or Event of Default has occurred and is continuing or would
be caused thereby, the preceding provisions will not prohibit:

     

    (1)         the
payment of any dividend within 60 days after the date of declaration of the
dividend, if at the date of declaration, the dividend would have complied with
the provisions of this Indenture;

     

    (2)         the
redemption, repurchase, retirement, defeasance or other acquisition of any
Subordinated Indebtedness of the Company or any Guarantor or of any Equity
Interests of the Company in exchange for, or out of the net cash proceeds of the
substantially concurrent sale (other than to a Subsidiary of the Company) of,
Equity Interests of the Company (other than Disqualified Stock); provided that
the amount of any such net cash proceeds that are utilized for any such
Restricted Payment will be excluded from clause (3)(B) of the preceding
paragraph;

    
      
         

      

      
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    (3)           the
defeasance, redemption, repurchase, retirement or other acquisition of
Subordinated Indebtedness of the Company or any Guarantor with the net cash
proceeds from a substantially concurrent incurrence of, or in exchange for,
Permitted Refinancing Indebtedness; and

     

    (4)           the
payment of any dividend by a wholly-owned Restricted Subsidiary of the Company
to the Company or a Restricted Subsidiary;

     

    (5)           the
repurchase, redemption or other acquisition or retirement for value of any
Equity Interests of the Company or any Restricted Subsidiary of the Company held
by any current or former director or employee of the Company or any of its
Restricted Subsidiaries pursuant to any director or employee equity subscription
agreement or plan, stock option agreement or similar agreement or plan; provided
that the aggregate price paid for all such repurchased, redeemed, acquired or
retired Equity Interests may not exceed $4.0 million in any twelve-month
period;

     

    (6)           the
acquisition of Equity Interests by the Company in connection with the exercise
of stock options or stock appreciation rights by way of cashless
exercise;

     

    (7)           so
long as no Default has occurred and is continuing, upon the occurrence of a
Change of Control or an Asset Sale and within 60 days after the completion of
the offer to repurchase the Notes pursuant to Section 4.15 or Section 4.10
(including the purchase of all Notes tendered), any purchase, repurchase,
redemption, defeasance, acquisition or other retirement for value of
Subordinated Indebtedness required under the terms thereof as a result of such
Change of Control or Asset Sale at a purchase or redemption price not to exceed
101% of the outstanding principal amount thereof, plus accrued and unpaid
interest thereon, if any, provided that, in the notice to Holders relating to a
Change of Control or Asset Sale hereunder, the Company shall describe this
clause (7);

     

    (8)           the
payment of cash in lieu of fractional shares of Capital Stock in connection with
any transaction otherwise permitted under this Indenture;

     

    (9)           Permitted
Payments to Parent Companies;

     

    (10)         other
Restricted Payments in an aggregate amount since the Issue Date not to exceed
$70.0 million;

     

    (11)         the
payment of dividends on the Company’s common equity (or the payment of dividends
or distributions to a direct or indirect parent company of the Company to fund
the payment by such parent company of dividends or distributions on its common
equity) of up to 6.0% per calendar year of the net proceeds received by the
Company from any public Equity Offering or contributed to the Company by a
direct or indirect parent company of the Company from any public Equity
Offering; provided that
the amount of any such net cash proceeds that are utilized for any such
Restricted Payment will be excluded from clause (3)(B) of Section 4.07(a);
and

     

    (12)         the
declaration and payment of dividends to holders of any class or series of
preferred stock or Disqualified Stock of the Company or any of its Restricted
Subsidiaries issued in accordance with Section 4.09 to the extent such dividends
are included in the calculation of Fixed Charges.

    
      
         

      

      
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    (c)         The
amount of all Restricted Payments (other than cash) will be the Fair Market
Value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued by the Company or such Restricted
Subsidiary, as the case may be, pursuant to the Restricted Payment.  The
Fair Market Value of any assets or securities that are required to be valued by
this covenant will be determined by the Board of Directors of the Company, whose
determination shall be evidenced by a resolution of the Board of Directors of
the Company.  Such Board of Directors’ determination must be based upon an
opinion or appraisal issued by an accounting, appraisal or investment banking
firm of national standing if the Fair Market Value exceeds $20.0 million. 
For purposes of determining compliance with this Section 4.07, in the event that
a Restricted Payment meets the criteria of more than one of the categories of
Restricted Payments described in the preceding clauses (1) through (12), the
Company will be permitted to classify (or later classify or reclassify in whole
or in part in its sole discretion) such Restricted Payment in any manner that
complies with this covenant.

     

    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.

     

    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 as in effect on the Issue
Date 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, replacements 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 Issue
Date;

     

    (2)           this
Indenture, the Notes and the Guarantees;

     

    (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 (except to the extent such Indebtedness or Capital Stock was
incurred in connection with or in contemplation 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;

    
      
         

      

      
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    (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;

     

    (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.

     

    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
Restricted Subsidiary 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 Restricted Subsidiary 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 2.25 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 the
Disqualified Stock had been issued, as the case may be, at the beginning of such
four-quarter period.

    
      
         

      

      
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    (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 and or any Restricted Subsidiary 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) $925.0 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 revolving credit Indebtedness under
the 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;

     

    (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 represented by the Notes and the
related Guarantees to be issued on the Issue Date and any Exchange Notes and
related Guarantees issued in exchange therefor pursuant to the Registration
Rights Agreement;

     

    (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 design, construction, installation or
improvement of property, plant or equipment used in the business of the Company
or such Restricted Subsidiaries, in an aggregate principal amount, including all
Permitted Refinancing Indebtedness incurred to renew, refund, refinance,
replace, defease or discharge any Indebtedness incurred pursuant to this clause
(4), not to exceed $20.0 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 renew, refund, refinance, replace, defease or discharge any Indebtedness
(other than intercompany Indebtedness) that was permitted by this Indenture to
be incurred under Section 4.09(a) hereof or clauses (2), (3) or (12) 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, Disqualified Stock or preferred stock 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
(i) subsequent issuance or transfer of Equity Interests that results in any
such Indebtedness, Disqualified Stock or preferred stock being held by a Person
other than the Company or a Restricted Subsidiary of the Company, and
(ii) sale or other transfer of any such Indebtedness, Disqualified Stock or
preferred stock to a Person that is not either the Company or a Restricted
Subsidiary of the Company,

    
      
         

      

      
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    will be
deemed, in each case, to constitute an incurrence of such Indebtedness,
Disqualified Stock or preferred stock by the Company or such Restricted
Subsidiary, as the case may be, that was not permitted by this clause
(6);

     

    (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 or any of its Unrestricted Subsidiaries of
Non-Recourse Debt of an Unrestricted Subsidiary 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 that is 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 case other than an obligation for money
borrowed);

     

    (12)         Indebtedness,
Disqualified Stock or preferred stock 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,
Disqualified Stock or preferred stock 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 to incur $1.00 of additional Indebtedness pursuant to Section 4.09(a)
after giving effect to the incurrence of such Indebtedness, Disqualified Stock
or preferred stock pursuant to this clause (12);

     

    (13)         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;

     

    (14)         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 $50.0 million; and

    
      
         

      

      
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    (15)         Indebtedness
to the extent the proceeds thereof are used to finance insurance
premiums.

     

    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, 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.

     

    Section
4.10        Asset Sales.

     

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

     

    (1)           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;

     

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

     

    (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.

     

    For
purposes of this provision, each of the following will be deemed to be
cash:

     

    (A)          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 agreement that releases the Company or such
Restricted Subsidiary from further liability; and

     

    (B)          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:

    
      
         

      

      
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    (1)           to
repay, redeem or repurchase Indebtedness of the Company or a Guarantor that is
not Subordinated Indebtedness (but excluding intercompany Indebtedness of the
Company or any Guarantor to the Company or any of its Affiliates); 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;

     

    (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.

     

    Pending
the final application of any Net Proceeds, 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 an Asset Sale (or, at the Company’s option, any earlier date),
if the aggregate amount of Excess Proceeds then exceeds $15.0 million, the
Company will make an Asset Sale Offer to all Holders of Notes pursuant to
Section 3.09 hereof, and all holders of other Indebtedness that is pari passu with the Notes
containing provisions similar to those 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.

     

    (d)         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 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.

     

    (e)         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.

     

    (f)          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.

     

    Section
4.11        Transactions with
Affiliates.

     

    (a)         The
Company will not, and will not permit any of its Restricted Subsidiaries to,
make any payment to, or sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any property or assets from, or enter into
or make or amend any transaction, contract, agreement, understanding, loan,
advance or guarantee with, or for the benefit of, any Affiliate (each, an “Affiliate Transaction”),
unless:

    
      
         

      

      
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    (1)         the
Affiliate Transaction is on terms that are no less favorable to the Company or
the relevant Restricted Subsidiary than those that would have been obtained in a
comparable transaction by the Company or such Restricted Subsidiary with an
unrelated Person; and

     

    (2)         the
Company delivers to the Trustee:

     

    (A)         with
respect to any Affiliate Transaction or series of related Affiliate Transactions
involving aggregate consideration in excess of $10.0 million, a resolution of
the Board of Directors of the Company set forth in an Officers’ Certificate
certifying that such Affiliate Transaction complies with this covenant and that
such Affiliate Transaction has been approved by a majority of the disinterested
members of the Board of Directors of the Company; and

     

    (B)          with
respect to any Affiliate Transaction or series of related Affiliate Transactions
involving aggregate consideration in excess of $25.0 million, the Company
delivers to the Trustee a written opinion that such Affiliate Transaction(s) is
fair, from a financial point of view, to the Company and its Restricted
Subsidiaries, taken as a whole, or that such Affiliate Transaction(s) is not
less favorable to the Company and its Restricted Subsidiaries than could
reasonably be expected to be obtained at the time in an arm’s-length transaction
with a person who is not an Affiliate, in either such case issued by an
independent accounting, appraisal or investment banking firm of national
standing.

     

    (b)         The
following items will not be deemed to be Affiliate Transactions and, therefore,
will not be subject to the provisions of paragraph (a) of this
Section:

     

    (1)           any
employment or severance agreement or other employee compensation agreement,
arrangement or plan, or any amendment thereto, entered into by the Company or
any of its Restricted Subsidiaries in the ordinary course of
business;

     

    (2)           transactions
between or among any of the Parent, the Company and its Restricted
Subsidiaries;

     

    (3)           transactions
with a Person (other than an Unrestricted Subsidiary of the Company) that is an
Affiliate of the Company solely because the Company owns an Equity Interest in
such Person;

     

    (4)           the
payment of reasonable directors’ fees, payments, the payments of other
reasonable benefits and the provision of officers’ and directors’
indemnification and insurance to the extent permitted by law to persons who are
officers and directors of the Parent or its Subsidiaries and the Company and its
Restricted Subsidiaries and who are not otherwise Affiliates of the Company, in
each case in the ordinary course of business and approved by the Board of
Directors of the Company;

     

    (5)           sales
of Equity Interests (other than Disqualified Stock) to Affiliates of the
Company;

    
      
         

      

      
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    (6)           transactions
among the Company, its Restricted Subsidiaries and Energy XXI Services, Inc.
(“Services”), a
wholly-owned subsidiary of Parent and a sister company of the Company relating
to the provision of employment, administrative and related services by Services
pursuant to the Cost Allocation Agreement in effect on the Issue Date among the
Company, certain Subsidiaries and Services, as such agreement may be amended,
modified or supplemented from time to time provided that any such amendment,
modification or supplement will not be materially adverse to the Company or the
Restricted Subsidiaries compared to the terms of such agreement in effect on the
Issue Date; and

     

    (7)           Restricted
Payments that are permitted pursuant to Section 4.07 hereof, including Permitted
Payments to Parent Companies.

     

    Section
4.12        Liens.

     

    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 (other than Permitted Liens) securing Indebtedness or
Attributable Debt upon any of their property or assets, now owned or hereafter
acquired, unless the Notes or any Guarantee of such Restricted Subsidiary, as
applicable, is secured on an equal and ratable basis (or on a senior basis to,
in the case of obligations subordinated in right of payment to the Notes or such
Guarantee, as the case may be) with the obligations so secured until such time
as such obligations are no longer secured by a Lien.

     

    Section
4.13        Business
Activities.

     

    The
Company will not, and will not permit any Restricted Subsidiary to, engage in
any business other than the Oil and Gas Business, except to such extent as would
not be material to the Company and its Restricted Subsidiaries taken as a whole,
and Parent will not engage in any business other than the Permitted Parent
Business, except to such extent as would not be material to Parent.

     

    Section
4.14        Corporate
Existence.

     

    Subject
to Article 5 hereof, the Company shall do or cause to be done all things
necessary to preserve and keep in full force and effect:

     

    (1)           its
corporate existence, and the corporate, partnership, limited liability company
or other existence of each of its Subsidiaries, in accordance with the
respective organizational documents (as the same may be amended from time to
time) of the Company or any such Subsidiary; and

     

    (2)           the
rights (charter and statutory), licenses and franchises of the Company and its
Subsidiaries;

     

    provided, however, that the
Company shall not be required to preserve any such right, license or franchise,
or the corporate, partnership, limited liability company or other existence of
any of its Subsidiaries, if the Board of Directors of the Company shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of the Company and its Subsidiaries, taken as a whole, and that the
loss thereof would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole.

    
      
         

      

      
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    Section
4.15        Offer to Repurchase Upon Change of
Control.

     

    (a)         Upon
the occurrence of a Change of Control, each Holder will have the right to
require the Company to repurchase all or any part (equal to $1,000 or an
integral multiple of $1,000 in excess of $2,000) of that Holder’s Notes pursuant
to an offer (a “Change of
Control Offer”) at a purchase price in cash (the “Change of Control Payment”)
equal to 101% of the aggregate principal amount of Notes repurchased plus
accrued and unpaid interest, if any, on the Notes repurchased to the date of
settlement (the “Change of
Control Purchase Date”), subject to the rights of Holders on the relevant
record date to receive interest due on an Interest Payment Date that is on or
before the Change of Control Purchase Date. Within 30 days following any Change
of Control, or, at the Company’s option, prior to such Change of Control but
after public announcement thereof, the Company will mail a notice to each Holder
and the Trustee describing the transaction or transactions that constitute the
Change of Control, offering to repurchase the Notes as of the Change of Control
Purchase Date and stating:

     

    (1)           that
the Change of Control Offer is being made pursuant to this Section 4.15 and that
all Notes tendered will be accepted for payment;

     

    (2)           the
purchase price and the Change of Control Purchase Date, which shall be no
earlier than 30 days and no later than 60 days from the date such notice is
mailed;

     

    (3)           that
any Note not tendered will continue to accrue interest;

     

    (4)           that,
unless the Company defaults in the payment of the Change of Control Payment, all
Notes accepted for payment pursuant to the Change of Control Offer will cease to
accrue interest after the Change of Control Purchase Date;

     

    (5)           that
Holders electing to have any Notes purchased pursuant to a Change of Control
Offer will be required to surrender the Notes, with the form entitled “Option of
Holder to Elect Purchase” attached to the Notes completed, or transfer by
book-entry transfer, to the Paying Agent at the address specified in the notice
prior to the close of business on the third Business Day preceding the Change of
Control Purchase Date;

     

    (6)           that
Holders will be entitled to withdraw their election if the Paying Agent
receives, not later than the close of business on the second Business Day
preceding the Change of Control Purchase Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of Notes delivered for purchase, and a statement that such Holder is
withdrawing his election to have the Notes purchased; and

     

    (7)           that
Holders whose Notes are being purchased only in part will be issued new Notes
equal in principal amount to the unpurchased portion of the Notes surrendered,
which unpurchased portion must be equal to $2,000 in principal amount or an
integral multiple of $1,000 in excess of $2,000.

     

    The
Company will comply with the requirements of Rule 14e-1 under the Exchange Act
and any other securities laws and regulations thereunder to the extent those
laws and regulations are applicable in connection with the repurchase of the
Notes as a result of a Change of Control.  To the extent that the
provisions of any securities laws or regulations conflict with the provisions of
this Indenture, the Company will comply with the applicable securities laws and
regulations and will not be deemed to have breached its obligations under this
Section 4.15 by virtue of such compliance.

     

    (b)         On
the Change of Control Purchase Date, the Company will, to the extent
lawful:

     

    (1)           accept
for payment all Notes or portions of Notes properly tendered pursuant to the
Change of Control Offer;

    
      
         

      

      
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    (2)           deposit
with the Paying Agent an amount equal to the Change of Control Payment in
respect of all Notes or portions of Notes properly tendered; and

     

    (3)           deliver
or cause to be delivered to the Trustee the Notes properly accepted together
with an Officers’ Certificate stating the aggregate principal amount of Notes or
portions of Notes being purchased by the Company.

     

    On the
Change of Control Purchase Date, the Paying Agent will promptly mail to each
Holder of Notes properly tendered the Change of Control Payment for such Notes
(or, if all the Notes are then in global form, make such payment through the
facilities of DTC), and the Trustee will promptly authenticate and mail (or
cause to be transferred by book entry) to each Holder a new Note equal in
principal amount to any unpurchased portion of the Notes surrendered, if any;
provided, that each new
Note will be in a principal amount of $2,000 or an integral multiple of $1,000
in excess of $2,000.  The Company will publicly announce the results of the
Change of Control Offer on or as soon as practicable after the Change of Control
Purchase Date.

     

    Notwithstanding
anything to the contrary in this Section 4.15, the Company will not be required
to make a Change of Control Offer upon a Change of Control if (1) a third party
makes the Change of Control Offer in the manner, at the times and otherwise in
compliance with the requirements set forth in this Section 4.15 and Section 3.09
hereof and purchases all Notes properly tendered and not withdrawn under the
Change of Control Offer, or (2) notice of redemption of all outstanding Notes
has been given pursuant to Section 3.07 hereof, unless and until there is a
default in payment of the applicable redemption price.

     

    Section
4.16        Payments for
Consent.

     

    Neither
the Parent, the Company nor any of the Company's Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Beneficial Owner or Holder of any Notes for
or as an inducement to any consent to any waiver, supplement or amendment of any
terms or provisions of this Indenture or the Notes, unless such consideration is
offered to be paid or agreed to be paid to all Beneficial Owners and Holders of
the Notes which so consent in the time frame set forth in solicitation documents
relating to such consent.

     

    Section
4.17        Additional
Guarantees.

     

    If the
Company or any of its Restricted Subsidiaries acquires or creates another
Material Domestic Subsidiary after the Issue Date that Guarantees Indebtedness
of the Company under any Credit Facility, then the Company will cause such
Subsidiary to become a Guarantor by executing a supplemental indenture pursuant
to which it becomes a Guarantor within 20 Business Days of the date on which it
was acquired or created or guaranteed Indebtedness of the Company, as the case
may be; provided,
however, that the foregoing shall not apply to Subsidiaries of the
Company that have properly been designated as Unrestricted Subsidiaries in
accordance with this Indenture for so long as they continue to constitute
Unrestricted Subsidiaries.

     

    Section
4.18        Designation of Restricted and
Unrestricted Subsidiaries.

     

    (a)         The
Board of Directors of the Company may designate any Restricted Subsidiary of the
Company to be an Unrestricted Subsidiary if that designation would not cause a
Default.  If a Restricted Subsidiary of the Company is designated as an
Unrestricted Subsidiary, the aggregate Fair Market Value of all outstanding
Investments owned by the Company and its Restricted Subsidiaries in the
Subsidiary properly designated will be deemed to be an Investment made as of the
time of the designation and will reduce the amount available for Restricted
Payments under Section 4.07(a) hereof or represent Permitted Investments, as
determined by the Company.  That designation will only be permitted if the
Investment would be permitted at that time and if the Subsidiary so designated
otherwise meets the definition of an Unrestricted Subsidiary.

    
      
         

      

      
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    (b)           The
Board of Directors of the Company may at any time designate any Unrestricted
Subsidiary to be a Restricted Subsidiary of the Company; provided that such
designation will be deemed to be an incurrence of Indebtedness by a Restricted
Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted
Subsidiary and the creation, incurrence, assumption or otherwise causing to
exist any Lien of such Unrestricted Subsidiary and such designation will only be
permitted if (1) such Indebtedness is permitted under Section 4.09 hereof
calculated on a pro forma basis as if such designation had occurred at the
beginning of the four-quarter reference period, (2) such Lien is permitted under
Section 4.12 and (3) no Default or Event of Default would be in existence
following such designation.

     

    (c)           Any
designation of a Subsidiary of the Company as an Unrestricted Subsidiary will be
evidenced to the Trustee by filing with the Trustee a resolution of the Board of
Directors of the Company giving effect to such designation and an Officers’
Certificate certifying that such designation complied with the conditions set
forth in the definition of “Unrestricted Subsidiary” and was permitted by
Section 4.07.  If, at any time, any Unrestricted Subsidiary would fail
to meet the preceding requirements as an Unrestricted Subsidiary, (i) it will
thereafter cease to be an Unrestricted Subsidiary for purposes of this
Indenture, (ii) any Indebtedness and any Lien of such Subsidiary will be deemed
to have been incurred by a Restricted Subsidiary of the Company as of such date
and (iii) if such Indebtedness is not permitted to have been incurred as of such
date under Section 4.09 or Section 4.12, as applicable, the Company will be
in Default of such covenant, as applicable.

     

    Section
4.19          Sale and Leaseback
Transactions

     

    The
Company will not, and will not permit any of its Restricted Subsidiaries to,
enter into any sale and leaseback transaction; provided that the Company or any
Guarantor may enter into a sale and leaseback transaction if:

     

    (a)           the
Company or that Guarantor, as applicable, could have (a) incurred Indebtedness
in an amount equal to the Attributable Debt relating to such sale and leaseback
transaction under the Fixed Charge Coverage Ratio test in Section 4.09(a) and
(b) incurred a Lien to secure such Indebtedness  without securing the
Notes pursuant to Section 4.12 hereof;

     

    (b)           the
gross cash proceeds of that sale and leaseback transaction are at least equal to
the Fair Market Value, as determined in good faith by the Board of Directors of
the Company and set forth in an officers’ certificate delivered to the trustee,
of the property that is the subject of that sale and leaseback transaction;
and

     

    (c)           the
transfer of assets in that sale and leaseback transaction is permitted by, and
the Company applies the proceeds of such transaction in compliance with
Section 4.10 hereof.

    
      
         

      

      
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    Section
4.20        Suspended
Covenants.

     

    During
any period when the Notes have an Investment Grade Rating from both Rating
Agencies and no Default has occurred and is continuing under this Indenture (the
“Covenant Suspension
Period”), the Company and its Restricted Subsidiaries will not be subject
to the provisions of Sections 4.07, 4.08, 4.09, 4.10, 4.11, 4.13, 4.17 and
clause (4) of Section 5.01 of this Indenture (collectively, the “Suspended Covenants”); provided that if the Company
and the Restricted Subsidiaries are not subject to the Suspended Covenants for
any period of time as a result of the preceding portion of this sentence and,
subsequently, either of the Rating Agencies withdraws its ratings or downgrades
the ratings assigned to the Notes below the Investment Grade Ratings so that the
Notes do not have an Investment Grade Rating from both Rating Agencies, or a
Default (other than with respect to the Suspended Covenants) occurs and is
continuing, the Company and the Restricted Subsidiaries will thereafter again be
subject to the Suspended Covenants, subject to the terms, conditions and
obligations set forth in this Indenture (each such date of reinstatement being
the “Reinstatement
Date”).  Compliance with the Suspended Covenants with respect to
Restricted Payments made after the Reinstatement Date will be calculated in
accordance with the terms of Section 4.07 as though such covenant had been in
effect during the period since the Issue Date, provided that all Restricted
Payments made, Indebtedness incurred and other actions otherwise permitted by
this Indenture effected during any Covenant Suspension Period will not
constitute a Default on any Reinstatement Date.  The Company will provide
the Trustee with prompt written notice upon the commencement of a Covenant
Suspension Period and of the occurrence of a Reinstatement Date.  In
addition, during any Covenant Suspension Period, the Company will not be
permitted to designate any of its Subsidiaries as Unrestricted
Subsidiaries.

     

    ARTICLE
5

    SUCCESSORS

     

    Section
5.01        Merger, Consolidation, or Sale of
Assets.

     

    The
Company will not, directly or indirectly:  (1) consolidate or merge
with or into another Person (whether or not the Company is the surviving
corporation); or (2) sell, assign, transfer, lease, convey or otherwise dispose
of all or substantially all of the properties or assets of the Company and its
Restricted Subsidiaries taken as a whole, in one or more related transactions,
to another Person, unless:

     

    (1)           either
(A) the Company is the surviving corporation; or (B) the Person formed by or
surviving any such consolidation or merger (if other than the Company) or to
which such sale, assignment, transfer, lease, conveyance or other disposition
has been made is a corporation organized or existing under the laws of the
United States, any state of the United States or the District of
Columbia;

     

    (2)           the
Person formed by or surviving any such consolidation or merger (if other than
the Company) or the Person to which such sale, assignment, transfer, lease,
conveyance or other disposition has been made assumes all the obligations of the
Company under the Notes, this Indenture and the Registration Rights Agreement
pursuant to agreements reasonably satisfactory to the Trustee;

     

    (3)           immediately
after such transaction no Default or Event of Default exists;

     

    (4)           except
with respect to a transaction solely between the Company and a Guarantor, (i)
the Company or the Person formed by or surviving any such consolidation or
merger (if other than the Company), or to which such sale, assignment, transfer,
lease, conveyance or other disposition has been made will, on the date of such
transaction after giving pro forma effect thereto and any related financing
transactions as if the same had occurred at the beginning of the applicable
four-quarter period, be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in
Section 4.09(a) hereof or (ii) such Fixed Charge Coverage Ratio would increase
after giving such pro forma effect; and

    
      
         

      

      
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    (5)           the
Company shall have delivered to the Trustee an Officers’ Certificate and an
Opinion of Counsel, each stating that such consolidation, merger or disposition
and such Supplemental Indenture (if any) comply with this Indenture and that all
conditions precedent herein provided for relating to such transaction have been
complied with.

     

    Section
5.02        Successor Corporation
Substituted.

     

    Upon any
consolidation or merger, or any sale, assignment, transfer, lease, conveyance or
other disposition of all or substantially all of the properties or assets of the
Company or its Restricted Subsidiaries in a transaction that is subject to, and
that complies with the provisions of, Section 5.01 hereof, the successor Person
formed by such consolidation or into or with which the Company or Restricted
Subsidiaries is or are merged or to which such sale, assignment, transfer,
lease, conveyance or other disposition is made shall succeed to, and be
substituted for (so that from and after the date of such consolidation, merger,
sale, assignment, transfer, lease, conveyance or other disposition, the
provisions of this Indenture referring to the “Company” shall refer instead to
the successor Person and not to the Company or the applicable Restricted
Subsidiaries), and may exercise every right and power of the Company or
Restricted Subsidiaries under this Indenture with the same effect as if such
successor Person had been named as the Company or Restricted Subsidiaries
herein; provided,
however, that the predecessor Company or Restricted Subsidiaries shall
not be relieved from the obligation to pay the principal of and interest on the
Notes except in the case of a sale of all of the Company’s or the applicable
Restricted Subsidiaries’ assets in a transaction that is subject to, and that
complies with the provisions of, Section 5.01 hereof.

     

    ARTICLE
6

    DEFAULTS
AND REMEDIES

     

    Section
6.01        Events of
Default.

     

    Each of
the following is an “Event of
Default”:

     

    (1)           default
for 30 days in the payment when due of interest on the Notes;

     

    (2)           default
in the payment when due (at maturity, upon redemption or otherwise) of the
principal of, or premium, if any, on, the Notes;

     

    (3)           failure
by the Company to comply with the provisions of Sections 3.09, 4.10, 4.15 or
Article 5 hereof;

     

    (4)           failure
by the Parent, the Company or any of its Restricted Subsidiaries, as applicable,
to comply for 30 days after receipt of written notice from the Trustee or the
Holders of at least 25% in aggregate principal amount of the Notes to comply
with Sections 4.07, 4.08, 4.09, 4.11, 4.12, 4.13, 4.17 and 4.19
hereof;

     

    (5)           failure
by the Company or the Parent, as applicable, for 60 days after notice from the
Trustee or the Holders of at least 25% of the principal amount of the Notes
outstanding to comply with any of the other agreements in this Indenture (or 120
days with respect to Section 4.03 hereof provided, however, that
beginning on the 61st day the
Company is not in compliance with Section 4.03 hereof, additional interest
at a rate of 0.25% per annum shall accrue and be payable (in the same
manner and at the same time as regular interest payments) on the Notes until
such covenant is complied with);

    
      
         

      

      
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    (6)         default
under any mortgage, indenture or instrument under which there may be issued or
by which there may be secured or evidenced any Indebtedness for money borrowed
by the Company or any of its Significant Restricted Subsidiaries (or the payment
of which is guaranteed by the Company or any of its Significant Restricted
Subsidiaries), whether such Indebtedness or Guarantee now exists, or is created
after the Issue Date, if that default:

     

    (A)         is
caused by a failure to pay principal of, or interest or premium, if any, on,
such Indebtedness prior to the expiration of the grace period and any extensions
thereof provided in the documents governing such Indebtedness on the date of
such default (a “Payment
Default”); or

     

    (B)          results
in the acceleration of such Indebtedness prior to its final Stated
Maturity,

     

    and, in
each case, the principal amount of any such Indebtedness, together with the
principal amount of any other such Indebtedness under which there has been a
Payment Default or the maturity of which has been so accelerated, aggregates
$15.0 million or more;

     

    (7)         failure
by the Company or any of its Significant Restricted Subsidiaries to pay final
judgments entered by a court or courts of competent jurisdiction aggregating in
excess of $15.0 million, which judgments are not paid, discharged or stayed
(including a stay pending appeal) for a period of 60 days after the date of such
final judgment (or, if later, the date when payment is due pursuant to such
judgment);

     

    (8)         except
as permitted by this Indenture, any Guarantee of the Parent or a Significant
Subsidiary is held in any judicial proceeding to be unenforceable or invalid or
ceases for any reason to be in full force and effect, or any Guarantor that is
the Parent or a Significant Subsidiary, or any Person acting on behalf of any
Guarantor that is the Parent or a Significant Subsidiary, denies or disaffirms
in writing its obligations under its Guarantee;

     

    (9)         the
Company or any of its Restricted Subsidiaries that is a Significant Subsidiary
or any group of Restricted Subsidiaries of the Company that, taken together,
would constitute a Significant Subsidiary, pursuant to or within the meaning of
Bankruptcy Law:

     

    (A)         commences
a voluntary case,

     

    (B)          consents
to the entry of an order for relief against it in an involuntary
case,

     

    (C)          consents
to the appointment of a custodian of it or for all or substantially all of its
property,

     

    (D)          makes
a general assignment for the benefit of its creditors, or

     

    (E)          generally
is not paying its debts as they become due;

     

    (10)       a
court of competent jurisdiction enters an order or decree under any Bankruptcy
Law that:

    
      
         

      

      
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    (A)          is
for relief against the Company or any of its Restricted Subsidiaries that is a
Significant Subsidiary or any group of Restricted Subsidiaries of the Company
that, taken together, would constitute a Significant Subsidiary in an
involuntary case;

     

    (B)          appoints
a custodian of the Company or any of its Restricted Subsidiaries that is a
Significant Subsidiary or any group of Restricted Subsidiaries of the Company
that, taken together, would constitute a Significant Subsidiary or for all or
substantially all of the property of the Company or any of its Restricted
Subsidiaries that is a Significant Subsidiary or any group of Restricted
Subsidiaries of the Company that, taken together, would constitute a Significant
Subsidiary; or

     

    (C)          orders
the liquidation of the Company or any of its Restricted Subsidiaries that is a
Significant Subsidiary or any group of Restricted Subsidiaries of the Company
that, taken together, would constitute a Significant Subsidiary;

     

    and the
order or decree remains unstayed and in effect for 60 consecutive
days.

     

    Section
6.02          Acceleration.

     

    In the
case of an Event of Default specified in clause (9) or (10) of Section 6.01
hereof, all outstanding Notes will become due and payable immediately without
further action or notice.  If any other Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount of the then outstanding Notes may declare all the Notes to be due and
payable immediately.  Upon any such declaration, the Notes shall become due
and payable immediately.

     

    The
Holders of a majority in aggregate principal amount of the then outstanding
Notes by written notice to the Trustee may, on behalf of all of the Holders,
rescind an acceleration and its consequences, if the rescission would not
conflict with any judgment or decree and if all existing Events of Default
(except nonpayment of principal, interest or premium that has become due solely
because of the acceleration) have been cured or waived.

     

    Section
6.03          Other Remedies.

     

    If an
Event of Default occurs and is continuing, the Trustee may pursue any available
remedy to collect the payment of principal, premium, if any, and interest on the
Notes or to enforce the performance of any provision of the Notes or this
Indenture.

     

    The
Trustee may maintain a proceeding even if it does not possess any of the Notes
or does not produce any of them in the proceeding.  A delay or omission by
the Trustee or any Holder of a Note in exercising any right or remedy accruing
upon an Event of Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Event of Default.  All remedies are
cumulative to the extent permitted by law.

     

    Section
6.04          Waiver of Past
Defaults.

     

    Holders
of a majority in aggregate principal amount of the then outstanding Notes by
notice to the Trustee may on behalf of the Holders of all of the Notes waive an
existing Default or Event of Default and its consequences hereunder, except (i)
a continuing Default or Event of Default in the payment of the principal of,
premium, if any, or interest on, the Notes (including in connection with an
offer to purchase) or (ii) a Default or Event of Default in respect of a
provision that under Section 9.02 cannot be amended without the consent of each
Holder affected; provided,
however, that the Holders of a majority in aggregate principal amount of
the then outstanding Notes may rescind an acceleration and its consequences,
including any related payment default that resulted from such
acceleration.  Upon any such waiver, such Default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other Default or impair any right consequent
thereon.

    
      
         

      

      
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    Section
6.05        Control by
Majority.

     

    Holders
of a majority in aggregate principal amount of the then outstanding Notes may
direct the time, method and place of conducting any proceeding for exercising
any remedy available to the Trustee or exercising any trust or power conferred
on it.  However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture that the Trustee determines may be unduly
prejudicial to the rights of other Holders of Notes or that may involve the
Trustee in personal liability.

     

    Section
6.06        Limitation on
Suits.

     

    Except to
enforce the right to receive payment of principal, interest or premium, if any,
when due, no Holder of a Note may pursue any remedy with respect to this
Indenture or the Notes unless:

     

    (1)           such
Holder has previously given the Trustee notice that an Event of Default is
continuing;

     

    (2)           Holders
of at least 25% in aggregate principal amount of the then outstanding Notes have
requested the Trustee to pursue the remedy;

     

    (3)           such
Holder or Holders have offered the Trustee reasonable security or indemnity
against any loss, liability or expense;

     

    (4)           the
Trustee has not complied with such request within 60 days after the receipt
of the request and the offer of security or indemnity; and

     

    (5)           Holders
of a majority in aggregate principal amount of the then outstanding Notes have
not given the Trustee a direction inconsistent with such request within such
60-day period.

     

    A Holder
of a Note may not use this Indenture to prejudice the rights of another Holder
of a Note or to obtain a preference or priority over another Holder of a
Note.

     

    Section
6.07        Rights of Holders of Notes to
Receive Payment.

     

    Notwithstanding
any other provision of this Indenture, the right of any Holder of a Note to
receive payment of principal, premium, if any, and interest on the Note, on or
after the respective due dates expressed in the Note (including in connection
with an offer to purchase), or to bring suit for the enforcement of any such
payment on or after such respective dates, shall not be impaired or affected
without the consent of such Holder.

     

    Section
6.08       Collection Suit by
Trustee.

     

    If an
Event of Default specified in Sections 6.01(1) or (2) hereof occurs and is
continuing, the Trustee is authorized to recover judgment in its own name and as
Trustee of an express trust against the Company for the whole amount of
principal of, premium, if any, and interest remaining unpaid on, the Notes and
interest on overdue principal and, to the extent lawful, interest and such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.

    
      
         

      

      
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    Section
6.09          Trustee May File Proofs of
Claim.

     

    The
Trustee shall be authorized to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof.  To the extent that the payment of any such
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.07 hereof out
of the estate in any such proceeding, shall be denied for any reason, payment of
the same shall be secured by a Lien on, and shall be paid out of, any and all
distributions, dividends, money, securities and other properties that the
Holders may be entitled to receive in such proceeding whether in liquidation or
under any plan of reorganization or arrangement or otherwise.  Nothing
herein contained shall be deemed to authorize the Trustee to authorize or
consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder, or to authorize the Trustee to vote in respect of the
claim of any Holder in any such proceeding.

     

    Section
6.10          Priorities.

     

    If the
Trustee collects any money pursuant to this Article 6, it shall pay out the
money in the following order:

     

    First:      to
the Trustee, its agents and attorneys for amounts due under Section 7.07 hereof,
including payment of all compensation, expenses and liabilities incurred, and
all advances made, by the Trustee and the costs and expenses of
collection;

     

    Second: to Holders of
Notes for amounts due and unpaid on the Notes for principal, premium, if any,
and interest, ratably, without preference or priority of any kind, according to
the amounts due and payable on the Notes for principal, premium, if any, and
interest, respectively; and

     

    Third:     to
the Company or to such party as a court of competent jurisdiction shall
direct.

     

    The
Trustee may fix a record date and payment date for any payment to Holders of
Notes pursuant to this Section 6.10.

     

    
      
        
           

        

        
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    Section
6.11          Undertaking for
Costs.

    In any
suit for the enforcement of any right or remedy under this Indenture or in any
suit against the Trustee for any action taken or omitted by it as a Trustee, a
court in its discretion may require the filing by any party litigant in the suit
of an undertaking to pay the costs of the suit, and the court in its discretion
may assess reasonable costs, including reasonable attorneys’ fees, against any
party litigant in the suit, having due regard to the merits and good faith of
the claims or defenses made by the party litigant.  This Section 6.11 does
not apply to a suit by the Trustee, a suit by a Holder of a Note pursuant to
Section 6.07 hereof, or a suit by Holders of more than 10% in aggregate
principal amount of the then outstanding Notes.

     

    ARTICLE
7

    TRUSTEE

     

    Section
7.01        Duties of
Trustee.

     

    (a)         If
an Event of Default has occurred and is continuing, the Trustee will exercise
such of the rights and powers vested in it by this Indenture, and use the same
degree of care and skill in its exercise, as a prudent person would exercise or
use under the circumstances in the conduct of such person’s own
affairs.

     

    (b)         Except
during the continuance of an Event of Default:

     

    (1)           the
duties of the Trustee will be determined solely by the express provisions of
this Indenture and the Trustee need perform only those duties that are
specifically set forth in this Indenture and no others, and no implied covenants
or obligations shall be read into this Indenture against the Trustee;
and

     

    (2)           in
the absence of bad faith on its part, the Trustee may conclusively rely, as to
the truth of the statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the Trustee and conforming
to the requirements of this Indenture.  However, the Trustee will examine
the certificates and opinions to determine whether or not they conform to the
requirements of this Indenture.

     

    (c)         The
Trustee may not be relieved from liabilities for its own negligent action, its
own negligent failure to act, or its own willful misconduct, except
that:

     

    (1)           this
paragraph does not limit the effect of paragraph (b) of this Section
7.01;

     

    (2)           the
Trustee will not be liable for any error of judgment made in good faith by a
Responsible Officer, unless it is proved that the Trustee was negligent in
ascertaining the pertinent facts; and

     

    (3)           the
Trustee will not be liable with respect to any action it takes or omits to take
in good faith in accordance with a direction received by it pursuant to Section
6.05 hereof.

     

    (d)         Whether
or not therein expressly so provided, every provision of this Indenture that in
any way relates to the Trustee is subject to paragraphs (a), (b), and (c) of
this Section 7.01.

     

    (e)         No
provision of this Indenture will require the Trustee to expend or risk its own
funds or incur any liability.  The Trustee will be under no obligation to
exercise any of its rights and powers under this Indenture at the request of any
Holders, unless such Holder has offered to the Trustee security and indemnity
satisfactory to it against any loss, liability or expense.

    
      
         

      

      
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    (f)     
      The Trustee will not be liable for interest
on any money received by it except as the Trustee may agree in writing with the
Company.  Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law.

     

    Section
7.02          Rights of
Trustee.

     

    (a)           The
Trustee may conclusively rely upon any document believed by it to be genuine and
to have been signed or presented by the proper Person.  The Trustee need
not investigate any fact or matter stated in the document.

     

    (b)           Before
the Trustee acts or refrains from acting, it may require an Officers’
Certificate or an Opinion of Counsel or both.  The Trustee will not be
liable for any action it takes or omits to take in good faith in reliance on
such Officers’ Certificate or Opinion of Counsel.  The Trustee may consult
with counsel and the written advice of such counsel or any Opinion of Counsel
will be full and complete authorization and protection from liability in respect
of any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.

     

    (c)           The
Trustee may act through its attorneys and agents and will not be responsible for
the misconduct or negligence of any agent appointed with due care.

     

    (d)           The
Trustee will not be liable for any action it takes or omits to take in good
faith that it believes to be authorized or within the rights or powers conferred
upon it by this Indenture.

     

    (e)           Unless
otherwise specifically provided in this Indenture, any demand, request,
direction or notice from the Company will be sufficient if signed by an Officer
of the Company.

     

    (f)          
The Trustee will be under no obligation to exercise any of the rights or powers
vested in it by this Indenture at the request or direction of any of the Holders
unless such Holders have offered to the Trustee reasonable indemnity or security
against the losses, liabilities and expenses that might be incurred by it in
compliance with such request or direction

     

    (g)           The
Trustee shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document, but the Trustee, in its
discretion, may make such further inquiry or investigation into such facts or
matters as it may see fit, and, if the Trustee shall determine to make such
further inquiry or investigation, it shall be entitled to examine the books,
records and premises of the Company, personally or by agent or attorney at the
sole cost of the Company and shall incur no liability or additional liability of
any kind by reason of such inquiry or investigation.

     

    (h)           Except
for any Event of Default occurring pursuant to Section 6.01(1) or 6.01(2), the
Trustee shall not be deemed to have notice of any Default or Event of Default
unless a Responsible Officer of the Trustee has actual knowledge thereof or
unless written notice of any event which is in fact such a default is received
by the Trustee at the Corporate Trust Office of the Trustee, and such notice
references the Notes and this Indenture.

     

    (i)          
The rights, privileges, protections, immunities and benefits given to the
Trustee, including, without limitation, its right to be indemnified, are
extended to, and shall be enforceable by, the Trustee in each of its capacities
hereunder.

    
      
         

      

      
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    Section
7.03          Individual Rights of
Trustee.

     

    The
Trustee in its individual or any other capacity may become the owner or pledgee
of Notes and may otherwise deal with the Company or any Affiliate of the Company
with the same rights it would have if it were not Trustee.  However, in the
event that the Trustee acquires any conflicting interest it must eliminate such
conflict within 90 days, apply to the SEC for permission to continue as Trustee
(if this Indenture has been qualified under the TIA) or resign.  Any Agent
may do the same with like rights and duties.  The Trustee is also subject
to Sections 7.10 and 7.11 hereof.

     

    Section
7.04          Trustee’s
Disclaimer.

     

    The
Trustee will not be responsible for and makes no representation as to the
validity or adequacy of this Indenture or the Notes, it shall not be accountable
for the Company’s use of the proceeds from the Notes or any money paid to the
Company or upon the Company’s direction under any provision of this Indenture,
it will not be responsible for the use or application of any money received by
any Paying Agent other than the Trustee, and it will not be responsible for any
statement or recital herein or any statement in the Notes or any other document
in connection with the sale of the Notes or pursuant to this Indenture other
than its certificate of authentication.

     

    Section
7.05          Notice of
Defaults.

     

    If a
Default or Event of Default occurs and is continuing and if it is known to a
Responsible Officer, the Trustee will mail to Holders of Notes a notice of the
Default or Event of Default within 90 days after it occurs.  Except in the
case of a Default or Event of Default in payment of principal of, premium, if
any, or interest on, any Note, the Trustee may withhold the notice if and so
long as a committee of its Responsible Officers in good faith determines that
withholding the notice is in the interests of the Holders of the
Notes.

     

    Section
7.06          Reports by Trustee to Holders of the
Notes.

     

    (a)           Within
60 days after each May 15 beginning with the May 15 following the Issue Date,
and for so long as Notes remain outstanding, the Trustee will mail to the
Holders of the Notes a brief report dated as of such reporting date that
complies with TIA § 313(a) (but if no event described in TIA § 313(a)
has occurred within the twelve months preceding the reporting date, no report
need be transmitted).  The Trustee also will comply with TIA
§ 313(b).  The Trustee will also transmit by mail all reports as
required by TIA § 313(c).

     

    (b)           A
copy of each report at the time of its mailing to the Holders of Notes will be
mailed by the Trustee to the Company and filed by the Trustee with the SEC and
each stock exchange on which the Notes are listed in accordance with TIA
§ 313(d).  The Company will promptly notify the Trustee when the Notes
are listed on any stock exchange.

     

    Section
7.07          Compensation and
Indemnity.

     

    (a)           The
Company will pay to the Trustee from time to time reasonable compensation for
its acceptance of this Indenture and services hereunder.  The Trustee’s
compensation will not be limited by any law on compensation of a Trustee of an
express trust.  The Company will reimburse the Trustee promptly upon
request for all reasonable disbursements, advances and expenses incurred or made
by it in addition to the compensation for its services.  Such expenses will
include the reasonable compensation, disbursements and expenses of the Trustee’s
agents and counsel.

    
      
         

      

      
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    (b)           The
Company and the Guarantors will indemnify the Trustee against any and all
losses, liabilities or expenses incurred by it arising out of or in connection
with the acceptance or administration of its duties under this Indenture,
including the costs and expenses of enforcing this Indenture against the Company
and the Guarantors (including this Section 7.07) and defending itself against
any claim (whether asserted by the Company, the Guarantors, any Holder or any
other Person) or liability in connection with the exercise or performance of any
of its powers or duties hereunder, except to the extent any such loss, liability
or expense may be attributable to its negligence or bad faith.  The Trustee
will notify the Company promptly of any claim for which it may seek
indemnity.  Failure by the Trustee to so notify the Company will not
relieve the Company or any of the Guarantors of their obligations
hereunder.  The Company or such Guarantor will defend the claim and the
Trustee will cooperate in the defense.  The Trustee may have separate
counsel and the Company will pay the reasonable fees and expenses of such
counsel.  Neither the Company nor any Guarantor need pay for any settlement
made without its consent, which consent will not be unreasonably
withheld.

     

    (c)           The
obligations of the Company and the Guarantors under this Section 7.07 will
survive the satisfaction and discharge of this Indenture.

     

    (d)           To
secure the Company’s and the Guarantors’ payment obligations in this Section
7.07, the Trustee will have a Lien prior to the Notes on all money or property
held or collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes.  Such Lien will survive the satisfaction and
discharge of this Indenture.

     

    (e)           When
the Trustee incurs expenses or renders services after an Event of Default
specified in Section 6.01(9) or (10) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.

     

    (f)            The
Trustee will comply with the provisions of TIA § 313(b)(2) to the extent
applicable.

     

    Section
7.08           Replacement of
Trustee.

     

    (a)           A
resignation or removal of the Trustee and appointment of a successor Trustee
will become effective only upon the successor Trustee’s acceptance of
appointment as provided in this Section 7.08.

     

    (b)           The
Trustee may resign in writing upon thirty (30) days notice at any time and be
discharged from the trust hereby created by so notifying the Company.  The
Holders of a majority in aggregate principal amount of the then outstanding
Notes may remove the Trustee by so notifying the Trustee and the Company in
writing.  The Company may remove the Trustee if:

     

    (1)           the
Trustee fails to comply with Section 7.10 hereof;

     

    (2)           the
Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered
with respect to the Trustee under any Bankruptcy Law;

     

    (3)           a
custodian or public officer takes charge of the Trustee or its property;
or

     

    (4)           the
Trustee becomes incapable of acting.

    
      
         

      

      
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    (c)           If
the Trustee resigns or is removed or if a vacancy exists in the office of
Trustee for any reason, the Company will promptly appoint a successor
Trustee.  Within one year after the successor Trustee takes office, the
Holders of a majority in aggregate principal amount of the then outstanding
Notes may appoint a successor Trustee to replace the successor Trustee appointed
by the Company.

     

    (d)           If
a successor Trustee does not take office within 60 days after the retiring
Trustee resigns or is removed, the retiring Trustee, the Company, or the Holders
of at least 10% in aggregate principal amount of the then outstanding Notes may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.

     

    (e)           If
the Trustee, after written request by any Holder who has been a Holder for at
least six months, fails to comply with Section 7.10 hereof, such Holder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.

     

    (f)          
A successor Trustee will deliver a written acceptance of its appointment to the
retiring Trustee and to the Company.  Thereupon, the resignation or removal
of the retiring Trustee will become effective, and the successor Trustee will
have all the rights, powers and duties of the Trustee under this
Indenture.  The successor Trustee will mail a notice of its succession to
Holders.  The retiring Trustee will promptly transfer all property held by
it as Trustee to the successor Trustee; provided all sums owing to
the Trustee hereunder have been paid and subject to the Lien provided for in
Section 7.07 hereof.  Notwithstanding replacement of the Trustee pursuant
to this Section 7.08, the Company’s obligations under Section 7.07 hereof will
continue for the benefit of the retiring Trustee.

     

    Section
7.09          Successor Trustee by Merger,
etc.

     

    If the
Trustee consolidates, merges or converts into, or transfers all or substantially
all of its corporate trust business to, another corporation, the successor
corporation without any further act will be the successor Trustee.

     

    Section
7.10          Eligibility;
Disqualification.

     

    There
will at all times be a Trustee hereunder that is a corporation organized and
doing business under the laws of the United States of America or of any state
thereof that is authorized under such laws to exercise corporate trustee power,
that is subject to supervision or examination by federal or state authorities
and that has a combined capital and surplus of at least $100.0 million as set
forth in its most recent published annual report of condition.  No obligor
upon the Notes may serve as Trustee.

     

    This
Indenture will always have a Trustee who satisfies the requirements of TIA
§ 310(a)(1), (2) and (5).  The Trustee is subject to TIA
§ 310(b).

     

    Section
7.11          Preferential Collection of Claims
Against Company.

     

    The
Trustee is subject to TIA § 311(a), excluding any creditor relationship
listed in TIA § 311(b).  A Trustee who has resigned or been
removed shall be subject to TIA § 311(a) to the extent indicated
therein.

    
      
         

      

      
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    ARTICLE
8

    LEGAL
DEFEASANCE AND COVENANT DEFEASANCE

     

    Section
8.01        Option to Effect Legal Defeasance or
Covenant Defeasance.

     

    The
Company may at any time, at the option of its Board of Directors evidenced by a
resolution set forth in an Officers’ Certificate, elect to have either Section
8.02 or 8.03 hereof be applied to all outstanding Notes upon compliance with the
conditions set forth below in this Article 8.

     

    Section
8.02        Legal Defeasance and
Discharge.

     

    Upon the
Company’s exercise under Section 8.01 hereof of the option applicable to this
Section 8.02, the Company and each of the Guarantors will, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, be deemed to
have been discharged from their obligations with respect to all outstanding
Notes (including the Guarantees) on the date the conditions set forth below are
satisfied (hereinafter, “Legal
Defeasance”).  For this purpose, Legal Defeasance means that
the Company and the Guarantors will be deemed to have paid and discharged the
entire Indebtedness represented by the outstanding Notes (including the
Guarantees), which will thereafter be deemed to be “outstanding” only for the
purposes of Section 8.05 hereof and the other Sections of this Indenture
referred to in clauses (1) and (2) below, and to have satisfied all their other
obligations under such Notes, the Guarantees and this Indenture (and the
Trustee, on demand of and at the expense of the Company, shall execute proper
instruments acknowledging the same), except for the following provisions which
will survive until otherwise terminated or discharged hereunder:

     

    (1)           the
rights of Holders of outstanding Notes to receive payments in respect of the
principal of, or interest or premium, if any, on, such Notes when such payments
are due from the trust referred to in Section 8.05 hereof;

     

    (2)           the
Company’s obligations with respect to such Notes under Article 2 and Section
4.02 hereof;

     

    (3)           the
rights, powers, trusts, duties and immunities of the Trustee hereunder and the
Company’s and the Guarantors’ obligations in connection therewith;
and

     

    (4)           this
Article 8.

     

    Subject
to compliance with this Article 8, the Company may exercise its option under
this Section 8.02 notwithstanding the prior exercise of its option under Section
8.03 hereof.

     

    Section
8.03        Covenant
Defeasance.

     

    Upon the
Company’s exercise under Section 8.01 hereof of the option applicable to this
Section 8.03, the Company and each of the Guarantors will, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, be released
from each of their obligations under the covenants contained in Sections 4.03,
4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.15, 4.16, 4.17, 4.18, and 4.19
hereof and clause (4) of Section 5.01 hereof with respect to the outstanding
Notes on and after the date the conditions set forth in Section 8.04 hereof are
satisfied (hereinafter, “Covenant Defeasance”), and
the Notes will thereafter be deemed not “outstanding” for the purposes of any
direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but will
continue to be deemed “outstanding” for all other purposes
hereunder.  For this purpose, Covenant Defeasance means that, with
respect to the outstanding Notes and Guarantees, the Company and the Guarantors
may omit to comply with and will have no liability in respect of any term,
condition or limitation set forth in any such covenant, whether directly or
indirectly, by reason of any reference elsewhere herein to any such covenant or
by reason of any reference in any such covenant to any other provision herein or
in any other document and such omission to comply will not constitute a Default
or an Event of Default under Section 6.01 hereof, but, except as specified
above, the remainder of this Indenture and such Notes and Guarantees will be
unaffected thereby.  In addition, upon the Company’s exercise under
Section 8.01 hereof of the option applicable to this Section 8.03, subject to
the satisfaction of the conditions set forth in Section 8.04 hereof, Sections
6.01(3) through 6.01(8) hereof will not constitute Events of
Default.

    
      
         

      

      
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    Section
8.04        Conditions to Legal or Covenant
Defeasance.

     

    In order
to exercise either Legal Defeasance or Covenant Defeasance under either Section
8.02 or 8.03 hereof:

     

    (1)           the
Company must irrevocably deposit with the Trustee, in trust, for the benefit of
the Holders, cash in U.S. dollars, non-callable Government Securities, or a
combination thereof, in such amounts as will be sufficient, in the opinion of a
nationally recognized investment bank, appraisal firm, or firm of independent
public accountants, to pay the principal of, and interest and premium, if any,
on the outstanding Notes on the stated date for payment thereof or on the
applicable redemption date, as the case may be, and the Company must specify
whether the Notes are being defeased to such stated date for payment or to a
particular redemption date;

     

    (2)           in
the case of an election under Section 8.02 hereof, the Company must deliver to
the Trustee an Opinion of Counsel confirming that (a) the Company has received
from, or there has been published by, the Internal Revenue Service a ruling or
(b) since the Issue Date, there has been a change in the applicable federal
income tax law, in either case to the effect that, and based thereon such
Opinion of Counsel will confirm that, the Holders of the outstanding Notes will
not recognize income, gain or loss for federal income tax purposes as a result
of such Legal Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such Legal Defeasance had not occurred;

     

    (3)           in
the case of an election under Section 8.03 hereof, the Company must deliver to
the Trustee an Opinion of Counsel confirming that the Holders of the outstanding
Notes will not recognize income, gain or loss for federal income tax purposes as
a result of such Covenant Defeasance and will be subject to federal income tax
on the same amounts, in the same manner and at the same times as would have been
the case if such Covenant Defeasance had not occurred;

     

    (4)           no
Default or Event of Default shall have occurred and be continuing on the date of
such deposit (other than a Default or Event of Default resulting from the
borrowing of funds to be applied to such deposit);

     

    (5)           such
Legal Defeasance or Covenant Defeasance will not result in a breach or violation
of, or constitute a default under, any material agreement or instrument (other
than this Indenture) to which the Company or any of its Guarantors (other than
Parent) is a party or by which the Company or any of its Guarantors (other than
Parent) is bound;

    
      
         

      

      
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    (6)
          the Company must
deliver to the Trustee an Officers’ Certificate stating that the deposit was not
made by the Company with the intent of preferring the Holders of Notes over the
other creditors of the Company with the intent of defeating, hindering, delaying
or defrauding any creditors of the Company or others; and

     

    (7)           the
Company must deliver to the Trustee an Officers’ Certificate and an Opinion of
Counsel, each stating that all conditions precedent relating to the Legal
Defeasance or the Covenant Defeasance have been complied with.

     

    Section
8.05        Deposited Money and Government
Securities to be Held in Trust; Other Miscellaneous
Provisions.

     

    Subject
to Section 8.06 hereof, all money and non-callable Government Securities
(including the proceeds thereof) deposited with the Trustee (or other qualifying
trustee, collectively for purposes of this Section 8.05, the “Trustee”) pursuant to Section
8.04 hereof in respect of the outstanding Notes will be held in trust and
applied by the Trustee, in accordance with the provisions of such Notes and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as Paying Agent) as the Trustee may determine, to
the Holders of such Notes of all sums due and to become due thereon in respect
of principal, premium, if any, and interest, but such money need not be
segregated from other funds except to the extent required by law.

     

    The
Company will pay and indemnify the Trustee against any tax, fee or other charge
imposed on or assessed against the cash or non-callable Government Securities
deposited pursuant to Section 8.04 hereof or the principal and interest received
in respect thereof other than any such tax, fee or other charge which by law is
for the account of the Holders of the outstanding Notes.

     

    Notwithstanding
anything in this Article 8 to the contrary, the Trustee will deliver or pay to
the Company from time to time upon the request of the Company any money or
non-callable Government Securities held by it as provided in Section 8.04 hereof
which, in the opinion of a nationally recognized investment bank, appraisal firm
or firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee (which may be the opinion delivered under
Section 8.04(1) hereof), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.

     

    Section
8.06        Repayment to
Company.

     

    Any money
deposited with the Trustee or any Paying Agent, or then held by the Company, in
trust for the payment of the principal of, premium, if any, or interest on, any
Note and remaining unclaimed for two years after such principal, premium, if
any, or interest has become due and payable shall be paid to the Company on its
request or (if then held by the Company) will be discharged from such trust; and
the Holder of such Note will thereafter be permitted to look only to the Company
for payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, will thereupon cease; provided, however, that the
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Company cause to be published once, in the New York
Times or The Wall Street Journal, notice that such money remains unclaimed and
that, after a date specified therein, which will not be less than 30 days from
the date of such notification or publication, any unclaimed balance of such
money then remaining will be repaid to the Company.

    
      
         

      

      
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    Section
8.07        Reinstatement.

     

    If the
Trustee or Paying Agent is unable to apply any U.S. dollars or non-callable
Government Securities in accordance with Section 8.02 or 8.03 hereof, as the
case may be, by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, then
the Company’s and the Guarantors’ obligations under this Indenture and the Notes
and the Guarantees will be revived and reinstated as though no deposit had
occurred pursuant to Section 8.02 or 8.03 hereof until such time as the Trustee
or Paying Agent is permitted to apply all such money in accordance with Section
8.02 or 8.03 hereof, as the case may be; provided, however, that, if
the Company makes any payment of principal of, premium, if any, or interest on,
any Note following the reinstatement of its obligations, the Company will be
subrogated to the rights of the Holders of such Notes to receive such payment
from the money held by the Trustee or Paying Agent.

     

    ARTICLE
9

    AMENDMENT,
SUPPLEMENT AND WAIVER

     

    Section
9.01        Without Consent of Holders of
Notes.

     

    Notwithstanding
Section 9.02 of this Indenture, the Company, the Guarantors and the Trustee may
amend or supplement this Indenture, the Notes or the Guarantees without the
consent of any Holder of a Note:

     

    (1)           to
cure any ambiguity, defect or inconsistency;

     

    (2)           to
provide for uncertificated Notes in addition to or in place of certificated
Notes;

     

    (3)           to
provide for the assumption of the Company’s or a Guarantor’s obligations to the
Holders of the Notes and Guarantees by a successor to the Company or such
Guarantor pursuant to Article 5 hereof;

     

    (4)           to
make any change that would provide any additional rights or benefits to the
Holders of the Notes or that does not adversely affect the legal rights
hereunder of any Holder provided that any change to
conform the text of this Indenture, the Notes or the Guarantees to any provision
of the “Description of Notes” section of the Offering Memorandum will not be
deemed to adversely affect the legal rights under this Indenture of any
Holder;

     

    (5)           to
secure the Notes or the Guarantees pursuant to the requirements of Section
4.12.

     

    (6)           to
provide for the issuance of Additional Notes in accordance with the limitations
set forth in this Indenture as of the date hereof;

     

    (7)           to
add any additional Guarantor or to evidence the release of any Guarantor from
its Guarantee in accordance with the terms of this Indenture;

     

    (8)           to
comply with requirements of the SEC to effect or maintain qualifications of this
Indenture under the TIA; or

     

    (9)           to
evidence or provide for acceptance of appointment of a successor
Trustee.

    
      
         

      

      
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    Upon the
request of the Company accompanied by a resolution of its Board of Directors
authorizing the execution of any such amended or supplemental indenture, and
upon receipt by the Trustee of the documents described in Section 9.06 hereof,
the Trustee will join with the Company and the Guarantors in the execution of
any amended or supplemental indenture authorized or permitted by the terms of
this Indenture and to make any further appropriate agreements and stipulations
that may be therein contained, but the Trustee will not be obligated to enter
into such amended or supplemental indenture that affects its own rights, duties
or immunities under this Indenture or otherwise.

     

    Section
9.02        With Consent of Holders of
Notes.

     

    Except as
provided above in Section 9.01 and below in this Section 9.02, the Company and
the Trustee may amend or supplement this Indenture, the Notes and the Guarantees
with the consent of the Holders 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), and, subject to Sections 6.04
and 6.07 hereof, any existing Default or Event of Default or compliance with any
provision of this Indenture, the Notes or the Guarantees may be waived with the
consent of the Holders of 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). Section
2.08 hereof shall determine which Notes are considered to be “outstanding” for
purposes of this Section 9.02.  However, without the consent of each
Holder affected, an amendment, supplement or waiver may not (with respect to any
Notes held by a non-consenting Holder):

     

    (1)           reduce
the principal amount of Notes whose Holders must consent to an amendment,
supplement or waiver;

     

    (2)           reduce
the principal of or change the fixed maturity of any Note or alter or waive any
of the provisions with respect to the redemption or repurchase of the Notes
(other than the provisions of Sections 3.09, 4.10 and 4.15 hereof);

     

    (3)           reduce
the rate of or change the time for payment of interest, including default
interest, on any Note;

     

    (4)           waive
a Default or Event of Default in the payment of principal of, or premium, if
any, or interest on, the Notes (except a rescission of acceleration of the Notes
by the Holders of at least a majority in aggregate principal amount of the then
outstanding Notes and a waiver of the payment default that resulted from such
acceleration);

     

    (5)           make
any Note payable in currency other than that stated in the Notes;

     

    (6)           make
any change in the provisions of this Indenture relating to waivers of past
Defaults or the rights of Holders of Notes to receive payments of principal of,
or interest or premium, if any, on, the Notes;

     

    (7)           waive
a redemption or repurchase payment with respect to any Note (other than a
payment required by Sections 3.09, 4.10 or 4.15 hereof);

     

    (8)           release
any Guarantor from any of its obligations under its Guarantee or this Indenture,
except in accordance with the terms of this Indenture; or

     

    (9)           make
any change in the preceding amendment, supplement and waiver
provisions.

     

    
      
        
           

        

        
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    Section
9.03        Compliance with Trust Indenture
Act.

     

    Every
amendment or supplement to this Indenture or the Notes will be set forth in a
amended or supplemental indenture that complies with the TIA as then in
effect.

     

    Section
9.04        Revocation and Effect of
Consents.

     

    Until an
amendment, supplement or waiver becomes effective, a consent to it by a Holder
of a Note is a continuing consent by the Holder of a Note and every subsequent
Holder of a Note or portion of a Note that evidences the same debt as the
consenting Holder’s Note, even if notation of the consent is not made on any
Note.  However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the amendment, supplement or waiver becomes
effective.  An amendment, supplement or waiver becomes effective in
accordance with its terms and thereafter binds every Holder.

     

    The
Company may, but shall not be obligated to, fix a record date for the purpose of
determining the Holders entitled to consent to any amendment, supplement or
waiver.  If a record date is fixed, then notwithstanding the
provisions of the immediately preceding paragraph, those Persons who were
Holders at such record date (or their duly designated proxies), and only those
Persons, shall be entitled to consent to such amendment or waiver or to revoke
any consent previously given, whether or not such Persons continue to be Holders
after such record date.

     

    Section
9.05        Notation on or Exchange of
Notes.

     

    The
Trustee may place an appropriate notation about an amendment, supplement or
waiver on any Note thereafter authenticated.  The Company in exchange
for all Notes may issue and the Trustee shall, upon receipt of an Authentication
Order, authenticate new Notes that reflect the amendment, supplement or
waiver.

     

    Failure
to make the appropriate notation or issue a new Note will not affect the
validity and effect of such amendment, supplement or waiver.

     

    Section
9.06        Trustee to Sign Amendments,
etc.

     

    The
Trustee will sign any amended or supplemental indenture authorized pursuant to
this Article 9 if the amendment or supplement does not adversely affect the
rights, duties, liabilities or immunities of the Trustee.  The Company
may not sign an amended or supplemental indenture until the Board of Directors
of the Company approves it.  In executing any amended or supplemental
indenture, the Trustee will be entitled to receive and will be fully protected
in relying in good faith upon, in addition to the documents required by Section
11.04 hereof, an Officers’ Certificate and an Opinion of Counsel stating that
the execution of such amended or supplemental indenture is authorized or
permitted by this Indenture.

     

    ARTICLE
10

    SATISFACTION
AND DISCHARGE

     

    Section
10.01      Satisfaction and
Discharge.

     

    This
Indenture will be discharged and will cease to be of further effect as to all
Notes issued hereunder, when:

    
      
         

      

      
        75

        
          

        

      

      
         

      

    

    (1)           either:

     

    (a)   all
Notes that have been authenticated, except lost, stolen or destroyed Notes that
have been replaced or paid and Notes for whose payment money has been deposited
in trust and thereafter repaid to the Company, have been delivered to the
Trustee for cancellation; or

     

    (b)   all
Notes that have not been delivered to the Trustee for cancellation have become
due and payable or will become due and payable within one year by reason of the
mailing of a notice of redemption or otherwise and the Company or any Guarantor
has irrevocably deposited or caused to be deposited with the Trustee as trust
funds in trust solely for the benefit of the Holders, cash in U.S. dollars,
non-callable Government Securities, or a combination thereof, in such amounts as
will be sufficient, without consideration of any reinvestment of interest, to
pay and discharge the entire Indebtedness on the Notes not delivered to the
Trustee for cancellation for principal, interest and premium, if any, to the
date of maturity or redemption;

     

    (2)           the
Company or any Guarantor has paid or caused to be paid all other sums payable by
it under this Indenture;

     

    (3)           the
deposit will not result in a breach or violation of, or constitute a default
under, any material agreement or instrument (other than this Indenture) of the
Company or any Guarantor; and

     

    (4)           the
Company has delivered irrevocable instructions to the Trustee under this
Indenture to apply the deposited money toward the payment of the Notes at fixed
maturity or on the redemption date, as the case may be.

     

    In
addition, the Company must deliver an Officers’ Certificate and an Opinion of
Counsel to the Trustee stating that all conditions precedent to satisfaction and
discharge have been satisfied.

     

    Notwithstanding
the satisfaction and discharge of this Indenture, if money has been deposited
with the Trustee pursuant to subclause (b) of clause (1) of this Section 10.01,
the provisions of Sections 10.02 and 8.06 hereof will survive.  In
addition, nothing in this Section 10.01 will be deemed to discharge those
provisions of Section 7.07 hereof, that, by their terms, survive the
satisfaction and discharge of this Indenture.

     

    Section
10.02      Application of Trust
Money.

     

    Subject
to the provisions of Section 8.06 hereof, all money deposited with the Trustee
pursuant to Section 10.01 hereof shall be held in trust and applied by it, in
accordance with the provisions of the Notes and this Indenture, to the payment,
either directly or through any Paying Agent (including the Company acting as its
own Paying Agent) as the Trustee may determine, to the Persons entitled thereto,
of the principal (and premium, if any) and interest for whose payment such money
has been deposited with the Trustee; but such money need not be segregated from
other funds except to the extent required by law.

     

    If the
Trustee or Paying Agent is unable to apply any money or Government Securities in
accordance with Section 10.01 hereof by reason of any legal proceeding or by
reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, the Company’s
and any Guarantor’s obligations under this Indenture and the Notes shall be
revived and reinstated as though no deposit had occurred pursuant to Section
10.01 hereof; provided
that if the Company has made any payment of principal of, premium, if any, or
interest on, any Notes because of the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of such Notes to
receive such payment from the money or Government Securities held by the Trustee
or Paying Agent.

    
      
         

      

      
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    ARTICLE
11

    MISCELLANEOUS

     

    Section
11.01      Trust Indenture Act
Controls.

     

    If any
provision of this Indenture limits, qualifies or conflicts with the duties
imposed by the TIA, the imposed duties will control.

     

    Section
11.02      Notices.

     

    Any
notice or communication by the Company, any Guarantor or the Trustee to the
others is duly given if in writing and delivered in Person or by first class
mail (registered or certified, return receipt requested), facsimile transmission
or overnight air courier guaranteeing next day delivery, to the others’
address:

     

    If to the
Company and/or any Guarantor:

     

    ENERGY
XXI GULF COAST, INC.

    1021
Main

    Suite
2626

    Houston,
Texas  77002

    Attention:  Chief
Financial Officer

     

    If to the
Trustee:

     

    Wells
Fargo Bank, National Association

    1445 Ross
Avenue, 2nd Floor

    MAC
T5303-022

    Dallas,
Texas 75202-2812

    Facsimile
No.:  (214) 777-4806

    Attention:  Corporate
Trust and Escrow Services

    

    The
Company, any Guarantor or the Trustee, by notice to the others, may designate
additional or different addresses for subsequent notices or
communications.

     

    All
notices and communications (other than those sent to Holders) will be deemed to
have been duly given: at the time delivered by hand, if personally delivered;
five Business Days after being deposited in the mail, postage prepaid, if
mailed; when receipt acknowledged, if transmitted by facsimile; and the next
Business Day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery.

     

    Any
notice or communication to a Holder will be mailed by first class mail,
certified or registered, return receipt requested, or by overnight air courier
guaranteeing next day delivery to its address shown on the register kept by the
Registrar.  Any notice or communication will also be so mailed to any
Person described in TIA § 313(c), to the extent required by the
TIA.  Failure to mail a notice or communication to a Holder or any
defect in it will not affect its sufficiency with respect to other
Holders.

    
      
         

      

      
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    If a
notice or communication is mailed in the manner provided above within the time
prescribed, it is duly given, whether or not the addressee receives
it.

     

    If the
Company mails a notice or communication to Holders, it will mail a copy to the
Trustee and each Agent at the same time.

     

    Notwithstanding
any other provision of this Indenture or any Note, where this Indenture or any
Note provides for notice of any event (including any notice of redemption) to a
Holder of a Global Note (whether by mail or otherwise), such notice shall be
sufficiently given if given to the Depositary for such Note (or its designee),
pursuant to the customary procedures of such Depositary.

     

    Section
11.03      Communication by Holders of Notes
with Other Holders of Notes.

     

    Holders
may communicate pursuant to TIA § 312(b) with other Holders with respect to
their rights under this Indenture or the Notes.  The Company, the
Trustee, the Registrar and anyone else shall have the protection of TIA
§ 312(c).

     

    Section
11.04      Certificate and Opinion as to
Conditions Precedent.

     

    Upon any
request or application by the Company to the Trustee to take any action under
this Indenture, the Company shall furnish to the Trustee:

     

    (1)         an
Officers’ Certificate in form and substance reasonably satisfactory to the
Trustee (which must include the statements set forth in Section 11.05 hereof)
stating that, in the opinion of the signers, all conditions precedent and
covenants, if any, provided for in this Indenture relating to the proposed
action have been satisfied; and

     

    (2)         an
Opinion of Counsel in form and substance reasonably satisfactory to the Trustee
(which must include the statements set forth in Section 11.05 hereof) stating
that, in the opinion of such counsel, all such conditions precedent and
covenants have been satisfied.

     

    Section
11.05      Statements Required in Certificate
or Opinion.

     

    Each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture (other than a certificate provided pursuant to
TIA § 314(a)(4)) must comply with the provisions of TIA § 314(e) and
must include:

     

    (1)         a
statement that the Person making such certificate or opinion has read such
covenant or condition;

     

    (2)         a
brief statement as to the nature and scope of the examination or investigation
upon which the statements or opinions contained in such certificate or opinion
are based;

     

    (3)         a
statement that, in the opinion of such Person, he or she has made such
examination or investigation as is necessary to enable him or her to express an
informed opinion as to whether or not such covenant or condition has been
satisfied; and

     

    (4)         a
statement as to whether or not, in the opinion of such Person, such condition or
covenant has been satisfied.

    
      
         

      

      
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    Section
11.06      Rules by Trustee and
Agents.

     

    The
Trustee may make reasonable rules for action by or at a meeting of
Holders.  The Registrar or Paying Agent may make reasonable rules and
set reasonable requirements for its functions.

     

    Section
11.07      No Personal Liability of Directors,
Officers, Employees and Stockholders.

     

    No
director, officer, employee, incorporator or stockholder or other owner of
Capital Stock of the Company or any Guarantor, as such, will have any liability
for any obligations of the Company or the Guarantors under the Notes, this
Indenture or the Guarantees or for any claim based on, in respect of, or by
reason of, such obligations or their creation.  Each Holder of Notes
by accepting a Note waives and releases all such liability.  The
waiver and release are part of the consideration for issuance of the
Notes.

     

    Section
11.08      Governing Law.

     

    THE
INTERNAL LAW OF THE STATE OF NEW YORK WILL GOVERN AND BE USED TO CONSTRUE THIS
INDENTURE, THE NOTES AND THE GUARANTEES.

     

    Section
11.09      No Adverse Interpretation of Other
Agreements.

     

    This
Indenture may not be used to interpret any other indenture, loan or debt
agreement of the Company or its Subsidiaries or of any other
Person.  Any such indenture, loan or debt agreement may not be used to
interpret this Indenture.

     

    Section
11.10      Successors.

     

    All
agreements of the Company in this Indenture and the Notes will bind its
successors.  All agreements of the Trustee in this Indenture will bind
its successors.  All agreements of each Guarantor in this Indenture
will bind its successors, except as otherwise provided in Section 12.05
hereof.

     

    Section
11.11      Severability.

     

    In case
any provision in this Indenture or in the Notes is invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions will not in any way be affected or impaired thereby.

     

    Section
11.12      Counterpart
Originals.

     

    The
parties may sign any number of copies of this Indenture.  Each signed
copy will be an original, but all of them together represent the same
agreement.  The exchange of copies of this Indenture and of signature
pages by facsimile or portable document format (PDF) transmission shall
constitute effective execution and delivery of this Indenture as to the parties
hereto and may be used in lieu of the original Indenture for all
purposes.  Signatures of the parties hereto transmitted by facsimile
or PDF shall be deemed to be their original signatures for all
purposes.

    
      
         

      

      
        79

        
          

        

      

      
         

      

    

    Section
11.13      Table of Contents, Headings,
etc.

     

    The Table
of Contents, Cross-Reference Table and Headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not to
be considered a part of this Indenture and will in no way modify or restrict any
of the terms or provisions hereof.

     

    Section
11.14      Patriot
Act.

     

    The
parties hereto acknowledge that in accordance with Section 326 of the U.S.A.
Patriot Act, the Trustee, like all financial institutions, and in order to help
fight the funding of terrorism and money laundering, is required to obtain,
verify, and record information that identifies each person or legal entity that
establishes a relationship or opens an account with the Trustee.  The
parties to this Indenture agree that they will provide the Trustee with such
information within their possession or control as it may reasonably request in
order for the Trustee to satisfy the requirements of the U.S.A. Patriot
Act.

     

    ARTICLE
12

    GUARANTEES

     

    Section
12.01      Guarantee.

     

    (a)         Subject
to this Article 12, each of the Guarantors hereby, jointly and severally, fully
and unconditionally guarantees to each Holder of a Note authenticated and
delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of this Indenture, the Notes or
the obligations of the Company hereunder or thereunder, that:

     

    (1)           the
principal of, premium, if any, and interest on, the Notes will be promptly paid
in full when due, whether at maturity, by acceleration, upon repurchase or
redemption or otherwise, and interest on the overdue principal of, premium and
(to the extent permitted by law) interest, if any, on the Notes and all other
obligations of the Company to the Holders or the Trustee under this Indenture or
the Notes will be promptly paid in full or performed, all in accordance with the
terms of this Indenture and the Notes; and

     

    (2)           in
case of any extension of time of payment or renewal of any Notes or any of such
other obligations, the same will be promptly paid in full when due or performed
in accordance with the terms of the extension or renewal, whether at stated
maturity, by acceleration, upon repurchase or redemption or
otherwise.

     

    Failing
payment when so due of any amount so guaranteed or any performance so guaranteed
for whatever reason, the Guarantors will be jointly and severally obligated to
pay the same immediately.  Each Guarantor agrees that this is a
guarantee of payment and not a guarantee of collection.

     

    (b)         The
Guarantors hereby agree that their obligations hereunder are unconditional,
irrespective of the validity, regularity or enforceability of the Notes or this
Indenture, the absence of any action to enforce the same, any waiver or consent
by any Holder of the Notes with respect to any provisions hereof or thereof, the
recovery of any judgment against the Company, any action to enforce the same or
any other circumstance which might otherwise constitute a legal or equitable
discharge or defense of a Guarantor.  Each Guarantor hereby waives
diligence, presentment, demand of payment, filing of claims with a court in the
event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all demands whatsoever
and covenants that this Guarantee will not be discharged except by complete
performance of the obligations contained in the Notes and this
Indenture.

    
      
         

      

      
        80

        
          

        

      

      
         

      

    

    (c)         If
any Holder or the Trustee is required by any court or otherwise to return to the
Company, the Guarantors or any custodian, trustee, liquidator or other similar
official acting in relation to any of the Company or the Guarantors, any amount
paid by the Company or any Guarantor to the Trustee or such Holder, this
Guarantee, to the extent theretofore discharged, will be reinstated in full
force and effect.

     

    (d)         Each
Guarantor agrees that it will not be entitled to any right of subrogation in
relation to the Holders in respect of any obligations guaranteed hereby until
payment in full of all obligations guaranteed hereby.  Each Guarantor
further agrees that, as between the Guarantors, on the one hand, and the Holders
and the Trustee, on the other hand, (1) the maturity of the obligations
guaranteed hereby may be accelerated as provided in Article 6 hereof for the
purposes of this Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (2) in the event of any declaration of acceleration of
such obligations as provided in Article 6 hereof, such obligations (whether or
not due and payable) will forthwith become due and payable by the Guarantor for
the purpose of this Guarantee.  The Guarantors will have the right to
seek contribution from any non-paying Guarantor so long as the exercise of such
right does not impair the rights of the Holders under the
Guarantee.

     

    Section
12.02      Limitation on Guarantor
Liability.

     

    Each
Guarantor, and by its acceptance of Notes, each Holder, hereby confirms that it
is the intention of all such parties that the Guarantee of such Guarantor not
constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law,
the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or
any similar federal or state law to the extent applicable to any
Guarantee.  To effectuate the foregoing intention, the Trustee, the
Holders and the Guarantors hereby irrevocably agree that the obligations of such
Guarantor will be limited to the maximum amount that will, after giving effect
to all other contingent and fixed liabilities of such Guarantor that are
relevant under such laws, and after giving effect to any collections from,
rights to receive contribution from or payments made by or on behalf of any
other Guarantor in respect of the obligations of such other Guarantor under this
Article 12, result in the obligations of such Guarantor under its Guarantee not
constituting a fraudulent transfer or fraudulent conveyance under federal or
state law and not otherwise be void or voidable under any similar laws affecting
the rights of creditors generally.

     

    Section
12.03      Execution and Delivery of
Guarantee.

     

    To
evidence its Guarantee set forth in Section 12.01 hereof, each Guarantor hereby
agrees that a notation of such Guarantee substantially in the form attached as
Exhibit D hereto will be signed by an Officer of such Guarantor (by manual or
facsimile signature) on each Note authenticated and delivered by the Trustee and
that this Indenture will be executed on behalf of such Guarantor by one of its
Officers.

     

    Each
Guarantor hereby agrees that its Guarantee set forth in Section 12.01 hereof
will remain in full force and effect notwithstanding any failure to endorse on
each Note a notation of such Guarantee.

     

    If an
Officer whose signature is on this Indenture or on the Guarantee no longer holds
that office at the time the Trustee authenticates the Note on which a Guarantee
is endorsed, the Guarantee will be valid nevertheless.

     

    
      
        
           

        

        
          81

          
            

          

        

        
           

        

      

    

     

    The
delivery of any Note by the Trustee, after the authentication thereof hereunder,
will constitute due delivery of the Guarantee set forth in this Indenture on
behalf of the Guarantors.

    In the
event that the Company or any of its Restricted Subsidiaries creates or acquires
any Domestic Subsidiary after the Issue Date, if required by Section 4.17
hereof, the Company will cause such Domestic Subsidiary to comply with the
provisions of Section 4.17 hereof and this Article 12, to the extent
applicable.

     

    Section
12.04      Guarantors May Consolidate, etc., on
Certain Terms.

     

    Except as
otherwise provided in Section 12.05 hereof, no Guarantor may sell or otherwise
dispose of all or substantially all of its properties or assets to, or
consolidate with or merge with or into (whether or not such Guarantor is the
surviving Person) another Person, other than the Company or another Guarantor,
unless:

     

    (1)           immediately
after giving effect to such transaction, no Default or Event of Default exists;
and

     

    (2)           either:

     

    (a)  subject
to Section 12.05 hereof, the Person acquiring the properties or assets in any
such sale or other disposition or the Person formed by or surviving any such
consolidation or merger (if other than the Guarantor) unconditionally assumes,
pursuant to a supplemental indenture substantially in the form of Exhibit E, all
the obligations of such Guarantor under this Indenture, the Notes, its Guarantee
and the Registration Rights Agreement on terms set forth herein or therein;
or

     

    (b)  such
sale or other disposition complies with Section 4.10 hereof.

     

    In the
case of any such consolidation, merger, sale or conveyance and upon the
assumption by the successor Person, by supplemental indenture, executed and
delivered to the Trustee and satisfactory in form to the Trustee, of the
Guarantee endorsed upon the Notes and the due and punctual performance of all of
the covenants and conditions of this Indenture to be performed by the Guarantor,
such successor Person will succeed to and be substituted for such Guarantor with
the same effect as if it had been named herein as a Guarantor.  Such
successor Person thereupon may cause to be signed any or all of the Guarantees
to be endorsed upon all of the Notes issuable hereunder which theretofore shall
not have been signed by the Company and delivered to the Trustee.  All
the Guarantees so issued will in all respects have the same legal rank and
benefit under this Indenture as the Guarantees theretofore and thereafter issued
in accordance with the terms of this Indenture as though all of such Guarantees
had been issued at the date of the execution hereof.

     

    Except as
set forth in Articles 4 and 5 hereof, and notwithstanding clauses 2(a) and (b)
above, nothing contained in this Indenture or in any of the Notes will prevent
any consolidation or merger of a Guarantor with or into the Company or another
Guarantor, or will prevent any sale or conveyance of the property of a Guarantor
as an entirety or substantially as an entirety to the Company or another
Guarantor.

    
      
         

      

      
        82

        
          

        

      

      
         

      

    

    Section
12.05      Releases.

     

    The
Guarantee of a Guarantor will be released:

     

    (1)           With
respect to any Guarantees by a Subsidiary of the Company, in connection with any
sale or other disposition of all or substantially all of the properties or
assets of such Guarantor (including by way of merger or consolidation) to a
Person that is not (either before or after giving effect to such transaction)
the Company or a Subsidiary of the Company, if the sale or other disposition
complies with Section 4.10 hereof;

     

    (2)           in
connection with any sale or other disposition of all of the Capital Stock of
such Guarantor to a Person that is not (either before or after giving effect to
such transaction) the Company or a Subsidiary of the Company, if the sale or
other disposition complies with Section 4.10 hereof;

     

    (3)           if
the Company designates such Guarantor to be an Unrestricted Subsidiary in
accordance with Section 4.18 hereof;

     

    (4)           with
respect to any Guarantees by a Subsidiary of the Company, if such Guarantor
ceases to Guarantee any other Indebtedness under a Credit Facility;
or

     

    (5)           upon
Legal Defeasance or Covenant Defeasance in accordance with Article 8 hereof or
satisfaction and discharge of this Indenture in accordance with Article 10
hereof.

     

    Upon
delivery by the Company to the Trustee of an Officers’ Certificate to the effect
that any of the conditions described in the foregoing clauses (1) - (5) has
occurred, the Trustee shall execute any documents reasonably requested by the
Company in order to evidence the release of any Guarantor from its obligations
under its Guarantee.  Any Guarantor not released from its obligations
under its Guarantee as provided in this Section 12.05 will remain liable for the
full amount of principal of and interest and premium, if any, on the Notes and
for the other obligations of any such Guarantor under this Indenture as provided
in this Article 12.

     

    [Signatures
on following page]

    
      
         

      

      
        83

        
          

        

      

      
         

      

    

     

    IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first
written above.

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  	 
      	
                                          ENERGY
      XXI GULF COAST, INC.

                                        
	 	 	 
	 
      	
                                          By: 

                                        	
                                           /s/ Rick Fox

                                        
	 
      	 
      	
                                          Rick
      Fox

                                        
	 
      	 
      	
                                          Chief
      Financial Officer

                                        
	 
      	 
      	 
      
	 
      	
                                          ENERGY
      XXI (BERMUDA) LIMITED

                                        
	 
      	 
      	 
      
	 
      	
                                          By:

                                        	
                                           /s/ David West
  Griffin

                                        
	 
      	 
      	
                                          David
      West Griffin

                                        
	 
      	 
      	
                                          Chief
      Financial Officer

                                        
	 
      	 
      	 
      
	 
      	
                                          ENERGY
      XXI TEXAS ONSHORE, LLC

                                        
	 
      	
                                          ENERGY
      XXI ONSHORE, LLC

                                        
	 
      	
                                          ENERGY
      XXI GOM, LLC

                                        
	 
      	
                                          ENERGY
      XXI PIPELINE, LLC

                                        
	 
      	 
      	 
      
	 
      	
                                          By:

                                        	
                                           /s/ Rick Fox

                                        
	 
      	 
      	
                                          Rick
      Fox

                                        
	 
      	 
      	
                                          Chief
      Financial Officer

                                        
	 	 
	 
      	
                                          WELLS
      FARGO BANK, NATIONAL

                                          ASSOCIATION

                                        
	 	 
	 
      	
                                          By:

                                        	
                                           /s/ Patrick T.
    Giordano

                                        
	 
      	 
      	
                                          Patrick
      T. Giordano

                                        
	 
      	 
      	
                                          Vice
      President

                                        

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    
       

      EXHIBIT
A

       

      [Face of
QIB/Reg S Note]

      
        

      

    

     

    [Insert
the Global Note Legend, if applicable pursuant to the provisions of this
Indenture]

     

    [Insert
the Private Placement Legend, if applicable pursuant to the provisions of this
Indenture]

     

    [Insert
Regulation S Temporary Global Note Legend, if applicable pursuant to the
provisions of this Indenture]

    
      
         

      

      
        A-1

        
          

        

      

      
         

      

    

     

    CUSIP/CINS
____________

     

    9.25%
Senior Notes due 2017

     

    
      	
              No.
      ___

            	
              $____________

            

    

     

    ENERGY
XXI GULF COAST, INC.

     

    promises
to pay to [              ]
or registered assigns, the principal sum of
__________________________________________________________ DOLLARS
on  December 15, 2017.

     

    Interest
Payment Dates:  June 15 and December 15

     

    Record
Dates:  June 1 and December 1

     

    Dated:  _______________,
20__

     

    
      
        
          
            	 
      	
                    ENERGY
      XXI GULF COAST, INC.

                  
	 
      	 
      	 
      
	 
      	
                    By: 

                  	 
      
	 
      	 
      	
                    Name:

                  
	 
      	 
      	
                    Title:

                  

          

        

      

    

    
      
         

      

      
        A-2

        
          

        

      

      
         

      

    

    This is
one of the Notes referred to

    in the
within-mentioned Indenture:

     

    WELLS
FARGO BANK, NATIONAL ASSOCIATION,

      as
Trustee

     

    
      
        
          	
                  By: 

                	 
      	 
      
	 
      	
                  Authorized
      Signatory

                	 
      

        

      

    

    
      
         

      

      
        A-3

        
          

        

      

      
         

      

    

    

    [Back of
Note]

    9.25%
Senior Notes due 2017

     

    Capitalized
terms used herein have the meanings assigned to them in the Indenture referred
to below unless otherwise indicated.

     

    (1)           Interest.  Energy
XXI Gulf Coast, Inc., a Delaware corporation (the “Company”), promises to pay
interest on the principal amount of this Note at a rate of 9.25% per annum, from
December 17, 2010 until maturity [and shall pay Special Interest, if any,
payable pursuant to Section 4 of the Registration Rights Agreement]1.  The Company
will pay interest [including Special Interest, if any,]2 semi-annually in arrears
on June 15 and December 15 of each year, or if any such day is not a Business
Day, on the next succeeding Business Day (each, an “Interest Payment
Date”).  Interest on the Notes will accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from the
date of issuance; provided that if there is no
existing Default in the payment of interest, and if this Note is authenticated
between a record date referred to on the face hereof (each, a “Record Date”) and the next
succeeding Interest Payment Date, interest shall accrue from such next
succeeding Interest Payment Date; provided further that the
first Interest Payment Date shall be June 15, 2011.  The Company will
pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal and premium, if any, from time to time on
demand at the interest rate then in effect to the extent lawful; it will pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest [including Special Interest,
if any,]3 (without
regard to any applicable grace periods) from time to time on demand at the same
rate to the extent lawful.  Interest will be computed on the basis of
a 360-day year of twelve 30-day months.

     

    (2)           Method of
Payment.  The Company will pay interest on the Notes (except
defaulted interest) to the Persons who are registered Holders of Notes at the
close of business on June 1 or December 1 next preceding the Interest Payment
Date, even if such Notes are canceled after such record date and on or before
such Interest Payment Date, except as provided in Section 2.12 of the Indenture
with respect to defaulted interest.  The Notes will be payable as to
principal, premium, if any, and interest at the office or agency of the Company
maintained for such purpose, or, at the option of the Company, payment of
interest may be made by check mailed to the Holders at their addresses set forth
in the register of Holders; provided that payment by wire
transfer of immediately available funds will be required with respect to
principal of and interest, and premium, if any, on all Global Notes and all
other Notes the Holders of which will have provided wire transfer instructions
to the Company or the Paying Agent.  Such payment will be in such coin
or currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts.

     

    (3)           Paying
Agent and Registrar.  Initially, Wells Fargo Bank, National
Association, the Trustee under the Indenture, will act as Paying Agent and
Registrar.  The Company may change any Paying Agent or Registrar
without notice to any Holder.  The Company or any of its Domestic
Subsidiaries may act as Paying Agent.

    

      

    
      
        1 Delete
for Exchange Note.

      

    

    
      
        2 Delete
for Exchange Note.

      

    

    
      
        3 Delete
for Exchange Note.

      

    

    
      
         

      

      
        A-4

        
          

        

      

      
         

      

    

     

    (4)           Indenture.  The
Company issued the Notes under an Indenture dated as of December 17, 2010 (the
“Indenture”) among the
Company, the Guarantors and the Trustee.  The terms of the Notes
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939, as amended.  The Notes
are subject to all such terms, and Holders are referred to the Indenture and
such Act for a statement of such terms.  To the extent any provision
of this Note conflicts with the express provisions of the Indenture, the
provisions of the Indenture shall govern and be controlling.  The
Company initially issued $750,000,000 principal amount of Notes under the
Indenture.  The Company may issue Additional Notes under the
Indenture, subject to Section 4.09 thereof.

     

    (5)           Optional
Redemption.

     

    The Notes
are subject to redemption as provided in Article 3 of the
Indenture.

     

    (6)           Mandatory
Redemption.

     

    The
Company is not required to make mandatory redemption or sinking fund payments
with respect to the Notes

     

    (7)          Repurchase
at the Option of Holder.

     

    (a)   If
there is a Change of Control, the Company will be required to make an offer (a
“Change of Control
Offer”) to each Holder to repurchase all or any part (equal to $2,000 or
an integral multiple of $1,000 in excess of $2,000) of each Holder’s Notes at a
purchase price in cash equal to 101% of the aggregate principal amount thereof
plus accrued and unpaid interest thereon to the date of settlement (the “Change of Control Purchase
Date”), subject to the rights of Holders on the relevant record date to
receive interest due on an Interest Payment Date that is on or before the Change
of Control Purchase Date (the “Change of Control
Payment”).  Within 30 days following any Change of Control or,
at the Company’s option, prior to such Change of Control but after public
announcement thereof, the Company will mail a notice to each Holder and the
Trustee setting forth the procedures governing the Change of Control Offer as
required by the Indenture.

     

    (b)   If
the Company or a Restricted Subsidiary of the Company consummates an Asset Sale,
the Company in circumstances specified in the Indenture may be required to
commence an 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 the Indenture with
respect to offers to purchase or redeem with the proceeds of sales of assets (an
“Asset Sale Offer”)
pursuant to Section 3.09 of the Indenture to purchase the maximum principal
amount of Notes and such other pari passu Indebtedness that
may be purchased out of the Excess Proceeds at an offer price in cash in an
amount equal to 100% of the principal amount thereof plus accrued and unpaid
interest thereon to the date of purchase, in accordance with the procedures set
forth in the Indenture.  Holders of Notes that are the subject of an
offer to purchase will receive an Asset Sale Offer from the Company prior to any
related purchase date as required by the Indenture.

     

    (8)           Notice of
Redemption.  Notice of redemption will be mailed at least 30
days but not more than 60 days before the redemption date to each Holder whose
Notes are to be redeemed at its registered address, except that redemption
notices may be mailed more than 60 days prior to a redemption date if the notice
is issued in connection with a defeasance of the Notes or a satisfaction or
discharge of the Indenture.  Notes in denominations larger than $2,000
may be redeemed in part but only in whole multiples of $1,000 in excess of
$2,000, unless all of the Notes held by a Holder are to be
redeemed.

    
      
         

      

      
        A-5

        
          

        

      

      
         

      

    

     

    (9)           Denominations,
Transfer, Exchange.  The Notes are in registered form without
coupons in denominations of $2,000 and integral multiples of $1,000 in excess of
$2,000.  The transfer of Notes may be registered and Notes may be
exchanged as provided in the Indenture.  The Registrar and the Trustee
may require a Holder, among other things, to furnish appropriate endorsements
and transfer documents, and the Company may require a Holder to pay any taxes
and fees required by law or permitted by the Indenture.  The Company
need not exchange or register the transfer of any Note or portion of a Note
selected for redemption, except for the unredeemed portion of any Note being
redeemed in part.  Also, the Company need not exchange or register the
transfer of any Notes for a period of 15 days before the mailing of a notice of
redemption or during the period between a record date and the next succeeding
Interest Payment Date.

     

    (10)         Persons
Deemed Owners.  The registered Holder of a Note may be treated
as its owner for all purposes.

     

    (11)         Amendment,
Supplement and Waiver.  Subject to certain exceptions, the
Indenture, the Notes or the Guarantees may be amended or supplemented with the
consent of the Holders of at least a majority in aggregate principal amount of
the then outstanding Notes, voting as a single class, and any existing Default
or Event or Default or compliance with any provision of the Indenture, the Notes
or the Guarantees may be waived with the consent of the Holders of a majority in
aggregate principal amount of the then outstanding Notes, voting as a single
class.  Without the consent of any Holder of a Note, the Indenture,
the Notes or the Guarantees may be amended or supplemented to cure any
ambiguity, defect or inconsistency and to effect certain other changes as set
forth in the Indenture.

     

    (12)         Defaults
and Remedies.  If any Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount of the then outstanding Notes may declare all the Notes to be due and
payable immediately.  Notwithstanding the foregoing, in the case of an
Event of Default arising from certain events of bankruptcy or insolvency, all
outstanding Notes will become due and payable immediately without further action
or notice.  Holders may not enforce the Indenture or the Notes except
as provided in the Indenture.  Subject to certain limitations, Holders
of a majority in aggregate principal amount of the then outstanding Notes may
direct the Trustee in its exercise of any trust or power.  The Trustee
may withhold from Holders of the Notes notice of any continuing Default or Event
of Default (except a Default or Event of Default relating to the payment of
principal or interest or premium, if any,) if it determines in good faith that
withholding notice is in their interest.  The Holders of a majority in
aggregate principal amount of the then outstanding Notes by notice to the
Trustee may, on behalf of the Holders of all of the Notes, rescind an
acceleration or waive any existing Default or Event of Default and its
consequences under the Indenture except a continuing Default or Event of Default
in the payment of interest or premium, if any, on, or the principal of, the
Notes or a Default or Event of Default in respect of a provision in the
Indenture that cannot be amended without the consent of each Holder
affected.  The Company is required to deliver to the Trustee annually
a statement regarding compliance with the Indenture, and the Company is
required, upon becoming aware of any Default or Event of Default, to deliver to
the Trustee a statement specifying such Default or Event of
Default.

     

    (13)         Trustee
Dealings with Company.  The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Company or its Affiliates, and may otherwise deal with the Company or
its Affiliates, as if it were not the Trustee.

    
      
         

      

      
        A-6

        
          

        

      

      
         

      

    

     

    (14)         No
Recourse Against Others.  No director, officer, employee,
incorporator or stockholder of the Company or any Guarantor, as such, will have
any liability for any obligations of the Company or the Guarantors under the
Notes, the Indenture or the Guarantees or for any claim based on, in respect of,
or by reason of, such obligations or their creation.  Each Holder of
Notes by accepting a Note waives and releases all such liability.  The
waiver and release are part of the consideration for issuance of the
Notes.

     

    (15)         Authentication.  This
Note will not be valid until authenticated by the manual signature of the
Trustee or an authenticating agent.

     

    (16)         Abbreviations.  Customary
abbreviations may be used in the name of a Holder or an assignee, such
as:  TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors
Act).

     

    (17)         CUSIP
Numbers.  Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes, and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders.  No
representation is made as to the accuracy of such numbers either as printed on
the Notes or as contained in any notice of redemption, and reliance may be
placed only on the other identification numbers placed thereon.

     

    (18)         GOVERNING
LAW. THE INTERNAL LAW OF THE STATE OF NEW YORK WILL GOVERN AND BE
USED TO CONSTRUE THE INDENTURE, THIS NOTE AND THE GUARANTEES.

     

    The
Company will furnish to any Holder upon written request and without charge a
copy of the Indenture.  Requests may be made to:

     

    ENERGY
XXI GULF COAST, INC.

    1021
Main

    Suite
2626

    Houston,
Texas  77002

    Attention:  Chief
Financial Officer

    
      
         

      

      
        A-7

        
          

        

      

      
         

      

    

     

    Assignment
Form

     

    To assign
this Note, fill in the form below:

     

    
      
        
          
            
              
                
                  	(I)
      or (we) assign and transfer this Note to: 	 
	 	
                          (Insert
      assignee’s legal
name)

                        

                

              

            

          

        

      

    

    
       

    

    
      
        
          
            
              
                
                  	 
      
	
                          (Insert
      assignee’s soc. sec. or tax I.D. no.)

                        
	 
      
	 
	 
      
	 
      
	 
      
	
                          (Print
      or type assignee’s name, address and zip
code)

                        

                

              

            

          

        

      

    

     

    and
irrevocably appoint                                                                                                                                          
to
transfer this Note on the books of the Company.  The agent may
substitute another to act for him.

     

    Date:  _______________

     

    
      
        
          
            	 
      	
                    Your
      Signature:

                  	 
      
	 
      	
                    (Sign
      exactly as your name appears on the face of this
  Note)

                  

          

        

      

    

    

    Signature
Guarantee*:  _________________________

    

    *           Participant
in a recognized Signature Guarantee Medallion Program (or other signature
guarantor acceptable to the Trustee).

    
      
         

      

      
        A-8

        
          

        

      

      
         

      

    

    Option
of Holder to Elect Purchase

    

    If you
want to elect to have this Note purchased by the Company pursuant to Section
4.10 or 4.15 of the Indenture, check the appropriate box below:

     

     ̈
Section
4.10                                  ̈
Section 4.15

     

    If you
want to elect to have only part of the Note purchased by the Company pursuant to
Section 4.10 or Section 4.15 of the Indenture, state the amount you elect to
have purchased:

     

    $_______________

    

    Date:  _______________

     

    
      
        
          
            
              	 
      	
                      Your
      Signature:

                    	 
      
	 
      	
                      (Sign
      exactly as your name appears on the face of this
  Note)

                    

            

          

        

      

    

    

    
      
        
          
            	 
      	
                    Tax
      Identification No.:

                  	 
      

          

        

      

    

    

    Signature
Guarantee*:  _________________________

    

    *           Participant
in a recognized Signature Guarantee Medallion Program (or other signature
guarantor acceptable to the Trustee).

    
      
         

      

      
        A-9

        
          

        

      

      
         

      

    

    Schedule
of Exchanges of Interests in the Global Note *

     

    The
following exchanges of a part of this Global Note for an interest in another
Global Note or for a Definitive Note, or exchanges of a part of another Global
Note or Definitive Note for an interest in this Global Note, have been
made:

    

    
      
        	
                Date of Exchange

              	 
      	
                Amount of decrease in

                Principal Amount 

                of 

                this Global Note

              	 
      	
                Amount of increase in

                Principal Amount 

                of 

                this Global Note

              	 
      	
                Principal Amount 

                of this Global Note

                following such

                decrease 

                (or increase)

              	 
      	
                Signature of authorized

                officer of Trustee or

                Notes Custodian

              
	 
      	
                  

              	 
      	
                  

              	 
      	
                  

              	 
      	
                  

              	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      

      

    

    

    
      	
              *

            	
              This schedule should be
      included only if the Note is issued in global
  form.

            

    

     

    
      
         

      

      
        A-10

        
          

        

      

      
         

      

    

     

    EXHIBIT
B

     

    FORM OF
CERTIFICATE OF TRANSFER

     

    ENERGY
XXI GULF COAST, INC.

    1021
Main, Suite 2626

    Houston,
TX  77002

    Attention:  Chief
Financial Officer

     

    Wells
Fargo Bank, National Association

    1445 Ross
Avenue, 2nd Floor

    MAC
T5303-022

    Dallas,
Texas 75202-2812

    Facsimile
No.:  (214) 777-4806

    Attention:  Corporate
Trust and Escrow Services

     

    
      Re:  9.25%
Senior Notes due 2017

    

     

    Reference
is hereby made to the Indenture, dated as of December 17, 2010 (the “Indenture”), among Energy XXI
Gulf Coast, Inc., as issuer (the “Company”), the Guarantors
party thereto and Wells Fargo Bank, National Association, as
trustee.  Capitalized terms used but not defined herein shall have the
meanings given to them in the Indenture.

     

    ___________________,
(the “Transferor”) owns
and proposes to transfer the Note[s] or interest in such Note[s] specified in
Annex A hereto, in the principal amount of $___________ in such Note[s] or
interests (the “Transfer”),
to  ___________________________ (the “Transferee”), as further
specified in Annex A hereto.  In connection with the Transfer, the
Transferor hereby certifies that:

     

    [CHECK
ALL THAT APPLY]

     

    1.   ̈   Check if
Transferee will take delivery of a beneficial interest in the QIB Global Note or
a Restricted Definitive Note pursuant to Rule 144A.  The Transfer is
being effected pursuant to an in accordance with Rule 144A under the Securities
Act of 1933, as amended (the “Securities Act”), and,
accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Note is being transferred to a Person that the Transferor
reasonably believes is purchasing the beneficial interest or Definitive Note for
its own account, or for one or more accounts with respect to which such Person
exercises sole investment discretion, and such Personal and each such account is
a “qualified  institutional buyer” within the meaning of Rule 144A in
a transaction meeting the requirements of Rule 144A, and such Transfer is in
compliance with any applicable blue sky securities laws of any state of the
United States.  Upon consummation of the proposed Transfer in
accordance with the terms of the Indenture, the transfer enumerated in the
Private Placement Legend printed on the QIB Global Note and/or the Restricted
Definitive Note and in the Indenture and the Securities Act.

    
      
         

      

      
        B-1

        
          

        

      

      
         

      

    

    2.   ̈  Check if
Transferee will take delivery of a beneficial interest in the Regulation
S  Temporary Global Note, the Regulation S Permanent Global Note or a
Restricted Definitive Note pursuant to Regulation S.  The
Transfer is being effected pursuant to and in accordance with Rule 903 or Rule
904 under the Securities Act and, accordingly, the Transferor hereby further
certifies that (i) the Transfer is not being made to a Person in the United
States and (x) at the time the buy order was originated, the Transferee was
outside the United States or such Transferor and any Person acting on its behalf
reasonably believed and believes that the Transferee was outside the United
States or (y) the transaction was executed in, on or through the facilities of a
designated offshore securities market and neither such Transferor nor any Person
acting on its behalf knows that the transaction was prearranged with a buyer in
the United States, (ii) no directed selling efforts have been made in
contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S
under the Securities Act, (iii) the transaction is not part of a plan or scheme
to evade the registration requirements of the Securities Act and (iv) if the
proposed transfer is being made prior to the expiration of the Restricted
Period, the transfer is not being made to a U.S. Person or for the account or
benefit of a U.S. Person.  Upon consummation of the proposed transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will be subject to the restrictions on Transfer
enumerated in the Private Placement Legend printed on the Regulation S Permanent
Global Note, the Regulation S Temporary Global Note and/or the Restricted
Definitive Note and in the Indenture and the Securities Act.

     

    3.   ̈   Check and
complete if Transferee will take delivery of a beneficial interest in a
Restricted Definitive Note pursuant to any provision of the Securities Act other
than Rule 144A or Regulation S.  The Transfer is being effected
in compliance with the transfer restrictions applicable to beneficial interests
in Restricted Global Notes and Restricted Definitive Notes and pursuant to and
in accordance with the Securities Act and any applicable blue sky securities
laws of any state of the United States, and accordingly the Transferor hereby
further certifies that (check one):

     

    (a)        ̈   such
Transfer is being effected pursuant to and in accordance with Rule 144 under the
Securities Act;

     

    or

     

    (b)        ̈   such
Transfer is being effected to the Company or a subsidiary thereof;

     

    or

     

    (c)        ̈   such
Transfer is being effected pursuant to an effective registration statement under
the Securities Act and in compliance with the prospectus delivery requirements
of the Securities Act;

     

    or

     

    (d)        ̈   such
Transfer is being effected pursuant to and in accordance with another exemption
from registration under the Securities Act and complies with all transfer
restrictions applicable thereto in the Indenture.

     

    This
certificate and the statements contained herein are made for your benefit and
the benefit of the Company.

     

    
      
        
          	 
      	 
      
	 
      	
                  [Insert
      Name of Transferor]

                

        

      

    

     

    
      
        
          	 
      	
                  By:

                	 
      
	 
      	 
      	
                  Name:

                
	 
      	 
      	
                  Title:

                

        

      

    

     

    Dated:  _______________________

    
      
         

      

      
        B-2

        
          

        

      

      
         

      

    

    ANNEX A
TO CERTIFICATE OF TRANSFER

     

    
      	
              1.

            	
              The
      Transferor owns and proposes to transfer the
  following:

            

    

     

    [CHECK
ONE OF (a) OR (b)]

     

    
      (a)          
 ̈   a
beneficial interest in the:

    

     

    
      	
            	
              (i)

            	
               ̈    QIB
      Global Note (CUSIP __________), or

            

    

     

    
      	
            	
              (ii)

            	
               ̈    Regulation
      S Global Note (CUSIP _________)

            

    

     

    
      	
              2.

            	
              After
      the Transfer the Transferee will
hold:

            

    

     

    [CHECK
ONE]

     

    
      	
            	
              (a)

            	
               ̈   a
      beneficial interest in the:

            

    

     

    
      	
            	
              (i)

            	
               ̈
      QIB Global Note (CUSIP __________),
or

            

    

     

    
      	
            	
              (ii)

            	
               ̈   Regulation
      S Global Note (CUSIP _________)

            

    

     

    in
accordance with the terms of the Indenture.

    
      
         

      

      
        B-3

        
          

        

      

      
         

      

    

     

    EXHIBIT
C

     

    FORM OF
CERTIFICATE OF EXCHANGE

     

    ENERGY
XXI GULF COAST, INC.

    1021
Main, Suite 2626

    Houston,
TX  77002

    Attention:  Chief
Financial Officer

     

    Wells
Fargo Bank, National Association

    1445 Ross
Avenue, 2nd Floor

    MAC
T5303-022

    Dallas,
Texas 75202-2812

    Facsimile
No.:  (214) 777-4806

    Attention:  Corporate
Trust and Escrow Services

     

    
      Re:  9.25%
Senior Notes due 2017

    

     

    (CUSIP
____________)

     

    Reference
is hereby made to the Indenture, dated as of December 17, 2010 (the “Indenture”), among Energy XXI
Gulf Coast, Inc., as issuer (the “Company”), the Guarantors
party thereto and Wells Fargo Bank, National Association, as
trustee.  Capitalized terms used but not defined herein shall have the
meanings given to them in the Indenture.

     

    __________________________,
(the “Owner”) owns and
proposes to exchange the Note[s] or interest in such Note[s] specified herein,
in the principal amount of $____________ in such Note[s] or interests (the
“Exchange”).  In
connection with the Exchange, the Owner hereby certifies that:

     

    1.          Exchange
of Restricted Definitive Notes or Beneficial Interests in Restricted Global
Notes for Restricted Definitive Notes or Beneficial Interests in Restricted
Global Notes

     

    (a)   ̈ Check if Exchange is from beneficial
interest in a Restricted Global Note to Restricted Definitive
Note.  In connection with the Exchange of the Owner’s
beneficial interest in a Restricted Global Note for a Restricted Definitive Note
with an equal principal amount, the Owner hereby certifies that the Restricted
Definitive Note is being acquired for the Owner’s own account without
transfer.  Upon consummation of the proposed Exchange in accordance
with the terms of the Indenture, the Restricted Definitive Note issued will
continue to be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Definitive Note and in the Indenture
and the Securities Act.

     

    (b)   ̈ Check if Exchange is from Restricted
Definitive Note to beneficial interest in a Restricted Global
Note.  In connection with the Exchange of the Owner’s
Restricted Definitive Note for a beneficial interest in the [CHECK ONE]  ̈ QIB
Global Note,  ̈
Regulation S Global Note with an equal principal amount, the Owner hereby
certifies (i) the beneficial interest is being acquired for the Owner’s own
account without transfer and (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to the Restricted Global Notes and
pursuant to and in accordance with the Securities Act, and in compliance with
any applicable blue sky securities laws of any state of the United
States.  Upon consummation of the proposed Exchange in accordance with
the terms of the Indenture, the beneficial interest issued will be subject to
the restrictions on transfer enumerated in the Private Placement Legend printed
on the relevant Restricted Global Note and in the Indenture and the Securities
Act.

    
      
         

      

      
        C-1

        
          

        

      

      
         

      

    

     

    This
certificate and the statements contained herein are made for your benefit and
the benefit of the Company.

     

    
      
        
          	 
      	 
      
	 
      	
                  [Insert
      Name of Transferor]

                

        

      

    

     

    
      
        
          	 
      	
                  By:

                	 
      
	 
      	 
      	
                  Name:

                
	 
      	 
      	
                  Title:

                

        

      

    

     

    Dated:  ______________________

    
      
         

      

      
        C-2

        
          

        

      

      
         

      

    

     

    EXHIBIT
D

     

    FORM OF
NOTATION OF GUARANTEE

     

    For value
received, each Guarantor (which term includes any successor Person under the
Indenture) has, jointly and severally, fully and unconditionally guaranteed, to
the extent set forth in the Indenture and subject to the provisions in the
Indenture dated as of December 17, 2010 (the “Indenture”) among Energy XXI
Gulf Coast, Inc. (the “Company”), the Guarantors
party thereto and Wells Fargo Bank, National Association, as trustee (the “Trustee”), (a) that the
principal of, premium, if any, and interest on, the Notes will be promptly paid
in full when due, whether at maturity, by acceleration, upon repurchase or
redemption or otherwise, and interest on overdue principal of, premium and (to
the extent permitted by law) interest on the Notes, if any, and all other
obligations of the Company to the Holders or the Trustee will be promptly paid
in full or performed, all in accordance with the terms of the Indenture and the
Notes and (b) in case of any extension of time of payment or renewal of any
Notes or any of such other obligations, that the same will be promptly paid in
full when due or performed in accordance with the terms of the extension or
renewal, whether at stated maturity, by acceleration or
otherwise.  The obligations of the Guarantors to the Holders of Notes
and to the Trustee pursuant to the Guarantee and the Indenture, and the
limitations thereon, are expressly set forth in Article 12 of the Indenture and
reference is hereby made to the Indenture for the precise terms of the
Guarantee.

     

    Capitalized
terms used but not defined herein have the meanings given to them in the
Indenture.

     

    
      
        
          
            
              
                
                  
                    	 
      	
                            Energy
      XXI (Bermuda) Limited

                          
	 
      	 
      	 
      
	 
      	
                            By:

                          	 
      
	 
      	 
      	
                            Name:

                          
	 
      	 
      	
                            Title:

                          
	 
      	
                            [Name
      of Guarantor(s)]

                          
	 
      	 
      	 
      
	 
      	
                            By:

                          	 
      
	 
      	 
      	
                            Name:

                          
	 
      	 
      	
                            Title:

                          
	 
      	
                            [Name
      of Guarantor(s)]

                          
	 
      	 
      	 
      
	 
      	
                            By:

                          	 
      
	 
      	 
      	
                            Name:

                          
	 
      	 
      	
                            Title:

                          

                  

                

              

            

          

        

      

    

    
      
         

      

      
        D-1

        
          

        

      

      
         

      

    

     

    EXHIBIT
E

     

    FORM OF
SUPPLEMENTAL INDENTURE

    TO BE
DELIVERED BY SUBSEQUENT GUARANTORS

     

    Supplemental
Indenture (this “Supplemental Indenture”),
dated as of ________________, 20__, among __________________ (the “Guaranteeing Subsidiary”), a
subsidiary of Energy XXI (or its permitted successor), a Delaware corporation
(the “Company”), the
Company, the other Guarantors (as defined in the Indenture referred to herein)
and Wells Fargo Bank, National Association, as trustee under the Indenture
referred to below (the “Trustee”).

     

    WITNESSETH

     

    WHEREAS,
the Company has heretofore executed and delivered to the Trustee an indenture
(the “Indenture”),
dated as of December 17, 2010 providing for the issuance of 9.25% Senior Notes
due 2017 (the “Notes”);

     

    WHEREAS,
the Indenture provides that under certain circumstances the Guaranteeing
Subsidiary shall execute and deliver to the Trustee a supplemental indenture
pursuant to which the Guaranteeing Subsidiary shall unconditionally guarantee
all of the Company’s Obligations under the Notes and the Indenture on the terms
and conditions set forth herein (the “Guarantee”); and

     

    WHEREAS,
pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute
and deliver this Supplemental Indenture.

     

    NOW,
THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the Guaranteeing
Subsidiary and the Trustee mutually covenant and agree for the equal and ratable
benefit of the Holders of the Notes as follows:

     

    1.          Capitalized
Terms.  Capitalized terms used herein without definition shall
have the meanings assigned to them in the Indenture.

     

    2.          Agreement
to Guarantee.  The Guaranteeing Subsidiary hereby agrees to
provide an unconditional Guarantee on the terms and subject to the conditions
set forth in the Guarantee and in the Indenture including but not limited to
Article 12 thereof, and subject to the limitations therein.

     

    3.          No
Recourse Against Others.  No director, officer, employee,
incorporator or stockholder of the Company or any Guarantor, as such, will have
any liability for any obligations of the Company or the Guarantors under the
Notes, the Indenture or the Guarantees or for any claim based on, in respect of,
or by reason of, such obligations or their creation.  Each Holder of
Notes by accepting a Note waives and releases all such liability.  The
waiver and release are part of the consideration for issuance of the
Notes.  The waiver may not be effective to waive liabilities under the
federal securities laws.

     

    4.          NEW
YORK LAW TO GOVERN.  THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN
AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE.

     

    5.          Counterparts.  The
parties may sign any number of copies of this Supplemental
Indenture.  Each signed copy shall be an original, but all of them
together represent the same agreement.  The exchange of copies of this
Supplemental Indenture and of signature pages by facsimile or portable document
format (PDF) transmission shall constitute effective execution and delivery of
this Supplemental Indenture as to the parties hereto and may be used in lieu of
the original Supplemental Indenture for all purposes.  Signature of
the parties hereto transmitted by facsimile or PDF shall be deemed to be their
original signatures for all purposes.

    
      
         

      

      
        E-1

        
          

        

      

      
         

      

    

     

    6.          Effect
of Headings.  The Section headings herein are for convenience
only and shall not affect the construction hereof.

     

    7.          The
Trustee.  The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplemental
Indenture or for or in respect of the recitals contained herein, all of which
recitals are made solely by the Guaranteeing Subsidiary and the
Company.

    
      
         

      

      
        E-2

        
          

        

      

      
         

      

    

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

     

    Dated:  _______________,
20__

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    	 
      	
                                            [Guaranteeing
      Subsidiary]

                                          
	 
      	 
      	 
      
	 
      	
                                            By:

                                          	 
      
	 
      	 
      	
                                            Name:

                                          
	 
      	 
      	
                                            Title:

                                          
	 	 
	 
      	
                                            Energy
      XXI Gulf Coast, Inc.

                                          
	 	 	 
	 
      	
                                            By:

                                          	 
      
	 
      	 
      	
                                            Name:

                                          
	 
      	 
      	
                                            Title:

                                          
	 	 
	 
      	
                                            [Existing
      Guarantors]

                                          
	 	 	 
	 
      	
                                            By:

                                          	 
      
	 
      	 
      	
                                            Name:

                                          
	 
      	 
      	
                                            Title:

                                          
	 	 
	 
      	
                                            Wells
      Fargo Bank, National Association,

                                          
	 
      	
                                             
      as Trustee

                                          
	 
      	 
      	 
      
	 
      	
                                            By:

                                          	 
      
	 
      	 
      	
                                            Authorized
      Signatory

                                          

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
        
        

      

      
        E-3

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