Document:

Unassociated Document

    

    

    
      

      

    

     

    
      

    

    

      ENERGY
        XXI GULF COAST, INC.

       AND
        EACH OF THE GUARANTORS 
        PARTY
        HERETO

    

     

    10%
      SENIOR NOTES DUE 2013

     

    
      

    

    INDENTURE

     

    Dated
      as
      of June 8, 2007

     

    
      

    

    

    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) 

            	 	
              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

            
	
              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.

              	 	
                27

              
	
                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.

              	 	
                44

              
	
                Section
                  4.06

              	 	
                Stay,
                  Extension and Usury Laws.

              	 	
                44

              
	
                Section
                  4.07

              	 	
                Restricted
                  Payments.

              	 	
                45

              
	
                Section
                  4.08

              	 	
                Dividend
                  and Other Payment Restrictions Affecting Subsidiaries.

              	 	
                47

              
	
                Section
                  4.09

              	 	
                Incurrence
                  of Indebtedness and Issuance of Preferred Stock.

              	 	
                49

              
	
                Section
                  4.10

              	 	
                Asset
                  Sales.

              	 	
                51

              

      

    

     

    
      
        
        

      

      
        i

        
          

        

      

      
        
        

      

    

     

    

    
      	
              Section
                4.11

            	 	
              Transactions
                with Affiliates

            	 	
              53

            
	
              Section
                4.12

            	 	
              Liens

            	 	
              54

            
	
              Section
                4.13

            	 	
              Business
                Activities

            	 	
              54

            
	
              Section
                4.14

            	 	
              Corporate
                Existence

            	 	
              55

            
	
              Section
                4.15

            	 	
              Offer
                to Repurchase Upon Change of Control

            	 	
              55

            
	
              Section
                4.16

            	 	
              Payments
                for Consent

            	 	
              56

            
	
              Section
                4.17

            	 	
              Additional
                Guarantees

            	 	
              57

            
	
              Section
                4.18

            	 	
              Designation
                of Restricted and Unrestricted Subsidiaries

            	 	
              57

            
	
              Section
                4.19

            	 	
              Sale
                and Leaseback Transactions

            	 	
              57

            
	 	 	 	 	 
	 	 	
              ARTICLE
                5

            	 	
               

            
	 	 	
              SUCCESSORS

            	 	
               

            
	 	 	 	 	 
	
              Section
                5.01

            	 	
              Merger,
                Consolidation, or Sale of Assets

            	 	
              58

            
	
              Section
                5.02

            	 	
              Successor
                Corporation Substituted

            	 	
              58

            
	 	 	 	 	 
	 	 	
              ARTICLE
                6

            	 	
               

            
	 	 	
              DEFAULTS
                AND REMEDIES

            	 	
               

            
	 	 	 	 	 
	
              Section
                6.01

            	 	
              Events
                of Default

            	 	
              59

            
	
              Section
                6.02

            	 	
              Acceleration

            	 	
              60

            
	
              Section
                6.03

            	 	
              Other
                Remedies

            	 	
              61

            
	
              Section
                6.04

            	 	
              Waiver
                of Past Defaults

            	 	
              61

            
	
              Section
                6.05

            	 	
              Control
                by Majority

            	 	
              61

            
	
              Section
                6.06

            	 	
              Limitation
                on Suits

            	 	
              61

            
	
              Section
                6.07

            	 	
              Rights
                of Holders of Notes to Receive Payment

            	 	
              62

            
	
              Section
                6.08

            	 	
              Collection
                Suit by Trustee

            	 	
              62

            
	
              Section
                6.09

            	 	
              Trustee
                May File Proofs of Claim

            	 	
              62

            
	
              Section
                6.10

            	 	
              Priorities

            	 	
              63

            
	
              Section
                6.11

            	 	
              Undertaking
                for Costs

            	 	
              63

            
	 	 	 	 	 
	 	 	
              ARTICLE
                7

            	 	
               

            
	 	 	
              TRUSTEE

            	 	
               

            
	 	 	 	 	 
	
              Section
                7.01

            	 	
              Duties
                of Trustee

            	 	
              63

            
	
              Section
                7.02

            	 	
              Rights
                of Trustee

            	 	
              64

            
	
              Section
                7.03

            	 	
              Individual
                Rights of Trustee

            	 	
              65

            
	
              Section
                7.04

            	 	
              Trustee’s
                Disclaimer

            	 	
              65

            
	
              Section
                7.05

            	 	
              Notice
                of Defaults

            	 	
              65

            
	
              Section
                7.06

            	 	
              Reports
                by Trustee to Holders of the Notes

            	 	
              65

            
	
              Section
                7.07

            	 	
              Compensation
                and Indemnity

            	 	
              66

            
	
              Section
                7.08

            	 	
              Replacement
                of Trustee

            	 	
              66

            
	
              Section
                7.09

            	 	
              Successor
                Trustee by Merger, etc.

            	 	
              67

            
	
              Section
                7.10

            	 	
              Eligibility;
                Disqualification

            	 	
              67

            
	
              Section
                7.11

            	 	
              Preferential
                Collection of Claims Against Company

            	 	
              68

            
	 	 	 	 	 
	 	 	
              ARTICLE
                8

            	 	
               

            
	 	 	
              LEGAL
                DEFEASANCE AND COVENANT DEFEASANCE

            	 	
               

            
	 	 	 	 	 
	
              Section
                8.01

            	 	
              Option
                to Effect Legal Defeasance or Covenant Defeasance

            	 	
              68

            
	
              Section
                8.02

            	 	
              Legal
                Defeasance and Discharge

            	 	
              68

            
	
              Section
                8.03

            	 	
              Covenant
                Defeasance

            	 	
              68

            
	
              Section
                8.04

            	 	
              Conditions
                to Legal or Covenant Defeasance

            	 	
              69

            
	
              Section
                8.05

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

            	 	
              70

            

    

     

    
      
        
        

      

      
        ii

        
          

        

      

      
        
        

      

    

     

    
      	
              Section
                8.06

            	 	
              Repayment
                to Company

            	 	
              70

            
	
              Section
                8.07

            	 	
              Reinstatement

            	 	
              71

            
	 	 	
            	 	 
	 	 	
              ARTICLE
                9

            	 	
               

            
	 	 	
              AMENDMENT,
                SUPPLEMENT AND WAIVER

            	 	
               

            
	 	 	 	 	 
	
              Section
                9.01

            	 	
              Without
                Consent of Holders of Notes

            	 	
              71

            
	
              Section
                9.02

            	 	
              With
                Consent of Holders of Notes

            	 	
              72

            
	
              Section
                9.03

            	 	
              Compliance
                with Trust Indenture Act

            	 	
              73

            
	
              Section
                9.04

            	 	
              Revocation
                and Effect of Consents

            	 	
              73

            
	
              Section
                9.05

            	 	
              Notation
                on or Exchange of Notes

            	 	
              73

            
	
              Section
                9.06

            	 	
              Trustee
                to Sign Amendments, etc.

            	 	
              73

            
	 	 	 	 	 
	 	 	
              ARTICLE
                10

            	 	
               

            
	 	 	
              SATISFACTION
                AND DISCHARGE

            	 	
               

            
	 	 	 	 	 
	
              Section
                10.01

            	 	
              Satisfaction
                and Discharge

            	 	
              74

            
	
              Section
                10.02

            	 	
              Application
                of Trust Money

            	 	
              74

            
	 	 	 	 	 
	 	 	
              ARTICLE
                11

            	 	
               

            
	 	 	
              MISCELLANEOUS

            	 	
               

            
	 	 	 	 	 
	
              Section
                11.01

            	 	
              Trust
                Indenture Act Controls

            	 	
              75

            
	
              Section
                11.02

            	 	
              Notices

            	 	
              75

            
	
              Section
                11.03

            	 	
              Communication
                by Holders of Notes with Other Holders of Notes

            	 	
              76

            
	
              Section
                11.04

            	 	
              Certificate
                and Opinion as to Conditions Precedent

            	 	
              76

            
	
              Section
                11.05

            	 	
              Statements
                Required in Certificate or Opinion

            	 	
              76

            
	
              Section
                11.06

            	 	
              Rules
                by Trustee and Agents

            	 	
              77

            
	
              Section
                11.07

            	 	
              No
                Personal Liability of Directors, Officers, Employees and
                Stockholders

            	 	
              77

            
	
              Section
                11.08

            	 	
              Governing
                Law

            	 	
              77

            
	
              Section
                11.09

            	 	
              No
                Adverse Interpretation of Other Agreements

            	 	
              77

            
	
              Section
                11.10

            	 	
              Successors

            	 	
              77

            
	
              Section
                11.11

            	 	
              Severability

            	 	
              77

            
	
              Section
                11.12

            	 	
              Counterpart
                Originals

            	 	
              77

            
	
              Section
                11.13

            	 	
              Table
                of Contents, Headings, etc.

            	 	
              78

            
	 	 	 	 	 
	 	 	
              ARTICLE
                12

            	 	
               

            
	 	 	
              GUARANTEES

            	 	
               

            
	 	 	 	 	 
	
              Section
                12.01

            	 	
              Guarantee

            	 	
              78

            
	
              Section
                12.02

            	 	
              Limitation
                on Guarantor Liability

            	 	
              79

            
	
              Section
                12.03

            	 	
              Execution
                and Delivery of Guarantee

            	 	
              79

            
	
              Section
                12.04

            	 	
              Guarantors
                May Consolidate, etc., on Certain Terms

            	 	
              79

            
	
              Section
                12.05

            	 	
              Releases

            	 	
              80

            

    

     

    EXHIBIS

    

    
      	
              Exhibit
                A

            	
              FORM
                OF NOTE

            
	
              Exhibit
                B

            	
              FORM
                OF CERTIFICATE OF TRANSFER

            
	
              Exhibit
                C

            	
              FORM
                OF CERTIFICATE OF EXCHANGE

            
	
              Exhibit
                D

            	
              FORM
                OF CERTIFICATE OF ACQUIRING INSTITUTIONAL ACCREDITED
                INVESTOR

            
	
              Exhibit
                E

            	
              FORM
                OF NOTATION OF GUARANTEE

            
	
              Exhibit
                F

            	
              FORM
                OF SUPPLEMENTAL INDENTURE

            

    

    
      
        
        

      

      
        iii

        
          

        

      

      
        
        

      

    

    

    INDENTURE
      dated as of June 8, 2007 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 
      10%
      Senior Notes due 2013 (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
      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 (i) until such time as the Company’s reserve reports
      for the year ending June 30, 2007 have been prepared by the Company’s
      independent petroleum engineers, (a) the reserve report as of June 30, 2006
      relating to the Marlin Assets prepared by Netherland Sewell & Associates,
      Inc. and the reserve report as of June 30, 2006 relating to the Castex Assets
      prepared by Miller and Lents, Ltd. and (b) the reserve report dated as of
      December 31, 2006 relating to the Pogo Assets prepared by Ryder Scott Company,
      LP, and (ii) following such time as the Company’s year-end reserve report or
      reports, as the case may be, for the year ending June 30, 2007 have been
      prepared by one or more of the Company’s independent petroleum engineers, 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) 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.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

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

     

    “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) redemption price of such Note as of June 15, 2010 (without
      regard to accrued and unpaid interest) plus (2) all required interest payments
      due on such Note through June 15, 2010, 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 or sale and leaseback transaction); 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 $2.5 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;

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (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.

     

    (8) the
      creation or perfection of a Lien (but not the sale or other disposition of
      the
      properties or assets subject to such Lien); 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:

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (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;

     

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

     

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

     

    “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);

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (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;

     

    (4) the
      first
      day on which a majority of the members of the Board of Directors of the Parent
      or the Company are not Continuing Directors; or

     

    (5) 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 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.

     

    “Commission”
      means
      the Securities and Exchange Commission.

     

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

     

    “Confidential
      Information Memorandum”
      or
“CIM”
      means
      the Company’s final Confidential Information Memorandum, dated May 24, 2007,
      regarding the issuance and sale of the Initial Notes.

     

    “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) consolidated
      interest expense of such Person and its Restricted Subsidiaries for such period,
      whether paid or accrued and whether or not capitalized (excluding any interest
      attributable to Dollar-Denominated Production Payments but including, without
      limitation, amortization of debt issuance costs 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 interest rate Hedging Obligations, to
      the
      extent that any such expense was deducted in computing such Consolidated Net
      Income; plus

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    (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) 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

     

    (5) non-cash
      items increasing such Consolidated Net Income for such period, other than items
      that were accrued in the ordinary course of business; minus (to the extent
      included in determining Consolidated Net Income):

     

    (6) 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;

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    (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 FAS 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 in connection with any
      early extinguishment of Indebtedness will be excluded; and

     

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

     

    In
      addition, notwithstanding the preceding, for the purposes of Section 4.07 only,
      there shall be excluded from Consolidated Net Income any nonrecurring charges
      relating to any premium or penalty paid, write off of deferred finance costs
      or
      other charges in connection with redeeming or retiring any Indebtedness prior
      to
      its Stated Maturity.

     

    “Continuing
      Directors”
      means,
      as of any date of determination, any member of the Board of Directors of the
      Parent or the Company, as applicable, who:

     

    (1) was
      a
      member of such Board of Directors on the Issue Date; or

     

    (2) was
      nominated for election or elected to such Board of Directors with the approval
      of a majority of the Continuing Directors who were members of such Board of
      Directors at the time of such nomination or election.

     

    “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 to be entered into as of the
      Issue Date among the Company, as borrower, the various lenders named therein,
      The Royal Bank of Scotland plc, RBS Securities Corporation, BNP Paribas and
      Harris Nesbitt Financing, Inc., 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 secured 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 secured 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.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    “Custodian”
      means
      the Trustee, as custodian with respect to the Notes in global form, or any
      successor entity thereto.

     

    “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.

     

    “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., as operator of the Euroclear system.

     

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

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    “Exchange
      Notes”
means
      Notes issued 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(a)) in existence on the Issue Date,
      until
      such amounts are repaid.

     

    “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 provided, that, for purposes of
      calculating the Fixed Charge Coverage Ratio prior to the availability of
      financial statements for the quarter ended June 30, 2007, the Fixed Charge
      Coverage Ratio shall be calculated using Consolidated Cash Flow and Fixed
      Charges for the nine months ended March 31, 2007 multiplied by 4/3. 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);

     

    (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;

     

    (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

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    (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(g)(2) hereof, which is required to be
      placed on all Global Notes issued under this Indenture.

     

    “Global
      Notes”
      means,
      individually and collectively, each of the Restricted Global Notes 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(b)(3)
      hereof.

     

    “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.

     

    
      
        
        

      

      
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    “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 and not for purposes of speculation;

     

    (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 and not for
      purposes of speculation;

     

    (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.

     

    “IAI
      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
      Institutional Accredited Investors.

     

    “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;

     

    (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

     

    
      
        
        

      

      
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    (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

     

    (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.

     

    
      
        
        

      

      
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    “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.

     

    “Institutional
      Accredited Investor”
      means an
      institution that is an “accredited investor” as defined in Rule 501(a)(1), (2),
      (3) or (7) under the Securities Act.

     

    “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 commission,
      travel 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.

     

    “Marlin
      Assets”
means
      the assets acquired by the Company pursuant to that certain Purchase and Sale
      Agreement, dated as of February 21, 2006 by and between the Borrower and Marlin
      Energy, L.L.C., a Delaware limited liability company, as amended.

     

    “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

     

    (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.

     

    
      
        
        

      

      
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    “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 3.0% 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.

     

    “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,
      minus

     

    (2) all
      current liabilities of the Company and its Restricted Subsidiaries, except
      current liabilities included in Indebtedness;

     

    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;

     

    
      
        
        

      

      
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    (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) as
      to
      which the lenders have been notified in writing that they will not have any
      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
      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. 

     

    “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.

     

    “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.

     

    “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.

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    “Parent”
      means
      Energy XXI (Bermuda) Limited, a Bermuda company, and 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:

     

    (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;

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    (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 of its Restricted Subsidiaries
      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
      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 assets other than those of the Person
      merged into or consolidated with the Company or the Restricted
      Subsidiary;

     

    (4) 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;

     

    (5) 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;

     

    (6) Liens
      existing on the Issue Date;

     

    (7) 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;

     

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

     

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

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    (10) 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;

     

    (11) 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;

     

    (12) 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;
      and

     

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

     

    “Permitted
      Parent Business” means:

     

    (1) the
      ownership of all of the Capital Stock of its existing Subsidiaries as of the
      Issue Date and any activities directly related to such ownership;

     

    (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
      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

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    (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 the appropriate
      taxing authority within 30 days of Parents’ receipt of such Tax Payments or
      refunded to the Company.

     

    “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.

     

    “Pogo
      Assets”
      means
      the assets acquired by the Company pursuant to that certain Purchase and Sale
      Agreement, dated as of April 24, 2007, by and between Energy XXI GOM, LLC,
      as
      buyer, and Pogo Producing Company, as seller, as may be amended, supplemented,
      restated or otherwise modified from time to time.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    “Private
      Placement Legend”
      means
      the legend set forth in Section 2.06(g)(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.

     

    “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.

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    “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.

     

    “SEC”
      means
      the Securities and Exchange Commission.

     

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

     

    “Senior
      Debt” means
      all
      Indebtedness of the Company or any of its Restricted Subsidiaries permitted
      to
      be incurred under the terms of this Indenture, unless the instrument under
      which
      such Indebtedness is incurred expressly provides that it is subordinate in
      right
      of payment to the Notes or any Guarantee, and all Obligations with respect
      to
      the foregoing.

     

    “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.

     

    “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 rights of
      the
      Holders of the Notes.

     

    “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 June 15, 2010;
provided,
      however,
      that if
      the period from the redemption date to June 15, 2010 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.

     

    
      
        
        

      

      
        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

            
	
              “Calculation
                Agent”

            	 	
              4.01

            
	
              “Change
                of Control Offer”

            	 	
              4.15

            
	
              “Change
                of Control Payment”

            	 	
              4.15

            
	
              “Change
                of Control Payment Date”

            	 	
              4.15

            
	
              “Covenant
                Defeasance”

            	 	
              8.03

            
	
              “DTC”

            	 	
              2.03

            
	
              “Event
                of Default”

            	 	
              6.01

            
	
              “incur”

            	 	
              4.09

            
	
              “Interest
                Accrual Period”

            	 	
              4.01

            
	
              “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

            
	
              “Restricted
                Payments”

            	 	
              4.07

            
	
              “Services”

            	 	
              4.11

            
	
              “Trustee”

            	 	
              Preamble

            
	 	 	 

    

    Section
      1.03 Incorporation
      by Reference of Trust Indenture Act.

     

    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;

     

    (3) “or”
is
      not exclusive;

     

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

     

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

     

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

     

    (7) references
      to sections of or rules under the Securities Act will be deemed to include
      substitute, replacement of 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 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 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 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 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 Custodian, at the direction of the Trustee, in accordance with
      instructions given by the Holder thereof as required by Section 2.06
      hereof.

     

    
      
        
        

      

      
        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
      authenticated by the Trustee as hereinafter provided. 

     

    Following
      the termination of the Restricted Period, 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
      provisions of the “Operating Procedures of the Euroclear System” and “Terms and
      Conditions Governing Use of Euroclear” and the “General Terms and Conditions of
      Clearstream Banking” and “Customer Handbook” of 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, upon receipt of a written order of the Company signed by two
      Officers (an “Authentication
      Order”),
      authenticate Notes for original issue that may be validly issued under this
      Indenture, including any Additional Notes. 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. 

     

    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. An authenticating agent has
      the
      same rights as an Agent to deal with Holders or an Affiliate of the
      Company.

     

    Section
      2.03 Registrar
      and Paying Agent.

     

    The
      Company will maintain an office or agency where Notes may be presented for
      registration of transfer or for exchange (“Registrar”)
      and an
      office or agency where Notes may be presented for payment (“Paying
      Agent”).
      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 Trustee will
      initially act as Paying Agent and Registrar. The Company or any of its
      Subsidiaries may act as Paying Agent or Registrar.

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

    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 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 of Notes 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:

     

    (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

     

    
      
        
        

      

      
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    (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.

     

    (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:

     

    (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

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

     

    (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;

     

    (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; and

     

    (C) if
      the
      transferee will take delivery in the form of a beneficial interest in the IAI
      Global Note, then the transferor must deliver a certificate in the form of
      Exhibit B hereto, including the certifications, certificates and Opinion of
      Counsel required by item (3) thereof, if applicable. 

     

    (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 (2)(a) thereof;

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

     

    (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 to an Institutional Accredited Investor
      in reliance on an exemption from the registration requirements of the Securities
      Act other than those listed in subparagraphs (B) or (C) above, a certificate
      to
      the effect set forth in Exhibit B hereto, including the certifications,
      certificates and Opinion of Counsel required by item (3) thereof, if
      applicable;

     

    (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,

     

    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.

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

     

    (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 an Institutional Accredited
      Investor in reliance on an exemption from the registration requirements of
      the
      Securities Act other than those listed in subparagraphs (B) through (D) of
      this
      Section 2.06, a certificate to the effect set forth in Exhibit B hereto,
      including the certifications, certificates and Opinion of Counsel required
      by
      item (3) thereof, if applicable;

     

    (F) 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

     

    (G) 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, in the case of clause (C) above, the Regulation S Global Note,
      and
      in all other cases, the IAI Global Note.

     

    (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).

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

     

    (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 (10 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,
      certificates and Opinion of Counsel required by item (3) thereof, if
      applicable.

     

    (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 subparagraph (B) of 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:

     

    “THIS
      SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
      (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR
      ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
      TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
      SUCH
      REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
      REGISTRATION. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF (1)
      REPRESENTS THAT (A) IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE
      144A UNDER THE SECURITIES ACT), (B) IT IS A NON-U.S. PURCHASER AND IS ACQUIRING
      THIS SECURITY IN AN OFFSHORE TRANSACTION WITHIN THE MEANING OF REGULATION S
      UNDER THE SECURITIES ACT, OR (B) IT IS AN INSTITUTIONAL “ACCREDITED INVESTOR”
WITHIN THE MEANING OF SUBPARAGRAPH (a)(1), (2), (3) OR (7) OF RULE 501 UNDER
      THE
      SECURITIES ACT, AND (2) AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH
      SECURITY, PRIOR TO THE DATE WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL
      ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF
      THE
      COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY),
      ONLY (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) PURSUANT TO A
      REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
      ACT, (C) TO THE EXTENT THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A,
      TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS
      DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT
      OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
      THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS
      AND SALES TO NON-U.S. PURCHASERS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN
      THE
      MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL
“ACCREDITED INVESTOR” WITHIN THE MEANING OF SUBPARAGRAPH (a)(1), (2), (3) OR (7)
      OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS
      OWN
      ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR
      INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION
      WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (F) PURSUANT TO
      ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
      ACT, SUBJECT TO THE COMPANY’S AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER,
      SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E), OR (F) TO REQUIRE THE DELIVERY
      OF
      AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY
      TO
      EACH OF THEM, AND IN EACH OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER
      IN
      THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED
      BY THE TRANSFEROR TO THE TRUSTEE OR TRANSFER AGENT.”

     

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

     

    (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(a) 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.”

     

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

     

    (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
      Trustee or by the Depositary at the direction of the Trustee 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 Trustee 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) The
      Registrar will not be required to register the transfer of or exchange of any
      Note selected for redemption in whole or in part, except the unredeemed portion
      of any Note being redeemed in part.

     

    (4) 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.

     

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

     

    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

    

     

    (A) to
      issue,
      to register the transfer of or to exchange any Notes during a period beginning
      at the opening of business 15 days before the day of any selection of Notes
      for
      redemption under Section 3.02 hereof and ending at the close of business on
      the
      day of selection;

     

    (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.

     

    (6) 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.

     

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

     

    (8) 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 Trustee or the Company and the Trustee
      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 if the Trustee’s requirements are
      met. If required by the Trustee or the Company, an indemnity bond must be
      supplied by the Holder that is sufficient in the judgment of 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(a)
      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.

     

    
      
        
        

      

      
        36

        
          

        

      

      
        
        

      

    

     

    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 the Trustee knows are so owned
      will be so disregarded.

     

    Section
      2.10 Temporary
      Notes.

     

    Until
      certificates representing 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 destroy canceled Notes (subject
      to
      the record retention requirement of the Exchange Act). Certification of the
      destruction of all canceled Notes will be delivered to the Company. 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 interest at the rate equal
      to
      2% per annum in excess of 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,
      in
      each case at the rate provided in the Notes and in Section 4.01 hereof. 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 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 $1,000
      or
      whole multiples of $1,000; 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, 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.

     

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

     

    
      
        
        

      

      
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    (1) the
      redemption date;

     

    (2) the
      redemption price;

     

    (3) If
      the
      Notes are being redeemed in part:

     

    (a) the
      Trustee shall select Notes for redemption as follows: i) if the relevant Notes
      are listed on any national securities exchange, in compliance with the
      requirements of such exchange on which the Notes are listed; or ii) on a pro
      rata basis; and in either case, not in parts of $1,000 or less;

     

    (b) the
      portion of the principal amount of such Notes to be redeemed and that, after
      the
      redemption date upon surrender of such Notes, a new Note or Notes in principal
      amount equal to the unredeemed portion will be issued upon cancellation of
      the
      original Note; the name and address of the Paying Agent;

     

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

     

    (5) that,
      unless the Company defaults in making such redemption payment, interest on
      Notes
      called for redemption ceases to accrue on and after the redemption
      date;

     

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

     

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

     

    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
      called for redemption become irrevocably due and payable on the redemption
      date
      at the redemption price. A notice of redemption may not be
      conditional.

     

    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 Trustee or with the Paying Agent 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 Trustee or the Paying Agent will promptly return
      to the Company any money deposited with the Trustee or 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.

     

    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 4.01
      hereof.

     

    
      
        
        

      

      
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    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 June 15, 2010. Beginning on
      June 15, 2010, 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 the relevant Interest Payment Date),
      if
      redeemed during the twelve-month periods beginning on June 15 of the years
      set
      forth below:

     

    
      	
              Period

            	 	
              Percentage

            	 
	
              2010

            	 	 	
              105.000

            	
              %

            
	
              2011

            	 	 	
              102.500

            	
              %

            
	
              2012
                and thereafter.

            	 	 	
              100.000

            	
              %

            

    

    

    (b) At
      any
      time and from time to time prior to June 15, 2010, 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 110% 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 the relevant Interest Payment 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.

     

    (c) At
      any
      time prior to June 15, 2010, 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 thereof 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). 

     

    
      
        
        

      

      
        40

        
          

        

      

      
        
        

      

    

     

    (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, and no additional interest will be payable to Holders who tender
      Notes pursuant to the Asset Sale Offer.

     

    (e) Upon
      the
      commencement of an Asset Sale Offer, the Company will send, by first class
      mail,
      a notice to the Trustee and 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;

     

    (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 integral multiples of $1,000 only;

     

    
      
        
        

      

      
        41

        
          

        

      

      
        
        

      

    

     

    (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 $1,000, or integral multiples
      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).

     

    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. 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.

     

    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.

     

    
      
        
        

      

      
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    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.

     

    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. Such office shall initially be at Wells Fargo Bank, National
      Association, 1445 Ross Avenue, 2nd
      Floor,
      Dallas, Texas 75202-2812, Attention: Corporate Trust
      Administration.

     

    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: 

     

    (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 

     

    
      
        
        

      

      
        43

        
          

        

      

      
        
        

      

    

     

    (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.

     

    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.

     

    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.

     

    
      
        
        

      

      
        44

        
          

        

      

      
        
        

      

    

     

    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;

     

    (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) and (10) 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 April 1, 2007 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

     

    
      
        
        

      

      
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    (B) 100%
      of
      the aggregate net cash proceeds received by the Company (including 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; 

     

    (3) the
      defeasance, redemption, repurchase, retirement or other acquisition of
      Subordinated Indebtedness of the Company or any Guarantor with the net cash
      proceeds from an 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 $2.0 million in any twelve-month period;
      

     

    
      
        
        

      

      
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    (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; and

     

    (10) other
      Restricted Payments in an aggregate amount since the Issue Date not to exceed
      $20.0 million. 

     

    (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. Not
      later than the date of making any Restricted Payment under the first paragraph
      of this covenant the Company will deliver to the Trustee an Officers’
Certificate stating that such Restricted Payment is permitted and setting forth
      the basis upon which the calculations required by this Section 4.07 were
      computed, together with a copy of any fairness opinion or appraisal required
      by
      this Indenture. 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 (10), 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

     

    
      
        
        

      

      
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    (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, replacement or refinancings are not materially more
      restrictive, taken as a whole, with respect to such dividend and other payment
      restrictions than those contained in those agreements on the 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, which encumbrance or restriction is not applicable to any Person,
      or the properties or assets of any Person, other than the Person, or the
      property or assets of the Person, so acquired, provided that, in the case of
      Indebtedness, such Indebtedness was permitted by the terms of this Indenture
      to
      be incurred;

     

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

     

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

     

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

     

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

     

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

     

    (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;

     

    
      
        
        

      

      
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    (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 Guarantor
      (other than Parent) will issue any Disqualified Stock and the Company will
      not
      permit any of its other Restricted Subsidiaries to issue any shares of preferred
      stock; provided,
      however,
      that
      the Company and any Guarantor (other than Parent) may incur Indebtedness
      (including Acquired Debt) or issue Disqualified Stock, if the Fixed Charge
      Coverage Ratio for the Company’s most recently ended four full fiscal quarters
      for which internal financial statements are available immediately preceding
      the
      date on which such additional Indebtedness is incurred or such Disqualified
      Stock is issued, would have been at least 2.5 to 1.0, determined on a pro forma
      basis (including a pro forma application of the net proceeds therefrom), as
      if
      the additional Indebtedness had been incurred or the Disqualified Stock had
      been
      issued, as the case may be, at the beginning of such four-quarter
      period.

     

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

     

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

     

    (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 $10.0 million at any time outstanding;

     

    
      
        
        

      

      
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    (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 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 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 to a Person that is not either the Company or a Restricted
      Subsidiary of the Company, 

     

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

     

    (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 other than an obligation for money borrowed);

     

    
      
        
        

      

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

     

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

     

    (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 $25.0 million.

     

    For
      purposes of determining compliance with this Section 4.09, in the event that
      an
      item of Indebtedness (including Acquired Debt) meets the criteria of more than
      one of the categories of Permitted Debt described in clauses (1) through (14)
      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;

     

    
      
        
        

      

      
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    (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. 

     

    (4) 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 novation 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:

     

    (1) to
      repay,
      redeem or repurchase Indebtedness under a Credit Facility; 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
      the 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. 

     

    
      
        
        

      

      
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    (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:

     

    (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:

     

    
      
        
        

      

      
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    (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;

     

    (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.

     

    
      
        
        

      

      
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    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 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 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.

     

    Section
      4.15 Offer
      to Repurchase Upon Change of Control. 

     

    (a) Upon
      the
      occurrence of a Change of Control, the Company will make an offer (a
“Change
      of Control Offer”)
      to each
      Holder to repurchase all or any part (equal to $1,000 or an integral multiple
      of
      $1,000) of that Holder’s Notes at a purchase price in cash 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 purchase, subject
      to
      the rights of Holders on the relevant record date to receive interest due on
      the
      relevant interest payment 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 describing the transaction or transactions that
      constitute the Change of Control 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 purchase date, which shall be no earlier than 30 days
      and
      no later than 60 days from the date such notice is mailed (the “Change
      of Control Payment Date”);
      

     

    (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 Payment 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 Payment 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 Payment 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

     

    
      
        
        

      

      
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    (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 $1,000 in principal amount or an
      integral multiple thereof.

     

    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 in Control. To the extent that the provisions
      of
      any securities laws or regulations conflict with the provisions of this Section
      4.15, 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 Payment 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;

     

    (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.

     

    The
      Paying Agent will promptly mail to each Holder of Notes properly tendered the
      Change of Control Payment for such Notes, 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 an aggregate principal amount of $1,000 or an integral
      multiple thereof. The Company will publicly announce the results of the Change
      of Control Offer on or as soon as practicable after the Change of Control
      Payment 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 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.

     

    
      
        
        

      

      
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    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, or if any Restricted
      Subsidiary that is not already a Guarantor guarantees any other Indebtedness
      of
      the Company after such date, then in either case 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.

     

    (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.

     

    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 Sections 4.09(a)
      and
      (b) hereof incurred a Lien to secure such Indebtedness 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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    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, 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; and

     

    (5) the
      Company shall have delivered to the Trustee an Officers’ Certificate and an
      Opinion of Counsel in a form satisfactory to the Trustee, each stating that
      such
      consolidation, merger or disposition and such Supplemental Indenture (if any)
      comply with this Indenture.

     

    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. 

     

    
      
        
        

      

      
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    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 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 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); 

     

    (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 Restricted Subsidiaries (or the payment of which
      is
      guaranteed by the Company or any of its 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;

     

    
      
        
        

      

      
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    (7) failure
      by the Parent, the Company or any of its Restricted Subsidiaries to pay final
      judgments entered by a court or courts of competent jurisdiction aggregating
      in
      excess of $15.0 million with respect to any amounts not covered by insurance,
      which judgments are not paid, discharged or stayed within 60 days;

     

    (8) except
      as
      permitted by this Indenture, any Guarantee 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, or any Person acting on behalf of any Guarantor,
      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:

     

    (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;
      or

     

    Section
      6.02 Acceleration.

     

    In
      the
      case of an Event of Default specified in clause (9) or (10) of Section 6.01
      hereof, with respect to the Company, any Restricted Subsidiary of the Company
      that is a Significant Subsidiary or any group of Restricted Subsidiaries of
      the
      Company that, taken together, would constitute a Significant Subsidiary, 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.
      

     

    
      
        
        

      

      
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    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 not less than 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 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); 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.

     

    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;

     

    
      
        
        

      

      
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    (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
      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; provided
      that a
      Holder shall not have the right to institute any such suit for the enforcement
      of payment if and to the extent that the institution or prosecution thereof
      or
      the entry of judgment therein would, under applicable law, result in the
      surrender, impairment, waiver or loss of the Lien of this Indenture upon any
      property subject to such Lien.

     

    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.

     

    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.

     

    
      
        
        

      

      
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    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.

     

    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:

     

    
      
        
        

      

      
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    (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.

     

    (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.

     

    
      
        
        

      

      
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    (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.

     

    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
      the
      Trustee, 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)(2). 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.

     

    
      
        
        

      

      
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    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.

     

    (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 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:

     

    
      
        
        

      

      
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    (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.

     

    (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.

     

    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).

     

    
      
        
        

      

      
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    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.

     

    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 reasonably acceptable to the Trustee 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 reasonably acceptable to the Trustee 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 has occurred and is 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);

     

    
      
        
        

      

      
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    (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;

     

    (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 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 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 Confidential Information
      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
      Guarantees in accordance with the terms of this Indenture; 

     

    (8) to
      release a Guarantee in accordance with this Indenture;

     

    
      
        
        

      

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

     

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

     

    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 7.02(b)
      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 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 (other than a Default or Event of Default
      in the payment of the principal of, premium, if any, or interest on, the Notes,
      except a payment default resulting from an acceleration that has been rescinded)
      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.

     

    (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);

     

    
      
        
        

      

      
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    (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 and waiver provisions.

     

    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 (subject to Section 7.01 hereof) will
      be
      fully protected in relying 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.

     

    
      
        
        

      

      
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    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:

     

    (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) no
      Default or Event of Default has occurred and is continuing on the date of the
      deposit (other than a Default or Event of Default resulting from the borrowing
      of funds to be applied to such deposit) and the deposit will not result in
      a
      breach or violation of, or constitute a default under, any other instrument
      to
      which the Company or any Guarantor is a party or by which the Company or any
      Guarantor is bound;

     

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

     

    
      
        
        

      

      
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    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.

     

    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 TIA §318(c), 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

    Dallas,
      Texas 75202-2812

    Facsimile
      No.: (214) 777-4806

    Attention:
      Corporate Trust Services - Relationship Manager

     

    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.

     

    
      
        
        

      

      
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    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.

     

    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;

     

    
      
        
        

      

      
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    (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.

     

    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. The waiver may not be effective
      to waive liabilities under the federal securities laws.

     

    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.

     

    
      
        
        

      

      
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    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.

     

    ARTICLE
      12

    GUARANTEES

     

    Section
      12.01 Guarantee.

     

    (a) Subject
      to this Article 12, each of the Guarantors hereby, jointly and severally,
      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, redemption or otherwise,
      and interest on the overdue principal of and interest on the Notes, if any,
      if
      lawful, and all other obligations of the Company to the Holders or the Trustee
      hereunder or thereunder will be promptly paid in full or performed, all in
      accordance with the terms hereof and thereof; and 

     

    (2) in
      case
      of any extension of time of payment or renewal of any Notes or any of such
      other
      obligations, that 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.

     

    Failing
      payment when 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 covenant
      that this Guarantee will not be discharged except by complete performance of
      the
      obligations contained in the Notes and this Indenture.

     

    (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 either the Company or the Guarantors, any amount
      paid by either 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 Guarantors 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.

     

    
      
        
        

      

      
        78

        
          

        

      

      
        
        

      

    

     

    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 such maximum amount
      and
      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 conveyance.

     

    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 E 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.

     

    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 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:

     

    
      
        
        

      

      
        79

        
          

        

      

      
        
        

      

    

     

    (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 property in any such sale
      or
      disposition or the Person formed by or surviving any such consolidation or
      merger assumes all the obligations of that Guarantor under this Indenture,
      its
      Guarantee to a supplemental indenture satisfactory to the Trustee;
      or

     

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

     

    In
      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 the 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.

     

    Section
      12.05 Releases.

     

    The
      Guarantee of a Guarantor will be released:

     

    (1) With
      respect to a Guarantor (other than Parent), in connection with any sale or
      other
      disposition of all or substantially all of the assets of that 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 Restricted
      Subsidiary of the Company, if the sale or other disposition does not violate
      Section 4.10 hereof;

     

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

     

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

     

    (4) 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.

     

    
      
        
        

      

      
        80

        
          

        

      

      
        
        

      

    

     

    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
      Guarantor under this Indenture as provided in this Article 12.

     

    [Signatures
      on following page]

    

    
      
        
          
          

        

        
          81

          
            

          

        

        
          
          

        

      

    

     

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

    
      	 	 	 
	 	ENERGY XXI GULF COAST,
              INC.
	 
 	 
 	 
 
	 	By:  	/s/
              J. Granger Anderson III
	 	
              
Name:
              J. Granger Anderson III
	 	Title: Vice President,
              Land

    

    
      	 	 	 
	 	ENERGY XXI (BERMUDA)
              LIMITED
	 
 	 
 	 
 
	 	By:  	/s/ David West Griffin
	 	
              
Name:
              David West Griffin
	 	Title: Chief Financial
              Officer

    

    
      	 	 	 
	 	
              ENERGY
                XXI TEXAS, LP

            
	 
 	 
 	 
 
	 	By:  	/s/ J. Granger Anderson III
	 	
              
Name:
              J. Granger Anderson III
	 	Title: Vice President,
              Land

    

    
      	 	 	 
	 	ENERGY
              XXI
              TEXAS GP, LLC
	 
 	 
 	 
 
	 	By:  	/s/ J. Granger Anderson III
	 	
              
Name:
              J. Granger Anderson III
	 	Title: Vice President,
              Land

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	 	 
	 	ENERGY
              XXI
              GOM, LLC
	 
 	 
 	 
 
	 	By:  	/s/ J. Granger Anderson III
	 	
              
Name:
              J. Granger Anderson III
	 	Title: Vice President,
              Land

    

    
      	 	 	 
	 	WELLS
              FARGO BANK, NATIONAL ASSOCIATION
	 
 	 
 	 
 
	 	By:  	/s/ Patrick T. Giordano
	 	
              
Name:
              Patrick T. Giordano
	 	Title: Vice President

    

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    [Face
      of
      QIB/IAI/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
      ____________

     

    10%
      Senior Notes due 2013

     

    
      	No. ___	
              $____________

            

    

     

    ENERGY
      XXI GULF COAST, INC.

     

    promises
      to pay to [              ]
      or
      registered assigns, the principal sum of
      __________________________________________________________ DOLLARS on June
      15 ,
      2013.

     

    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]

    10%
      Senior Notes due 2013

     

    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
      10%
      per annum, from June 8, 2007 until maturity. The Company will pay interest
      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 December 15, 2007. 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 a rate that is 2% per annum in excess of 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 (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, premium 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 Subsidiaries may act in any such capacity.

     

    (4)
INDENTURE.
      The
      Company issued the Notes under an Indenture dated as of June 8, 2007 (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 Indenture does not limit the aggregate principal
      amount of Notes that may be issued thereunder.

     

    
      
        
        

      

      
        A-4

        
          

        

      

      
        
        

      

    

     

    (5)
OPTIONAL
      REDEMPTION.

     

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

     

    (6)
MANDATORY
      REDEMPTION.

     

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

     

    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 $1,000 or an integral
      multiple thereof) 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 purchase, subject to the rights of Holders on the
      relevant record date to receive interest due on the relevant interest payment
      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 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 and may elect to have such Notes purchased by
      completing the form entitled “Option
      of Holder to Elect Purchase”
      attached to the Notes.

     

    (7)
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 $1,000 may be redeemed in part but only in whole
      multiples of $1,000, unless all of the Notes held by a Holder are to be
      redeemed. 

     

    (8)
DENOMINATIONS,
      TRANSFER,
      EXCHANGE.
      The
      Notes are in registered form without coupons in denominations of $2,000 and
      integral multiples of $1,000. 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 a selection of Notes to be redeemed or during
      the
      period between a record date and the corresponding Interest Payment
      Date.

     

    
      
        
        

      

      
        A-5

        
          

        

      

      
        
        

      

    

     

    (9)
PERSONS
      DEEMED
      OWNERS.
      The
      registered Holder of a Note may be treated as its owner for all
      purposes.

     

    (10)
      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.

     

    (11)
      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
      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. 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.

     

    (12)
      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.

     

    (13)
      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. 

     

    
      
        
        

      

      
        A-6

        
          

        

      

      
        
        

      

    

     

    (14)
      AUTHENTICATION.
      This
      Note will not be valid until authenticated by the manual signature of the
      Trustee or an authenticating agent.

     

    (15)
      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).

     

    (16) 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.

     

    (17) 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

          
            

          

        

        
          
          

        

      

    

     

    
      SCHEDULEOF
        EXCHANGESOF
        INTERESTSINTHE
        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 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

    Dallas,
      Texas 75202-2812

    Facsimile
      No.: (214) 777-4806

    Attention:
      Corporate Trust Services — Relationship Manager

     

    Re:
      10%
      Senior Notes due 2013

     

    Reference
      is hereby made to the Indenture, dated as of June 8, 2007 (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.

     

    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.

     

    
      
        
        

      

      
        B-1

        
          

        

      

      
        
        

      

    

     

    3.
       ̈ Check
      and complete if Transferee will take delivery of a beneficial interest in the
      IAI Global Note or 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 to an Institutional Accredited Investor and pursuant
      to an exemption from the registration requirements of the Securities Act other
      than Rule 144A, Rule 144, Rule 903 or Rule 904, and the Transferor hereby
      further certifies that it has not engaged in any general solicitation within
      the
      meaning of Regulation D under the Securities Act and the Transfer complies
      with
      the transfer restrictions applicable to beneficial interests in a Restricted
      Global Note or Restricted Definitive Notes and the requirements of the exemption
      claimed, which certification is supported by (1) a certificate executed by
      the
      Transferee in the form of Exhibit D to the Indenture and (2) an Opinion of
      Counsel provided by the Transferor or the Transferee (a copy of which the
      Transferor has attached to this certification), to the effect that such Transfer
      is in compliance with the Securities Act. 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 IAI Global
      Note and/or the Restricted Definitive Notes and in the Indenture and the
      Securities Act.

     

    This
      certificate and the statements contained herein are made for your benefit and
      the benefit of the Company.

     

    
      
        
        

      

      
        B-2

        
          

        

      

      
        
        

      

    

     

    
      	 	 	 
	 	
            
	 
 	
              [Insert
                Name of Transferor]

               

            
	 	By:  	 
	 	
              
Name:
	 	Title:
	 	 
	Dated: _______________________	 

    

     

    
      
        
          
          

        

        
          B-3

          
            

          

        

        
          
          

        

      

    

    

    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 _________), or

     

    (iii)  ̈
      IAI
      Global Note (CUSIP _________); or

     

    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 _________), or

     

    (iii)  ̈
      IAI
      Global Note (CUSIP _________); or

     

    in
      accordance with the terms of the Indenture.

    

    
      
        
          
          

        

        
          B-4

          
            

          

        

        
          
          

        

      

    

    
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

    Dallas,
      Texas 75202-2812

    Facsimile
      No.: (214) 777-4806

    Attention:
      Corporate Trust Services — Relationship Manager

     

    Re:
      10%
      Senior Notes due 2013

     

    (CUSIP
      ____________)

     

    Reference
      is hereby made to the Indenture, dated as of June 8, 2007 (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,  ̈
      IAI
      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
      CERTIFICATE FROM

    ACQUIRING
      INSTITUTIONAL ACCREDITED INVESTOR

     

    ENERGY
      XXI GULF COAST, INC.

    1021
      Main, Suite 2626

    Houston,
      TX 77002

    Attention:
      Chief Financial Officer

     

    If
      to the
      Trustee:

    Wells
      Fargo Bank, National Association

    1445
      Ross
      Avenue, 2nd
      Floor

    Dallas,
      Texas 75202-2812

    Facsimile
      No.: (214) 777-4806

    Attention:
      Corporate Trust Services — Relationship Manager

     

    Re:
      10%
      Senior Notes due 2013

     

    Reference
      is hereby made to the Indenture, dated as of June 8, 2007 (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.

     

    In
      connection with our proposed purchase of $____________ aggregate principal
      amount of:

     

    (a)
       ̈
      a
      beneficial interest in a Global Note, or

     

    (b)
       ̈
      a
      Definitive Note,

     

    we
      confirm that:

     

    1. We
      understand that any subsequent transfer of the Notes or any interest therein
      is
      subject to certain restrictions and conditions set forth in the Indenture and
      the undersigned agrees to be bound by, and not to resell, pledge or otherwise
      transfer the Notes or any interest therein except in compliance with, such
      restrictions and conditions and the Securities Act of 1933, as amended (the
      “Securities
      Act”).

     

    2. We
      understand that the offer and sale of the Notes have not been registered under
      the Securities Act, and that the Notes and any interest therein may not be
      offered or sold except as permitted in the following sentence. We agree, on
      our
      own behalf and on behalf of any accounts for which we are acting as hereinafter
      stated, that if we should sell the Notes or any interest therein, we will do
      so
      only (A) to the Company or any subsidiary thereof, (B) in accordance with Rule
      144A under the Securities Act to a “qualified institutional buyer” (as defined
      therein), (C) to an institutional “accredited investor” (as defined below) that,
      prior to such transfer, furnishes (or has furnished on its behalf by a U.S.
      broker-dealer) to you and to the Company a signed letter substantially in the
      form of this letter and an Opinion of Counsel in form reasonably acceptable
      to
      the Company to the effect that such transfer is in compliance with the
      Securities Act, (D) outside the United States in accordance with Rule 904 of
      Regulation S under the Securities Act, (E) pursuant to the provisions of Rule
      144(k) under the Securities Act or (F) pursuant to an effective registration
      statement under the Securities Act, and we further agree to provide to any
      Person purchasing the Definitive Note or beneficial interest in a Global Note
      from us in a transaction meeting the requirements of clauses (A) through (E)
      of
      this paragraph a notice advising such purchaser that resales thereof are
      restricted as stated herein.

     

    
      
        
        

      

      
        D-1

        
          

        

      

      
        
        

      

    

     

    3. We
      understand that, on any proposed resale of the Notes or beneficial interest
      therein, we will be required to furnish to you and the Company such
      certifications, legal opinions and other information as you and the Company
      may
      reasonably require to confirm that the proposed sale complies with the foregoing
      restrictions. We further understand that the Notes purchased by us will bear
      a
      legend to the foregoing effect.

     

    4. We
      are an
      institutional “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or
      (7) of Regulation D under the Securities Act) and have such knowledge and
      experience in financial and business matters as to be capable of evaluating
      the
      merits and risks of our investment in the Notes, and we and any accounts for
      which we are acting are each able to bear the economic risk of our or its
      investment.

     

    5. We
      are
      acquiring the Notes or beneficial interest therein purchased by us for our
      own
      account or for one or more accounts (each of which is an institutional
“accredited investor”) as to each of which we exercise sole investment
      discretion.

     

    You
      and
      the Company are entitled to rely upon this letter and are irrevocably authorized
      to produce this letter or a copy hereof to any interested party in any
      administrative or legal proceedings or official inquiry with respect to the
      matters covered hereby.

    
      
        	 	 	 
	 	
              
	 
 	 
 	[Insert
                Name of Accredited Investor]
	 	By:  	 
	 	
                
Name:
	 	Title:
	 	 
	Dated: _______________________	 

      

    

    

    

    
      
        
          
          

        

        
          D-2

          
            

          

        

        
          
          

        

      

    

    

    FORM
      OF
      NOTATION OF GUARANTEE

     

    For
      value
      received, each Guarantor (which term includes any successor Person under the
      Indenture) has, jointly and severally, unconditionally guaranteed, to the extent
      set forth in the Indenture and subject to the provisions in the Indenture dated
      as of June 8, 2007 (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)
      the due and punctual payment of the principal of, premium, if any, and interest
      on, the Notes, whether at maturity, by acceleration, redemption or otherwise,
      the due and punctual payment of interest on overdue principal of and interest
      on
      the Notes, if any, if lawful, and the due and punctual performance of all other
      obligations of the Company to the Holders or the Trustee all in accordance
      with
      the terms of the Indenture 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:
	 	 
	
              	
                [NAMEOF
                  GUARANTOR(S)]

              

      

    

     

    
      
        
          	 	 	 
	 	By:  	 
	 	
                  
Name:
	 	Title:
	 	 
	
                	
                  [NAMEOF
                    GUARANTOR(S)]

                

        

      

      
        
          
            	 	 	 
	 	
                  
	 	By:  	 
	 	
                    
Name:
	 	Title:
	 	 
	
                  	
                  

          

        

        

        
          
            
            

          

          
            E-1

            
              

            

          

          
            
            

          

        

      

    

    
    EXHIBIT
      F

     

    FORM
      OF
      SUPPLEMENTAL INDENTURE

    TO
      BE
      DELIVERED BY SUBSEQUENT GUARANTORS

     

    Supplemental
      Indenture
      (this
“Supplemental
      Indenture”),
      dated
      as of ________________, 2007, 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 June 8, 2007 providing for the issuance of 10% Senior Notes due 2013
      (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.

     

    6. Effect
      of
      Headings.
      The
      Section headings herein are for convenience only and shall not affect the
      construction hereof.

     

    
      
        
        

      

      
        F-1

        
          

        

      

      
        
        

      

    

     

    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.

     

    

    
      
        
          
          

        

        
          F-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
	 	 
	 	 
	
                      	
                      

              

            

          

           

          
            
              
              

            

            
              F-3Unassociated Document

    ENERGY
      XXI GULF COAST, INC.

     

    Senior
      Notes due 2013

     

    REGULATION
      D PURCHASE AGREEMENT

     

    REGULATION
      D PURCHASE AGREEMENT (the “Agreement”)
      by and
      among Energy XXI Gulf Coast, Inc., a Delaware corporation (the “Company”),
      Energy XXI (Bermuda) Limited, a Bermuda company and the ultimate parent of
      the
      Company (“Parent”),
      the
      other guarantors under the indenture referred to below (the “Subsidiary
      Guarantors,”
and
      together with Parent, the “Guarantors”)
      and
      the Regulation D Purchasers listed on the signature page hereto (the
“Regulation
      D Purchasers”).

     

    WHEREAS:

     

    A. The
      Company proposes to issue and sell $750,000,000 in aggregate principal amount
      of
      its Senior Notes due 2013 (the “Notes”).
      The
      Notes will be offered and sold (i) outside the United States (the “Regulation
      S Notes”)
      to the
      initial purchasers (the “Initial
      Purchasers”)
      in a
      transaction (the “Regulation
      S Offering”)
      exempt
      from the registration requirements of the Securities Act of 1933, as amended,
      and the rules and regulations of the Securities and Exchange Commission (the
      “Commission”)
      thereunder (collectively, the “Securities
      Act”)
      in
      reliance upon Regulation S of the Securities Act (“Regulation
      S”),
      and
      (ii) within the United States (the “Regulation
      D Notes”
and,
      together with the Regulation S Notes, constitute the “Notes”) directly to the
      Regulation D Purchasers in a private placement (the “Regulation
      D Placement”)
      without being registered under the Securities Act in reliance upon Section
      4(2)
      thereof and/or Regulation D thereunder (“Regulation
      D”).

     

    B. In
      connection with the Regulation D Placement, the Company and Guarantors
      (together, the “Company
      Parties”)
      have
      entered into a placement agency agreement (the “Placement
      Agency Agreement”)
      with
      the placement agents named therein (the “Placement
      Agents”).
      Each
      of the Placement Agents have agreed to act as initial purchasers in connection
      with the Regulation S Offering (in such capacity, each, an “Initial
      Purchaser”
and,
      collectively, the “Initial
      Purchasers”)
      subject to the terms and conditions and other provisions of a Regulation S
      Purchase Agreement (the “Regulation
      S Purchase Agreement”)
      to be
      entered into between the Initial Purchasers and the Company
      Parties.

     

    C. Prior
      to
      or concurrently with the closing of the Regulation S Offering and the Regulation
      D Placement, the Company Parties will enter into an Amended and Restated First
      Lien Credit Agreement with the Lenders party thereto and The Royal Bank of
      Scotland plc, as Administrative Agent of the Lenders (such agreement and all
      related loan documents, collectively, the “Credit
      Agreement”).
      Proceeds from the sale of the Notes, and borrowing under the Credit Agreement
      will be used to finance the acquisition (the “Pogo
      Acquisition”)
      of
      certain of the offshore Gulf of Mexico oil and natural gas properties (the
      “Pogo
      Assets”)
      of
      Pogo Producing Company (“Pogo”)
      pursuant to the Purchase and Sale Agreement (the “Purchase
      and Sale Agreement”)
      dated
      as of April 24, 2007 between Pogo and Energy XXI GOM, LLC, a wholly-owned
      subsidiary of the Company (“Buyer”),
      and
      to repay certain debt and to pay fees and expenses of these transactions as
      summarized in the Preliminary CIM (as defined below). The closing of the Pogo
      Acquisition under the Purchase and Sale Agreement will occur concurrently with
      the closing of the Regulation S Offering, the Regulation D Placement and the
      borrowing under the Credit Agreement (the “Closing
      Date”).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    D. The
      Notes
      will be issued pursuant to an indenture (the “Indenture”),
      to be
      entered into between the Company, Parent, the other Guarantors and Wells Fargo
      Bank, National Association, as trustee (the “Trustee”).
      Pursuant to the Indenture, the Guarantors shall fully and unconditionally
      guarantee, on a senior basis, to each holder of the Notes and the Trustee,
      the
      payment and performance of the Company’s obligations under the Indenture and the
      Notes (each such guarantee being referred to herein as a “Guarantee.”

     

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

     

    F. The
      Company, Jefferies & Company, Inc., as closing agent (the “Closing
      Agent”),
      and
      Wells Fargo Bank, National Association, as escrow agent, will enter into an
      escrow agreement (the “Escrow
      Agreement”)
      to
      provide for the escrow of the proceeds for the purchase of the Notes and the
      payment of such proceeds on the Closing Date pursuant to the terms of the Escrow
      Agreement and as set forth in this Agreement.

     

    G. This
      Agreement, the Credit Agreement, the Purchase and Sale Agreement, the Indenture,
      the Registration Rights Agreement and the Escrow Agreement are referred to
      herein collectively as the “Transaction
      Documents,”
and
      the transactions contemplated hereby and thereby are referred to herein
      collectively as the “Transactions.”
This
      Agreement, the Registration Rights Agreement and the Indenture are referred
      herein collectively as the “Regulation
      D Purchase Documents.”
      Nothing in this Agreement should be read to limit or otherwise modify the terms
      and other provisions of the Engagement Letter dated as of March 15, 2007 (the
      “Engagement
      Letter”)
      between Parent and Jefferies, provided
      that, in
      the event any terms of the Engagement Letter are inconsistent with or contradict
      any terms of this Agreement, this Agreement shall govern.

     

    H. The
      Company has prepared a preliminary confidential information memorandum, dated
      May 12, 2007 (the “Preliminary
      CIM”),
      relating to the Regulation D Placement and the Regulation S Offering, (ii)
      a
      pricing term sheet attached hereto as Schedule I, which includes pricing terms
      and other information with respect to the Notes (the “Pricing
      Supplement”
and,
      together with the Preliminary CIM, the “Time
      of Sale Document”)
      and
      (iii) a final confidential information memorandum dated the date hereof relating
      to the Regulation D Placement and the Regulation S Offering, as the same may
      be
      amended or supplemented (the “CIM”).
“CIM”
      means, as of any date or time referred to in this Agreement, the most recent
      information memorandum (whether the Time of Sale Document or the CIM, and any
      amendment or supplement to either such document), including exhibits and
      schedules thereto. 

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

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

     

    1. PURCHASE
      AND SALE OF REGULATION D NOTES. 

     

    (a) Purchase
      and Sale of Regulation D Notes.

     

    (i) Closing.
      Subject
      to the satisfaction (or waiver) of the conditions set forth in Sections
      5
      and
6,
      at the
      closing of the Regulation D Placement (the “Closing”),
      the
      Company shall issue and sell to the several Regulation D Purchasers, and the
      Regulation D Purchasers severally agree to purchase from the Company on the
      Closing Date (as defined below), the principal amount of Regulation D Notes
      set
      forth in the confirmations of sale delivered to the Regulation D Purchasers
      by
      or on behalf of the Company on or about the date hereof. The Closing shall
      occur
      at the offices of Vinson & Elkins LLP, First City Tower, 1001 Fannin Street,
      Suite 2500, Houston, Texas 77002-6760.

     

    (ii) Determination
      of Closing Date.
      The
      date and time of the Closing (the “Closing
      Date”)
      shall
      be 10:00 a.m., New York City time, on June 8, 2007 (or such later date as is
      mutually agreed to by the Company and the Closing Agent); provided,
      however,
      that if
      the Closing has not taken place on the Closing Date because of a failure to
      satisfy one or more of the conditions specified in Section
      5
      or
Section
      6
      hereof,
“Closing Date” shall mean 10:00 a.m., New York City time, on the first business
      day following the satisfaction (or waiver) of all such conditions after
      notification by the Company to the Closing Agent of the satisfaction (or waiver)
      of such conditions, provided
      further, that
      if
      the Closing has not occurred by June 13, 2007, each Regulation D Purchaser’s
      payment of their respective portion of the Purchase Price that was deposited
      into the escrow account will be returned to it promptly as set forth in the
      Escrow Agreement.

     

    (iii) Purchase
      Price.
      The
      purchase price for the Regulation D Notes to be purchased by the several
      Regulation D Purchasers at the Closing (in the aggregate, the “Purchase
      Price”)
      shall
      be set forth in the confirmation of sale delivered to the Regulation D
      Purchasers by or on behalf of the Company on or about the date hereof and the
      payment of the Purchase Price shall be made by the Regulation D Purchasers
      by
      wire transfer of immediately available funds in accordance with the instructions
      set forth in Section
      1(b).

     

    (b) Closing
      Mechanics.

     

    (i) Closing
      Agent to Contact Regulation D Purchasers.
      By the
      fifth business day prior to the Closing, the Closing Agent, will contact the
      Regulation D Purchasers to confirm the closing mechanics set forth
      herein.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (ii) Company
      to Deliver Executed Regulation D Notes to Closing Agent for Regulation D
      Purchasers.
      At
      least three business days prior to the Closing Date, the Company will deliver
      to
      the Closing Agent duly executed certificates representing the Regulation D
      Notes
      in the form contemplated by the Indenture, registered in the names previously
      provided by the Closing Agent to the Company, which certificates the Closing
      Agent shall hold until the Closing Agent is directed to release such
      certificates by the Company for sale to the Regulation D Purchasers as provided
      in Section
      1(b)(vi).
      

     

    (iii) Regulation
      D Purchasers to Fund Purchase Price.
      On or
      before 10:00 a.m., New York City time, on the second business day prior to
      the
      Closing Date, each of the Regulation D Purchasers will deliver their respective
      portions of the Purchase Price to the Closing Agent by wire transfer in
      immediately available funds according to the wire transfer instructions
      previously delivered to each of such Regulation D Purchasers. Regulation D
      Purchasers will receive from the Company interest on the amount they funded
      according to the prior sentence at the initial interest rate to be borne by
      the
      Regulation D Notes for the number of days such funds remain deposited into
      the
      escrow account of the Escrow Agreement (computed on the basis of a 360-day
      year), payable on the Closing Date, as set forth in the Escrow Agreement; if
      there is no Closing, Regulation D Purchasers will receive from the Company
      interest on the amount they funded according to the prior sentence based on
      the
      return on Permitted Investments (as defined in the Escrow Agreement) applicable
      to such funded amounts, payable when such funds are returned to such Regulation
      D Purchasers, as set forth in the Escrow Agreement. The delivery of funds from
      a
      Regulation D Purchaser to the Closing Agent shall be deemed to constitute
      irrevocable instructions from such Regulation D Purchaser to the Closing Agent
      that the Regulation D Purchasers’ conditions to the Closing, as set forth in
Section
      6,
      will be
      deemed to be satisfied upon receipt by the Closing Agent of the Company Closing
      Certificate (as defined below) and, in that event, such Regulation D Purchaser
      agrees that the Closing Agent may instruct the Escrow Agent to release the
      funds
      as contemplated by, and subject to, Section
      1(b)(vi).
      Funds
      received by the Closing Agent pursuant to this Section
      1
      (or
      funded by the Closing Agent in its sole discretion pursuant to Section
      1(b)(iv))
      will be
      held in trust and not as property or in the title of the Closing
      Agent.

     

    (iv) Closing
      Agent Right to Fund for Late Regulation D Purchasers.
      In the
      event that any Regulation D Purchaser shall fail to deliver all or any of its
      respective portion of the Purchase Price on or before 9:00 a.m., New York City
      time, on the Closing Date:

     

    (A) The
      Closing Agent may, in its sole discretion, but shall not be obligated to, fund
      the unfunded portion of the Purchase Price applicable to such Regulation D
      Purchaser, on behalf of such Regulation D Purchaser. The funding of any portion
      of the Purchase Price by the Closing Agent pursuant to this Section
      1(b)(iv)
      shall
      not relieve a defaulting Regulation D Purchaser of any liability that it may
      have to the Company or the Closing Agent pursuant to this Agreement or for
      the
      breach of its obligations under this Agreement.

     

    (B) In
      the
      event that the Closing Agent shall have funded any such unfunded portion as
      set
      forth in the preceding clause (A), the Closing Agent may, in its sole
      discretion, but shall not be obligated to, (I) retain, at and following the
      Closing, beneficial ownership in the Regulation D Notes as such Regulation
      D
      Purchaser would have been entitled to had it timely funded, (II) direct the
      disposition of such Regulation D Note to another party or (III) require such
      Regulation D Purchaser, upon written notice, to purchase such Registration
      D
      Notes from the Closing Agent within two business days after the Closing Date
      at
      a price equal to the initial offering price of such Regulation D Notes plus
      accrued and unpaid interest to the date of settlement.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (C) In
      the
      case of the preceding clause (B)(I) or (II), if so requested by the Closing
      Agent, (I) such Regulation D Purchaser shall take any action reasonably
      requested by the Closing Agent to effect the transfer of the applicable
      Regulation D Notes to the Closing Agent or such other party, as the case may
      be,
      and shall be deemed to have consented to the Closing Agent retaining and taking
      beneficial ownership, or directing the disposition, of such Regulation D Notes
      and (II) the Company shall transfer registration of such Regulation D Notes
      to,
      or as directed by, the Closing Agent. 

     

    (v) Distribution
      of Purchase Price Received by Closing Agent to Escrow Agent.
      Upon
      receipt of the Purchase Price from any Regulation D Purchaser, the Closing
      Agent
      will distribute such funds to the Escrow Agent for deposit into the escrow
      account to be established pursuant to the Escrow Agreement (the “Escrow
      Account”).

     

    (vi) Release
      of Purchase Price Funds; Delivery of Regulation D Notes.
      On the
      Closing Date: 

     

    (A) upon
      receipt by the Closing Agent of a certificate from Chief Financial Officer
      of
      the Company (the “Company
      Closing Certificate”)
      certifying that the conditions to the Regulation D Purchasers’ obligations to
      close as set forth in Section
      6
      have
      been satisfied and in consideration for the sale of the Regulation D Notes
      to
      Regulation D Purchasers, the Closing Agent will instruct the Escrow Agent,
      pursuant to the terms of the Escrow Agreement, to release the Purchase Price
      as
      set forth in the Escrow Agreement; and 

     

    (B) in
      consideration for the receipt of the Purchase Price deposited in the Escrow
      Account as specified above, the Company shall deliver, the Regulation D
      Purchasers the Regulation D Notes to the applicable Regulation D Purchasers
      in
      accordance with the instructions contained in Annex
      A
      hereto.

     

    2. REGULATION
      D PURCHASERS’ REPRESENTATIONS AND WARRANTIES.

     

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

     

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

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

    Such
      Regulation D Purchaser also acknowledges that it has the knowledge and
      experience in financial and business matters as are necessary in order to
      evaluate the merits and risks of an investment in the Regulation D
      Notes.

     

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

     

    (d) No
      General Solicitation or Advertising.
      The
      Regulation D Purchaser has not engaged, and will not engage, directly or
      indirectly in any form of “general solicitation” or “general advertising” in
      connection with the offering of the Regulation D Notes (as those terms are
      used
      in Regulation D under the Securities Act) or in any manner involving a public
      offering within the meaning of Section 4(2) of the Securities Act. 

     

    (e) Independent
      Evaluation.
      The
      Regulation D Purchaser confirms and agrees that (i) it has independently
      evaluated the merits of its decision to purchase the Regulation D Notes,
      (ii) it has not relied on the advice of, or any representations by,
      Jefferies, Greenwich Capital Markets, Inc., BNP Paribas Securities Corp., BMO
      Capital Markets Corp., Capital One Southcoast, Inc. and Natexis Bleichroeder
      Inc. (each, a “Placement
      Agent”
and,
      collectively, the “Placement
      Agents”)
      or any
      of their respective affiliates or any representative of the Placement Agents
      or
      their respective affiliates in making such decision, and (iii) neither the
      Placement Agents nor any of their respective representatives has any
      responsibility with respect to the completeness or accuracy of any information
      or materials furnished to the Regulation D Purchaser in connection with the
      transactions contemplated hereby, including the Preliminary CIM, Time of Sale
      Document and CIM.

     

    (f) Information.
      The
      Regulation D Purchaser acknowledges that the Company has offered the Regulation
      D Purchaser materials relating to the business, finances and operations of
      the
      Company or relating to the offer and sale of the Regulation D Notes specifically
      requested by the Regulation D Purchaser and that historical financial
      information and pro forma financial information included in the Time of Sale
      Document, including under the headings “Summary - Energy XXI Summary Historical
      and Pro Forma Financial Data,” “Summary - Pogo Properties Summary Historical
      Financial Data,” “Summary - Summary Unaudited Consolidated Pro Forma Financial
      Statements” relating to the Pogo Assets, is unaudited and furthermore, that the
      pro forma financial information has not been prepared in accordance with
      Regulation S-X of the Commission. The Regulation D Purchaser and its advisors,
      if any, have been afforded the opportunity to ask questions of the Company.
      The
      Regulation D Purchaser understands that its investment in the Regulation D
      Notes
      involves a high degree of risk and is able to bear the economic risk of such
      investment. The Regulation D Purchaser has such knowledge and experience in
      financial and business matters as to be capable of evaluating the merits and
      risks of its investment in the Regulation D Notes and has sought such
      accounting, legal and tax advice as it has considered necessary to make an
      informed investment decision with respect to its acquisition of the Regulation
      D
      Notes.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

    (j) Validity;
      Enforcement.
      This
      Agreement has been duly and validly authorized, executed and delivered on behalf
      of the Regulation D Purchaser and constitutes the legal, valid and binding
      obligation of the Regulation D Purchasers enforceable against the Regulation
      D
      Purchaser in accordance with its terms, except as such enforceability may be
      limited by general principles of equity or by applicable bankruptcy, insolvency,
      reorganization, moratorium, liquidation and other similar laws relating to,
      or
      affecting generally, the enforcement of applicable creditors’ rights and
      remedies.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

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

     

    3. REPRESENTATIONS
      AND WARRANTIES OF THE COMPANY PARTIES.

     

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

     

    (a) No
      Material Misstatement or Omission.
      The CIM
      did not, as of its date, contain any untrue statement of a material fact or
      omit
      to state a material fact necessary in order to make the statements therein,
      in
      the light of the circumstances under which they were made, not
      misleading.

     

    (b) The
      Transaction Documents.
      Each of
      the Company Parties has all necessary power and authority to execute and deliver
      the Transaction Documents to which they are a party and to perform its
      respective obligations thereunder; each of the Transaction Documents has been
      duly authorized by the Company Parties, as the case may be, and, when executed
      and delivered by the Company Parties, as the case may be, will constitute a
      valid and binding agreement of the Company Parties, as the case may be,
      enforceable against the Company Parties, as the case may be, in accordance
      with
      its terms; and the Indenture, when executed and delivered by the Company Parties
      will meet the requirements for qualification under the Trust Indenture Act
      of
      1939, as amended, and the rules and regulations of the Commission thereunder
      (collectively, the “Trust
      Indenture Act”).

     

    (c) Acquisition
      of Pogo Assets.
      After
      giving effect to the Transactions contemplated by the CIM, the Company will
      have
      acquired the Pogo Assets as contemplated by the CIM.

     

    (d) The
      Regulation D Notes.
      The
      Company has all necessary power and authority to execute, issue and deliver
      the
      Regulation D Notes; the Regulation D Notes have been duly authorized for
      issuance and sale by the Company, will be in the form contemplated by the
      Indenture and, when executed, authenticated and issued in accordance with the
      terms of the Indenture and delivered to and paid for by the Regulation D
      Purchasers pursuant to this Agreement, will constitute valid and binding
      obligations of the Company, entitled to the benefits of the Indenture,
      enforceable against the Company in accordance with their terms. The Regulation
      D
      Notes and the Guarantees will conform, in all material respects to the
      description thereof contained in the CIM.

     

    (e) The
      Guarantees.
      Each of
      the Guarantors has all necessary power and authority to execute, issue and
      deliver its respective Guarantee; the Guarantees have been duly authorized
      for
      issuance and sale by each of the Guarantors, will be in the form contemplated
      by
      the Indenture and, when executed and the Guarantees issued in accordance with
      the terms of the Indenture, will constitute valid and binding obligations of
      each of the Guarantors, entitled to the benefits of the Indenture, enforceable
      against each of the Guarantors in accordance with their terms.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

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

     

    (g) No
      Material Adverse Change.
      Except
      as otherwise disclosed in the CIM, and for the period from and after the date
      hereof and prior to the Closing Date, except as otherwise disclosed or to be
      disclosed in the CIM: (i) there has been no material adverse change, or any
      development that could reasonably be expected to result in a material adverse
      change, in the condition, financial or otherwise, or in the earnings, business
      or operations, whether or not arising from transactions in the ordinary course
      of business, of the Company and its subsidiaries, considered as one entity,
      Parent or the Pogo Assets (any such change is called a “Material
      Adverse Change”);
      (ii)
      Parent, or the Company and its subsidiaries, considered as one entity, have
      not
      incurred any material liability or obligation (including any off-balance sheet
      obligation), indirect, direct or contingent, not in the ordinary course of
      business nor entered into any material transaction or agreement not in the
      ordinary course of business; (iii) there has been no dividend or distribution
      of
      any kind declared, paid or made by the Company or Parent, except for dividends
      paid to the Company or other subsidiaries, any of the Company’s subsidiaries on
      any class of capital stock or repurchase or redemption by the Company or Parent
      or any of its subsidiaries of any class of capital stock; and (iv) there has
      not
      occurred any downgrading from the Caa2 rating by Moody’s Investors Service, Inc.
      and the CCC rating by Standard & Poor’s Rating Services accorded to any
      securities of the Parent of the Company, nor has any notice been given of any
      intended or potential downgrading or of any review for a possible change that
      does not indicate the direction of the possible change, in the rating accorded
      any securities of the Parent or the Company or any of its subsidiaries by any
      “nationally recognized statistical rating organization” (as such term is defined
      for purposes of Rule 436(g)(2) under the Securities Act).

     

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

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (i) Independent
      Accountants.
      (i)
      UHY, LLP, who have expressed their opinion with respect to the financial
      statements of the Company and, the carve-out financial statements for Castex
      Energy, Inc. (which, in each case, includes the related notes thereto) included
      in the CIM and (ii) Grant Thornton LLP, who have expressed their opinion with
      respect to the financial statements of Marlin Energy Offshore L.L.C., Marlin
      Texas GP, L.L.C. and Marlin Texas L.L.C. (which term includes the related notes
      thereto) to be included in the CIM, are each (i) independent public or certified
      public accountants as required by the Securities Exchange Act of 1934 as amended
      (the “Exchange
      Act”),
      (ii)
      in compliance with the applicable requirements relating to the qualification
      of
      accountants under Rule 2-01 of Regulation S-X and (iii) a registered public
      accounting firm as defined by the Public Company Accounting Oversight Board
      whose registration has not been suspended or revoked and who has not requested
      such registration to be withdrawn.

     

    (j) Preparation
      of the Financial Statements.
      As of
      the date hereof, the financial statements contained in the Preliminary CIM
      and
      the Time of Sale Document and to be contained in the CIM, present fairly in
      all
      material respects the consolidated financial position of (i) the Company and
      its
      subsidiaries, (ii) Marlin Energy Offshore L.L.C., Marlin Texas GP L.L.C., and
      Marlin Texas L.L.C., (iii) the assets acquired from Castex Energy, Inc., and
      (iv) the Pogo Assets, in each case, as of and at the dates indicated and the
      results of each of their respective operations and cash flows for the periods
      specified. All such financial statements have been prepared in conformity in
      all
      material respects with generally accepted accounting principles applied on
      a
      consistent basis throughout the periods involved, except as contemplated by
      the
      CIM. As of the date hereof, the financial data set forth in the CIM, and the
      financial data set forth or to be set forth in the CIM will as of its date,
      fairly present the information set forth therein on a basis consistent with
      that
      of the audited and unaudited financial statements contained in the CIM.

     

    (k) Pro
      Forma Financial Information.
      The pro
      forma financial information of the Company and its subsidiaries and the related
      notes thereto included under the captions Summary - Energy XXI Summary
      Historical and Pro Forma Financial Data,” “Summary - Summary Unaudited
      Consolidated Pro Forma Financial Statements” and “Capitalization” under the
      column “As Adjusted” and elsewhere in the CIM, as of its date, presented fairly
      the information contained therein, and the assumptions used in the preparation
      thereof are reasonable and the adjustments used therein are appropriate to
      give
      effect to the Transactions and circumstances referred to therein. 

     

    (l) Engineer
      Reports.
      The
      Company has heretofore delivered to the Placement Agents true, correct and
      complete copies of the engineering reports of (i) Netherland, Sewell &
Associates, (ii) Miller & Lents, Ltd., and (iii) Ryder Scott
      Company LP (collectively, the “Engineer
      Reports”).
      There
      have been no material adverse developments concerning the matters reported
      in
      such Engineering Reports since their respective dates.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (m) Incorporation
      and Good Standing of the Company Parties.
      Each of
      the Company Parties has been duly incorporated or organized and is validly
      existing as a corporation, partnership or limited liability company, as
      applicable, in good standing under the laws of the jurisdiction of its
      incorporation or organization and has the power and authority (corporate or
      other) to own, lease and operate its properties and to conduct its business
      as
      described in the CIM as of its date, and to enter into and perform its
      obligations under each of the Transaction Documents to which it is a party.
      Each
      of the Company Parties is duly qualified as a foreign corporation, partnership
      or limited liability company, as applicable, to transact business and is in
      good
      standing in each jurisdiction in which such qualification is required, whether
      by reason of the ownership or leasing of property or the conduct of business,
      except where the failure to be so qualified would not, individually or in the
      aggregate, have a material adverse effect on the financial position,
      stockholders’ equity, results of operations or business of the Company, Parent
      or the Pogo Assets (a “Material
      Adverse Effect”).
      All
      of the issued and outstanding capital stock or other equity or ownership
      interest of each of the Subsidiary Guarantors has been duly authorized and
      validly issued, is fully paid and nonassessable and is owned by the Company,
      directly or through subsidiaries, free and clear of any security interest,
      mortgage, pledge, lien, charge, encumbrance or adverse claim, except as
      disclosed in the CIM. Parent does not, directly or indirectly, own any
      securities of any entity other than the Energy XXI (US Holdings) Limited, Energy
      XXI USA, Inc., the Company and its subsidiaries. As of the date hereof, the
      Company does not own or control, and as of the Closing Date, the Company will
      not own or control, directly or indirectly, any corporation, association or
      other entity other than (i) the subsidiaries listed on Annex
      B
      hereto
      and (ii) such other entities omitted from Annex
      B
      hereto,
      which, when such omitted entities are considered in the aggregate as a single
      subsidiary, would not constitute a “significant subsidiary” within the meaning
      of Rule 1-02(w) of Regulation S-X.

     

    (n) Capitalization
      and Other Capital Stock Matters.
      As of
      the date hereof, the capitalization of the Company and its subsidiaries
      presented on a consolidated basis in the CIM under the caption “Capitalization”
under the column “Actual” is a fair summary of such capitalization in all
      material respects.

     

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

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    (r) Intellectual
      Property Rights.
      Except
      as otherwise disclosed in the CIM, the Company Parties own or possess, and
      as of
      the closing of the Transaction will own and possess, sufficient trademarks,
      service marks, trade names, patents, patent rights, copyrights, domain names,
      licenses, approvals, trade secrets, inventions, know-how (including unpatented
      and/or unpatentable proprietary or confidential information, systems or
      procedures), licenses and other similar rights (collectively, “Intellectual
      Property Rights”)
      reasonably necessary to conduct their businesses as now conducted and as to
      be
      conducted as described in the CIM, except where the failure to own or possess
      such Intellectual Property Rights would not have a Material Adverse
      Effect.

     

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

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

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

     

    (u) Gas
      Imbalances; Prepayments.
      On a
      net basis there are no gas imbalances, take-or-pay or other prepayments that
      would require the Company or any of its subsidiaries to deliver Hydrocarbons
      produced from the Oil and Gas Properties at some future time without then or
      thereafter receiving full payment therefor exceeding one-half bcf of gas (on
      an
      mcf equivalent basis) in the aggregate, other than as disclosed in the CIM
      or as
      would not result in a Material Adverse Effect.

     

    (v) Tax
      Law Compliance.
      Except
      as disclosed in the CIM, the Company Parties have filed all necessary federal
      and state income and franchise tax returns and have paid all taxes required
      to
      be paid by any of them and, if due and payable, any related or similar
      assessment, fine or penalty levied against any of them except as may be being
      contested in good faith and by appropriate proceedings, except as would not
      result in a Material Adverse Effect. The Company has made adequate charges,
      accruals and reserves in the applicable financial statements referred to in
      Sections
      3(j)
      above in
      respect of all federal and state and income and franchise taxes for all periods
      as to which the tax liability of the Company or any of its subsidiaries has
      not
      been finally determined, other than as disclosed in the CIM or as would not
      result in a Material Adverse Effect.

     

    (w) Company’s
      Accounting System.
      The
      Company makes and keeps accurate books and records and maintains a system of
      accounting controls sufficient to provide reasonable assurances that (i)
      transactions are executed in accordance with management’s general or specific
      authorization; (ii) transactions are recorded as necessary to permit preparation
      of financial statements in conformity with generally accepted accounting
      principles as applied in the United States and to maintain accountability for
      assets; (iii) access to assets is permitted only in accordance with management’s
      general or specific authorization; and (iv) the recorded accountability for
      assets is compared with existing assets at reasonable intervals and appropriate
      action is taken with respect to any differences in each case, other than as
      disclosed in the CIM or as would not result in a Material Adverse
      Effect.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    (x) Insurance.
      Each of
      the Company Parties is insured by recognized, financially sound and reputable
      institutions with policies in such amounts and with such deductibles and
      covering such risks as are generally deemed adequate and customary for their
      businesses including, but not limited to, policies covering real and personal
      property owned or leased by the Company Parties against theft, damage,
      destruction, acts of vandalism, earthquakes and hurricanes, other than as
      disclosed in the CIM or as would not result in a Material Adverse Effect. The
      Company has no reason to believe that it or any Guarantor will not be able
      (i)
      to renew its existing insurance coverage as and when such policies expire or
      (ii) to obtain comparable coverage from similar institutions as may be necessary
      or appropriate to conduct its business as now conducted and at a cost that
      would
      not result in a Material Adverse Change. Except as described in the CIM and
      except as would not result in a Material Adverse Effect, none of the Company
      Parties has been denied any insurance coverage which it has sought or for which
      it has applied.

     

    (y) No
      Unlawful Contributions or Other Payments.
      Neither
      the Company Parties nor, to the best of the Company’s knowledge, any employee or
      agent of the Company Parties, has made any contribution or other payment to
      any
      official of, or candidate for, any federal, state or foreign office in violation
      of any law.

     

    (z) Disclosure
      Controls and Procedures; Deficiencies in or Changes to Internal Control Over
      Financial Reporting.
      Parent
      has established and maintains disclosure controls and procedures (as defined
      in
      Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as
      amended), which (i) are designed to ensure that material information relating
      to
      the Parent, including its consolidated subsidiaries, is made known to the
      Parent’s principal executive officer and its principal financial officer by
      others within those entities and are effective in all material respects to
      perform the functions for which they were established. Based on the most recent
      evaluation of its disclosure controls and procedures, Parent is not aware of
      (i)
      any significant deficiencies or material weaknesses in the design or operation
      of internal control over financial reporting which are reasonably likely to
      adversely affect its ability to record, process, summarize and report financial
      information or (ii) any fraud, whether or not material, that involves management
      or other employees who have a significant role in Parent’s internal control over
      financial reporting. Parent is not aware of any change in its internal control
      over financial reporting that has occurred during its most recent fiscal quarter
      that has materially affected, or is reasonably likely to materially affect,
      its
      internal control over financial reporting.

     

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

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    (dd) Brokers.
      Except
      for the Placement Agents, there is no broker, finder or other party that is
      entitled to receive from the Company any brokerage or finder’s fee or other fee
      or commission as a result of the Regulation D Placement or the transactions
      contemplated thereby.

     

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

     

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

     

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

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    (hh) No
      General Solicitation.
      To the
      knowledge of the Company, none of the Company Parties or any of their respective
      Affiliates have engaged, or will engage, directly or indirectly in any form
      of
“general solicitation” or “general advertising” in connection with the offering
      of the Regulation D Notes (as those terms are used in Regulation D under the
      Securities Act) or in any manner involving a public offering within the meaning
      of Section 4(2) of the Securities Act. To the knowledge of the Company, none
      of
      the Company Parties have entered, and will enter, into any arrangement or
      agreement with respect to the distribution of the Regulation D Notes, except
      for
      this Agreement, the Placement Agency Agreement, the Indenture, the Escrow
      Agreement, the Engagement Letter and the Registration Rights Agreement, and
      the
      Company agrees not to enter into any such arrangement or agreement.

     

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

     

    The
      Company acknowledges that the Placement Agents and, for purposes of the opinion
      to be delivered pursuant to Section
      6
      hereof,
      counsel to the Company, will rely upon the accuracy and truthfulness of the
      foregoing representations and hereby consents to such reliance.

     

    4. COVENANTS.

     

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

     

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

     

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

     

    (d) Fees
      and Expenses.
      Except
      as otherwise set forth in the Regulation D Documents, each party to this
      Agreement shall bear its own expenses in connection with the sale of the
      Regulation D Notes to the Regulation D Purchasers.

     

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

     

    
      
        
        

      

      
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    (f) Withholding
      Taxes.
      The
      Regulation D Purchasers shall deliver to the Company a properly completed and
      duly executed applicable Internal Revenue Service Form W-8 or W-9 that
      establishes a complete exemption from United States withholding tax. The
      Regulation D Purchasers will provide replacement forms on the obsolescence
      of
      such forms or inaccuracy of any information thereon.

     

    5. CONDITIONS
      TO THE COMPANY’S OBLIGATION TO SELL.

     

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

     

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

     

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

     

    (c) At
      least
      $750.0 million in aggregate principal amount of Notes shall have been sold
      by
      the Company to the Regulation D Purchasers and the Initial Purchasers and an
      amount shall have been borrowed by the Company under the Credit Agreement in
      an
      amount sufficient to repay all outstanding borrowings under the Amended and
      Restated Second Lien Credit Agreement, dated as of July 28, 2006 among the
      Company, various lenders named therein, BNP Paribas, and RBS Securities
      Corporation (the “Second
      Lien Facility”).

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

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

     

    6. CONDITIONS
      TO THE REGULATION D PURCHASERS’ OBLIGATION TO PURCHASE.

     

    The
      several obligations of the Regulation D Purchasers hereunder to purchase the
      Regulation D Notes at the Closing are subject to the satisfaction, at or before
      the Closing Date, of each of the following conditions, provided
      that (a)
      these conditions are for the Regulation D Purchasers’ sole respective benefit
      and may be waived by the Regulation D Purchasers at any time in their sole
      discretion (each with respect to itself only) by providing the Company with
      prior written notice thereof and (b) the Regulation D Purchasers acknowledge
      that their respective portions of the Purchase Price may be released from the
      Escrow Account pursuant to the terms of the Escrow Agreement upon receipt by
      the
      Closing Agent of the Company Closing Certificate as set forth in Section
      1(b):

     

    (a) Each
      of
      the Company Parties shall have executed and delivered, or caused to be
      delivered, to the Regulation D Purchasers or the Closing Agent (i) each of
      the Transaction Documents to which it is a party and (ii) the Regulation D
      Notes
      being purchased by the Regulation D Purchasers at the Closing pursuant to this
      Agreement, in each case in form and substance reasonably satisfactory to the
      Regulation D Purchasers or their agents.

     

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

     

    (c) At
      least
      $750.0 million in aggregate principal amount of Notes shall have been sold
      by
      the Company to the Regulation D Purchasers and the Initial Purchasers and an
      amount shall have been borrowed by the Company under the Credit Agreement in
      an
      amount sufficient to repay all outstanding borrowings under the Second Lien
      Facility.

     

    (d) The
      Regulation D Notes shall have been designated for trading on PORTAL, to the
      extent so eligible.

     

    (e) On
      the
      Closing Date, the Regulation D Purchasers or the Closing Agent (on behalf of
      the
      Regulation D Purchasers) shall have received the opinions of Vinson & Elkins
      LLP, U.S. counsel for Parent and the Company, and Appleby Hunter Bailhache,
      Bermuda counsel for Parent, in each case dated as of the Closing Date,
      substantially to the effect set forth on Annex
      C.

     

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

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

    7. TERMINATION.

     

    In
      the
      event that the Closing shall not have occurred due to the failure of the Company
      Parties or the Regulation D Purchasers to satisfy the conditions set forth
      in
Sections
      5
      and
6
      above
      (and the nonbreaching party’s failure to waive such unsatisfied condition(s)),
      the nonbreaching party shall have the option to terminate this Agreement with
      respect to such breaching party at the close of business on the third business
      day following the date previously scheduled to be the Closing Date subject
      to
Section
      1(a)(ii).

     

    8. INDEMNIFICATION.
      

     

    (i) In
      consideration of the Regulation D Purchasers’ execution and delivery of the
      Regulation D Purchase Documents and the issuance of the Regulation D Notes
      under
      the Indenture, and acquiring the Regulation D Notes hereunder and in addition
      to
      all of the other obligations of the Company under this Agreement, the Company,
      shall defend, protect, indemnify and hold harmless the Regulation D Purchasers
      and the Regulation D Purchasers’ stockholders, partners, members, officers,
      directors, employees and direct or indirect investors and any of the foregoing
      Persons’ agents or other representatives, including, without limitation, those
      retained in connection with the transactions contemplated by this Agreement
      (each, an “Indemnitee”
and
      collectively, the “Indemnitees”),
      as
      incurred, from and against any and all actions, causes of action, suits, claims,
      losses, costs, penalties, fees, liabilities and damages, and expenses in
      connection therewith (irrespective of whether any such Indemnitee is a party
      to
      the action for which indemnification hereunder is sought), and including
      reasonable attorneys’ fees and disbursements (the “Indemnified
      Liabilities”),
      incurred by any Indemnitee as a result of, or arising out of, or relating to
      any
      misrepresentation or breach of any representation or warranty made by the
      Company in the Note Purchase Documents or any other certificate, instrument
      or
      document contemplated hereby or thereby. To the extent that the foregoing
      undertaking by each of the Parent and the Company may be unenforceable for
      any
      reason, each of the Parent and the Company shall make the maximum contribution
      to the payment and satisfaction of each of the Indemnified Liabilities which
      is
      permissible under applicable law. 

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

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

     

    (v) Notwithstanding
      anything to the contrary herein, the rights and remedies provided in this
Section
      8
      are the
      sole rights with respect to the transactions contemplated by this Agreement
      and
      no party hereto shall make any other claim for costs, damages of expenses
      (including fees and expenses of attorneys, consultants, experts or other
      representatives) to any fine of or penalty on or any liability of any other
      nature or otherwise, under, arising out of or relating to this Agreement, or
      the
      transactions contemplated hereby, whether based on contract, tort, strict
      liability, other laws or otherwise.

     

    (vi) Notwithstanding
      anything to the contrary herein, the provisions of this Section
      8
      are
      intended solely for the benefit of the Regulation D Purchasers and not for
      the
      benefit of, nor may any provision hereby be enforced by, any other
      Person.

     

    (vii) No
      indemnification will or may be sought under this Section
      8,
      by any
      Person who would have been entitled to indemnification under this Section
      8
      two
      years after the date of this Agreement.

     

    9. MISCELLANEOUS.

     

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

     

    If
      to the
      Company:

     

    Energy
      XXI Gulf Coast, Inc.

    Suite
      2626

    1021
      Main

    Houston,
      Texas 77002

    Facsimile:
      713-351-3300

    Attn:
      David West Griffin, Director

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    Copy
      to:

     

    Vinson
      & Elkins LLP

    First
      City Tower

    1001
      Fannin Street

    Suite
      2500

    Houston,
      Texas 77002-6760

    Facsimile:
      713-758-2346

    Attn:
      T.
      Mark Kelly, Esq.

     

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

     

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

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

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

     

    (d) Survival.
      Unless
      this Agreement is terminated under Section
      7,
      the
      representations and warranties of the parties hereto contained in Sections
      2
      and
3,
      respectively, and the agreements and covenants set forth in Sections
      4
      and
8
      shall
      survive the Closing.

     

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

     

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

     

    (g) Entire
      Agreement.
      This
      Agreement and the Escrow Agreement constitutes the entire agreement of the
      parties to this Agreement and supersedes all prior written or oral and all
      contemporaneous oral agreements, understandings and negotiations with respect
      to
      the subject matter hereof.

     

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

     

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

     

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

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    (k) No
      Third Party Beneficiaries.
      This
      Agreement is intended for the benefit of the parties hereto and their respective
      permitted successors and assigns, and is not for the benefit of, nor may any
      provision hereof be enforced by, any other Person; provided,
      however,
      that
      each of the Placement Agents may rely upon Sections 1,
      2,
      3,
      and
4
      hereof
      as if such representations, warranties, agreements and covenants, as applicable,
      were made directly to the Placement Agents. The parties further agree that
      the
      Placement Agents may rely on or, if the Placement Agents so requests, be
      specifically named as an addressee of, the legal opinions to be delivered
      pursuant to Section
      6(e)
      of this
      Agreement.

     

    (l) Limitation
      on Duties of Closing Agent and Placement Agents; Exculpation.
      Each
      party hereto agrees for the express benefit of each of the Closing Agent and
      the
      Placement Agents, their respective affiliates and their respective
      representatives that:

     

    (i) Neither
      the Closing Agent, nor any of its respective affiliates or any of their
      representatives has any duties or obligations other than those specifically
      set
      forth herein.

     

    (ii) None
      of
      the Closing Agent, the Placement Agents nor any of their respective affiliates
      or respective representatives (1) shall be liable for any improper payment
      made
      in accordance with the information provided by the Company; (2) makes any
      representation or warranty, or has any responsibilities as to the validity,
      accuracy, value or genuineness of any information, certificates or documentation
      delivered by or on behalf of the Company pursuant to this Agreement, the
      Placement Agency Agreement or the other Transaction Documents or in connection
      with any of the transactions contemplated hereby or thereby, including any
      information in the Preliminary CIM or the CIM or (3) shall be liable (x) for
      any
      action taken, suffered or omitted by any of them in good faith and reasonably
      believed to be authorized or within the discretion or rights or powers conferred
      upon it by this Agreement, the Placement Agency Agreement or any other
      Transaction Document or (y) for anything that any of them may do or refrain
      from
      doing in connection with this Agreement, the Placement Agency Agreement or
      any
      other Transaction Document, except for such party’s own gross negligence,
      willful misconduct or bad faith. 

     

    (iii) Each
      of
      the Closing Agent, the Placement Agents, their respective affiliates and their
      respective representatives shall be entitled to (1) rely on, and shall be
      protected in acting upon, any certificate, instrument, opinion, notice, letter
      or any other document or security delivered to any of them by or on behalf
      of
      the Company, and (2) be indemnified by the Company for acting as Placement
      Agent
      and Closing Agent, respectively, hereunder pursuant the indemnification
      provisions set forth in the Placement Agency Agreement, which hereby are
      incorporated by reference herein.

     

    [SIGNATURE
      PAGE FOLLOWS]

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, the parties hereto have caused their respective signature
      page
      to this Regulation D Purchase Agreement to be duly executed as
      of          , 2007.

    
      	 	 	 
	 	ENERGY
              XXI
              GULF COAST, INC.
	 
 	 
 	 
 
	
            	By:  	/s/ J. Granger Anderson III
	 	
              

              Name:
                J. Granger Anderson III

              Title:
                Vice President, Land

            
	 	
            

    

    
      	 	 	 
	 	ENERGY XXI (BERMUDA)
              LIMITED
	 
 	 
 	 
 
	
            	By:  	/s/ David West Griffin
	 	
              

              Name:
                David West Griffin

              Title:
                Chief Financial Officer

            
	 	 

    

    
      	 	 	 
	 	ENERGY
              XXI
              TEXAS, LP
	 
 	 
 	 
 
	
            	By:  	/s/ J. Granger Anderson III
	 	
              

              Name:
                J. Granger Anderson III

              Title:
                Vice President, Land

            
	 	
            

    

    
      	 	 	 
	 	ENERGY
              XXI
              TEXAS GP, LLC
	 
 	 
 	 
 
	
            	By:  	/s/ J. Granger Anderson III
	 	
              

              Name:
                J. Granger Anderson III

              Title:
                Vice President, Land

            
	 	
            

    

    
      	 	 	 
	 	ENERGY
              XXI
              GOM, LLC
	 
 	 
 	 
 
	
            	By:  	/s/ J. Granger Anderson III
	 	
              

              Name:
                J. Granger Anderson III

              Title:
                Vice President, Land

            

    

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	 	 
	 	PURCHASER
	 
 	 
 	 
 
	 	
              
Insert
              name of Purchaser
	 	 
	
            	By:  	
            
	 	 	
              

              Name:

              Title:

            
	 	 	 
	 	
              Address: 

              
                

              

              
                

              

              Telephone:

              
                

              

              Fax: 

              
                
 

            

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Annex
      A

     

    Registration
      Information

     

    Legal
      Name Of Regulation D Purchaser:
      ______________________________________________________________

     

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

    (if
      special denominations required, please note)

     

    Address
      Of Regulation D Purchaser:
      _________________________________________________________________ 

     

    
      
        	 	Attention:	_________________________
	
                Telephone
                  Number: 
                  Fax
                    Number: 

                   

                

              	
                __________________________________

                
                  __________________________________

                  
                    __________________________________

                     

                  

                

              

      

    

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

     

    
      
        
          	
                  Tax
                    I.D. Number:

                	__________________________________

        

      

    

     

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

     

    Person
      To
      Receive Copies of Regulation D Purchase Documents 

     

    
      
        
          	
                  Name:

                  
                    Telephone
                      Number:

                    
                      Email:

                    

                  

                	
                  __________________________________

                  __________________________________

                  
                    __________________________________

                  

                

        

      

    

     

    Operations
      Contacts

    
      
        	
                Primary:

                
                  Telephone
                    Number: 

                  
                    Email:

                    
                      Secondary:

                      
                        Telephone
                          Number:  

                        
                          Email:

                        

                      

                    

                  

                

              	
                __________________________________

                
                  __________________________________

                  
                    __________________________________

                    
                      __________________________________

                      
                        __________________________________

                        
                          __________________________________

                           

                        

                      

                    

                  

                

              

      

    

    Mail
      Payment Notices (if different than mailing address):

    
      
        
          	 	__________________________________

        

        
        

         

        
          	 	Attention:
                  	_________________________

        

        
          	
                  Telephone
                    Number:  

                   

                	
                  __________________________________

                  __________________________________

                  __________________________________

                   

                
	
                  Fax
                    Number:  

                  State
                    of Principal Place of Business: 

                	
                   

                  __________________________________

                  __________________________________

                
	
                  Custodian
                    Information: 

                	 
	
                  Name:

                  
                    DTC
                      Participant No.  

                     

                  

                	
                  __________________________________

                  __________________________________

                   

                
	Physical Delivery Instructions:
	 

        

      

    

    
      
        
          	
                	__________________________________

        

         

        
          	 	Attention:	_________________________
	
                  Telephone
                    Number:  

                	
                  __________________________________

                  __________________________________

                
	
                  Fax
                    Number:  

                	__________________________________

        

      

    

     

    Tax
      Withholding Form Attached (indicate type):
      ____________________________________________________

     

    Wire
      Transfer Instructions for Payments to Regulation D Purchaser under the Escrow
      Agreement: ____________________

     

    
      
        
        

      

      
        
          Annex
            A-1

        

        
          

        

      

      
        
        

      

    

    Annex
      B

    

    List
      of Subsidiaries of the Company

    

    Energy
      XXI Texas, LP

    

    Energy
      XXI Texas GP, LLC

    

    Energy
      XXI GOM, LLC

    

    
      
        
        

      

      
        
          Annex
            B-1

        

        
          

        

      

      
        
        

      

    

    Annex
      C

     

    Opinion
      of Vinson & Elkins, as U.S. counsel for Parent and the Company, and Appleby
      Hunter Bailhache, as Bermuda counsel for Parent, to be delivered pursuant to
      Section
      6(b)
      of the Purchase Agreement.
      [To
      be
      allocated among counsel]

     

    References
      to the Preliminary CIM in this Exhibit include any supplements thereto at the
      Closing Date.

     

    1. Each
      of
      the Company and the Guarantors is a corporation duly incorporated, validly
      existing and in good standing under the laws of its jurisdiction of formation,
      with limited liability power and corporate power, as the case may be, and
      authority to own, lease and operate its properties and to conduct its business
      as described in the CIM and to enter into and perform its respective obligations
      under the Regulation D Purchase Agreement, Escrow Agreement, the Registration
      Rights Agreement and the Indenture (collectively the “Note
      Purchase Documents”),
      as
      the case may be.

     

    2. Each
      of
      the Company and the Guarantors has all necessary corporate power and authority
      to execute and deliver the Note Purchase Documents, to perform its obligations
      thereunder to issue the Regulation D Notes.

     

    3. The
      Regulation D Purchase Agreement has been duly authorized, executed and delivered
      by each of the Guarantors and the Company.

     

    4. Each
      of
      the Indenture, Escrow Agreement, and the Registration Rights Agreement has
      been
      duly authorized, executed and delivered by the Company and each of the
      Guarantors, as the case may be, and constitutes a valid and binding agreement
      of
      the Company and each of the Guarantors, as the case may be, enforceable against
      the Company and each of the Guarantors, as the case may be, in accordance with
      its terms. The Indenture is in sufficient form for qualification under the
      Trust
      Indenture Act.

     

    5. The
      Regulation D Notes, when executed, authenticated and issued in accordance with
      the terms of the Indenture and delivered to and paid for by the Regulation
      D
      Purchasers pursuant to the Purchase Agreement, will constitute valid and binding
      obligations of the Company, entitled to the benefits of the Indenture,
      enforceable against the Company in accordance with their terms.

     

    6. The
      Guarantees, when the Regulation D Notes have been executed, authenticated and
      issued in accordance with the terms of the Indenture and delivered to and paid
      for by the Regulation D Purchasers pursuant to the Purchase Agreement, will
      constitute valid and binding obligations of the Guarantors, entitled to the
      benefits of the Indenture, enforceable against the Guarantors in accordance
      with
      their terms.

     

    7. The
      Exchange Notes and the related Guarantees have been duly authorized by the
      Company and the Guarantors, as the case may be. 

     

    
      
        
        

      

      
        
          Annex
            C-1

        

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    10. Neither
      the Parent nor the Company is, and after receipt of payment for the Notes,
      will
      be, an “investment company” within the meaning of, and subject to registration
      under, Investment Company Act. 

     

    
      
        
        

      

      
        
          Annex
            C-2

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