Exhibit 10.1
THIRD AMENDMENT TO CREDIT AGREEMENT
     THIS THIRD AMENDMENT TO CREDIT AGREEMENT (herein called the “Amendment”)
made as of December 29, 2005 by and among Encore Acquisition Company, a Delaware
corporation (“Borrower”), Encore Operating, L.P., a Texas limited partnership
(“Operating”), Bank of America, N.A., as Administrative Agent (“Administrative
Agent”) and L/C Issuer, and the Lenders party to the Original Agreement defined
below (“Lenders”).
W I T N E S S E T H:
     WHEREAS, Borrower, Operating, Administrative Agent, L/C Issuer and Lenders
entered into that certain Credit Agreement dated as of August 19, 2004, as
amended by that certain First Amendment to Credit Agreement dated as of
April 29, 2005, and as further amended by that certain Second Amendment to
Credit Agreement dated as of November 14, 2005 (as so amended, the “Original
Agreement”), for the purpose and consideration therein expressed, whereby L/C
Issuer became obligated to issue Letters of Credit to Borrower and Lenders
became obligated to make loans to Borrower as therein provided; and
     WHEREAS, Borrower, Operating, Administrative Agent, L/C Issuer and Lenders
desire to amend the Original Agreement as set forth herein;
     NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein and in the Original Agreement, in consideration
of the loans and other credit which may hereafter be made by Lenders and L/C
Issuer to Borrower, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto do hereby
agree as follows:
ARTICLE I.
DEFINITIONS AND REFERENCES
     Section 1.1. Terms Defined in the Original Agreement. Unless the context
otherwise requires or unless otherwise expressly defined herein, the terms
defined in the Original Agreement shall have the same meanings whenever used in
this Amendment.
     Section 1.2. Other Defined Terms. Unless the context otherwise requires,
the following terms when used in this Amendment shall have the meanings assigned
to them in this Section 1.2.
     “Amendment” means this Third Amendment to Credit Agreement.
     “Amendment Documents” means this Amendment, the Consent and Agreement of
the Guarantors relating to this Amendment and all other documents or instruments
delivered in connection herewith or therewith.
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     “Credit Agreement” means the Original Agreement as amended hereby.
ARTICLE II.
AMENDMENTS TO ORIGINAL AGREEMENT
     Section 2.1. Defined Terms.
     (a) The definition of “Maturity Date” in Section 1.01 of Original Agreement
is hereby amended in its entirety to read as follows:
               “‘Maturity Date’ means December 29, 2010.”
     (b) The definition of “Permitted Subordinate Debt” in Section 1.01 of
Original Agreement is hereby amended in its entirety to read as follows:
               “‘Permitted Subordinate Debt’ means, collectively, (a) Debt of
the Borrower, and Debt constituting Guarantees thereof by Restricted
Subsidiaries, resulting from the issuance of the Borrower’s 6.25% Senior
Subordinated Notes Due 2014 in an outstanding principal balance of $150,000,000
(the “Original Issuance”), (b) Debt of the Borrower, and Debt constituting
Guarantees thereof by Restricted Subsidiaries, resulting from the issuance of
the Borrower’s 6.00% Senior Subordinated Notes Due July 15, 2015 in an aggregate
outstanding principal balance of $300,000,000, (c) Debt of the Borrower, and
Debt constituting Guarantees thereof by Restricted Subsidiaries, resulting from
the issuance of the Borrower’s 7.25% Senior Subordinated Notes Due 2017 in an
outstanding principal balance of $150,000,000, (d) Debt of the Borrower, and
Debt constituting Guarantees thereof by Restricted Subsidiaries, resulting from
the issuance of the Borrower’s senior subordinated unsecured notes, which (1) is
fully subordinated to the Obligations to the same extent set forth in the
Original Issuance, unless otherwise approved by Required Lenders, (2) is not
subject to negative covenants or events of default (or other provisions which
have the same effect as negative covenants or events of default) which, taken as
a whole, are materially more restrictive on the Borrower than those set forth in
the Original Issuance, unless otherwise approved by Required Lenders, and
(3) does not have a maturity date prior to the maturity date relative to the
Original Issuance, and any Permitted Refinancing of any Debt incurred under this
clause (d), provided that the aggregate principal amount of any Debt at any time
outstanding under this clause (d) plus all Permitted Refinancings thereof
pursuant to the following clause (e) (or, if such Debt is issued at a discount,
the initial issuance price thereof) shall not exceed $150,000,000 in the
aggregate (plus, in the case of such Permitted Refinancing, the amount of any
premiums paid and reasonable expenses incurred in connection with any such
Permitted Refinancing), and (e) any Permitted Refinancing of items (a), (b),
(c) and (d).”
     (c) The definition of “Redetermination Date” in Section 1.01 of Original
Agreement is hereby amended in its entirety to read as follows:
               “‘Redetermination Date’ means (a) with respect to any Scheduled
Redetermination, each April 1 and October 1, commencing April 1, 2006, (b) with
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respect to any Special Redetermination, the first day of the first month which
is not less than twenty (20) Business Days following the date of a request for a
Special Redetermination, and (c) with respect to any redetermination pursuant to
Section 2.13(d), the date upon which any Credit Party completes any Asset
Disposition.”
               (d) The second sentence of the definition of “Reserve Report” in
Section 1.01 of Original Agreement is hereby amended in its entirety to read as
follows:
               “Each Reserve Report required to be delivered pursuant to
Section 2.13(a), prepared as of December 31, shall be prepared by the Approved
Petroleum Engineer.”
     Section 2.2. Reserve Report; Proposed Borrowing Base. Clause (a) of
Section 2.13 of the Original Agreement is hereby amended in its entirety to read
as follows:
     “(a) Reserve Report; Proposed Borrowing Base. As soon as available and in
any event by February 28 and August 31 of each year commencing February 28,
2006, the Borrower shall deliver to Administrative Agent and each Lender a
Reserve Report prepared as of the immediately preceding December 31 and June 30,
respectively. Simultaneously with the delivery to Administrative Agent and each
Lender of each Reserve Report, the Borrower shall notify Administrative Agent
and each Lender of the amount of the Borrowing Base which the Borrower requests
become effective on the next Redetermination Date (or such date promptly
following such Redetermination Date as Required Lenders shall elect).”
     Section 2.3. Borrowing Base. Clause (e) of Section 2.13 of the Original
Agreement is hereby amended in its entirety to read as follows:
     “(e) Permitted Subordinate Debt Adjustment. In addition to Scheduled
Redeterminations, Special Redeterminations and Asset Disposition adjustments, as
set forth above in subsection 2.13(d), if Debt described in clause (d) of the
definition of Permitted Subordinate Debt is issued in any amount, the Borrowing
Base then if effect pursuant to the terms of this Section 2.13 shall be
automatically reduced by $50,000,000. Each determination of the Borrowing Base
after such a reduction shall be determined and stated taking such Permitted
Subordinate Debt into account in lieu of such automatic reduction.”
     Section 2.4. Borrowing Base Redetermination. The Borrower, the
Administrative Agent and Lenders agree that from and after the date hereof until
the next redetermination or adjustment thereof, the Borrowing Base shall be
$550,000,000.
     Section 2.5. Reports. Clause (i) of Section 6.01 of the Original Agreement
is hereby amended in its entirety to read as follows:
     “(i) no later than February 28 and August 31 of each year, reports of
production, volumes, revenue, expenses and product prices for all Mineral
Interests owned by any Credit Party for the periods of six (6) months ending the
preceding December 31 and June 30, respectively. Such reports shall be prepared
on an accrual basis and shall be reported on an accounting key code basis;”
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     Section 2.6. Mortgages. Upon request of Administrative Agent, but in no
event later than August 1, 2008, Borrower and Operating agree to amend any and
all Mortgages, in a manner reasonably satisfactory to Administrative Agent, in
order to amend the maturity date referenced therein to the Maturity Date in the
Original Agreement, as amended.
     Section 2.7. Amendment to Schedule. Schedule 2.01 (“Commitments and
Applicable Percentages”) of the Original Agreement is hereby amended in its
entirety and replaced with Schedule 2.01 attached hereto as Exhibit A.
     Section 2.8. Waiver. Administrative Agent and each Lender hereby waive any
Default occurring prior to the date hereof to the extent resulting from the
Borrower providing the Reserve Report prepared as of June 30 of each year
prepared by Borrower’s in-house staff instead of by the Approved Petroleum
Engineer.
ARTICLE III.
CONDITIONS OF EFFECTIVENESS
     Section 3.1. Effective Date. This Amendment shall become effective (the
“Effective Date”) when and only when:
     (a) Administrative Agent shall have received all of the following, at
Administrative Agent’s office, duly executed and delivered and in form and
substance satisfactory to Administrative Agent, all of the following:
     (i) this Amendment executed by the Borrower, Operating and one hundred
percent (100%) of the Lenders;
     (ii) the Consent and Agreement relating to this Amendment executed by each
Guarantor;
     (iii) the written opinion of counsel to Borrower-Related Parties, addressed
to Administrative Agent, to the effect that this Amendment and the other
Amendment Documents have been duly authorized, executed and delivered by
Borrower and Operating and that the Amendment and the other Amendment Documents
constitute the legal, valid and binding obligations of the Borrower-Related
Parties as applicable, enforceable in accordance with their terms (subject, as
to enforcement of remedies, to applicable bankruptcy, reorganization, insolvency
and similar laws and to moratorium laws and other laws affecting creditors’
rights generally from time to time in effect);
     (iv) certificates of resolutions or other action, incumbency certificates
and/or other certificates of Responsible Officers of each Credit Party as the
Administrative Agent may require evidencing the identity, authority and capacity
of each Responsible Officer thereof authorized to act as a Responsible Officer
in connection with this Amendment, the other Amendment Documents and the other
Loan Documents to which such Credit Party is a party, and certifying that all
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articles of incorporation and bylaws or similar documents of each Credit Party
are true and correct and/or certifying that such organizational documents remain
enforceable and have not been amended or altered since the date of last
certification; and
(v) such documents and certifications as the Administrative Agent may reasonably
require to evidence that each Credit Party is duly organized or formed, validly
existing, in good standing and qualified to engage in business in each
jurisdiction where its ownership, lease or operation of properties or the
conduct of its business requires such qualification, except to the extent that
failure to do so could not reasonably be expected to have a Material Adverse
Effect.
     (b) Borrower shall have paid, in connection with this Amendment and the
Loan Documents, all other fees and reimbursements to be paid to Administrative
Agent pursuant to this Amendment or any Loan Documents, or otherwise due
Administrative Agent and including fees and disbursements of Administrative
Agent’s attorneys.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
     Section 4.1. Representations and Warranties. In order to induce L/C Issuer
and each Lender to enter into this Amendment, Borrower and Operating represent
and warrant to L/C Issuer and each Lender that:
     (a) The representations and warranties contained in Article V of the
Original Agreement are true and correct on the Effective Date, except to the
extent such representations and warranties specifically refer to an earlier
date, in which case they are true and correct as of such earlier date, and
except for purposes of this Amendment, the representations and warranties
contained in subsections (a) and (b) of Section 5.04 of the Credit Agreement
shall be deemed to refer to the most recent statements furnished pursuant to
clauses (a) and (b), respectively, of Section 6.01 of the Credit Agreement.
     (b) Each Credit Party is duly authorized to execute and deliver this
Amendment and the other Amendment Documents (to the extent such Credit Party is
a party to this Amendment and the other Amendment Documents) and is and will
continue to be duly authorized to borrow monies and to perform its obligations
under the Credit Agreement. Each Credit Party has duly taken all company action
necessary to authorize the execution and delivery of this Amendment and the
other Amendment Documents (to the extent that such Credit Party is a party to
this Amendment and the other Amendment Documents) and to authorize the
performance of its obligations hereunder and thereunder.
     (c) The execution and delivery by each Credit Party of this Amendment and
the other Amendment Documents (to the extent that such Credit Party is a party
to this Amendment and the other Amendment Documents), the performance each
Credit Party of its obligations hereunder and thereunder and the consummation of
the transactions contemplated hereby and thereby do not and will not conflict
with any provision of Law or of the Organization Documents
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of such Credit Party, or of any material agreement, judgment, license, order or
permit applicable to or binding upon such Credit Party, or, except as provided
hereby, result in the creation of any Lien upon any assets or properties of such
Credit Party. Except for those which have been obtained, no consent, approval,
authorization or order of any court or Governmental Authority or third party is
required in connection with the execution and delivery by any Credit Party of
this Amendment and the other Amendment Documents (to the extent that such Credit
Party is a party to this Amendment and the other Amendment Documents) or to
consummate the transactions contemplated hereby and thereby.
     (d) When duly executed and delivered, each of this Amendment, the Amendment
Documents and the Credit Agreement will be a legal and binding obligation of
each Credit Party (to the extent that such Credit Party is a party to this
Amendment and the other Amendment Documents), enforceable in accordance with its
terms, except as limited by bankruptcy, insolvency or similar Laws of general
application relating to the enforcement of creditors’ rights and by equitable
principles of general application.
     (e) The audited annual consolidated and consolidating financial statements
of Borrower dated as of December 31, 2004, and the unaudited consolidated and
consolidating balance sheets, statements of income and statements of cash flow
of the Borrower dated as of September 30, 2005 fairly present the financial
position at such dates and the statement of operations and the changes in
financial position for the periods ending on such dates for the Borrower-Related
Parties. Copies of such financial statements have heretofore been delivered to
L/C Issuer and each Lender. Since such date, no Material Adverse Change has
occurred.
ARTICLE V.
MISCELLANEOUS
     Section 5.1. Ratification of Agreements. The Original Agreement as hereby
amended is hereby ratified and confirmed in all respects. The Loan Documents, as
they may be amended or affected by the various Amendment Documents, are hereby
ratified and confirmed in all respects. Any reference to the Credit Agreement in
any Loan Document shall be deemed to be a reference to the Original Agreement as
hereby amended. The execution, delivery and effectiveness of this Amendment and
the other Amendment Documents shall not, except as expressly provided herein or
therein, operate as a waiver of any right, power or remedy of L/C Issuer or
Lenders under the Credit Agreement, the Notes, or any other Loan Document nor
constitute a waiver of any provision of the Credit Agreement, the Notes or any
other Loan Document.
     Section 5.2. Ratification of Security Documents. Borrower, Operating,
Administrative Agent, L/C Issuer and Lenders each acknowledge and agree that any
and all indebtedness, liabilities or obligations, arising under or in connection
with the L/C Obligations or the Notes, are Obligations and are secured
indebtedness under, and are secured by, the Pledge Agreement and the Mortgages.
Borrower and Operating hereby re-pledges, re-grants and re-assigns a security
interest in and lien on every asset of Borrower and Operating described as
Collateral in the Pledge Agreement and as Mortgaged Property in Section 2.2 of
the Mortgages.
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     Section 5.3. Survival of Agreements. All representations, warranties,
covenants and agreements of any Credit Party herein shall survive the execution
and delivery of this Amendment and the performance hereof, including without
limitation the making or granting of the Loans, and shall further survive until
all of the Obligations are paid in full. All statements and agreements contained
in any certificate or instrument delivered by any Credit Party hereunder or
under the Credit Agreement to L/C Issuer or any Lender shall be deemed to
constitute representations and warranties by, and/or agreements and covenants
of, Borrower and Operating under this Amendment and under the Credit Agreement.
     Section 5.4. Loan Documents. This Amendment and the other Amendment
Documents are each a Loan Document, and all provisions in the Credit Agreement
pertaining to Loan Documents apply hereto and thereto.
     Section 5.5. Provisions Regarding New Lenders and Commitments:
     (a) Each of the parties signatory hereto in the capacity as Lenders who
were not Lenders under the Original Agreement (the “New Lenders”) hereby
represents and warrants that it has received a copy of the Credit Agreement,
together with copies of the most recent financial statements delivered pursuant
to Section 6.01 thereof, as applicable, and such other documents and information
as it has deemed appropriate to make its own credit analysis and decision to
enter into this Amendment and become a Lender under the Credit Agreement, it has
made such analysis and decision independently and without reliance on the
Administrative Agent, L/C Issuer or any other Lender. The Borrower, Operating,
Administrative Agent, LC Issuer, each Lender under the Original Agreement and
each New Lender (i) agrees that from and after the Effective Date, each new
Lender shall be a Lender under the Credit Agreement, bound by the provisions
thereof as a Lender thereunder, and, to the extent of its Commitment, shall have
the rights and obligations of a Lender thereunder.
     (b) From and after the Effective Date, the Lenders, including the New
Lenders, shall have the respective Commitments as set forth on Schedule 2.01
attached hereto as Exhibit A.
     (c) The Lenders hereby authorize the Administrative Agent and the Borrower
to request borrowings from the Lenders and to make prepayments of Loans in order
to ensure that, upon the Effective Date, the Loans of the Lenders, including the
New Lenders, shall be outstanding on a ratable basis in accordance with their
respective Applicable Percentages and that the Commitments shall be as set forth
on Schedule 2.01, as amended by this Amendment and attached hereto as Exhibit A,
and no such borrowing, prepayment or reduction shall violate any provisions of
the Credit Agreement. The Lenders hereby confirm that, from and after the
Effective Date, all participations of the Lenders in respect of Letters of
Credit outstanding hereunder pursuant to Section 2.03(c) shall be based upon the
Applicable Percentages of the Lenders (after giving effect to this Amendment).
     Section 5.6. Governing Law. This Amendment shall be governed by and
construed in accordance the Laws applicable to the Credit Agreement.
     Section 5.7. Counterparts; Fax. This Amendment may be separately executed
in counterparts and by the different parties hereto in separate counterparts,
each of which when so
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executed shall be deemed to constitute one and the same Amendment. This
Amendment and the other Amendment Documents may be validly executed by facsimile
or other electronic transmission.
     THIS AMENDMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS OF THE PARTIES.
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     IN WITNESS WHEREOF, this Amendment is executed as of the date first above
written.

                  ENCORE ACQUISITION COMPANY
 
                By:   /s/ L. Ben Nivens                   L. Ben Nivens        
Senior Vice President, Chief Financial Officer         Treasurer and Corporate
Secretary
 
                ENCORE OPERATING, L.P.
 
                By: EAP Operating, Inc., its sole general partner
 
           
 
      By:   /s/ L. Ben Nivens
 
           
 
          L. Ben Nivens
 
          Senior Vice President, Chief Financial
 
          Officer, Treasurer and Corporate
 
          Secretary

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              BANK OF AMERICA, N.A.,     as Administrative Agent
 
       
 
  By:   /s/ Todd G. MacNeill
 
       
 
      Name: Todd G. MacNeill
 
      Title: Assistant Vice President
 
            BANK OF AMERICA, N.A.,     as L/C Issuer and a Lender
 
       
 
  By:   /s/ Jeffrey H. Rathkamp
 
       
 
      Name: Jeffrey H. Rathkamp
 
      Title: Principal

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              FORTIS CAPITAL CORP., as a Lender
 
       
 
  By:   /s/ Trond Rokholdt
 
       
 
      Name: Trond Rokholdt
 
      Title: Managing Director
 
       
 
  By:   /s/ Michele Jones
 
       
 
      Name: Michele Jones
 
      Title: Senior Vice President

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              WACHOVIA BANK, N.A., as a Lender
 
       
 
  By:   /s/ David Humphreys
 
       
 
      Name: David Humphreys
 
      Title: Director

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                  CITICORP NORTH AMERICA, INC., as a Lender  
 
           
 
  By:       /s/   Ashish Sethi    
 
     
 
    Name: Ashish Sethi    
 
          Title: Vice President    

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                  BNP PARIBAS, as a Lender    
 
           
 
  By:      /s/   Larry Robinson    
 
     
 
   Name: Larry Robinson    
 
         Title: Director    
 
           
 
  By:      /s/   Betsy Jocher    
 
           
 
         Name: Betsy Jocher    
 
         Title: Vice President    

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                  CALYON NEW YORK BRANCH, as a Lender
 
           
 
  By:      /s/   Page Dillehunt    
 
     
 
  Name: Page Dillehunt    
 
        Title: Director    
 
           
 
  By:      /s/   Michael Willis    
 
     
 
   
 
        Name: Michael Willis    
 
        Title: Vice President    

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            COMERICA BANK, as a Lender
      By:     /s/   Peter L. Setzik           Name:     Peter L. Setzik       
  Title:     Vice President     

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            THE FROST NATIONAL BANK, as a Lender
      By:     /s/   John S. Warren           Name:     John S. Warren       
  Title:     Senior Vice President     

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            KEYBANK NATIONAL ASSOCIATION, as a Lender
      By:     /s/   Thomas Rajan           Name:     Thomas Rajan       
  Title:     Vice President     

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            SUNTRUST BANK, as a Lender
      By:     /s/   John A. Fields, Jr.           Name:     John A. Fields, Jr. 
        Title:     Managing Director     

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            COMPASS BANK, as a Lender
      By:     /s/   Dorothy Marchand           Name:     Dorothy Marchand       
  Title:     Senior Vice President     

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            UNION BANK OF CALIFORNIA, N.A., as a Lender
      By:     /s/   Alison Fuqua           Name:     Alison Fuqua       
  Title:     Investment Banking Officer              By:     /s/   Kimberly Coil
          Name:     Kimberly Coil          Title:     Vice President     

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            BANK OF SCOTLAND, as a Lender
      By:     /s/   Karen Weich           Name:     Karen Weich       
  Title:     Assistant Vice President     

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            U.S. BANK NATIONAL ASSOCIATION, as a Lender
      By:     /s/   Mark E. Thompson           Name:     Mark E. Thompson       
  Title:     Vice President     

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            NATEXIS BANQUES POPULAIRES, as a Lender
      By:     /s/   Donovan C. Broussard           Name:     Donovan C.
Broussard          Title:     Vice President & Group Manager              By:  
  /s/   Daniel Payer           Name:     Daniel Payer          Title:     Vice
President     

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EXHIBIT A
SCHEDULE 2.01
COMMITMENTS
AND APPLICABLE PERCENTAGES

                              Applicable Lender   Commitment   Percentage
Bank of America, N.A.
  $ 68,181,818.18       9.090909091 %
 
               
Fortis Capital Corp.
  $ 68,181,818.18       9.090909091 %
 
               
Wachovia Bank, N.A.
  $ 68,181,818.18       9.090909091 %
 
               
Citicorp North America, Inc.
  $ 68,181,818.18       9.090909091 %
 
               
BNP Paribas
  $ 68,181,818.18       9.090909091 %
 
               
Calyon New York Branch
  $ 47,727,272.73       6.363636364 %
 
               
SunTrust Bank
  $ 47,727,272.73       6.363636364 %
 
               
Comerica Bank
  $ 40,909,090.91       5.454545455 %
 
               
The Frost National Bank
  $ 40,909,090.91       5.454545455 %
 
               
KeyBank National Association
  $ 40,909,090.91       5.454545455 %
 
               
Compass Bank
  $ 40,909,090.91       5.454545455 %
 
               
Union Bank of California, N.A.
  $ 40,909,090.91       5.454545455 %
 
               
Bank of Scotland
  $ 40,909,090.91       5.454545455 %
 
               
U.S. Bank National Association
  $ 34,090,909.09       4.545454545 %
 
               
Natexis Banques Populaires
  $ 34,090,909.09       4.545454545 %
 
               
Total
  $ 750,000,000.00       100.000000000 %

[Schedule 2.01]

 

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[Third Amendment]
CONSENT AND AGREEMENT
     Each of the undersigned hereby consents to the provisions of this Amendment
and the transactions contemplated herein and hereby, with respect to each Loan
Document executed by it, (a) ratifies and confirms the Guaranty, the Pledge
Agreement, the Mortgages and all other Loan Documents, each as amended,
supplemented, modified or restated hereby, (b) agrees that all of its respective
obligations and covenants under the Guaranty, the Pledge Agreement, the
Mortgages and all other Loan Documents, each as amended, supplemented, modified
or restated hereby, shall remain unimpaired by the execution and delivery of
this Amendment and the other documents and instruments executed in connection
therewith, (c) agrees there are no offsets, claims or defenses of the
undersigned with respect to the Guaranty, the Pledge Agreement or the Mortgages
nor, to the knowledge of the undersigned, with respect to the Loans, (d) agrees
the Guaranty, the Pledge Agreement and the Mortgages are not released,
diminished or impaired in any way by the transactions contemplated in connection
with this Amendment, (e) agrees that any and all indebtedness, liabilities or
obligations, arising under or in connection with the L/C Obligations or the
Notes, are Obligations and are secured indebtedness under, and are secured by,
the Pledge Agreement and the Mortgages and hereby re-pledges, re-grants and
re-assigns a security interest in and lien on each of its assets described as
Collateral in the Pledge Agreement and as Mortgaged Property or in Section 2.2
of the Mortgages, and (f) agrees that the Guaranty, the Pledge Agreement, the
Mortgages and all other Loan Documents, each as amended, supplemented, modified
or restated hereby, shall remain in full force and effect.

              EAP OPERATING, INC.
 
       
 
  By:   /s/ L. Ben Nivens
 
            L. Ben Nivens     Senior Vice President, Chief Financial Officer,  
  Treasurer and Corporate Secretary

            ENCORE OPERATING LOUISIANA, LLC
      By:     /s/ Thomas H. Olle         Thomas H. Olle, President           

            EAP ENERGY, INC.
      By:   /s/ L. Ben Nivens              L. Ben Nivens             Senior Vice
President, Chief Financial
     Officer, Treasurer and Corporate Secretary     

[Consent and Agreement]

 

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            EAP ENERGY SERVICES, L.P.     By:   EAP Energy, Inc., its sole
general partner    

                  By:   /s/ L. Ben Nivens         L. Ben Nivens        Senior
Vice President, Chief Financial Officer Treasurer and Corporate Secretary     

            EAP PROPERTIES, INC.
      By:   /s/ L. Ben Nivens         L. Ben Nivens        Senior Vice
President, Chief Financial Officer
Treasurer and Corporate Secretary     

[Consent and Agreement]