Exhibit 10.4

EXECUTION VERSION

 

 

 

1.75 LIEN TERM LOAN CREDIT AGREEMENT

dated as of

March 15, 2017

among

EXCO RESOURCES, INC.,

as Borrower

CERTAIN SUBSIDIARIES OF BORROWER,

as Guarantors

The Lenders Party Hereto

WILMINGTON TRUST, NATIONAL ASSOCIATION,

as Administrative Agent

and

WILMINGTON TRUST, NATIONAL ASSOCIATION,

as Collateral Trustee

 

 

 

 

    EXCO Resources, Inc.     1.75 Lien Term Loan Credit Agreement

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TABLE OF CONTENTS

 

         Page   ARTICLE I   DEFINITIONS  

Section 1.01

 

Defined Terms

     2  

Section 1.02

 

Terms Generally

     69  

Section 1.03

 

Accounting Terms; GAAP

     70  

Section 1.04

 

Time of Day

     70   ARTICLE II   THE CREDITS  

Section 2.01

 

Term Loans

     70  

Section 2.02

 

Termination and Reduction of the Commitments

     70  

Section 2.03

 

Loans and Borrowings

     71  

Section 2.04

 

Requests for Borrowings

     71  

Section 2.05

 

Deemed Funding of Borrowings

     71  

Section 2.06

 

Repayment of Loans; Evidence of Debt

     71  

Section 2.07

 

Optional Prepayment of Loans

     72  

Section 2.08

 

Mandatory Prepayment of Loans

     74  

Section 2.09

 

Fees and Applicable Premium

     76  

Section 2.10

 

Interest

     77  

Section 2.11

 

Reserve Requirements; Change in Circumstances

     81  

Section 2.12

 

Taxes

     82  

Section 2.13

 

Payments Generally; Pro Rata Treatment; Sharing of Set-offs

     86  

Section 2.14

 

Mitigation Obligations; Replacement of Lenders; Illegality

     88  

Section 2.15

 

Defaulting Lenders

     89  

Section 2.16

 

Returned Payments

     90  

Section 2.17

 

Collection of Proceeds of Production

     90   ARTICLE III   REPRESENTATIONS AND WARRANTIES  

Section 3.01

 

Organization; Powers

     90  

Section 3.02

 

Authorization; Enforceability

     91  

Section 3.03

 

Governmental Approvals; No Conflicts

     91  

Section 3.04

 

Financial Condition; No Material Adverse Change

     91  

Section 3.05

 

Properties

     92  

Section 3.06

 

Litigation and Environmental Matters

     92  

Section 3.07

 

Compliance with Laws and Agreements

     93  

Section 3.08

 

Investment Company Status; Energy Regulatory Status

     93  

 

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Section 3.09

 

Taxes

     93  

Section 3.10

 

ERISA

     94  

Section 3.11

 

Disclosure

     94  

Section 3.12

 

Labor Matters

     94  

Section 3.13

 

Capitalization and Credit Party Information

     94  

Section 3.14

 

Margin Stock

     94  

Section 3.15

 

Oil and Gas Properties

     95  

Section 3.16

 

Insurance

     95  

Section 3.17

 

Solvency

     95  

Section 3.18

 

Deposit Accounts

     96  

Section 3.19

 

Maintenance of Properties

     96  

Section 3.20

 

Foreign Corrupt Practices; OFAC

     96  

Section 3.21

 

USA PATRIOT Act

     97  

Section 3.22

 

Security Interest in Collateral

     97   ARTICLE IV   CONDITIONS  

Section 4.01

 

Effective Date

     98  

Section 4.02

 

Compliance with Conditions to Effective Date

     101   ARTICLE V   AFFIRMATIVE COVENANTS  

Section 5.01

 

Financial Statements; Other Information

     102  

Section 5.02

 

Lender Conference Calls

     104  

Section 5.03

 

Notices of Material Events

     104  

Section 5.04

 

Existence; Conduct of Business

     105  

Section 5.05

 

Payment of Obligations

     105  

Section 5.06

 

Insurance

     105  

Section 5.07

 

Operation and Maintenance of Properties

     106  

Section 5.08

 

Books and Records; Inspection Rights

     107  

Section 5.09

 

Compliance with Laws

     107  

Section 5.10

 

Use of Proceeds

     107  

Section 5.11

 

Reserve Reports

     107  

Section 5.12

 

Liens on Collateral and Additional Property

     108  

Section 5.13

 

Title Data

     110  

Section 5.14

 

Additional Guarantors

     110  

Section 5.15

 

Deposit Accounts

     111  

Section 5.16

 

Credit Ratings

     111  

Section 5.17

 

Further Assurances

     112  

Section 5.18

 

Post-Closing Matters

     112  

 

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ARTICLE VI   NEGATIVE COVENANTS  

Section 6.01

 

Limitation on Indebtedness

     112  

Section 6.02

 

Limitation on Restricted Payments

     117  

Section 6.03

 

Limitation on Restrictions on Distributions from Restricted Subsidiaries

     121  

Section 6.04

 

Fundamental Changes and Dispositions

     123  

Section 6.05

 

Limitation on Affiliate Transactions

     126  

Section 6.06

 

Prepayment of Junior Lien Credit Agreement

     128  

Section 6.07

 

Limitation on Liens

     128  

Section 6.08

 

Limitation on Sale/Leaseback Transactions

     128  

Section 6.09

 

Payment of Fees

     128   ARTICLE VII   GUARANTEE OF OBLIGATIONS  

Section 7.01

 

Guarantee of Payment

     129  

Section 7.02

 

Guarantee Absolute

     129  

Section 7.03

 

Guarantee Irrevocable

     129  

Section 7.04

 

Reinstatement

     130  

Section 7.05

 

Subrogation

     130  

Section 7.06

 

Subordination

     130  

Section 7.07

 

Payments Generally

     130  

Section 7.08

 

Setoff

     131  

Section 7.09

 

Formalities

     131  

Section 7.10

 

Limitations on Guarantee

     131   ARTICLE VIII   EVENTS OF DEFAULT   ARTICLE IX   THE AGENTS  

Section 9.01

 

Appointment and Authority

     135  

Section 9.02

 

Rights as a Lender

     135  

Section 9.03

 

Exculpatory Provisions

     135  

Section 9.04

 

Reliance by Agent

     137  

Section 9.05

 

Delegation of Duties

     137  

Section 9.06

 

Resignation of Agent

     137  

Section 9.07

 

Non-Reliance on Agent and Other Lenders

     138  

Section 9.08

 

Right to Request and Act on Instructions

     138  

 

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ARTICLE X   MISCELLANEOUS  

Section 10.01

 

Notices

     138  

Section 10.02

 

Waivers; Amendments

     141  

Section 10.03

 

Expenses; Indemnity; Damage Waiver

     143  

Section 10.04

 

Successors and Assigns

     144  

Section 10.05

 

Survival

     149  

Section 10.06

 

Counterparts; Integration; Effectiveness

     149  

Section 10.07

 

Severability

     150  

Section 10.08

 

Right of Setoff

     150  

Section 10.09

 

GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS

     150  

Section 10.10

 

WAIVER OF JURY TRIAL

     151  

Section 10.11

 

Headings

     151  

Section 10.12

 

Confidentiality

     151  

Section 10.13

 

Interest Rate Limitation

     152  

Section 10.14

 

USA PATRIOT Act

     153  

Section 10.15

 

Flood Insurance Regulation

     153  

Section 10.16

 

No Fiduciary Duty

     153  

Section 10.17

 

Intercreditor Agreement and Collateral Trust Agreement

     154  

Section 10.18

 

Additional Indebtedness

     155  

Section 10.19

 

Compliance with Provisions in this Agreement

     155  

Section 10.20

 

Acknowledgement and Consent to Bail-In of EEA Financial Institutions

     155  

 

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EXHIBITS:     

Exhibit A

 

–

  

Form of Assignment and Assumption

Exhibit B

 

–

  

Reserved

Exhibit C

 

–

  

Form of Counterpart Agreement

Exhibit D

 

–

  

Form of Solvency Certificate

Exhibit E

 

–

  

Form of Note

Exhibit F

 

–

  

Form of Collateral Trust Agreement

Exhibit G

 

–

  

Form of Intercreditor Agreement

Exhibit H-1

 

–

  

Form of U.S. Tax Compliance Certificate

Exhibit H-2

 

–

  

Form of U.S. Tax Compliance Certificate

Exhibit H-3

 

–

  

Form of U.S. Tax Compliance Certificate

Exhibit H-4

 

–

  

Form of U.S. Tax Compliance Certificate

SCHEDULES:     

Schedule 2.01

 

–

  

Commitments

Schedule 3.06

 

–

  

Disclosed Matters

Schedule 3.13

 

–

  

Capitalization and Credit Party Information

Schedule 3.18

 

–

  

Specified Accounts

Schedule 3.22

 

–

  

Filing Offices for Mortgages and Financing Statements

Schedule 5.18

 

–

  

Post-Closing Matters

Schedule 6.01

 

–

  

Existing Indebtedness

Schedule 6.05

 

–

  

Affiliate Transactions

Schedule 6.07

 

–

  

Existing Liens

 

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1.75 LIEN TERM LOAN CREDIT AGREEMENT

THIS 1.75 LIEN TERM LOAN CREDIT AGREEMENT, dated as of March 15, 2017, among
EXCO RESOURCES, INC., a Texas corporation, as Borrower, CERTAIN SUBSIDIARIES OF
BORROWER, as Guarantors, the LENDERS party hereto, WILMINGTON TRUST, NATIONAL
ASSOCIATION, as Administrative Agent and WILMINGTON TRUST, NATIONAL ASSOCIATION,
as Collateral Trustee.

RECITALS

WHEREAS, the Lenders are, collectively, the direct, or indirect through their
subsidiaries and affiliated funds, holders of (x) $300,000,000 in aggregate
principal amount of the Borrower’s pari passu senior secured second lien term
loans issued pursuant to that certain Term Loan Credit Agreement, dated as of
October 19, 2015 (as amended, supplemented, modified, restated, refinanced or
replaced from time to time in accordance with the Intercreditor Agreement, the
Collateral Trust Agreement and Section 6.01(b)(3) and as in effect prior to the
effectiveness of the Exchange Agreement, the “Fairfax Credit Agreement”), by and
among the Borrower, as borrower, certain subsidiaries of the Borrower as
guarantors party from time to time thereto, the lenders party from time to time
thereto, Hamblin Watsa Investment Counsel, Ltd., as administrative agent,
Wilmington Trust, National Association, as collateral trustee, and the other
parties party from time to time thereto, and (y) $382,753,719 in aggregate
principal amount of the Borrower’s pari passu senior secured second lien term
loans issued pursuant to that certain Term Loan Credit Agreement, dated as of
October 19, 2015 (as amended, supplemented, modified, restated, refinanced or
replaced prior to the Effective Date and as in effect prior to the effectiveness
of the Exchange Agreement, the “Exchange Term Loan Agreement” and collectively
with the Fairfax Credit Agreement, the “Existing Second Lien Credit
Agreements”), by and among, the Borrower, as borrower, certain subsidiaries of
the Borrower as guarantors party from time to time thereto, the lenders party
from time to time thereto, Wilmington Trust, National Association, as
administrative agent, Wilmington Trust, National Association, as collateral
trustee, and the other parties party from time to time thereto;

WHEREAS, concurrently with the occurrence of the Effective Date, the Lenders
will enter the Exchange Agreement whereby each Lender, as a lender under one or
both of the Fairfax Term Loan Agreement (the “Tranche A Fairfax Term Loan
Lenders”) or the Exchange Term Loan Agreement (the “Tranche A Exchange Term Loan
Lenders”), as applicable, will agree to accept as prepayment, in full and on a
cashless basis, of certain or all of its respective commitments, loans and other
obligations (the “Existing Exchanged Loans”) under the applicable Existing
Second Lien Credit Agreements, as applicable, and to the extent provided in the
Exchange Agreement, in an equal principal amount of the Loans and Commitments
hereunder;

WHEREAS, as a result of the transactions contemplated by the Exchange Agreement,
(x) the obligations under the Fairfax Credit Agreement will be repaid in full
and the Fairfax Credit Agreement will be terminated and (y) the Exchange Term
Loan Agreement will be amended by the Exchange Term Loan Amendment and will be
referred to for all purposes hereunder as the “Junior Lien Credit Agreement”;

 

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WHEREAS, the Borrower has requested that the Lenders provide a term loan
facility, and the Lenders have indicated their willingness to lend on the terms
and subject to the conditions set forth herein;

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
contained and of the loans and commitments hereinafter referred to, the parties
hereto covenant and agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01    Defined Terms. As used in this Agreement, the following terms
have the meanings specified below:

“Act” has the meaning assigned to such term in Section 10.14.

“Additional Secured Debt Designation” means the written agreement of the
Priority Lien Representative of holders of any Series of Priority Lien Debt, the
Junior Priority Lien Representative of holders of any Series of Junior Priority
Lien Debt or the Junior Lien Representative of holders of any Series of Junior
Lien Debt, as applicable, as set forth in the indenture, credit agreement or
other agreement governing such Series of Priority Lien Debt, Series of Junior
Priority Lien Debt or Series of Junior Lien Debt, for the benefit of (a) all
holders of existing and future Senior Priority Lien Debt, the Senior Priority
Lien Collateral Agent and each existing and future holder of Senior Priority
Liens, (b) if applicable, all holders of each existing and future Series of
Priority Lien Debt, the Priority Lien Collateral Trustee and each existing and
future holder of Priority Liens, (c) if applicable, all holders of each existing
and future Series of Junior Priority Lien Debt, the Junior Priority Lien
Collateral Agent and each existing and future holder of Junior Priority Liens,
and (d) if applicable, all holders of each existing and future Series of Junior
Lien Debt, the Junior Lien Collateral Agent and each existing and future holder
of Junior Liens, in each case:

(1)    providing that all Priority Lien Obligations, Junior Priority Lien
Obligations or Junior Lien Obligations, as applicable, will be and are secured
equally and ratably by all Priority Liens, Junior Priority Liens or Junior
Liens, as applicable, at any time granted by the Borrower or any Guarantor to
secure any Obligations in respect of such Series of Priority Lien Debt, Series
of Junior Priority Lien Debt or Series of Junior Lien Debt, as applicable,
whether or not upon Property otherwise constituting collateral for such Series
of Priority Lien Debt, Series of Junior Priority Lien Debt or Series of Junior
Lien Debt, as applicable, and that all such Priority Liens, Junior Priority
Liens or Junior Liens, as applicable, will be enforceable by the Collateral
Trustee, the Junior Priority Lien Collateral Agent or Junior Lien Collateral
Agent, as applicable, for the benefit of all holders of Priority Lien
Obligations, Junior Priority Lien Obligations or Junior Lien Obligations, as
applicable, equally and ratably;

 

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(2)    providing that such Priority Lien Representative, Junior Priority Lien
Representative or Junior Lien Representative, as applicable, and the holders of
Obligations in respect of such Series of Priority Lien Debt, Series of Junior
Priority Lien Debt or Series of Junior Lien Debt, as applicable, are bound by
the provisions of the Intercreditor Agreement, including the provisions relating
to the ranking of Senior Priority Liens, Priority Liens, Junior Priority Liens
and Junior Liens and the order of application of proceeds from the enforcement
of Senior Priority Liens, Priority Liens, Junior Priority Liens and Junior
Liens; and

(3)    appointing the Priority Lien Collateral Trustee, Collateral Trustee,
Junior Priority Lien Collateral Agent or Junior Lien Collateral Agent, as
applicable, and consenting to the terms of the Intercreditor Agreement and the
performance by the Priority Lien Collateral Trustee, Collateral Trustee, Junior
Priority Lien Collateral Agent or Junior Lien Collateral Agent, as applicable,
of, and directing the Collateral Trustee, Junior Priority Lien Collateral Agent
or Junior Lien Collateral Agent, as applicable, to perform, its obligations
under the Collateral Trust Agreement or applicable security documents, as
applicable, and the Intercreditor Agreement, together with all such powers as
are reasonably incidental thereto.

“Administrative Agent” means Wilmington Trust, National Association, in its
capacity as contractual representative of the Lenders hereunder pursuant to
Article IX and not in its individual capacity as a Lender, and any successor
agent appointed pursuant to Article IX.

“Administrative Questionnaire” means an Administrative Questionnaire in a form
supplied by the Administrative Agent.

“Affiliate” means, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.

“Affiliate Transaction” has the meaning assigned to such term in Section 6.05.

“Agents” has the meaning assigned to such term in Section 9.01.

“Aggregate Credit Exposure” means, as of any date of determination, the sum of
the Credit Exposure of all of the Lenders as of such date.

“Agreement” means this 1.75 Lien Term Loan Credit Agreement, dated as of
March 15, 2017, as may be further amended, restated, amended and restated,
supplemented, replaced (whether upon or after termination or otherwise) modified
or restated in accordance with the terms hereof.

“Appalachian Area” has the meaning assigned to such term in the Marcellus Joint
Development Agreement as in effect on the Marcellus JV Closing Date and as
amended or restated thereafter.

“Applicable Percentage” means, with respect to any Lender at any time, (a) with
respect to the Term Loans, a percentage equal to a fraction the numerator of
which is the

 

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aggregate outstanding principal amount of the Term Loans of such Lender and the
denominator of which is the aggregate outstanding principal amount of the Term
Loans of all Term Lenders, and (b) with respect to the Aggregate Credit
Exposure, a percentage based upon its share of the Aggregate Credit Exposure;
provided that, in accordance with Section 2.15 (other than Section 2.15(b)), so
long as any Lender shall be a Defaulting Lender, such Defaulting Lender’s
Commitment shall be disregarded in the calculations under clauses (a) and (b)
above. The initial amount of each Lender’s Applicable Percentage is as set forth
on Schedule 2.01. If the Commitments have terminated or expired, the Applicable
Percentage of any Lender shall be determined based upon the Commitments most
recently in effect, giving effect to any assignments and to any Lender’s status
as a Defaulting Lender at the time of determination.

“Approved Bank” means any domestic or foreign commercial bank having capital and
surplus of not less than $250,000,000 in the case of U.S. banks and $100,000,000
(or the Dollar Equivalent as of the date of determination) in the case of
non-U.S. banks.

“Approved Fund” has the meaning assigned to such term in Section 10.04.

“Approved Petroleum Engineer” means Lee Keeling & Associates, Netherland
Sewell & Associates, Inc., Ryder Scott Petroleum Consultants or any other
reputable firm of independent petroleum engineers selected by the Borrower and
approved by the Administrative Agent and the Majority Lenders which approval
shall not be unreasonably withheld.

“Asset Sale” means any sale, lease, transfer or other disposition (or series of
related sales, leases, transfers or dispositions) by the Borrower or any
Restricted Subsidiary, including any disposition by means of a merger,
consolidation or similar transaction (each referred to for the purposes of this
definition as a “disposition”) of (a) any shares of Capital Stock of a
Restricted Subsidiary (other than directors’ qualifying shares or shares
required by applicable law to be held by a Person other than the Borrower or a
Restricted Subsidiary), (b) all or substantially all the assets of any division
or line of business of the Borrower or any Restricted Subsidiary, and (c) any
other assets of the Borrower or any Restricted Subsidiary outside of the
ordinary course of business of the Borrower or such Restricted Subsidiary;
provided that none of the following shall constitute an “Asset Sale” for
purposes of this Agreement:

(a)    a disposition by (i) a Guarantor to the Borrower or by the Borrower or a
Guarantor to a Guarantor, (ii) a Non-Credit Party Restricted Subsidiary to the
Borrower or a Guarantor and (iii) a Non-Credit Party Restricted Subsidiary to a
Non-Credit Party Restricted Subsidiary;

(b)    for purposes of Section 6.04 only, a disposition that constitutes a
Restricted Payment (or would constitute a Restricted Payment but for the
exclusions from the definition thereof) and that is not prohibited by
Section 6.04;

(c)    a disposition of Crude Oil, Natural Gas or other Hydrocarbons or other
mineral products in the ordinary course of business of the oil and gas
production operations of the Borrower and its Subsidiaries (but, excluding,
among other things and for the avoidance of doubt, the disposition of all or
substantially all the assets of the Borrower and its Restricted Subsidiaries,
taken as a whole);

 

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(d)    the provision of services, equipment and other assets for the operation
and development of the Borrower’s and its Restricted Subsidiaries’ Crude Oil and
Natural Gas wells, in the ordinary course of the Borrower’s and its Restricted
Subsidiaries Oil and Gas Business, notwithstanding that such transactions may be
recorded as asset sales in accordance with full cost accounting guidelines;

(e)    the sale or other disposition of cash or Temporary Cash Investments,
Hedging Obligations or other financial instruments in the ordinary course of
business;

(f)    the trade or exchange by the Borrower or any Restricted Subsidiary of any
Oil and Gas Property of the Borrower or such Restricted Subsidiary for any Oil
and Gas Properties of another Person or for the Capital Stock of a Person
primarily engaged in the Oil and Gas Business, including any de minimis amount
of cash or Cash Equivalents necessary in order to achieve an exchange of
equivalent value (but, excluding, among other things and for the avoidance of
doubt, the disposition of all or substantially all the assets of the Borrower
and its Restricted Subsidiaries, taken as a whole); provided, however, that the
value of the Oil and Gas Properties therein received by the Borrower or any
Restricted Subsidiary in such trade or exchange (including any cash or Cash
Equivalents) is at least equal to the fair market value (as determined in good
faith by the Board of Directors or an executive officer of the Borrower or such
Restricted Subsidiary with the responsibility for such transaction (if the Board
of Directors has delegated such determination to such executive officer, which
delegation may occur for Oil and Gas Properties for which the fair market value
is less than $30,000,000), which determination shall be conclusive evidence of
compliance with this provision) of the Oil and Gas Properties or Capital Stock
of a Person primarily engaged in the Oil and Gas Business (including any cash or
Cash Equivalents) so traded or exchanged; provided, further, that any Net Cash
Proceeds are applied pursuant to the requirements of Section 2.08;

(g)    the creation or perfection of a Lien permitted pursuant to this
Agreement;

(h)    the abandonment, farm-out, lease or sublease of developed or undeveloped
Oil and Gas Properties in the ordinary course of business;

(i)    the sale or transfer of surplus or obsolete equipment;

(j)    dispositions of receivables in connection with the compromise, settlement
or collection thereof in the ordinary course of business or in bankruptcy or
similar proceedings and exclusive of factoring or similar arrangements;

(k)    the licensing or sublicensing of intellectual property (including without
limitation the licensing of seismic data) or other general intangibles and
licenses, leases or subleases of other property (other than any Oil and Gas
Properties or other interest in real property) in the Borrower’s ordinary course
of business which do not materially interfere with the business of the Borrower
and its Restricted Subsidiaries;

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

 

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(m)     the following transactions:

(i)    the sale, transfer or assignment by the Borrower, EXCO PA, EXCO WV or any
other Restricted Subsidiary of an undivided interest in Oil and Gas Properties
acquired by the Borrower, EXCO PA, EXCO WV or any other Restricted Subsidiary in
the Appalachian Area to the extent required pursuant to and in accordance with
the right of first refusal provisions of the Marcellus JV Documents; and

(ii)    the sale, transfer or assignment by the Borrower, EOC or any other
Restricted Subsidiary of an undivided interest in Oil and Gas Properties
acquired by the Borrower, EOC or any other Restricted Subsidiary in the East
Texas/North Louisiana Area to the extent required pursuant to and in accordance
with the right of first refusal provisions of the BG Joint Development
Agreement; and

(n)    a disposition of assets in a single transaction or a series of related
transactions with a fair market value of less than $6,000,000.

“Assignment and Assumption” means an assignment and assumption entered into by a
Lender and an Eligible Assignee (with the consent of any party whose consent is
required by Section 10.04), and accepted by the Administrative Agent, in the
form of Exhibit A or any other form approved by the Administrative Agent.

“Attributable Debt” in respect of a Sale/Leaseback Transaction means, as at the
time of determination, the present value (discounted at the interest rate borne
by the Loans, compounded annually) of the total obligations of the lessee for
rental payments during the remaining term of the lease included in such
Sale/Leaseback Transaction (including any period for which such lease has been
extended); provided, that if such Sale/Leaseback Transaction results in a
Capital Lease Obligation, the amount of Indebtedness represented thereby will be
determined in accordance with the definition of “Capital Lease Obligation.”

“Backstop Commitment Parties” means Hamblin Watsa Investment Counsel Ltd. and
its Affiliates (including Fairfax Financial Holdings Limited), ESAS, OCM EXCO
Holdings LLC and Gen IV and, in each case, their respective Affiliates
(excluding, in each case, the Company and its Subsidiaries) and any arranger,
representative or agent appointed by such parties to act on their behalf in
their collective capacity as the Backstop Commitment Parties under this
Agreement and the other Loan Documents.

“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by
the applicable EEA Resolution Authority in respect of any liability of an EEA
Financial Institution.

“Bail-In Legislation” means, with respect to any EEA Member Country implementing
Article 55 of Directive 2014/59/EU of the European Parliament and of the Council
of the European Union, the implementing law for such EEA Member Country from
time to time which is described in the EU Bail-In Legislation Schedule.

 

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“Bankruptcy Code” means Title 11 of the United States Code entitled
“Bankruptcy,” as now and hereinafter in effect, or any successor statute.

“Bankruptcy Event” means, with respect to any Person, such Person becomes the
subject of a bankruptcy, reorganization or insolvency proceeding, or has had a
receiver, conservator, trustee, administrator, custodian, assignee for the
benefit of creditors or similar Person charged with the reorganization or
liquidation of its business appointed for it, or, in the good faith
determination of the Administrative Agent, has taken any action in furtherance
of, or indicating its consent to, approval of, or acquiescence in, any such
proceeding or appointment, provided that, for the avoidance of doubt, a
Bankruptcy Event shall not result solely by virtue of (i) any ownership
interest, or the acquisition of any ownership interest, in such Person or any
parent thereof by a Governmental Authority or instrumentality thereof or (ii) in
the case of a solvent Person, the precautionary appointment of an administrator,
guardian, custodian or other similar official by a Governmental Authority under
or based on the law of the country where such Person is subject to home
jurisdiction supervision if applicable law requires that such appointment not be
publicly disclosed where such action does not result in or provide such Person
with immunity from the jurisdiction of courts within the United States of
America or from the enforcement of judgments or writs of attachment on its
assets or permit such Person (or such Governmental Authority or
instrumentality), to reject, repudiate, disavow or disaffirm any contracts or
agreements made by such Person.

“Bankruptcy Law” means the Bankruptcy Code and any other federal, state or
foreign bankruptcy, insolvency, receivership or similar law.

“BG Development Costs” means the costs and expenses Incurred in the conduct of
development operations in the East Texas/North Louisiana Area pursuant to the BG
JV Documents.

“BG Joint Development Agreement” means that certain Joint Development Agreement,
dated as of August 14, 2009 (as the same may be amended, supplemented, modified
or restated), by and among BG US Production Company, LLC, a Delaware limited
liability company, and EOC, pursuant to which the parties thereto entered into a
joint development agreement to develop and operate certain oil and gas
properties located in the East Texas/North Louisiana Area.

“BG JV Documents” means the BG Joint Development Agreement and any other
documents, instruments, agreements or certificates contemplated by or executed
in connection therewith.

“BG Operating Account” means that certain controlled disbursement operating
account maintained at JPMorgan Chase Bank, N.A. and established by EOC and BG US
Production Company, LLC, a Delaware limited liability company, for the purpose
of funding the costs and expenses associated with the development of the East
Texas/North Louisiana Area in accordance with the terms of the BG Joint
Development Agreement.

“Bluescape Agreement” means that certain Services and Investment Agreement,
dated as of March 31, 2015, between Borrower and Energy Strategic Advisory
Services LLC, a Delaware limited liability company, as the same may be amended,
supplemented, modified, restated, refinanced or replaced from time to time.

 

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“Board” means the Board of Governors of the Federal Reserve System of the United
States of America.

“Board of Directors” means: (a) with respect to a corporation, the board of
directors of the corporation or any committee thereof duly authorized to act on
behalf of such board; (b) with respect to a partnership, the board of directors
of the general partner of the partnership; (c) with respect to a limited
liability company, the managing member or members or any controlling committee
of managing members thereof; and (d) with respect to any other Person, the board
or committee of such Person serving a similar function.

“Borrower” means EXCO Resources, Inc., a Texas corporation.

“Borrowing” means a borrowing of a Term Loan made on the same date.

“Borrowing Request” means a request by the Borrower for a Borrowing in
accordance with Section 2.04.

“Business Day” means each day which is not a Saturday, a Sunday or a day on
which commercial banks in New York, New York are authorized or required by law,
regulation or executive order to remain closed.

“Capital Lease Obligations” of any Person means the obligations of such Person
to pay rent or other amounts under any lease of (or other arrangement conveying
the right to use) real or personal property, or a combination thereof, which
obligations are required to be classified and accounted for as capital leases on
a balance sheet of such Person under GAAP, and the amount of such obligations
shall be the capitalized amount thereof determined in accordance with GAAP. For
purposes of Section 6.07, a Capital Lease Obligation will be deemed to be
secured by a Lien on the property being leased.

“Capital Stock” means: (a) in the case of a corporation, corporate stock or
shares in the capital of such corporation; (b) in the case of an association or
business entity, any and all shares, interests, participations, rights or other
equivalents (however designated) of corporate stock; (c) in the case of a
partnership or limited liability company, partnership or membership interests
(whether general or limited); and (d) 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; provided that any instrument
evidencing Indebtedness convertible or exchangeable into Capital Stock, whether
or not such debt securities include any right of participation with Capital
Stock, shall not be deemed to be Capital Stock unless and until such instrument
is so converted or exchanged.

“Cash Equivalents” means any of the following:

(a)    Dollars;

 

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(b)    securities issued or directly and fully and unconditionally guaranteed or
insured by the U.S. government or any agency or instrumentality thereof, the
securities of which are unconditionally guaranteed as a full faith and credit
obligation of such government with maturities of two years or less from the date
of acquisition;

(c)    certificates of deposit, time deposits and eurodollar time deposits with
maturities of three years or less from the date of acquisition, demand deposits,
bankers’ acceptances with maturities not exceeding three years and overnight
bank deposits, in each case with an Approved Bank;

(d)    repurchase obligations for underlying securities of the types described
in clauses (b) and (c) above or clauses (f) and (g) below entered into with any
Approved Bank or recognized securities dealer meeting the qualifications
specified in clause (c) above;

(e)    commercial paper and variable or fixed rate notes issued by an Approved
Bank (or by the parent company thereof) or any variable or fixed rate note
issued by, or guaranteed by, a corporation (other than structured investment
vehicles and other than corporations used in structured financing transactions)
rated at least P-2 (or the equivalent thereof) or A-2 (or the equivalent
thereof) from either Moody’s or S&P (or, if at any time neither Moody’s nor S&P
shall be rating such obligations, an equivalent rating from another Rating
Agency selected by the Borrower) and in each case maturing within 36 months
after the date of acquisition thereof;

(f)    marketable short-term money market and similar liquid funds having a
rating of at least P-2 (or the equivalent thereof) or A-2 (or the equivalent
thereof) from either Moody’s or S&P, respectively (or, if at any time neither
Moody’s nor S&P shall be rating such obligations, an equivalent rating from
another Rating Agency selected by the Borrower);

(g)    readily marketable direct obligations issued or fully guaranteed by any
state, commonwealth or territory of the U.S. or any political subdivision or
taxing authority thereof; provided that each such readily marketable direct
obligation shall have an Investment Grade Rating from either Moody’s or S&P (or,
if at any time neither Moody’s nor S&P shall be rating such obligations, an
equivalent rating from another Rating Agency selected by the Borrower) with
maturities of two years or less from the date of acquisition;

(h)    Investments with average maturities of 18 months or less from the date of
acquisition in money market funds rated AAA- (or the equivalent thereof) or
better by S&P or Aaa3 (or the equivalent thereof) or better by Moody’s (or, if
at any time neither Moody’s nor S&P shall be rating such obligations, an
equivalent rating from another Rating Agency selected by the Borrower);

(i)    investment funds investing substantially all of their assets in
securities of the types described in clauses (a) through (h) above; and

 

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(j)    Indebtedness or preferred stock issued by Persons with a rating of “A” or
higher from S&P and “A-2” from Moody’s with maturities of two years or less from
the date of acquisition.

“Cash Interest” has the meaning assigned to such term in Section 2.10.

“Cash Management Obligations” means any obligations in respect of treasury
management arrangements, depositary or other cash management services, including
commercial credit card and merchant card services.

“Change in Law” means (a) the adoption of any law, rule, regulation or treaty
(including any rules or regulations issued under or implementing any existing
law) after the date of this Agreement, (b) any change in any law, rule,
regulation or treaty or in the interpretation or application thereof by any
Governmental Authority after the date of this Agreement or (c) compliance by any
Lender (or, for purposes of Section 2.11(b), by any lending office of such
Lender or by such Lender’s holding company, if any) with any request, guideline
or directive (whether or not having the force of law) of any Governmental
Authority made or issued after the date of this Agreement; provided that
notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street
Reform and Consumer Protection Act and all requests, rules, guidelines or
directives thereunder, issued in connection therewith or in implementation
thereof, and (ii) all requests, rules, guidelines and directives promulgated by
the Bank for International Settlements, the Basel Committee on Banking
Supervision (or any successor or similar authority) or the United States of
America or foreign regulatory authorities, shall in each case be deemed to be a
“Change in Law”, regardless of the date enacted, adopted, issued or implemented.

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

(a)    any “person” (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act), other than any Permitted Investor, is or becomes the “beneficial
owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that
for purposes of this clause (a) such person shall be deemed to have “beneficial
ownership” of all shares that any such person has the right to acquire, whether
such right is exercisable immediately or only after the passage of time),
directly or indirectly, of more than 50% of the total voting power of the Voting
Stock of the Borrower (or its successors by merger, consolidation or purchase of
all or substantially all of its assets);

(b)    the adoption of a plan relating to the liquidation or dissolution of the
Borrower;

(c)    the merger or consolidation of the Borrower with or into another Person
or the merger of another Person with or into the Borrower, or the sale of all or
substantially all the assets of the Borrower (determined on a consolidated
basis) to another Person other than, in the case of a merger or consolidation
transaction, a transaction in which holders of securities that represented 100%
of the Voting Stock of the Borrower immediately prior to such transaction (or
other securities into which such securities are converted as part of such merger
or consolidation transaction) become the beneficial owners directly or
indirectly of at least a majority of the Voting Stock of the surviving Person in
such merger or consolidation transaction immediately after such transaction; or

 

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(d)    the occurrence of any “Change of Control” (or similar term) as such term
is defined under the First Lien RBL Credit Agreement or under any Senior
Priority Lien Document, Priority Lien Document, Junior Priority Lien Document or
Junior Lien Document.

“Charges” has the meaning assigned to such term in Section 10.13.

“Code” means the United States Internal Revenue Code of 1986, as amended, or any
successor statute.

“Collateral” means all assets, whether now owned or hereafter acquired by any
Borrower or any other Credit Party, in which a Lien is granted or purported to
be granted to any Secured Party or the Collateral Trustee as security for any
Obligation.

“Collateral Coverage Ratio” means, as of any date, the ratio of (a) the sum of
(without duplication) (i) the PV-10 of Proved Reserves and Unproved Reserves of
the Mortgaged Properties and other Oil and Gas Properties as evaluated in the
Collateral Coverage Reserve Report most recently delivered pursuant to
Section 5.11, and (ii) the value for net undeveloped acres that do not have
scheduled locations within the Collateral Coverage Reserve Report derived from
Credit Parties’ land records and recent leasing activity for comparable acreage,
to (b) the aggregate outstanding Secured Indebtedness of the Borrower and its
Restricted Subsidiaries as of such date.

“Collateral Coverage Reserve Report” means a report setting forth, as of the end
of the Borrower’s most recent fiscal year, (i) the PV-10 of the Proved Reserves,
as evaluated in the Reserve Report most recently delivered pursuant to
Section 5.11, based upon the economic assumptions consistent with the First Lien
RBL Agent’s lending requirements at the time, (ii) the PV-10 of the Unproved
Reserves of the Mortgaged Properties and other Oil and Gas Properties, and
(iii) the value for net undeveloped acres that do not have scheduled locations
within the Proved Reserves and Unproved Reserves derived from Credit Parties’
land records and recent leasing activity for comparable acreage attributable to
the Oil and Gas Properties of the Borrower and the Restricted Subsidiaries,
based upon NYMEX Prices as of the report date.

“Collateral Trust Agreement” means that certain Collateral Trust Agreement dated
as of October 19, 2015 among (after giving effect to the amendment and
restatement to be made thereto on the Effective Date) the Borrower, the
Guarantors party thereto, the Collateral Trustee, the Administrative Agent and
the Junior Lien Administrative Agent, as the same was amended on the Effective
Date in the form attached hereto as Exhibit F and as may be further amended,
restated, amended and restated, supplemented, replaced (whether upon or after
termination or otherwise) modified or restated in accordance with the terms
thereof.

“Collateral Trust Joinder Agreement” means, with respect to the Collateral Trust
Agreement, (x) in the case of additional debt, a joinder agreement substantially
in the form of Exhibit B to the Collateral Trust Agreement or (y) in the case of
an additional grantor, a joinder agreement substantially in the form of Exhibit
C to the Collateral Trust Agreement.

 

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“Collateral Trustee” means the collateral trustee for all holders of the Junior
Priority Lien Obligations and Junior Lien Obligations under the Collateral Trust
Agreement. Wilmington Trust, National Association will initially serve as the
Collateral Trustee.

“Commitment” means, with respect to each Lender, such Lender’s Term Loan
Commitment. The initial amount of each Lender’s Commitment is set forth on
Schedule 2.01, or in the Assignment and Assumption pursuant to which such Lender
shall have assumed its Commitment, as applicable. As of the Effective Date, the
aggregate principal amount of the Commitments is $682,753,719.

“Commodity Agreement” means any oil or natural gas hedging agreement and other
agreement or arrangement entered into in the ordinary course of business and
designed to protect the Borrower or any Restricted Subsidiary against
fluctuations in oil or natural gas prices.

“Common Stock” means the shares of common stock, par value $0.001 per share, of
the Borrower.

“Connection Income Taxes” means Other Connection Taxes that are imposed on or
measured by net income (however denominated) or that are franchise Taxes or
branch profits Taxes.

“Consolidated Coverage Ratio” as of any date of determination means the ratio of
(a) the aggregate amount of EBITDA for the period of the most recent four
consecutive fiscal quarters ending prior to the date of such determination to
(b) Consolidated Interest Expense for such four fiscal quarters; provided, that:

(a)    if the Borrower or any Restricted Subsidiary has Incurred any
Indebtedness since the beginning of such period that remains outstanding or if
the transaction giving rise to the need to calculate the Consolidated Coverage
Ratio is an Incurrence of Indebtedness, or both, EBITDA and Consolidated
Interest Expense for such period shall be calculated after giving effect on a
pro forma basis to such Indebtedness as if such Indebtedness had been Incurred
on the first day of such period;

(b)    if the Borrower or any Restricted Subsidiary has repaid, repurchased,
defeased or otherwise discharged any Indebtedness since the beginning of such
period or if any Indebtedness is to be repaid, repurchased, defeased or
otherwise discharged (in each case other than Indebtedness Incurred under any
revolving credit facility unless such Indebtedness has been permanently repaid
and has not been replaced) on the date of the transaction giving rise to the
need to calculate the Consolidated Coverage Ratio, EBITDA and Consolidated
Interest Expense for such period shall be calculated on a pro forma basis as if
such discharge had occurred on the first day of such period and as if the
Borrower or such Restricted Subsidiary has not earned the interest income
actually earned during such period in respect of cash or Temporary Cash
Investments used to repay, repurchase, defease or otherwise discharge such
Indebtedness;

(c)    if since the beginning of such period the Borrower or any Restricted
Subsidiary shall have made any Asset Sale, EBITDA for such period shall be
reduced by an amount equal to EBITDA (if positive) directly attributable to the
assets which are the

 

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subject of such Asset Sale for such period, or increased by an amount equal to
EBITDA (if negative), directly attributable thereto for such period and
Consolidated Interest Expense for such period shall be reduced by an amount
equal to the Consolidated Interest Expense directly attributable to any
Indebtedness of the Borrower or any Restricted Subsidiary repaid, repurchased,
defeased or otherwise discharged with respect to the Borrower and the continuing
Restricted Subsidiaries in connection with such Asset Sale for such period (or,
if the Capital Stock of any Restricted Subsidiary is sold, the Consolidated
Interest Expense for such period directly attributable to the Indebtedness of
such Restricted Subsidiary to the extent the Borrower and the continuing
Restricted Subsidiaries are no longer liable for such Indebtedness after such
sale);

(d)    if since the beginning of such period the Borrower or any Restricted
Subsidiary (by merger or otherwise) shall have made an Investment in any
Restricted Subsidiary (or any Person which becomes a Restricted Subsidiary) or
an acquisition, including any acquisition of assets occurring in connection with
a transaction requiring a calculation to be made, which constitutes all or
substantially all of an operating unit of a business, EBITDA and Consolidated
Interest Expense for such period shall be calculated after giving pro forma
effect thereto (including the Incurrence of any Indebtedness) as if such
Investment or acquisition occurred on the first day of such period;

(e)    if since the beginning of such period any Person (that subsequently
became a Restricted Subsidiary or was merged with or into the Borrower or any
Restricted Subsidiary since the beginning of such period) shall have made any
Asset Sale, any Investment or acquisition of assets that would have required an
adjustment pursuant to clause (c) or (d) above if made by the Borrower or a
Restricted Subsidiary during such period, EBITDA and Consolidated Interest
Expense for such period shall be calculated after giving pro forma effect
thereto as if such Asset Sale, Investment or acquisition occurred on the first
day of such period; and

(f)    interest income reasonably anticipated by such Person to be received
during the applicable four-quarter period from cash or Temporary Cash
Investments held by such Person or any Restricted Subsidiary of such Person,
which cash or Temporary Cash Investments exist on the date of determination or
will exist as a result of the transaction giving rise to the need to calculate
the Consolidated Coverage Ratio, will be included.

For purposes of this definition, whenever pro forma effect is to be given to an
acquisition of assets, the amount of income or earnings relating thereto and the
amount of Consolidated Interest Expense associated with any Indebtedness
Incurred in connection therewith, the pro forma calculations shall be determined
in good faith by a responsible financial or accounting officer of the Borrower.
If any Indebtedness bears a floating rate of interest and is being given pro
forma effect, the interest on such Indebtedness shall be calculated as if the
rate in effect on the date of determination had been the applicable rate for the
entire period (taking into account any Interest Rate Agreement applicable to
such Indebtedness, but if the remaining term of such Interest Rate Agreement is
less than twelve (12) months, then such Interest Rate Agreement shall only be
taken into account for that portion of the period equal to the remaining term
thereof).

 

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If any Indebtedness is incurred under a revolving credit facility and is being
given pro forma effect, the interest on such Indebtedness shall be calculated
based on the average daily balance of such Indebtedness for the four fiscal
quarters subject to the pro forma calculation to the extent that such
Indebtedness was incurred solely for working capital purposes.

“Consolidated Interest Expense” means, for any period, the total interest
expense of the Borrower and the consolidated Restricted Subsidiaries, plus, to
the extent not included in such total interest expense, and to the extent
incurred by the Borrower or the Restricted Subsidiaries, without duplication,

(a)    PIK Interest, “PIK Interest” (as defined in the Senior Secured Notes
Indenture), and interest expense attributable to Capital Lease Obligations;

(b)    capitalized interest;

(c)    commissions, discounts and other fees and charges owed with respect to
letters of credit and bankers’ acceptance financing;

(d)    net payments pursuant to Currency Agreements and Interest Rate
Agreements;

(e)    dividends accrued in respect of all Preferred Stock held by Persons other
than the Borrower or a Wholly-Owned Subsidiary (other than dividends payable
solely in Capital Stock (other than Disqualified Stock) of the Borrower);

(f)    interest incurred in connection with Investments in discontinued
operations;

(g)    interest actually paid by the Borrower or any such Restricted Subsidiary
under any Guarantee of Indebtedness or other obligation of any Person; and

(h)    the cash contributions to any employee stock ownership plan or similar
trust to the extent such contributions are used by such plan or trust to pay
interest or fees to any Person (other than the Borrower) in connection with
Indebtedness Incurred by such plan or trust.

Notwithstanding the foregoing, there shall be excluded from Consolidated
Interest Expense (1) Consolidated Interest Expense with respect to any
Production Payments to the extent such Production Payments are excluded from the
definition of “Indebtedness” and (2) noncash interest expense incurred in
connection with interest rate caps and other interest rate and currency options
that, at the time entered into, resulted in the Borrower and its Restricted
Subsidiaries being either neutral or net payors as to future payouts under such
caps or options.

“Consolidated Net Income” means, for any period, the net income of the Borrower
and its consolidated Restricted Subsidiaries; provided, however, that there
shall not be included in such Consolidated Net Income the following items, in
each case adjusted for income

 

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taxes, using the Borrower’s estimated income tax rate for the applicable period,
attributable to such items excluded from Consolidated Net Income:

(a)    any net income of any Person (other than the Borrower) if such Person is
not a Restricted Subsidiary or that is accounted for by the equity method of
accounting, except that:

(1)    subject to the exclusion contained in clause (e) below, the Borrower’s
equity in the net income of any such Person for such period shall be included in
such Consolidated Net Income up to the aggregate amount of cash actually
distributed by such Person during such period to the Borrower or a consolidated
Restricted Subsidiary as a dividend or other distribution (subject, in the case
of a dividend or other distribution paid to a Restricted Subsidiary, to the
limitations contained in clause (c) below); and

(2)    the Borrower’s cash contributions (net of cash contributions or other
cash distributions from such Person) in connection with a net loss of any such
Person for such period shall be included in determining such Consolidated Net
Income;

(b)    any net income (or loss) of any Person acquired by the Borrower or a
consolidated Restricted Subsidiary in a pooling of interests transaction (or any
transaction accounted for in a manner similar to a pooling of interests) for any
period prior to the date of such acquisition;

(c)    any net income of any consolidated Restricted Subsidiary if such
consolidated Restricted Subsidiary is subject to restrictions, directly or
indirectly, on the payment of dividends or the making of distributions by such
consolidated Restricted Subsidiary, directly or indirectly, to the Borrower,
except that:

(1)    subject to the exclusion contained in clause (e) below, the Borrower’s
equity in the net income of any such consolidated Restricted Subsidiary for such
period shall be included in such Consolidated Net Income up to the aggregate
amount of cash actually distributed (or, if greater, for purposes of calculation
of the Consolidated Coverage Ratio only, permitted at the date of determination
to be distributed) by such consolidated Restricted Subsidiary during such period
to the Borrower or another consolidated Restricted Subsidiary as a dividend or
other distribution (subject, in the case of a dividend or other distribution
paid to another consolidated Restricted Subsidiary, to the limitation contained
in this clause); and

(2)    the Borrower’s cash contributions in connection with a net loss of any
such consolidated Restricted Subsidiary for such period shall be included in
determining such Consolidated Net Income;

(d)    any gain (or loss) realized upon the sale or other disposition of any
assets of the Borrower, its consolidated Subsidiaries or any other Person
(including pursuant to any sale-and-leaseback arrangement) which are not sold or
otherwise disposed of in the ordinary course of business and any gain (or loss)
realized upon the sale or other disposition of any Capital Stock of any Person;

 

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(e)    any impairment losses on Oil and Gas Properties;

(f)    extraordinary or non-recurring gains or losses;

(g)    any unrealized non-cash gains or losses or charges in respect of Hedging
Obligations (including those resulting from the application of ASC815);

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

(i)    any income from assets or businesses classified as discontinued
operations;

(j)    the cumulative effect of a change in accounting principles; and

(k)    to the extent deducted in the calculation of Consolidated Net Income, any
non-cash or non-recurring charges relating to any premium or penalty paid,
write-off of deferred financing costs or other financial recapitalization
charges in connection with redeeming or retiring any Indebtedness prior to its
Stated Maturity will be excluded, in each case, for such period.

Notwithstanding the foregoing, for the purpose of Section 6.02 only (but not the
calculation of the Consolidated Coverage Ratio for purposes of determining
compliance with such covenant), there shall be excluded from Consolidated Net
Income any repurchases, repayments or redemptions of Investments, proceeds
realized on the sale of Investments or return of capital to the Borrower or a
Restricted Subsidiary to the extent such repurchases, repayments, redemptions,
proceeds or returns increase the amount of Restricted Payments permitted under
such section pursuant to Section 6.02(a)(3)(iii). In addition, for purposes of
this definition, the term “non-recurring” means any charge, expense, loss or
gain as of any date that is not reasonably likely to recur within the two years
following the date of occurrence of such charge, expense, loss or gain; provided
that if there is a charge, expense, loss or gain similar to such expense, loss
or gain within the two years preceding such date, such expense, loss or gain
shall not be deemed non-recurring and; provided further, that severance payments
shall be considered “non-recurring” regardless of the frequency of the payment
of such payments.

“Consolidated Subsidiaries” means, for any Person, any Subsidiary or other
entity the accounts of which would be consolidated with those of such Person in
its consolidated financial statements in accordance with GAAP.

“Contingent Obligations” means, with respect to any Person, any obligation of
such Person guaranteeing any leases, dividends or other obligations that do not
constitute Indebtedness (“primary obligations”) of any other Person (the
“primary obligor”) in any manner, whether directly or indirectly, including,
without limitation, any obligation of such Person, whether or not contingent:

(a)    to purchase any such primary obligation or any property constituting
direct or indirect security therefor;

 

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(b)    to advance or supply funds:

(1)    for the purchase or payment of any such primary obligation, or

(2)    to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor; or

(c)    to purchase property, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the primary
obligor to make payment of such primary obligation against loss in respect
thereof.

“Control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
“Controlling” and “Controlled” have meanings correlative thereto.

“Counterpart Agreement” means a Counterpart Agreement substantially in the form
of Exhibit C delivered by a Guarantor pursuant to Section 5.14.

“Credit Exposure” means, with respect to any Lender at any time, an amount equal
to the aggregate principal amount of its Term Loans outstanding.

“Credit Facilities” means, collectively, one or more debt facilities (including,
without limitation, the First Lien RBL Credit Agreement, this Agreement and the
Junior Lien Credit Agreement), capital markets financings or other financing
arrangements (including commercial paper facilities or indentures) providing for
revolving credit loans, term loans, letters of credit, bankers acceptances,
notes or other long-term indebtedness, including any mortgages, guarantees,
collateral documents, instruments and agreements executed in connection
therewith, and any amendments, supplements, modifications, extensions, renewals,
restatements or refundings thereof, in whole or in part, and any indentures or
credit facilities or commercial paper facilities that replace, refund,
supplement or refinance any part of the loans, notes, other credit facilities or
commitments thereunder, including any such replacement, refunding, supplemental
or refinancing facility, arrangement or indenture that increases the amount
permitted to be borrowed or issued thereunder or alters the maturity thereof or
adds additional borrowers or guarantors thereunder and whether by the same or
any other agent, trustee, lender or group of lenders or holders.

“Credit Parties” means collectively, the Borrower and each Guarantor and each
individually, a “Credit Party”.

“Crude Oil” means all crude oil and condensate.

“Currency Agreement” means any Swap Agreement with respect to currency values,
including foreign exchange contract, currency swap agreement or other similar
agreement with respect to currency values.

 

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“Default” means any event or condition which constitutes an Event of Default or
which upon notice, lapse of time or both would, unless cured or waived, become
an Event of Default.

“Defaulting Lender” means any Lender that (a) has failed, within two (2)
Business Days of the date required to be funded or paid, to (i) fund any portion
of its Loans or (ii) pay over to the Administrative Agent or any Lender any
other amount required to be paid by it hereunder, unless, in the case of clause
(i) above, such Lender notifies the Administrative Agent in writing that such
failure is the result of such Lender’s good faith determination that a condition
precedent to funding (specifically identified and including the particular
Default, if any) has not been satisfied, (b) has notified the Borrower, the
Administrative Agent or any Lender in writing, or has made a public statement,
to the effect that it does not intend or expect to comply with any of its
funding obligations under this Agreement (unless such writing or public
statement indicates that such position is based on such Lender’s good faith
determination that a condition precedent to funding (specifically identified and
including the particular Default, if any) cannot be satisfied), (c) has failed,
within three (3) Business Days after request by the Administrative Agent, acting
in good faith, to provide a certification in writing from an authorized officer
of such Lender that it will comply with its obligations to fund prospective
Loans under this Agreement, provided that such Lender shall cease to be a
Defaulting Lender pursuant to this clause (c) upon receipt by the Administrative
Agent of such certification in form and substance satisfactory to it and the
Administrative Agent, (d) has, or has a parent that has, on or after the
Effective Date, become the subject of a Bankruptcy Event or (e) becomes the
subject of a Bail-In Action.

“Deposit Account Control Agreement” means a deposit account control agreement to
be executed and delivered among any Credit Party, the Collateral Trustee and
each bank at which such Credit Party maintains any deposit account, in each
case, in accordance with such bank’s standard form of control agreement and
acceptable to the Collateral Trustee as to its rights and obligations, as the
same may be amended, restated, replaced, supplemented or otherwise modified from
time to time.

“Determination Date” means, February 28 (or February 29 in a leap year) and
August 31 of each year.

“DIP Financing” means any post-petition financing under Section 364 of the
Bankruptcy Code or any comparable provision of any other Bankruptcy Law.

“Disinterested Member” means, with respect to any transaction, a member of the
Borrower’s Board of Directors who does not have any material direct or indirect
financial interest (other than as an owner of Equity Interests in the Borrower
or as an officer, manager or employee of the Borrower or any Restricted
Subsidiary) in or with respect to such transaction and is not an Affiliate, or
an officer, director, member of a supervisory, executive or management board or
employee of any Person (other than the Borrower or a Restricted Subsidiary), who
has any direct or indirect financial interest in or with respect to such
transaction.

 

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“Disclosed Matters” means the actions, suits and proceedings and the
environmental matters disclosed in Schedule 3.06.

“Disposition” or “Dispose” means the sale, transfer, conveyance, license, lease,
farm-out, exchange or other disposition (including any sale and leaseback
transaction) of any Property by any Person, including any sale, assignment,
transfer or other disposal, with or without recourse, of any notes or accounts
receivable or any rights and claims associated therewith.

“Disqualified Institution” means a Person identified in writing to the
Administrative Agent by the Borrower on or prior to the Effective Date, which
list may be updated from time to time after the Effective Date at the request of
the Borrower with the consent of the Administrative Agent (not to be
unreasonably withheld or delayed). For the avoidance of doubt, the
Administrative Agent shall be permitted to post the list Disqualified
Institutions to the Lenders, and any additional list of Disqualified
Institutions will be available for inspection by any Lender upon request to the
Administrative Agent.

“Disqualified Stock” means, with respect to any Person, any Equity Interest
which by its terms (or by the terms of any security into which it is convertible
or for which it is exchangeable at the option of the holder) or upon the
happening of any event:

(a)    matures or is mandatorily redeemable (other than redeemable only for
Equity Interest of such Person which is not itself Disqualified Stock) pursuant
to a sinking fund obligation or otherwise;

(b)    is convertible or exchangeable at the option of the holder for
Indebtedness or Disqualified Stock; or

(c)    is mandatorily redeemable or must be purchased upon the occurrence of
certain events or otherwise, in whole or in part; in each case on or prior to
the 181st day after the Term Loan Maturity Date; provided, however, that any
Equity Interest that would not constitute Disqualified Stock but for provisions
thereof giving holders thereof the right to require such Person to purchase or
redeem such Equity Interest upon the occurrence of an “asset sale” or “change of
control” occurring prior to the 181st day after the Term Loan Maturity Date
shall not constitute Disqualified Stock if:

(1)    the “asset sale” or “change of control” provisions applicable to such
Equity Interest are not more favorable to the holders of such Equity Interest
than the terms applicable to the Loans in Section 2.08 and 6.04 and

(2)    any such requirement only becomes operative after compliance with such
terms applicable to the Loans, including the prepayment or repayment of any
Loans tendered pursuant thereto. The amount of any Disqualified Stock that does
not have a fixed redemption, repayment or repurchase price will be calculated in
accordance with the terms of such Disqualified Stock as if such Disqualified
Stock were redeemed, repaid or repurchased on any date on which the amount of
such Disqualified Stock is to be determined pursuant to this Agreement;
provided, however, that if such Disqualified Stock could not be

 

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required to be redeemed, repaid or repurchased at the time of such
determination, the redemption, repayment or repurchase price will be the book
value of such Disqualified Stock as reflected in the most recent financial
statements of such Person.

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

“Dollar Equivalent” means with respect to any monetary amount in a currency
other than Dollars, at any time for determination thereof, the amount of Dollars
obtained by converting such foreign currency involved in such computation into
Dollars at the spot rate for the purchase of Dollars with the applicable foreign
currency as published in The Wall Street Journal in the “Exchange Rates” column
under the heading “Currency Trading” on the date two (2) Business Days prior to
such determination. Except as described in Section 6.01, whenever it is
necessary to determine whether the Borrower or any Restricted Subsidiary has
complied with any covenant in this Agreement or a Default has occurred and an
amount is expressed in a currency other than Dollars, such amount will be
treated as the Dollar Equivalent determined as of the date such amount is
initially determined in such currency.

“Dollars” or “$” refers to lawful money of the United States of America.

“Domestic Subsidiary” means, with respect to any Person, a Subsidiary of such
Person that is incorporated or formed under the laws of the United States of
America, any state thereof or the District of Columbia.

“Dutch Auction” has the meaning assigned to such term in Section 10.04(e).

“East Texas/North Louisiana Area” has the meaning assigned to such term in the
BG Joint Development Agreement as in effect on the Effective Date and as amended
or restated thereafter.

“EBG Resources” means EBG Resources, LLC, a Delaware limited liability company.

“EBITDA” for any period means the sum of Consolidated Net Income, plus the
following to the extent deducted in calculating such Consolidated Net Income:

(a)    all income tax expense of the Borrower and its consolidated Restricted
Subsidiaries;

(b)    Consolidated Interest Expense;

(c)    depreciation, depletion, exploration and amortization (including
amortization of goodwill and other intangibles but excluding amortization of
prepaid cash expenses that were paid in a prior period) expense of the Borrower
and its consolidated Restricted Subsidiaries (excluding amortization of expenses
attributable to a prepaid operating activity item that was paid in cash in a
prior period);

 

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(d)    all other non-cash charges of the Borrower and the consolidated
Restricted Subsidiaries (excluding any such non-cash charge to the extent that
it represents an accrual of or reserve for cash expenditures in any future
period other than non-cash charges resulting from the application of Financial
Accounting Standards Board Accounting Standards Codification Subtopic 410-20 for
Asset Retirement Obligations); and

(e)    unrealized non-cash foreign exchange losses of the Borrower and the
consolidated Restricted Subsidiaries,

in each case, for such period, and less, to the extent included in calculating
such Consolidated Net Income and in excess of any costs or expenses attributable
thereto and deducted in calculating such Consolidated Net Income, the sum of:

(1)    the amount of deferred revenues that are amortized during such period and
are attributable to reserves that are subject to Volumetric Production Payments;
and

(2)    amounts recorded in accordance with GAAP as repayments of principal and
interest pursuant to Dollar-Denominated Production Payments.

Notwithstanding the foregoing, the provision for taxes based on the income or
profits of, and the depreciation and amortization and noncash charges of, a
consolidated Restricted Subsidiary shall be added to Consolidated Net Income to
compute EBITDA only to the extent (and in the same proportion, including by
reason of minority interests) that the net income or loss of such Restricted
Subsidiary was included in calculating Consolidated Net Income and only if a
corresponding amount would be permitted at the date of determination to be
dividended to the Borrower by such Restricted Subsidiary without prior approval
(that has not been obtained), pursuant to the terms of its charter and all
agreements, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to such Restricted Subsidiary or its
stockholders.

“EEA Financial Institution” means (a) any credit institution or investment firm
established in any EEA Member Country which is subject to the supervision of an
EEA Resolution Authority, (b) any entity established in an EEA Member Country
which is a parent of an institution described in clause (a) of this definition,
or (c) any financial institution established in an EEA Member Country which is a
subsidiary of an institution described in clauses (a) or (b) of this definition
and is subject to consolidated supervision with its parent.

“EEA Member Country” means any of the member states of the European Union,
Iceland, Liechtenstein, and Norway.

“EEA Resolution Authority” means any public administrative authority or any
person entrusted with public administrative authority of any EEA Member Country
(including any delegee) having responsibility for the resolution of any EEA
Financial Institution.

“Effective Date” means the date on which the conditions specified in
Section 4.01 are satisfied (or waived in accordance with Section 10.02).

 

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“Eligible Assignee” means (a) a Lender, (b) an Affiliate of a Lender, (c) a
Related Fund or an Approved Fund of a Lender, (d) any and all of the Backstop
Commitment Parties and (e) any other Person (other than a natural person)
approved by the Administrative Agent (acting at the written direction of the
Majority Lenders); provided that notwithstanding the foregoing, “Eligible
Assignee” shall not include the Borrower, any of the Borrower’s Affiliates or a
Disqualified Institution (provided, further, that the immediately preceding
proviso shall not apply to Fairfax or the ESAS Parties). Notwithstanding the
foregoing, each Credit Party and the Lenders acknowledge and agree that the
Administrative Agent shall not have any responsibility or obligation to
determine whether any Lender or potential Lender is a Disqualified Institution
and the Administrative Agent shall have no liability with respect to any
assignment made to a Disqualified Institution.

“Environmental Laws” means all laws, rules, regulations, codes, ordinances,
orders, decrees, judgments, injunctions, notices or binding agreements issued,
promulgated or entered into by any Governmental Authority, relating in any way
to the environment, preservation or reclamation of natural resources, the
management, release or threatened release of any Hazardous Material or to health
and safety matters.

“Environmental Liability” means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of any Credit Party directly or indirectly resulting
from or based upon (a) violation of any Environmental Law, (b) the generation,
use, handling, transportation, storage, treatment or disposal of any Hazardous
Materials, (c) exposure to any Hazardous Materials, (d) the release or
threatened release of any Hazardous Materials into the environment or (e) any
contract, agreement or other consensual arrangement pursuant to which liability
is assumed or imposed with respect to any of the foregoing.

“EOC” means EXCO Operating Company, LP, a Delaware limited partnership and its
successors and permitted assigns.

“Equity Interests” means Capital Stock and all warrants, options or other rights
to acquire Capital Stock; provided that any instrument evidencing Indebtedness
convertible or exchangeable into Capital Stock, whether or not such debt
securities include any right of participation with Capital Stock, shall not be
deemed to be an Equity Interest unless and until such instrument is so converted
or exchanged, except, solely for purposes of a pledge of Equity Interests in
connection with this Agreement or any other Loan Document, to the extent such
instrument could be treated as “stock” of a controlled foreign corporation for
purposes of Treasury Regulation Section 1.956-2(c)(2).

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time.

“ERISA Affiliate” means any trade or business (whether or not incorporated)
that, together with any Credit Party, is treated as a single employer under
Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of
ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.

 

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“ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of
ERISA or the regulations issued thereunder with respect to a Plan (other than an
event for which the thirty (30) day notice period is waived); (b) the existence
with respect to any Plan of an “accumulated funding deficiency” (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by any Credit Party or any of its ERISA Affiliates of
any liability under Title IV of ERISA with respect to the termination of any
Plan; (e) the receipt by any Credit Party or any ERISA Affiliate from the PBGC
or a plan administrator of any notice relating to an intention to terminate any
Plan or Plans or to appoint a trustee to administer any Plan; (f) the incurrence
by any Credit Party or any of its ERISA Affiliates of any liability with respect
to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or
(g) the receipt by any Credit Party or any ERISA Affiliate of any notice, or the
receipt by any Multiemployer Plan from any Credit Party or any ERISA Affiliate
of any notice, concerning the imposition of Withdrawal Liability or a
determination that a Multiemployer Plan is, or is expected to be, insolvent or
in reorganization, within the meaning of Title IV of ERISA.

“ESAS” means Energy Strategic Advisory Services LLC, a Delaware limited
liability company.

“ESAS Parties” means (a) ESAS, (b) C. John Wilder and any Affiliate of C. John
Wilder, (c) any spouse or lineal descendants (whether natural or adopted) of C.
John Wilder and any trust solely for the benefit of C. John Wilder and/or his
spouse and/or lineal descendants.

“Event of Default” has the meaning assigned to such term in Article VIII.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the SEC promulgated thereunder.

“Exchange Agreement” means that certain Purchase Agreement, dated as of
March 15, 2017, by and between the Borrower and certain of the Lenders under the
Existing Second Lien Credit Agreements and the other parties thereto as in
effect on the Effective Date and all other agreements, documents, certificates
and instruments delivered in connection therewith, or related thereto.

“Exchange Term Loan Agreement” has the meaning assigned to such term in the
recitals hereto.

“Exchange Term Loan Amendment” means the First Amendment, dated as of March 15,
2017, to the Exchange Term Loan Agreement, among the Borrower, the lenders party
thereto and Wilmington Trust, National Association, as administrative agent
thereunder.

“Excluded Accounts” means deposit accounts that (a) do not contain for a period
of more than three (3) Business Days, deposits in an aggregate amount in excess
of $150,000, (b) are designated solely as accounts for, and are used solely for,
payroll (and related payroll tax) funding, “flex” funding or similar employee
benefits, sales and other tax obligations or trust funds or a Credit Party’s
general corporate overhead costs and expenses (including internal
administrative, legal and accounting costs and expenses, except a Credit Party’s
expenses for

 

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payroll and related taxes), (c) are operating accounts used solely for the
purpose of accruing overnight interest, (d) are used in connection with escrow
agreements or arrangements to which a Credit Party is a party, (e) that certain
interest bearing escrow account held by EOC pursuant to that certain Resolution
adopted by the Louisiana State Mineral and Energy Board as of August 10, 2011,
or (f) the BG Operating Account.

“Excluded Information” means any non-public information with respect to the
Borrower or its Subsidiaries or any of their respective securities to the extent
such information could have a material effect upon, or otherwise be material to,
an assigning Lender’s decision to assign Loans or a purchasing Lender’s decision
to purchase Loans.

“Excluded Taxes” means, with respect to the Administrative Agent, any Lender or
any other recipient of any payment to be made by or on account of any obligation
of the Borrower hereunder or under any other Loan Document, (a) income or
franchise Taxes imposed on (or measured by) its net income by the United States
of America or such other jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits Taxes imposed by the United States of America or any similar Tax imposed
by any other jurisdiction in which the Borrower is located, (c) in the case of a
Lender (other than an assignee pursuant to a request by the Borrower under
Section 2.14(b)), any U.S. federal withholding Tax that is imposed on amounts
payable to such Lender at the time such Lender becomes a party to this Agreement
(or designates a new lending office) or is attributable to such Lender’s failure
to comply with Section 2.12(e), except to the extent that such Lender (or its
assignor, if any) was entitled, at the time of designation of a new lending
office (or assignment), to receive additional amounts with respect to such
withholding Tax pursuant to Section 2.12 and (d) any U.S. federal withholding
Taxes imposed by FATCA.

“EXCO PA” means EXCO Production Company (PA), LLC, a Delaware limited liability
company.

“EXCO Water” means EXCO Water Resources, LLC, a Delaware limited liability
company, and its successors and assigns.

“EXCO WV” means EXCO Production Company (WV), LLC, a Delaware limited liability
company.

“Existing Exchanged Loans” has the meaning specified in the recitals hereto. As
of the Effective Date, the aggregate principal amount of Existing Exchanged
Loans is $682,753,719.

“Existing Second Lien Credit Agreements” has the meaning specified in the
recitals hereto.

“Existing Unsecured Notes” means, collectively, the Issuer’s 7.500% Senior Notes
due 2018 (the “2018 Notes”) and 8.500% Senior Notes due 2022, in each case, as
outstanding on the Effective Date.

 

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“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule
published by the Loan Market Association (or any successor person), as in effect
from time to time.

“Fair Market Value” means, with respect to any asset or liability, the fair
market value of such asset or liability as determined by the Disinterested
Members of the Borrower’s Board of Directors in good faith.

“Fairfax” means Fairfax Financial Holdings Limited, and any of its Affiliates or
Subsidiaries.

“Fairfax Credit Agreement” has the meaning assigned to such term in recitals
hereto.

“Farm-In Agreement” means an agreement whereby a Person agrees to pay all or a
share of the drilling, completion or other expenses of an exploratory or
development well (which agreement may be subject to a maximum payment
obligation, after which expenses are shared in accordance with the working or
participation interest therein or in accordance with the agreement of the
parties) or perform the drilling, completion or other operation on such well in
exchange for an ownership interest in an oil or gas property.

“Farm-Out Agreement” means a Farm-In Agreement, viewed from the standpoint of
the party that transfers an ownership interest to another.

“FASB” means Financial Accounting Standards Board.

“FATCA” means Sections 1471 through 1474 of the Code, as of the Effective Date
(or any amended or successor version that is substantively comparable and not
materially more onerous to comply with), any current or future regulations or
official interpretations thereof, any agreements entered into pursuant to
Section 1471(b)(1) of the Code and any intergovernmental agreement that
implements or modifies the provisions of the foregoing (together with any law
implementing such agreement).

“FCPA” means the Foreign Corrupt Practices Act of 1977, as amended.

“Federal Funds Effective Rate” means, for any day, the weighted average (rounded
upwards, if necessary, to the next 1/100th of 1%) of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published on the next succeeding Business Day by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day that is a Business Day, the average (rounded upwards, if necessary, to
the next 1/100th of 1%) of the quotations for such day for such transactions
received by the Administrative Agent from three Federal funds brokers of
recognized standing selected by it.

“Fee Letter” means any fee letter executed and delivered by the Borrower in
favor of the Administrative Agent and/or the Collateral Trustee in connection
with the execution and delivery of any Loan Document, including any amendment,
modification, waiver or consent to this Agreement or any other Loan Document.

 

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“First Lien RBL Agent” means, at any time, the Person serving at such time as
the “Agent” or “Administrative Agent” under the First Lien RBL Credit Agreement
or any other representative then most recently designated in accordance with the
applicable provisions of the First Lien RBL Credit Agreement, together with its
successors in such capacity.

“First Lien RBL Amendment” means the Seventh Amendment, dated as of March 15,
2017, to the First Lien RBL Credit Agreement, among the Borrower, the lenders
party thereto and JPMorgan Chase Bank, N.A., as administrative agent thereunder
which amends the First Lien RBL Credit Agreement to, among other things,
(x) provide for an aggregate amount of revolving commitments in an amount equal
to $150,000,000, with other terms and economic provisions (including financial
covenants and covenant levels) reasonably satisfactory to the Backstop
Commitment Parties, (y) permit the maximum issuances of warrants and equity
interests in the Borrower contemplated hereunder and under the Senior Secured
Notes Documents and (z) provide that the Backstop Commitment Parties shall be
reasonably satisfied with any new or additional lenders to be party to the First
Lien RBL Credit Agreement on or after the Effective Date in connection with any
permitted increase to the outstanding loans or commitments thereunder.

“First Lien RBL Credit Agreement” means that certain Amended and Restated Credit
Agreement dated as of July 31, 2013 among the Borrower, the lenders party
thereto and JPMorgan Chase Bank, N.A., as administrative agent thereunder, as
the same was amended, supplemented, modified, restated, refinanced or replaced
on or prior to the Effective Date and as may be amended, supplemented, modified,
restated, refinanced or replaced from time to time after the Effective Date in
accordance with the Intercreditor Agreement and with the same and/or different
lenders and/or agents in accordance with the Intercreditor Agreement; provided
that any increase in the principal amount of the Loans or Letters of Credit
(each as defined in the First Lien RBL Credit Agreement) together with any other
borrowings or other extensions of credit thereunder is permitted solely under
Section 6.01(b)(1).

“First Lien RBL Documents” means, collectively, the First Lien RBL Credit
Agreement and each security document, mortgage, note, guarantee, instrument and
other “Loan Documents” (as defined in the First Lien RBL Credit Agreement)
executed or delivered in connection with the First Lien RBL Credit Agreement at
any time.

“First Lien RBL Lenders” means the financial institutions from time to time
party to the First Lien RBL Credit Agreement as lenders.

“Foreign Lender” means any Lender that is not a U.S. Person.

“GAAP” means generally accepted accounting principles in the United States of
America as in effect on the Effective Date.

“Gen IV” means Gen IV Investment Opportunities, LLC and its Affiliate Vega Asset
Partners, LP.

“Governing Body” means, as to any Person, the Board of Directors or, if such
Person is managed by a single entity and not a Board of Directors, the Board of
Directors of the managing entity of such Person.

 

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“Governmental Authority” means the government of the United States of America,
any other nation or any political subdivision thereof, whether state or local,
and any agency, authority, instrumentality, regulatory body, court, central bank
or other entity exercising executive, legislative, judicial, taxing, regulatory
or administrative powers or functions of or pertaining to government (including
any supra-national bodies such as the European Union or the European Central
Bank).

“Governmental Requirement” means any applicable law, statute, code, ordinance,
order, determination, rule, regulation, judgment, decree, injunction, franchise,
permit, certificate, license, authorization or other directive or requirement,
whether now or hereinafter in effect, including, without limitation,
Environmental Laws, energy and public utility laws and regulations and
occupational, safety and health standards or controls, of any Governmental
Authority.

“Guarantee” of or by any Person (in this definition, the “guarantor”) means any
obligation, contingent or otherwise, of the guarantor guaranteeing or having the
economic effect of guaranteeing any Indebtedness or other obligation of any
other Person (the “primary obligor”) in any manner, whether directly or
indirectly, and including any obligation of the guarantor, direct or indirect,
(a) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation or to purchase (or to advance or
supply funds for the purchase of) any security for the payment thereof, (b) to
purchase or lease property, securities or services for the purpose of assuring
the owner of such Indebtedness or other obligation of the payment thereof,
(c) to maintain working capital, equity capital or any other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (d) as an account party
in respect of any letter of credit or letter of guaranty issued to support such
Indebtedness or obligation; provided, that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business.

“Guaranteed Liabilities” has the meaning assigned to such term in Section 7.01.

“Guarantor” means Borrower (with respect to the Obligations of the other Credit
Parties) and each Restricted Subsidiary that is a party hereto or hereafter
executes and delivers to the Administrative Agent and the Lenders, a Counterpart
Agreement pursuant to Section 5.14 or otherwise.

“Guaranty” means a Guarantee by a Guarantor of the Obligations.

“Hazardous Materials” means all explosive or radioactive substances or wastes
and all hazardous or toxic substances, wastes or other pollutants, including
petroleum or petroleum distillates, asbestos or asbestos containing materials,
polychlorinated biphenyls, radon gas, infectious or medical wastes and all other
substances or wastes of any nature regulated pursuant to any Environmental Law.

“Hedging Obligations” means, with respect to any Person, the obligations of such
Person under any Swap Agreement, including Currency Agreements, Interest Rate
Agreements and Commodity Agreements.

 

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“Hydrocarbons” means all Crude Oil and Natural Gas produced from or attributable
to the Oil and Gas Properties of the Credit Parties.

“Incur” means issue, assume, Guarantee, incur or otherwise become liable for
Indebtedness; provided, however, that any Indebtedness of a Person existing at
the time such Person becomes a Restricted Subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be Incurred by such
Person at the time it becomes a Restricted Subsidiary. Notwithstanding the
foregoing proviso, any Indebtedness that is extinguished, retired or repaid in
connection with a Person merging with or becoming a Subsidiary of a Restricted
Subsidiary will not be deemed to be the Incurrence of Indebtedness. The term
“Incurrence” when used as a noun shall have a correlative meaning.

Solely for purposes of determining compliance with Section 6.01 of this
Agreement the following will not be deemed to be the Incurrence of Indebtedness:

(a)    amortization of debt discount or the accretion of principal with respect
to a non-interest bearing or other discount security;

(b)    the payment of regularly scheduled interest in the form of additional
Indebtedness of the same instrument or the payment of regularly scheduled
dividends on Capital Stock in the form of additional Capital Stock of the same
class and with the same terms;

(c)    the obligation to pay a premium in respect of Indebtedness arising in
connection with the issuance of a notice of redemption or making of a mandatory
offer to purchase such Indebtedness; and

(d)    unrealized losses or charges in respect of Hedging Obligations (including
those resulting from the application of ASC815).

“Indebtedness” means, with respect to any Person on any date of determination
(without duplication):

(a)    the principal in respect of (1) indebtedness of such Person for money
borrowed and (2) indebtedness evidenced by notes, debentures, bonds or other
similar instruments for the payment of which such Person is responsible or
liable, including, in each case, any premium on such indebtedness to the extent
such premium has become due and payable;

(b)    all Capital Lease Obligations of such Person and all Attributable Debt in
respect of Sale/Leaseback Transactions entered into by such Person;

(c)    all obligations of such Person issued or assumed as the deferred purchase
price of property, all conditional sale obligations of such Person and all
obligations of such Person under any title retention agreement (but excluding
trade accounts payable arising in the ordinary course of business);

 

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(d)    all obligations of such Person for the reimbursement of any obligor on
any letter of credit, bankers’ acceptance or similar credit transaction (other
than 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 payment on the letter
of credit);

(e)    the amount of all obligations of such Person with respect to the
redemption, repayment or other repurchase of any Disqualified Stock of such
Person or, with respect to any Subsidiary of such Person, the amount of all
obligations of such Subsidiary with respect to any Preferred Stock of such
Subsidiary, the principal amount of such Disqualified Stock or Preferred Stock
to be determined in accordance with this Agreement;

(f)    all obligations of the type referred to in clauses (a) through (e) above
of other Persons and all dividends of other Persons for the payment of which, in
either case, such Person is responsible or liable, directly or indirectly, as
obligor, guarantor or otherwise, including by means of any Guarantee;

(g)    all obligations of the type referred to in clauses (a) through (f) above
of other Persons secured by any Lien on any property or asset of such Person
(whether or not such obligation is assumed by such Person), the amount of such
obligation being deemed to be the lesser of the value of such property or assets
and the amount of the obligation so secured;

(h)    to the extent not otherwise included in this definition, Hedging
Obligations (after giving effect to any netting obligations) of such Person; and

(i)    any warranties or guaranties by such Person of production or payment with
respect to a Production Payment;

provided, however, that notwithstanding the foregoing, Indebtedness shall be
deemed not to include (1) Contingent Obligations (other than of a type
(x) referenced in clause (b)(2) of the definition thereof, (y) the primary
obligation (as referenced in such definition) of which constitutes damages (of
any kind whatsoever, including actual, special, direct, consequential or
punitive) or a claim therefor as to which there is a reasonable possibility of
an adverse determination (but excluding any such damages or claims with respect
to which the applicable third party insurance provider has not denied coverage)
or (z) in accordance with GAAP, that would be required to be shown on the
balance sheet of any obligor as indebtedness) incurred in the ordinary course of
business (provided that this clause (1) shall not apply for purposes of
determining what constitutes a “primary obligation” for purposes of the
definition of Contingent Obligations); (2) deferred or prepaid revenues;
(3) purchase price holdbacks in respect of a portion of the purchase price of an
asset to satisfy warranty or other unperformed obligations of the respective
seller; (4) any obligation (but excluding any obligation constituting debt for
borrowed money, including under obligations referenced under immediately
preceding clauses (a) and (b)) of a Person in respect of a Farm-In Agreement,
Farm-Out Agreement, joint

 

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development arrangements or similar arrangement whereby such Person agrees to
pay all or a share of the drilling, completion or other expenses of an
exploratory or development well (which agreement may be subject to a maximum
payment obligation, after which expenses are shared in accordance with the
working or participation interest therein or in accordance with the agreement of
the parties) or perform the drilling, completion or other operation on such well
in exchange for an ownership interest in an Oil and Gas Property; (5) in-kind
obligations relating to net oil, natural gas liquids or natural gas balancing
positions arising in the ordinary course of business; (6) in the case of the
Borrower and its Restricted Subsidiaries, intercompany liabilities in connection
with the cash management, tax and accounting operations between and among Credit
Parties; (7) any obligations in respect of appraisal rights and the settlement
of any claims or actions (whether actual, contingent or potential) with respect
thereto; (8) non-compete or consulting obligations incurred in connection with
any acquisition; (9) reserves for deferred income taxes; and (10) obligations
with respect to prepayments received in the ordinary course of business under
operating agreements, development agreements, offtake agreements or similar
arrangements.

Notwithstanding anything in this Agreement to the contrary, Indebtedness shall
not include, and shall be calculated without giving effect to, the effects of
Accounting Standards Codification Topic No. 815, Derivatives and Hedging, and
related interpretations to the extent such effects would otherwise increase or
decrease an amount of Indebtedness for any purpose under this Agreement as a
result of accounting for any embedded derivatives created by the terms of such
Indebtedness.

The amount of Indebtedness of any Person at any date shall be the outstanding
balance at such date of all obligations as described above; provided, however,
that in the case of Indebtedness sold at a discount, the amount of such
Indebtedness at any time will be the accreted value thereof at such time.

“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or
with respect to any payment made by or on account of any obligation of any
Credit Party under any Loan Document and (b) to the extent not otherwise
described in clause (a), Other Taxes.

“Indemnitee” has the meaning assigned to such term in Section 10.03.

“Independent Qualified Party” means an investment banking firm, accounting firm
or appraisal firm of national standing; provided, however, that such firm is not
an Affiliate of the Borrower.

“Information” has the meaning assigned to such term in Section 10.12.

“Initial Reserve Report” means collectively, the reserve report prepared by the
Approved Petroleum Engineers with respect to the Proved Reserves of the Borrower
and its Restricted Subsidiaries as of December 31, 2016.

“Intercreditor Agreement” means that certain Intercreditor Agreement dated as of
October 19, 2015, among (after giving effect to the Intercreditor Agreement
Amendment) the First Lien RBL Agent, the Priority Lien Collateral Trustee and
the Collateral Trustee (and acknowledged and agreed by the Credit Parties), as
the same may be amended, restated,

 

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amended and restated, supplemented, replaced (whether upon or after termination
or otherwise) modified or restated in accordance with the terms thereof. The
Intercreditor Agreement as in effect on the Effective Date (after giving effect
to the Intercreditor Agreement Amendment) is in the form attached hereto as
Exhibit G.

“Intercreditor Agreement Amendment” means the Amendment, dated as of March 15,
2017, to the Intercreditor Agreement, among the First Lien RBL Agent and the
Collateral Trustee (as defined in the Existing Second Lien Credit Agreements)
(and acknowledged and agreed by the Credit Parties, the Priority Lien Collateral
Trustee and the Collateral Trustee).

“Interest Payment Date” means, with respect to any Term Loan, commencing
June 20, 2017, (i) March 20, June 20, September 20 and December 20 of each year
and (ii) the Term Loan Maturity Date.

“Interest Rate Agreement” means any Swap Agreement with respect to exposure to
interest rates, including an interest rate swap agreement, interest rate cap
agreement or other financial agreement or arrangement with respect to exposure
to interest rates.

“Investment” means, with respect to any Person, all investments by such Person
in other Persons (including Affiliates) in the form of loans (including
Guarantees of Indebtedness or other obligations), advances or capital
contributions (excluding accounts receivable, credit card and debit card
receivables, trade credit and advances to customers and commission, travel and
similar advances to employees, directors, officers, members of management,
manufacturers and consultants, in each case, made in the ordinary course of
business), purchases or other acquisitions for consideration of Indebtedness,
Equity Interests or other securities issued by any other Person, together with
all items that are or would be classified as investments on a balance sheet
prepared in accordance with GAAP.

For purposes of the definition of “Unrestricted Subsidiary” and Section 6.02:

(a)    “Investments” shall include the portion (proportionate to the Borrower’s
Equity Interest in such Subsidiary) of the Fair Market Value of the net assets
of a Subsidiary of the Borrower at the time that such Subsidiary is designated
an Unrestricted Subsidiary; provided that upon a redesignation of such
Subsidiary as a Restricted Subsidiary, the Borrower shall be deemed to continue
to have a permanent “Investment” in an Unrestricted Subsidiary in an amount (if
positive) equal to (1) the Borrower’s “Investment” in such Subsidiary at the
time of such redesignation less (2) the portion (proportionate to the Borrower’s
Equity Interest in such Subsidiary) of the Fair Market Value of the net assets
of such Subsidiary at the time of such redesignation;

(b)    any Property transferred to or from an Unrestricted Subsidiary shall be
valued at its fair market value at the time of such transfer, as in each case as
determined in good faith by the Board of Directors of the Borrower; and

(c)    the amount of any Investment outstanding at any time shall be the
original cost of such Investment, reduced by any subsequent dividend,
distribution, interest payment, return of capital, repayment or other amount
received in cash by the Borrower or a Restricted Subsidiary in respect of such
Investment.

 

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

“IRS” means the United States Internal Revenue Service.

“Junior Lien” means a Lien junior in priority to the Senior Priority Liens and
the Priority Liens and equal in priority to the Junior Priority Liens, but which
is junior in right of the payment waterfall (as provided in the Collateral Trust
Agreement) to the Junior Priority Lien, granted by the Borrower or any Guarantor
in favor of holders of Junior Lien Debt (or any collateral trustee or
representative in connection therewith) at any time, upon any Property of the
Borrower or any Guarantor to secure Junior Lien Obligations (provided that, in
all events, such Property shall also be subject to Liens securing such
aforementioned Senior Priority Liens, the Priority Liens and Junior Priority
Liens).

“Junior Lien Administrative Agent” means the administrative agent under the
Junior Lien Credit Agreement designated pursuant to the Junior Lien Credit
Agreement, together with its successors and assigns. As of the Effective Date,
the Junior Lien Administrative Agent is Wilmington Trust, National Association.

“Junior Lien Credit Agreement” means that certain Term Loan Credit Agreement
dated as of October 19, 2015 among the Borrower, the lenders party thereto, the
Junior Lien Administrative Agent and the Junior Lien Collateral Agent, as the
same was amended on the Effective Date pursuant to the Exchange Term Loan
Amendment and as the same may be amended, supplemented, modified, restated,
refinanced or replaced from time to time after the Effective Date in accordance
with the Collateral Trust Agreement and the Intercreditor Agreement and with the
same and/or different lenders and/or agents in accordance with the Collateral
Trust Agreement and the Intercreditor Agreement; provided that any increase in
the principal amount of the Loans (as defined in the Junior Lien Credit
Agreement) together with any other borrowings or other extensions of credit
thereunder is permitted solely under Section 6.01(b)(3)(y). For the avoidance of
doubt, as of the Effective Date the “Junior Lien Credit Agreement” shall be the
Exchange Term Loan Agreement, as amended pursuant to the Exchange Term Loan
Amendment.

“Junior Lien Collateral Agent” means the collateral trustee or other
representative of lenders or holders of Junior Lien Obligations designated
pursuant to the terms of the Junior Lien Documents, the Collateral Trust
Agreement and the Intercreditor Agreement, in each case, together with its
successors and assigns. The initial Junior Lien Collateral Agent shall be the
Collateral Trustee.

“Junior Lien Debt” means (a) the Indebtedness and other Obligations (as defined
in the Junior Lien Credit Agreement) under the Junior Lien Credit Agreement and
(b) any Indebtedness (other than intercompany Indebtedness owing to the Borrower
or its Subsidiaries) of the Borrower or any Guarantor permitted to be Incurred
under Section 6.01(b)(3)(y) or (z) (including any Refinancing Indebtedness with
respect to Junior Lien Debt with other Junior Lien Debt to the extent
contemplated and permitted by the Intercreditor Agreement and the Collateral
Trust Agreement) that is secured by a Junior Lien and that is permitted to be
Incurred and so

 

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secured under each applicable Secured Debt Document; provided that, in the case
of any Indebtedness referred to in clause (b) of this definition:

(a)    (i) such Indebtedness does not mature and does not have any mandatory or
scheduled payments or sinking fund obligations prior to one-hundred eighty
(180) days after the Term Loan Maturity Date (except as a result of a customary
change of control, events of loss or asset sale repurchase offer provisions) and
(ii) the principal amount of such Indebtedness does not exceed the principal
amount of, plus any accrued and unpaid interest on, the Junior Lien Obligations
being refinanced or exchanged;

(b)    on or before the date on which any such Indebtedness is Incurred by the
Borrower or any Guarantor, such Indebtedness is designated by the Borrower, in
an Officers’ Certificate delivered to the Junior Priority Lien Collateral Agent
and Collateral Trustee, as “Junior Lien Debt,” and such Officers’ Certificate
also certifies that such Indebtedness is permitted and with respect to any other
requirements set forth in the Intercreditor Agreement;

(c)    a Junior Lien Representative is designated with respect to such
Indebtedness and executes and delivers an Additional Secured Debt Designation on
behalf of itself and all holders of such Indebtedness;

(d)    all relevant filings and recordations necessary to ensure that such
Indebtedness is secured by the Collateral in accordance with the applicable
security documents are authorized, executed (if applicable) and recorded in each
appropriate jurisdiction (provided that this clause (d) may be satisfied on a
post-closing basis if permitted by the Junior Lien Representative); and

(e)    all other requirements set forth in the Intercreditor Agreement and in
any applicable security documents as to the confirmation, grant or perfection of
the Liens of the holders of Junior Lien Debt to secure such Indebtedness or
obligations in respect thereof are satisfied;

provided that, unless the Administrative Agent shall otherwise agree in writing
(acting at the written direction of the Majority Lenders), all such Indebtedness
(other than any DIP Financing that is permitted by the Intercreditor Agreement
and other than, for the avoidance of doubt, the Junior Priority Lien Debt) shall
be pari passu in right of payment, it being understood that there may be
different tranches of Junior Lien Debt with different maturities and
amortization profiles, but, unless the Administrative Agent otherwise agree in
writing (acting at the written direction of the Majority Lenders), the principal
amount of Indebtedness under all such tranches must in all other respects be
pari passu in right of payment. Any such Indebtedness (other than any such DIP
Financing) that is not consistent with the foregoing condition for pari passu
treatment in right of payment with the loans under the Junior Priority Lien
Documents shall not constitute Junior Lien Debt.

“Junior Lien Documents” means, collectively, the Loan Documents (as defined in
the Junior Lien Credit Agreement), any indenture, credit agreement or other
agreement or instrument pursuant to which Junior Lien Debt is Incurred and the
documents pursuant to which Junior Lien Obligations are granted.

 

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“Junior Lien Obligations” means Junior Lien Debt and all other principal
(including reimbursement obligations and obligations to provide cash collateral
with respect to letters of credit whether or not drawn), interest (including, to
the extent legally permitted, all interest accrued thereon after the
commencement of any insolvency or liquidation proceeding at the rate, including
any applicable post-default rate even if such interest is not enforceable,
allowable or allowed as a claim in such proceeding), premium (if any), fees,
indemnifications, reimbursements, expenses, and other liabilities in respect
thereof.

“Junior Lien Representative” means, (a) in the case of the Junior Lien Credit
Agreement, the Junior Lien Administrative Agent, and (b) in the case of any
other Series of Junior Lien Debt, the trustee, agent or representative of the
holders of such Series of Junior Lien Debt who maintains the transfer register
for such Series of Junior Lien Debt and is appointed as a representative of the
Junior Lien Debt (for purposes related to the administration of the security
documents) pursuant to the indenture, credit agreement or other agreement
governing such Series of Junior Lien Debt.

“Junior Priority Lien” means a Lien junior in priority to the Senior Priority
Liens and the Priority Liens and senior in priority to the Junior Liens, in each
case, as provided in the Intercreditor Agreement, granted by the Borrower or any
Guarantor in favor of holders of Junior Priority Lien Debt (or any collateral
trustee or representative in connection therewith) at any time, upon any
Property of the Borrower or any Guarantor to secure Junior Priority Lien
Obligations (provided that, in all events, such Property shall also be subject
to Liens securing such aforementioned Senior Priority Liens and Priority Liens).

“Junior Priority Lien Collateral Agent” means the collateral trustee or other
representative of lenders or holders of Junior Priority Lien Obligations
designated pursuant to the terms of the Junior Priority Lien Documents and the
Intercreditor Agreement, in each case, together with its successors and assigns.
As of the Effective Date the Junior Priority Lien Collateral Agent is the
Collateral Agent.

“Junior Priority Lien Debt” means (a) the Indebtedness and other Obligations
under this Agreement and the other Loan Documents and (b) any other Indebtedness
(other than intercompany Indebtedness owing to the Borrower or its Subsidiaries)
of the Borrower or any Guarantor permitted to be Incurred under Section
6.01(b)(3)(x) (including any Refinancing Indebtedness with respect to Junior
Priority Lien Debt with other Junior Priority Lien Debt to the extent
contemplated and permitted by the Intercreditor Agreement) that is secured by a
Junior Priority Lien and that is permitted to be Incurred and so secured under
each applicable Secured Debt Document; provided that, in the case of any
Indebtedness referred to in clause (b) of this definition:

(1)    (i) such Indebtedness does not mature and does not have any mandatory or
scheduled payments or sinking fund obligations prior to one-hundred eighty
(180) days after the Term Loan Maturity Date (except as a result of a customary
change of control or asset sale repurchase offer provisions) and (ii) the
principal amount of such Indebtedness does not exceed the principal amount of,
plus any accrued and unpaid interest on, the Junior Priority Lien Obligations
being refinanced or exchanged;

 

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(2)    on or before the date on which any such Indebtedness is Incurred by the
Borrower or any Guarantor, such Indebtedness is designated by the Borrower, in
an Officers’ Certificate delivered to the Junior Priority Lien Collateral Agent
and Collateral Trustee, as “Junior Priority Lien Debt,” and such Officers’
Certificate also certifies that such Indebtedness is permitted and with respect
to any other requirements set forth in the Intercreditor Agreement;

(3)    a Junior Priority Lien Representative is designated with respect to such
Indebtedness and executes and delivers an Additional Secured Debt Designation on
behalf of itself and all holders of such Indebtedness;

(4)    all relevant filings and recordations necessary to ensure that such
Indebtedness is secured by the Collateral in accordance with the applicable
security documents are authorized, executed (if applicable) and recorded in each
appropriate jurisdiction (provided that this clause (5) may be satisfied on a
post-closing basis if permitted by the Junior Priority Lien Representative); and

(5)    all other requirements set forth in the Collateral Trust Agreement and in
any applicable security documents as to the confirmation, grant or perfection of
the Liens of the holders of Junior Priority Lien Debt to secure such
Indebtedness or obligations in respect thereof are satisfied.

provided that, unless the Administrative Agent shall otherwise agree in writing
(acting at the written direction of the Majority Lenders), all such Indebtedness
(other than any DIP Financing that is permitted by the Intercreditor Agreement
and, for the avoidance of doubt, Junior Lien Debt) shall be pari passu in right
of payment, it being understood that there may be different tranches of Junior
Priority Lien Debt with different maturities and amortization profiles, but,
unless the Administrative Agent otherwise agrees in writing (acting at the
written direction of the Majority Lenders), the principal amount of Indebtedness
under all such tranches must in all other respects be pari passu in right of
payment. Any such Indebtedness (other than any such DIP Financing) that is not
consistent with the foregoing condition for pari passu treatment in right of
payment with the revolving credit loans under the Junior Priority Lien Documents
shall not constitute Junior Priority Lien Debt

“Junior Priority Lien Documents” means, collectively, any indenture, credit
agreement or other agreement or instrument pursuant to which Junior Priority
Lien Debt is Incurred and the documents pursuant to which Junior Priority Lien
Obligations are granted. As of the Effective Date the Loan Documents constitute
Junior Priority Lien Documents.

“Junior Priority Lien Obligations” means Junior Priority Lien Debt and all other
principal (including reimbursement obligations and obligations to provide cash
collateral with respect to letters of credit whether or not drawn), interest
(including, to the extent legally permitted, all interest accrued thereon after
the commencement of any insolvency or liquidation proceeding at the rate,
including any applicable post-default rate even if such interest is not
enforceable, allowable or allowed as a claim in such proceeding), premium (if
any), fees, indemnifications, reimbursements, expenses, and other liabilities in
respect thereof. As of the Effective Date the Obligations constitute Junior
Priority Lien Obligations.

 

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“Junior Priority Lien Representative” means, in the case of any Series of Junior
Priority Lien Debt, the trustee, agent or representative of the holders of such
Series of Junior Priority Lien Debt who maintains the transfer register for such
Series of Junior Priority Lien Debt and is appointed as a representative of the
Junior Priority Lien Debt (for purposes related to the administration of the
security documents) pursuant to the indenture, credit agreement or other
agreement governing such Series of Junior Priority Lien Debt. As of the
Effective Date, the Junior Priority Lien Representative in respect of the Loan
Documents is the Administrative Agent.

“Lenders” means the Persons listed on Schedule 2.01 and any other Person that
shall have become a party hereto pursuant to an Assignment and Assumption, other
than any such Person that ceases to be a party hereto pursuant to an Assignment
and Assumption.

“Liabilities” means, as to any Person, all indebtedness, liabilities and
obligations of such Person, whether matured or unmatured, liquidated or
unliquidated, primary or secondary, direct or indirect, absolute, fixed or
contingent, and whether or not required to be considered pursuant to GAAP.

“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien,
pledge, hypothecation, encumbrance, charge or security interest in, on or of
such asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement (or any financing lease
having substantially the same economic effect as any of the foregoing) relating
to such asset and (c) in the case of securities, any purchase option, call or
similar right of a third party with respect to such securities.

“Liquidity” means an amount equal to (a) the sum of (1) the Borrower’s
Unrestricted Cash and Cash Equivalents and (2) any amounts available to be
borrowed under the First Lien RBL Credit Agreement (to the extent then
available) less (b) the face amount of any letters of credit outstanding under
the First Lien RBL Credit Agreement. With respect to any Interest Payment Date,
Liquidity shall be calculated on a pro forma basis after giving effect to any
payment of cash interest on the Senior Secured Notes and Cash Interest on the
Term Loans expected to be paid on the relevant Interest Payment Date.

“Loan Documents” means this Agreement, any promissory notes executed in
connection herewith, the Security Instruments, any Fee Letter, the Intercreditor
Agreement, the Intercreditor Agreement Amendment, the Collateral Trust Agreement
and all other agreements, instruments, documents and certificates now or
hereafter executed and delivered by a Credit Party to, or in favor of, the
Administrative Agent, the Collateral Trustee or any Lender in connection with
this Agreement or the transactions contemplated hereby.

“Loans” means the loans made by the Lenders to the Borrower pursuant to this
Agreement and shall include the Term Loans.

“Majority Lenders” means, (a) at any time where Fairfax has Credit Exposures
representing more than fifty percent (50%) of the sum of the Aggregate Credit
Exposure,

 

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Hamblin Watsa Investment Counsel, Ltd., acting on behalf of its Affiliates that
are Lenders or (b) at any time the condition in clause (a) of this definition is
not met, Lenders having Credit Exposures representing more than fifty percent
(50%) of the sum of the Aggregate Credit Exposure. The Credit Exposures of any
Defaulting Lender shall be disregarded in determining Majority Lenders at any
time.

“Make-Whole Amount” means (x) in the case of the Term Loans attributable to the
exchange of the Tranche A Exchange Term Loans, with respect to any applicable
repayment date, the greater of (a) 1.0% of the principal amount of the
applicable Term Loans prepaid; and (b) the excess of (1) the present value at
such repayment date of (i) the prepayment price of the applicable Term Loans at
October 26, 2018 (such prepayment price being set forth in the table appearing
in Section 2.07 hereof) plus (ii) all interest that would have accrued on the
applicable Term Loans from the date of repayment through October 26, 2018,
computed using a discount rate equal to the Adjusted Treasury Rate as of such
repayment date plus 50 basis points discounted to the repayment date on a
semi-annual basis (assuming a 360-day year consisting of twelve 30-day months),
over (2) the principal amount of the applicable Term Loans prepaid and (y) in
the case of the Term Loans attributable to the exchange of the Tranche A Fairfax
Term Loans, with respect to any applicable repayment date, with respect to any
payment of such Term Loans, an amount equal to all interest payments which would
have accrued, from the date of such payment through the Term Loan Maturity Date,
on an amount equal to such Term Loans being paid, such interest to be calculated
on such amount at the rate of Cash Interest in effect on such payment date,
without giving effect to any default rate interest which would be due under
Section 2.10(b) hereunder.

“Marcellus Development Costs” means the costs and expenses incurred in the
conduct of development operations in the Appalachian Area pursuant to the
Marcellus JV Documents.

“Marcellus Holding Companies” means one or more Unrestricted Subsidiaries formed
in connection with the Marcellus Joint Venture to facilitate the transfer of an
undivided 49.75% interest in the Marcellus JV Oil and Gas Assets to the
Marcellus JV Partner.

“Marcellus Joint Development Agreement” means that certain Joint Development
Agreement dated as of June 1, 2010, among one or more of the Borrower’s
Subsidiaries, the Marcellus JV Partner, the Marcellus Holding Companies and the
Marcellus JV Operator with respect to the Marcellus Joint Venture.

“Marcellus Joint Venture” means that certain joint venture arrangement between
the Borrower and one or more of its Subsidiaries and an unrelated third party
(the “Marcellus JV Partner”) and one or more of its Subsidiaries to develop and
operate the Marcellus JV Oil and Gas Assets.

“Marcellus JV Closing Date” means June 1, 2010.

“Marcellus JV Documents” means the Marcellus Joint Development Agreement, the
Marcellus Operator LLC Agreement, the Marcellus Midstream LLC Agreement, the
Marcellus Transfer Agreement and any other documents, instruments, agreements or
certificates contemplated by, or executed in connection with, the Marcellus
Joint Development Agreement, in each case, as the same may be amended, modified
or supplemented from time to time.

 

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“Marcellus JV Oil and Gas Assets” has the meaning assigned to the term “Subject
Oil and Gas Assets” in the Marcellus Joint Development Agreement as in effect on
the Marcellus JV Closing Date and as amended or restated thereafter so long as
the Administrative Agent receives an executed copy of any agreement evidencing
any amendment or restatement of such definition (or any definition used in such
definition).

“Marcellus JV Operator” means the operator of the Marcellus JV Oil and Gas
Assets located in the Appalachian Area.

“Marcellus JV Partner” has the meaning assigned to such term in the definition
of “Marcellus Joint Venture”.

“Marcellus Midstream Assets” means the gas gathering and pipeline systems and
related facilities associated with the Marcellus Shale portion of the Marcellus
JV Oil and Gas Assets.

“Marcellus Midstream LLC Agreement” means that certain Second Amended and
Restated Limited Liability Company Agreement of Marcellus Midstream Owner, dated
as of June 1, 2010, as such Limited Liability Company Agreement may thereafter
be amended, supplemented or otherwise modified from time to time.

“Marcellus Midstream Owner” means the direct or indirect owner of the Marcellus
Midstream Assets.

“Marcellus Operator LLC Agreement” means that certain Second Amended and
Restated Limited Liability Company Agreement of the Marcellus JV Operator dated
as of June 1, 2010.

“Marcellus Shale” means (a) with respect to the Commonwealth of Pennsylvania,
those subsurface depths that are below the base of (but excluding) the Haskill
Sandstone Formation (Base of Elk Sequence) formation at a measured depth of
2,758’, as identified by the Litho Density Compensated Neutron Array Induction
Temperature Log dated June 7, 2005 of the Seneca Resources operated Fee PGS SGL
No. 44 (API 37-047-23649) located in Elk County, Pennsylvania, (b) with respect
to the State of West Virginia, those subsurface depths that are below the base
of (but excluding) the Brallier Formation (Base of Elk Sequence) formation at a
measured depth of 6,612’, as identified by the Litho Density Compensated Neutron
Array Induction Temperature Log dated October 8, 2008 of the EXCO – North Coast
Energy, Inc. operated Wentz 4HS (API 47-001-02982) located in Barbour County,
West Virginia, recognizing that actual depths may vary, and (c) with respect to
the State of New York, those subsurface depths that are below the base of (but
excluding) the Genesee Formation at a measured depth of 2,548’, as identified by
the Density/Neutron, Gamma/Temperature Log dated May 6, 2005 of the Fortuna
Energy, Inc. operated Cotton-Hanlon #1 well (API 31-107-23185) located in Tioga
County, New York.

 

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“Marcellus Transfer Agreement” means that certain Membership Interest Transfer
Agreement dated as of June 1, 2010, among the Borrower or one or more of its
Restricted Subsidiaries and the Marcellus JV Partner pursuant to which the
Borrower or one or more of its Restricted Subsidiaries transfers to the
Marcellus JV Partner (a) 100% of the Equity Interests of the Marcellus Holding
Companies and (b) 50% of the Equity Interests of each of the Marcellus JV
Operator and the Marcellus Midstream Owner.

“Material Adverse Effect” means a material adverse effect on (a) the assets or
properties, financial condition, businesses or operations of the Borrower and
the Restricted Subsidiaries taken as a whole, (b) the ability of any Credit
Party to carry out its business as of the date of this Agreement or as proposed
at the date of this Agreement to be conducted, (c) the ability of any Credit
Party to perform fully and on a timely basis its respective obligations under
any of the Loan Documents to which it is a party, or (d) the validity or
enforceability of any of the Loan Documents or the rights and remedies of the
Administrative Agent, the Collateral Trustee or the Lenders under this Agreement
and the other Loan Documents.

“Material Domestic Subsidiary” means any Domestic Subsidiary of the Borrower
that owns or holds, directly or indirectly, assets, properties or interests
(including Oil and Gas Properties, whether owned directly or indirectly) with an
aggregate fair market value, on a consolidated basis, greater than
five percent (5%) of the aggregate fair market value of all of the assets,
properties and interests (including Oil and Gas Properties, whether owned
directly or indirectly) of the Borrower and the Restricted Subsidiaries, on a
consolidated basis; provided that if the aggregate fair market value of all of
the assets, properties and interests (including Oil and Gas Properties, whether
owned directly or indirectly) of all Domestic Subsidiaries that would not
constitute Material Domestic Subsidiaries exceeds 5% of the aggregate fair
market value of all of the assets, properties and interests (including Oil and
Gas Properties, whether owned directly or indirectly) of the Borrower and the
Restricted Subsidiaries, on a consolidated basis, then one or more of such
excluded Domestic Subsidiaries shall for all purposes of this Agreement be
deemed to be Material Domestic Subsidiaries in descending order based on the
aggregate fair market value of their assets, properties or interests (including
Oil and Gas Properties, whether owned directly or indirectly) until such excess
has been eliminated.

“Material Indebtedness” means Indebtedness under the First Lien RBL Documents,
the Senior Secured Notes Documents, the Junior Lien Documents, and the Existing
Unsecured Notes (and, in each case, any Refinancing Indebtedness in respect
thereof) and any other Indebtedness (other than the Loans) of the Borrower or
any one or more of the Restricted Subsidiaries that in each case is in an
aggregate principal amount exceeding $10,000,000. For purposes of determining
Material Indebtedness, the “principal amount” of the obligations of the Borrower
or any Guarantor in respect of any Hedging Obligations at any time shall be the
maximum aggregate amount (giving effect to any netting agreements) that the
Borrower or such Guarantor would be required to pay if the agreements with
respect to such Hedging Obligations were terminated at such time.

“Material Sales Contract” means, as of any date of determination, any agreement
for the sale of Hydrocarbons from the Oil and Gas Properties to which the
Borrower or any Restricted Subsidiary is a party if the aggregate volume of
Hydrocarbons sold pursuant to such agreement during the twelve (12) months
immediately preceding such date equals or exceeds

 

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ten percent (10%) of the aggregate volume of Hydrocarbons sold by the Borrower
and the Restricted Subsidiaries, on a consolidated basis, from the Oil and Gas
Properties during the twelve (12) months immediately preceding such date.

“Maximum Liability” has the meaning assigned to such term in Section 7.10.

“Maximum Rate” has the meaning assigned to such term in Section 10.13.

“Minimum Mortgaged Value” has the meaning assigned to such term in Section
5.12(d).

“Moody’s” means Moody’s Investors Service, Inc. and any successor to its rating
agency business.

“Mortgaged Properties” means the Oil and Gas Properties described in one or more
duly executed, delivered and filed Mortgages evidencing a Lien prior and
superior in right to any other Person (other than the Senior Priority Lien
Collateral Agent and the Priority Lien Collateral Agent) in favor of the
Collateral Trustee for the benefit of the Secured Parties and subject only to
the Liens permitted pursuant to Section 6.07.

“Mortgages” means all mortgages, deeds of trust, amendments to mortgages,
security agreements, assignments of production, pledge agreements, collateral
mortgages, collateral chattel mortgages, collateral assignments, financing
statements and other documents, instruments and agreements evidencing, creating,
perfecting or otherwise establishing the Liens required by Section 5.12. All
Mortgages shall be in form and substance satisfactory to Administrative Agent in
its sole discretion.

“Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3)
of ERISA.

“Natural Gas” means all natural gas, distillate or sulphur, natural gas liquids
and all products recovered in the processing of natural gas (other than
condensate) including, without limitation, natural gasoline, coalbed methane
gas, casinghead gas, iso-butane, normal butane, propane and ethane (including
such methane allowable in commercial ethane).

“Net Cash Proceeds” means:

(a)    with respect to any issuance, Incurrence or Disposition of Capital Stock
or Indebtedness, the cash proceeds of such issuance Incurrence or Disposition
net of attorneys’ fees, accountants’ fees, underwriters’ or placement agents’
fees, discounts or commissions and brokerage, consultant and other fees actually
incurred in connection with such issuance, Incurrence or Disposition and net of
taxes paid or payable as a result thereof; and

(b)    with respect to any Asset Sale, cash payments received therefrom,
including any cash payments received by way of deferred payment of principal
pursuant to a note or installment receivable or otherwise and cash proceeds from
the sale or other disposition of any non-cash consideration received as
consideration, but only as and

 

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when received, but excluding any other consideration received in the form of
assumption by the acquiring Person of Indebtedness or other obligations relating
to such properties, in each case net of (without duplication):

(1)    all legal, title and recording tax expenses, commissions and other fees
and expenses incurred, including without limitation, all attorney’s fees,
accountants’ fees, advisors’ or other consultants’ fees and other fees actually
incurred in connection therewith, and all federal, state, provincial, foreign
and local taxes required to be accrued as a liability under GAAP, as a
consequence of such Asset Sale;

(2)    all payments made on any Indebtedness which is secured by any assets
subject to such Asset Sale, in accordance with the terms of any Lien upon or
other security agreement of any kind with respect to such assets, or which must
by its terms, or in order to obtain a necessary consent to such Asset Sale, or
by applicable law, be repaid out of the proceeds from such Asset Sale;

(3)    all distributions and other payments required to be made to minority
interest holders in Restricted Subsidiaries or to holders of royalties or
similar interests as a result of such Asset Sale;

(4)    the deduction of appropriate amounts provided by the seller as a reserve,
in accordance with GAAP, against any liabilities associated with the property or
other assets disposed in such Asset Sale and retained by the Borrower or any
Restricted Subsidiary after such Asset Sale; and

(5)    any portion of the purchase price from an Asset Sale placed in escrow,
whether as a reserve for adjustment of the purchase price, for satisfaction of
indemnities in respect of such Asset Sale or otherwise in connection with that
Asset Sale; provided, however, that upon the termination of that escrow, Net
Cash Proceeds will be increased by any portion of funds in the escrow that are
released to the Borrower or any Restricted Subsidiary.

provided that, with respect to proceeds of any Asset Sale that are not applied
or invested as provided in Section 2.08(a), no such unapplied or uninvested
proceeds shall constitute Net Cash Proceeds until the aggregate amount of all
such unapplied or uninvested proceeds shall exceed $20,000,000, and then all of
such unapplied or uninvested proceeds shall constitute Net Cash Proceeds.

“Net Working Capital” means (a) all current assets of the Borrower and all of
its Restricted Subsidiaries excluding current assets under any Commodity
Agreements less (b) all current liabilities of the Borrower and all of its
Restricted Subsidiaries, excluding (1) the current liabilities included in
Indebtedness and (ii) any current liabilities under any Commodity Agreements, in
each case as set forth in the consolidated financial statements of the Borrower
prepared in accordance with GAAP.

“Non-Consenting Lender” has the meaning assigned to such term in Section
2.14(c).

 

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“Non-Credit Party Restricted Subsidiary” means a Restricted Subsidiary of the
Borrower that is not a Credit Party.

“Non-Recourse Debt” means Indebtedness:

(a)    as to which neither the Borrower nor any of its Restricted Subsidiaries
(1) provides credit support of any kind (including any undertaking, agreement or
instrument that would constitute Indebtedness), (2) is directly or indirectly
liable as a guarantor, surety or otherwise or (3) constitutes a lender;

(b)    as to which the lenders thereof will not have any recourse to the Equity
Interests or Property of the Borrower or any of its Restricted Subsidiaries
(other than the Equity Interests of an Unrestricted Subsidiary (to the extent
such Unrestricted Subsidiary is the borrower or guarantor of such Non-Recourse
Debt)); and

(c)    no default or event of default with respect to which (including any
rights that the holders thereof 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 of the Borrower or any of its Restricted
Subsidiaries to declare a default or event of default on such other Indebtedness
or cause the payment, repurchase, redemption, defeasance or other acquisition or
retirement for value thereof to be accelerated or payable prior to any scheduled
principal payment, scheduled sinking fund payment or stated maturity.

“Non-Recourse Purchase Money Indebtedness” means Indebtedness (other than
Capital Lease Obligations) of the Borrower or any Guarantor incurred in
connection with the acquisition by the Borrower or such Guarantor in the
ordinary course of business of fixed assets used in the Oil and Gas Business
(including office buildings and other real property used by the Borrower or such
Guarantor in conducting its operations) with respect to which:

(a)    the holders of such Indebtedness agree that they will look solely to the
fixed assets so acquired which secure such Indebtedness, and neither the
Borrower nor any Restricted Subsidiary (1) is directly or indirectly liable for
such Indebtedness (whether as a guarantor, surety or otherwise) or (2) provides
credit support, including any undertaking, Guarantee, agreement or instrument
that would constitute Indebtedness (other than the grant of a Lien on such
acquired fixed assets); and

(b)    no default or event of default with respect to such Indebtedness would
cause, or permit (after notice or passage of time or otherwise), any holder of
any other Indebtedness of the Borrower or a Guarantor to declare a default or
event of default on such other Indebtedness or cause the payment, repurchase,
redemption, defeasance or other acquisition or retirement for value thereof to
be accelerated or payable prior to any scheduled principal payment, scheduled
sinking fund payment or stated maturity.

“NYMEX” means the New York Mercantile Exchange.

“NYMEX Prices” means, as of any date of determination, the forward month prices
for the most comparable hydrocarbon commodity applicable to such future
production

 

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month for a sixty month period (or such shorter period if forward month prices
are not quoted for a reasonably comparable hydrocarbon commodity for the full
sixty month period), with such prices increased by five percent of the last
quoted forward month price of such period for the sixty first month and then
held constant thereafter, as such prices are (a) quoted on the NYMEX (or its
successor) calculated as of a date not more than thirty (30) days prior to the
date of determination (the “calculation date”) and (b) adjusted for energy
content, quality and basis differentials; provided that with respect to
estimated future production for which prices are defined, within the meaning of
SEC guidelines, by contractual arrangements excluding escalations based upon
future conditions, then such contract prices shall be applied to future
production subject to such arrangements.

“Obligations” means any and all obligations of every nature, contingent or
otherwise, whether now existing or hereafter arising, of the Borrower or any
other Credit Party from time to time owed under any Loan Document, whether for
principal, interest, funding indemnification amounts, fees, premium (including,
for the avoidance of doubt, any Make-Whole Amount), expenses (including
reasonable fees and expenses of attorneys, agents and advisors), indemnification
or otherwise.

“OFAC” means the Office of Foreign Assets Control of the United States
Department of Treasury.

“Officers’ Certificate” means a certificate signed on behalf of the Borrower by
any two Responsible Officers of the Borrower, one of whom must be either the
principal executive officer, the chief financial officer, chief accounting
officer, principal accounting officer, controller, treasurer or assistant
treasurer of the Borrower, in a form reasonably acceptable to the Administrative
Agent.

“Oil and Gas Business” means:

(a)    the acquisition, exploration, exploitation, development, operation and
disposition of interests in Hydrocarbons;

(b)    the gathering, marketing, distribution, treating, processing, storage,
refining, selling and transporting of any production from such interests or
properties and the marketing of Hydrocarbons obtained from unrelated Persons;

(c)    any business relating to or arising from exploration for or exploitation,
development, production, treatment, processing, storage, refining,
transportation, gathering or marketing of Hydrocarbons and products produced in
association therewith;

(d)    any other related energy business, including power generation and
electrical transmission business where fuel required by such business is
supplied, directly or indirectly, from Hydrocarbons produced substantially from
properties in which the Borrower or the Restricted Subsidiaries, directly or
indirectly, participate;

(e)    any business relating to oil field sales and service; and

 

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(f)    any activity necessary, appropriate or incidental to the activities
described in the preceding clauses (a) through (e) of this definition.

“Oil and Gas Property” means: (a) direct and indirect interests in and rights
with respect to oil, gas, mineral and related properties and assets of any kind
and nature, direct or indirect, including, without limitation, wellbore
interests, working, royalty and overriding royalty interests, mineral interests,
leasehold interests, production payments, operating rights, net profits
interests, other non-working interests, contractual interests, non-operating
interests and rights in any pooled, unitized or communitized acreage by virtue
of such interest being a part thereof; (b) interests in and rights with respect
to Hydrocarbons other minerals or revenues therefrom and contracts and
agreements in connection therewith and claims and rights thereto (including oil
and gas leases, operating agreements, unitization, communitization and pooling
agreements and orders, division orders, transfer orders, mineral deeds, royalty
deeds, oil and gas sales, exchange and processing contracts and agreements and,
in each case, interests thereunder), and surface interests, fee interests,
reversionary interests, reservations and concessions related to any of the
foregoing; (c) easements, rights-of-way, licenses, permits, leases, and other
interests associated with, appurtenant to, or necessary for the operation of any
of the foregoing; (d) interests in oil, gas, water, disposal and injection
wells, equipment and machinery (including well equipment and machinery), oil and
gas production, gathering, transmission, compression, treating, processing and
storage facilities (including tanks, tank batteries, pipelines and gathering
systems), pumps, water plants, electric plants, gasoline and gas processing
plants, refineries and other tangible or intangible, movable or immovable, real
or personal property and fixtures located on, associated with, appurtenant to,
or necessary for the operation of any of the foregoing; and (e) all seismic,
geological, geophysical and engineering records, data, information, maps,
licenses and interpretations.

“Organizational Documents” means (a) with respect to any corporation, its
certificate or articles of incorporation or organization, as amended, and its
by-laws, as amended, (b) with respect to any limited partnership, its
certificate of limited partnership, as amended, and its partnership agreement,
as amended, (c) with respect to any general partnership, its partnership
agreement, as amended, and (d) with respect to any limited liability company,
its certificate of formation or articles of organization, as amended, and its
limited liability company agreement or operating agreement, as amended.

“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as
a result of a present or former connection between such Recipient and the
jurisdiction imposing such Taxes (other than a connection arising from such
Recipient having executed, delivered, enforced, become a party to, performed its
obligations under, received payments under, received or perfected a security
interest under, or engaged in any other transaction pursuant to, or enforced,
any Loan Document), or sold or assigned an interest in any Loan or Loan
Document).

“Other Taxes” means any present or future stamp, court, documentary, intangible,
recording, filing or similar excise or property Taxes that arise from any
payment made under, from the execution, delivery, performance, enforcement or
registration of, or from the registration, receipt or perfection of a security
interest under, or otherwise with respect to, any Loan Document, except any such
Taxes that are Other Connection Taxes imposed with respect to an assignment
(other than an assignment made pursuant to Section 2.12(b)).

 

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“Participant” has the meaning assigned to such term in Section 10.04.

“Participant Register” has the meaning assigned to such term in Section 10.04.

“Payment Currency” has the meaning assigned to such term in Section 7.07.

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in
ERISA and any successor entity performing similar functions.

“Permitted Acquisition Indebtedness” means Indebtedness of the Borrower or any
of its Restricted Subsidiaries in an aggregate principal amount outstanding not
to exceed $60,000,000 (less the aggregate principal amount outstanding pursuant
to Section 6.01(b)(7) to the extent constituting Refinancing Indebtedness of
Permitted Acquisition Indebtedness) (the foregoing cap, the “Permitted
Acquisition Indebtedness Dollar Cap”) any time and solely to the extent such
Indebtedness was Indebtedness of:

(a)    an acquired Person Incurred prior to the date on which such Person became
a Restricted Subsidiary as a result of having been acquired and not Incurred in
contemplation of such acquisition, or

(b)    a Person that was merged, consolidated or amalgamated with or into the
Borrower or a Restricted Subsidiary and was not Incurred in contemplation of
such merger, consolidation or amalgamation.

provided on the date such Person became a Restricted Subsidiary or the date such
Person was merged, consolidated or amalgamated with or into the Borrower or a
Restricted Subsidiary, as applicable, if, after giving pro forma effect thereto,
the Consolidated Coverage Ratio either (x) equals or exceeds 2.25 to 1.00 or
(y) is greater than the Consolidated Coverage Ratio immediately prior to such
transaction.

“Permitted Business Investments” means Investments and expenditures in respect
of Unproved Reserves made in the ordinary course of, and of a nature that is or
shall have become customary in, the Oil and Gas Business as means of actively
exploiting, exploring for, acquiring, developing, processing, gathering,
marketing or transporting Hydrocarbons through agreements, transactions,
interests or arrangements that permit one to share risks 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:

(a)    ownership interests in Oil and Gas Properties or gathering,
transportation, processing, storage or related systems; and

(b)    entry into, and Investments and expenditures in the form of or pursuant
to, operating agreements, joint venture agreements (including, without
limitation, those relating to the Marcellus Midstream Owner), partnership
agreements, working interests,

 

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royalty interests, mineral leases, processing agreements, Farm-In Agreements,
Farm-Out Agreements, contracts for the sale, transportation or exchange of
Hydrocarbons, production sharing agreements, development agreements (including
without limitation the BG Joint Development Agreement and the Marcellus Joint
Development Agreement), area of mutual interest agreements, unitization
agreements, pooling arrangements, joint bidding agreements, service contracts
and other similar agreements with third parties (including Unrestricted
Subsidiaries), excluding, however, Investments in any corporation or publicly
traded partnership or limited liability company.

“Permitted Investment” means:

(a)    Investments by (i) a Credit Party in another Credit Party or a Person
that will, together with all of such Person’s Subsidiaries, upon the making of
such Investment, become Credit Parties (other than any of such Person’s
Subsidiaries that are designated as Unrestricted Subsidiaries in accordance with
the terms of this Agreement), (ii) by a Non-Credit Party Restricted Subsidiary
in another Non-Credit Party Restricted Subsidiary, (iii) by a Non-Credit Party
Restricted Subsidiary in a Credit Party; and (iv) by a Credit Party in a
Non-Credit Party Restricted Subsidiary in an aggregate amount, together with all
other Investments made pursuant to this clause (a)(iv) since the Effective Date,
not in excess of $30,000,000; provided, that to the extent constituting
Indebtedness, any such Investment under this clause (a) shall be made in
accordance with Section 6.01(b)(4);

(b)    Investments in another Person (1) if, as a result of such Investment,
such other Person is merged or consolidated with or into, or transfers or
conveys all or substantially all its assets to, the Borrower or another Credit
Party (and so long as (A) the Borrower or such other Credit Party is the
survivor of any such merger or consolidation and (B) in connection with any such
Investment all of such Person’s Subsidiaries, upon the making of such
Investment, will become Credit Parties (other than any of such Person’s
Subsidiaries that are designated as Unrestricted Subsidiaries in accordance with
the terms of this Agreement)) or (2) for consideration consisting solely of
Capital Stock of the Borrower; provided, that, in both cases, such Person’s
primary business is a Related Business and provided, further, the aggregate
amount of all such Investments shall not exceed $30,000,000 during the term of
the Loans;

(c)    Investments in cash and Temporary Cash Investments;

(d)    receivables owing to the Borrower or any Restricted Subsidiary if created
or acquired in the ordinary course of business and payable or dischargeable in
accordance with customary trade terms; provided, however, that such trade terms
may include such concessionary trade terms as the Borrower or any such
Restricted Subsidiary deems reasonable under the circumstances;

(e)    payroll, commission, travel, relocation and similar advances to officers
directors and employees to cover matters that are expected at the time of such
advances ultimately to be treated as expenses for accounting purposes and that
are made in the ordinary course of business;

 

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(f)    loans or advances to employees made in the ordinary course of business
consistent with past practices of the Borrower or such Restricted Subsidiary but
in any event not to exceed $3,000,000 in the aggregate outstanding at any one
time;

(g)    stock, obligations or securities received in settlement of debts created
in the ordinary course of business and owing to the Borrower or any Restricted
Subsidiary or in satisfaction of judgments;

(h)    Investments in any Person to the extent such Investment represents the
non-cash portion of the consideration received for (1) an Asset Sale as
permitted pursuant to Section 6.04 or (2) a disposition of assets not
constituting an Asset Sale;

(i)    Investments in any Person where such Investment was acquired by the
Borrower or any of the Restricted Subsidiaries (1) in exchange for any other
Investment or accounts receivable held by the Borrower or any such Restricted
Subsidiary in connection with or as a result of a bankruptcy, workout,
reorganization or recapitalization of the issuer of such other Investment or
accounts receivable or (2) as a result of a foreclosure by the Borrower or any
of the Restricted Subsidiaries with respect to any secured Investment or other
transfer of title with respect to any secured Investment in default;

(j)    Investments in any Person to the extent such Investments consist of
prepaid expenses, negotiable instruments held for collection and lease, utility
and workers’ compensation, performance and other similar deposits made in the
ordinary course of business by the Borrower or any Restricted Subsidiary;

(k)    Investments in any Person to the extent such Investments consist of
Hedging Obligations otherwise permitted under Section 6.01;

(l)    Investments in any Person to the extent such Investment (1) exists on the
Effective Date or (2) is an extension, modification or renewal of any such
Investments described under the immediately preceding clause (1) but only to the
extent not involving additional advances, contributions or other Investments of
cash or other assets or other increases thereof (other than as a result of the
accrual or accretion of interest or original issue discount or the issuance of
pay-in-kind securities, in each case, pursuant to the terms of such Investment
as in effect on the Effective Date);

(m)    Permitted Business Investments;

(n)    Guarantees issued in accordance with Sections 5.14 and 6.01;

(o)    Guarantees of performance or other obligations (other than Indebtedness)
arising in the ordinary course in the Oil and Gas Business, including
obligations under oil and natural gas exploration, development, joint operating
and related agreements and licenses or concessions related to the Oil and Gas
Business;

 

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(p)    any Investment consisting of purchases and acquisitions of inventory,
supplies, material and equipment, purchases of contract rights or licenses or
leases of intellectual property, in each case, in the ordinary course of
business; and

(q)    other Investments in any Person having an aggregate Fair Market Value
(measured on the date each such Investment was made and without giving effect to
subsequent changes in value), when taken together with all other Investments
made pursuant to this clause (q) since the Effective Date, do not exceed
$60,000,000.

With respect to any Permitted Investment, at the time such Permitted Investment
is made, the Borrower will be entitled to divide and classify such Investment in
more than one of the clauses of the definition of “Permitted Investment.”

“Permitted Investors” means (a) the ESAS Parties, (b) Fairfax, (c) any holder of
Senior Secured Notes or Lender under this Agreement and (d) any person (as such
term is used in Sections 13(d) and 14(d) of the Exchange Act) with respect to
which Persons described in clauses (a), (b) and (c) of this definition own the
majority of the aggregate ordinary voting power represented by the issued and
outstanding Equity Interests of the Borrower that is owned by such group.

“Permitted Liens” means, with respect to any Person:

(a)    Senior Priority Liens securing Senior Priority Lien Debt (i) under Credit
Facilities Incurred under Section 6.01(b)(1) and Senior Priority Liens securing
Cash Management Obligations constituting Senior Priority Lien Obligations, in
each case to the extent subject to the Intercreditor Agreement and in an
aggregate amount at any time outstanding (when added to the amount of all other
outstanding Senior Priority Lien Obligations) not exceeding the Senior Priority
Lien Cap and (ii) under Hedging Obligations to the extent that the Majority
Lenders have provided their prior written consent to the Borrower’s program
pursuant to which such Hedging Obligations were incurred and subject to any
limitations (including in amount) contained therein;

(b)    (x) Liens securing the Senior Secured Notes and any PIK Notes in respect
thereof and the Guarantees thereof and (y) to the extent subject to the
Intercreditor Agreement, Priority Liens securing other Priority Lien Debt
Incurred under Section 6.01(b)(2);

(c)    (x) Junior Priority Liens securing the Loans and other Obligations to the
extent subject to the Intercreditor Agreement and Junior Priority Liens securing
other Junior Priority Lien Debt Incurred under Section 6.01(b)(3)(x) and
(y) Junior Liens securing the Junior Lien Credit Agreement and to the extent
subject to the Intercreditor Agreement and the Collateral Trust Agreement,
Junior Liens securing other Junior Lien Debt Incurred, in each case, under
Section 6.01(b)(3)(y) or (z);

(d)    pledges or deposits by such Person under workers’ compensation laws,
unemployment insurance laws or similar legislation, or good faith deposits in
connection with bids, tenders, contracts (other than for the payment of
Indebtedness) or leases to which such Person is a party, or deposits to secure
public or statutory obligations of such

 

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Person or deposits of cash or United States government bonds to secure surety or
appeal bonds to which such Person is a party, or deposits as security for
contested taxes or import duties or for the payment of rent, in each case
incurred in the ordinary course of business;

(e)    Liens imposed by law, such as carriers’, warehousemen’s and mechanics’
Liens, in each case for sums not yet due or being contested in good faith by
appropriate proceedings or other Liens arising out of judgments or awards
against such Person with respect to which such Person shall then be proceeding
with an appeal or other proceedings for review and Liens arising solely by
virtue of any statutory or common law provision relating to banker’s Liens,
rights of set-off or similar rights and remedies as to deposit accounts or other
funds maintained with a creditor depository institution; provided, however, that
(1) such deposit account is not a dedicated cash collateral account and is not
subject to restrictions against access by the Borrower in excess of those set
forth by regulations promulgated by the Federal Reserve Board and (2) such
deposit account is not intended by the Borrower or any Restricted Subsidiary to
provide collateral to the depository institution;

(f)    Liens for taxes not yet subject to penalties for non-payment or which are
being contested in good faith by appropriate proceedings;

(g)    Liens in favor of issuers of performance, bid or surety bonds, completion
guarantees or letters of credit issued pursuant to the request of and for the
account of such Person in the ordinary course of its business; provided,
however, that such performance, bid or surety bonds, completion guarantees or
letters of credit do not constitute, or secure, any Indebtedness in an aggregate
amount in excess of $12,000,000 (in addition to and not in limitation of any
letters of credit which may be issued pursuant to Credit Facilities permitted
under clause (a) above);

(h)    survey exceptions, encumbrances, easements or reservations of, or rights
of others for, licenses, rights-of-way, sewers, electric lines, telegraph and
telephone lines and other similar purposes, or zoning or other restrictions as
to the use of real property or Liens incidental to the conduct of the business
of such Person or to the ownership of its properties which were not Incurred in
connection with Indebtedness and which do not in the aggregate materially
adversely affect the value of said properties or materially impair their use in
the operation of the business of such Person;

(i)    Liens securing Indebtedness Incurred to finance the construction,
purchase or lease of, or repairs, improvements or additions to, property, plant
or equipment of such Person; provided, however, that the Lien may not extend to
any other property owned by such Person or of any other property of the Borrower
or any of its Restricted Subsidiaries (whether at the time the Lien is Incurred
or otherwise) (other than assets and property affixed or appurtenant thereto),
and the Indebtedness (other than any interest thereon) secured by the Lien may
not be Incurred more than one-hundred eighty (180) days after the later of the
acquisition, completion of construction, repair, improvement, addition or
commencement of full operation of the property subject to the Lien; provided,
further, that after giving effect to the Incurrence of the Indebtedness secured
by such Lien, the Collateral Coverage Ratio is equal to or greater than 1.5 to
1.0;

 

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(j)    Liens securing Non-Recourse Purchase Money Indebtedness granted in
connection with the acquisition by the Borrower or any Restricted Subsidiary in
the ordinary course of business of fixed assets used in the Oil and Gas Business
(including the office buildings and other real property used by the Borrower or
such Restricted Subsidiary in conducting its operations); provided that (1) such
Liens attach only to the fixed assets acquired with the proceeds of such
Non-Recourse Purchase Money Indebtedness and (2) such Non-Recourse Purchase
Money Indebtedness is not in excess of the purchase price of such fixed assets;
provided, further, that after giving effect to the Incurrence of the
Indebtedness or other obligations secured by such Lien, the Collateral Coverage
Ratio is equal to or greater than 1.5 to 1.0;

(k)    Liens existing on the Effective Date and set forth on Schedule 6.07 other
than as described under clause (a), (b) and (c) of this definition;

(l)    Liens on property or shares of Capital Stock of another Person at the
time such other Person becomes a Subsidiary of such Person (and not incurred in
anticipation of or in connection with such transaction); provided, however, that
the Liens may not extend to any other property owned by such Person or any of
its Restricted Subsidiaries (other than assets and property affixed or
appurtenant thereto); provided, further, that at the time such Person becomes a
Subsidiary, the Collateral Coverage Ratio is equal to or greater than 1.5 to
1.0;

(m)    Liens on property at the time such Person or any of its Subsidiaries
acquires the property, including any acquisition by means of a merger or
consolidation with or into such Person or a Subsidiary of such Person (and not
Incurred in anticipation of or in connection with such transaction); provided,
however, that the Liens may not extend to any other property owned by such
Person or any other property of the Borrower or any of its Restricted
Subsidiaries (other than assets and property affixed or appurtenant thereto;
provided, further, that at the time of such acquisition, the Collateral Coverage
Ratio is equal to or greater than 1.5 to 1.0;

(n)    (x) Liens securing Indebtedness or other obligations of the Borrower or
any Guarantor owing to the Borrower or any Guarantor (provided that such Liens
and Indebtedness and other obligations are subject to a subordinated
intercompany note, in form and substance reasonably satisfactory to the
Administrative Agent), (y) Liens on the property of any Subsidiary of the
Borrower securing Indebtedness or other obligations of any Subsidiary of the
Borrower owing to the Borrower or any Guarantor of the Borrower (provided that
such Liens and Indebtedness and other obligations are subject to a subordinated
intercompany note, in form and substance reasonably satisfactory to the
Administrative Agent) and (z) Liens on the property of any Subsidiary of the
Borrower that is not a Guarantor securing Indebtedness or other obligations of
any Subsidiary of the Borrower that is not a Guarantor owing to the Borrower or
any Subsidiary of the Borrower;

 

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(o)    Liens on, or related to, assets to secure all or part of the costs (not
constituting Indebtedness for borrowed money) incurred in the ordinary course of
a Related Business for the surveying, exploration, drilling, extraction,
development, operation, production, construction, alteration, repair,
improvement, processing, transportation, marketing, storage or operation
thereof;

(p)    Liens on pipeline or pipeline facilities that arise under operation of
law;

(q)    Liens arising in the ordinary course of business under operating
agreements, joint venture agreements, partnership agreements, oil, natural gas,
other hydrocarbon and mineral leases, Farm-Out Agreements or Farm-In Agreements,
division orders, contracts for the sale, transportation or exchange of oil or
natural gas, unitization and pooling declarations and agreements, area of mutual
interest agreements, overriding royalty agreements, net profits agreements,
production payment agreements, royalty trust agreements, incentive compensation
programs on terms that are reasonably customary in the Oil and Gas Business for
geologists, geophysicists and other providers of technical services to the
Borrower or a Restricted Subsidiary, master limited partnership agreements,
development agreements, operating agreements, production sales contracts, gas
balancing or deferred production agreements, injection, re-pressuring and
recycling agreements, salt water or other disposal agreements, seismic or
geophysical permits or agreements, and other agreements that are customary in
the Oil and Gas Business provided, however, that in all instances such Liens are
limited to the assets that are the subject of the relevant agreement, program,
order or contract; provided, further, that such Liens do not secure any
Indebtedness for borrowed money (other than an aggregate principal amount not in
excess of $6,000,000 at any time outstanding);

(r)    Liens reserved in oil, natural gas, other hydrocarbon and mineral leases
for bonus or rental payments and for compliance with the terms of such leases;

(s)    Liens to secure any Refinancing (or successive Refinancings) as a whole,
or in part, of any Indebtedness secured by any Lien referred to in the foregoing
clause (i), (k), (l) or (m); provided, however, that (1) such new Lien shall be
limited to all or part of the same property and assets that secured or, under
the written agreements pursuant to which the original Lien arose, could secure
the original Lien (plus improvements and accessions to such property or proceeds
or distributions thereof) and (2) the Indebtedness secured by such Lien at such
time is not increased to any amount greater than the sum of (A) the outstanding
principal amount or, if greater, committed amount of the Indebtedness described
under clause (i), (k), (l) or (m) above at the time the original Lien became a
Permitted Lien and (B) an amount necessary to pay any fees and expenses,
including premiums, related to such Refinancing.

(t)    judgment liens in respect of judgments that do not constitute an Event of
Default under clause (j) of Article VIII (but excluding judgments in respect of
debt for borrowed money);

 

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

(v)    Liens on the Marcellus JV Oil and Gas Assets securing the obligations of
the Borrower and certain Restricted Subsidiaries under the Marcellus JV
Documents and Liens securing the obligations of the Borrower and certain
Restricted Subsidiaries under the BG JV Documents;

(w)    leases, licenses, subleases and sublicenses of real property and
intellectual property rights that do not materially interfere with the ordinary
conduct of the business of the Borrower or any of its Restricted Subsidiaries,
taken as whole; and

(x)    preferential rights to purchase, and provisions requiring a third party’s
consent prior to assignment and similar restraints on alienation, in each case,
granted pursuant to an oil and gas operating agreement and arising in the
ordinary course of business or incident to the exploration, development,
operation and maintenance of Oil and Gas Properties; provided such right,
requirement or restraint does not materially affect the value of such Oil and
Gas Properties;

provided that in each case set forth above, notwithstanding any stated
limitation on the assets that may be subject to such Lien, a Permitted Lien on a
specified asset or group or type of assets may include Liens on all
improvements, additions and accessions thereto and all products and proceeds
thereof; provided, further, that for purposes of this definition, the term
“Indebtedness” shall be deemed to include interest on such Indebtedness.

“Permitted Marketing Obligations” means Indebtedness of the Borrower or any
Restricted Subsidiary under letter of credit or borrowed money obligations or,
in lieu of or in addition to such letters of credit or borrowed money,
Guarantees of such Indebtedness or other obligations of the Borrower or any
Restricted Subsidiary by any other Restricted Subsidiary, in each case, related
to the purchase by the Borrower or any Restricted Subsidiary of Hydrocarbons for
which the Borrower or such Restricted Subsidiary has contracts to sell;
provided, however, that in the event that such Indebtedness or obligations are
guaranteed by the Borrower or any Restricted Subsidiary, then either: (a) the
Person with which the Borrower or such Restricted Subsidiary has contracts to
sell has an Investment Grade Rating or, in lieu thereof, a Person guaranteeing
the payment of such obligated Person has an Investment Grade Rating or (b) such
Person posts, or has posted for it, a letter of credit (issued by a Person that
has an Investment Grade Rating and is not an Affiliate of the Borrower) in favor
of the Borrower or such Restricted Subsidiary with respect to all such Person’s
obligations to the Borrower or such Restricted Subsidiary under such contracts.

“Permitted Prior Liens” means Liens incurred pursuant to clauses (d), (e), (f),
(g), (h), (j), (p) and (q) of the definition of “Permitted Liens”.

“Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.

 

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“PIK Interest” has the meaning assigned to such term in Section 2.10(b) of this
Agreement.

“PIK Notes” means any additional Senior Secured Notes issued from time to time
in respect of any PIK interest payment in accordance with the indenture
governing the Senior Secured Notes.

“PIK Shares” means Common Stock issued as provided in Section 2.10 of this
Agreement.

“Plan” means any employee pension benefit plan (other than a Multiemployer Plan)
subject to the provisions of Title IV of ERISA or Section 412 of the Code or
Section 302 of ERISA, and in respect of which any Credit Party or any ERISA
Affiliate is (or, if such plan were terminated, would under Section 4069 of
ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

“Pledge Agreement” means a Pledge and Security Agreement in favor of the
Collateral Trustee for the benefit of the Secured Parties and the other holders
of Junior Priority Lien Obligations covering, among other things, the rights and
interests of Borrower or any Restricted Subsidiary in the Equity Interest of
each Restricted Subsidiary and of each Affiliate that is an operator of any Oil
and Gas Properties (other than the Equity Interests of the Borrower) and
otherwise in form and substance satisfactory to the Administrative Agent.

“Preferred Stock,” as applied to the Capital Stock of any Person, means Capital
Stock of any class or classes (however designated) which is preferred as to the
payment of dividends or distributions, or as to the distribution of assets upon
any voluntary or involuntary liquidation or dissolution of such Person, over
shares of Capital Stock of any other class of such Person.

“Priority Lien” means a Lien junior in priority to the Senior Priority Liens and
senior in priority to the Junior Priority Liens and Junior Liens granted by the
Borrower or any Guarantor in favor of the Priority Lien Collateral Trustee
pursuant to a Priority Lien Security Document, at any time, upon any Property of
the Borrower or any Guarantor to secure Priority Lien Obligations (including
Liens on such Collateral under the security documents associated with any
Replacement Credit Facility).

“Priority Lien Collateral Trustee” means the collateral trustee for all holders
of the Priority Lien Obligations under the Priority Lien Collateral Trust
Agreement. Wilmington Trust, National Association will initially serve as the
Priority Lien Collateral Trustee.

“Priority Lien Collateral Trust Agreement” means that certain Collateral Trust
Agreement, dated as of the Effective Date, among the Borrower, the Guarantors
party thereto, the Priority Lien Collateral Trustee and the Senior Secured Notes
Trustee, as representative for the Senior Secured Notes, as the same may be
amended, restated, amended and restated, supplemented, replaced (whether upon or
after termination or otherwise) or otherwise modified or restated in accordance
with the terms thereof.

 

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“Priority Lien Debt” means (a) the Senior Secured Notes and other Obligations;
and (b) any other Indebtedness (other than intercompany Indebtedness owing to
the Borrower or its Subsidiaries) of the Borrower or any Guarantor permitted to
be Incurred under Section 6.01(b)(2) (including Refinancing Indebtedness with
respect to Priority Lien Debt with other Priority Lien Debt to the extent
contemplated and permitted by the Intercreditor Agreement and the Priority Lien
Collateral Trust Agreement) that is secured equally and ratably with the
Obligations by a Priority Lien and that is permitted to be Incurred and so
secured under each applicable Secured Debt Document; provided that, in the case
of any Indebtedness referred to in clause (b) of this definition:

(1)    (i) such Indebtedness does not mature and does not have any mandatory or
scheduled payments or sinking fund obligations on or prior to ninety-one
(91) days after the Stated Maturity of the Senior Secured Notes (except as a
result of a customary change of control or asset sale repurchase offer
provisions) and (ii) the principal amount of such Indebtedness does not exceed
the principal amount of, plus any accrued and unpaid interest on, the Priority
Lien Obligations being refinanced or exchanged;

(2)    on or before the date on which such Indebtedness is Incurred by the
Borrower or any Guarantor, such Indebtedness is designated by the Borrower in an
Officers’ Certificate delivered to each Priority Lien Representative and the
Collateral Trustee, as “Priority Lien Debt,” and such Officers’ Certificate also
certifies that such Indebtedness is permitted and with respect to any other
requirements set forth in the Intercreditor Agreement;

(3)    a Priority Lien Representative is designated with respect to such
Indebtedness and executes and delivers an Additional Secured Debt Designation on
behalf of itself and all holders of such Indebtedness;

(4)    all relevant filings and recordations necessary to ensure that such
Indebtedness is secured by the Collateral in accordance with the applicable
Priority Lien Security Documents are authorized, executed (if applicable) and
recorded in each appropriate jurisdiction (provided that this clause (4) may be
satisfied on a post-closing basis if permitted by the Priority Lien
Representative with respect to such Indebtedness); and

(5)    requirements set forth in the Collateral Trust Agreement as to the
confirmation, grant or perfection of the Collateral Trustee’s Liens to secure
such Indebtedness or Obligations in respect thereof are satisfied (and the
satisfaction of such requirements and the other provisions of this clause
(5) will be conclusively established if the Borrower delivers to the Collateral
Trustee an Officers’ Certificate stating that such requirements and other
provisions have been satisfied and that such Indebtedness is “Priority Lien
Debt”);

provided that all such Indebtedness (other than any DIP Financing that is
permitted by the Intercreditor Agreement) shall be pari passu in right of
payment, it being understood that there may be different tranches of Priority
Lien Debt with different maturities and amortization profiles, but the principal
amount of Indebtedness under all such tranches must in all other respects be
pari passu in right of payment. Any such Indebtedness (other than any such DIP
Financing) that is not consistent with the foregoing condition for pari passu
treatment in right of payment with the Senior Secured Notes under the Priority
Lien Documents shall not constitute Priority Lien Debt.

 

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“Priority Lien Documents” means, collectively, the Senior Secured Note Documents
and any additional indenture, supplemental indenture, credit agreement or other
agreement governing each other Series of Priority Lien Debt and the Priority
Lien Security Documents (other than any Priority Lien Security Documents that do
not secure Priority Lien Obligations).

“Priority Lien Obligations” means Priority Lien Debt and all other principal
(including reimbursement obligations), interest (including, to the extent
legally permitted, all interest accrued thereon after the commencement of any
insolvency or liquidation proceeding at the rate, including any applicable
post-default rate even if such interest is not enforceable, allowable or allowed
as a claim in such proceeding), premium (if any), fees, indemnifications,
reimbursements, expenses, and other liabilities in respect thereof.

“Priority Lien Representative” means (a) in the case of the Senior Secured
Notes, the Senior Secured Notes Trustee and (b) in the case of any other Series
of Priority Lien Debt, the trustee, agent or representative of the holders of
such Series of Priority Lien Debt who (1) is appointed as a Priority Lien
Representative (for purposes related to the administration of the Priority Lien
Security Documents) pursuant to the indenture, credit agreement or other
agreement governing such Series of Priority Lien Debt, together with its
successors in such capacity, and (2) has become a party to the Priority Lien
Collateral Trust Agreement by executing a Collateral Trust Joinder Agreement.

“Priority Lien Security Documents” means the Intercreditor Agreement, the Pledge
Agreement (as defined in the Senior Secured Notes Indenture), the Security
Agreement (as defined in the Senior Secured Notes Indenture) and all security
agreements, pledge agreements, collateral assignments, mortgages, deeds of
trust, collateral agency agreements, control agreements or other grants or
transfers for security executed and delivered by the Borrower or any Guarantor
creating (or purporting to create) a Priority Lien upon Collateral (as defined
in the Senior Secured Notes Indenture) in favor of the Priority Lien Collateral
Trustee, in each case, as amended, modified, renewed, restated or replaced, in
whole or in part, from time to time, in accordance with its terms.

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

“Property” means any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible, including, without limitation,
cash, securities, accounts and contract rights.

“Proved Reserves” means those Oil and Gas Properties designated as proved (in
accordance with SEC rules and regulations) in the Reserve Report most recently
delivered to Administrative Agent pursuant to Section 5.01.

“PV-10” means, as of any date of determination, the present value of future cash
flows from the Proved Reserves and Unproved Reserves included in the Oil and Gas
Properties,

 

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as set forth in the most recent Collateral Coverage Reserve Report delivered
pursuant to Section 5.11 or a more a recent Collateral Coverage Reserve Report,
utilizing a 10% discount rate and using NYMEX Prices.

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

“Recipient” means, as applicable, the Administrative Agent and any Lender.

“Record Date” for the interest, if any, payable on any applicable Interest
Payment Date means February 20, May 20, August 20 and November 20 (whether or
not a Business Day) next preceding such Interest Payment Date.

“Refinance” means, in respect of any Indebtedness, to refinance, extend, renew,
refund, replace, repay, prepay, purchase, redeem, defease or retire, or to issue
other Indebtedness in exchange or replacement for, such Indebtedness.
“Refinanced” and “Refinancing” shall have correlative meanings.

“Refinancing Indebtedness” means (a) Indebtedness incurred by the Borrower or
any Restricted Subsidiary, (b) Disqualified Stock issued by the Borrower or any
Restricted Subsidiary or (c) Preferred Stock issued by any Restricted
Subsidiary, which, in each case, serves to extend, replace, refund, refinance,
renew or defease any Indebtedness, Disqualified Stock or Preferred Stock, as the
case may be, including Refinancing Indebtedness, so long as:

(1)    the principal amount (or accreted value, if applicable) of such new
Indebtedness, the amount of such new Preferred Stock or the liquidation
preference of such new Disqualified Stock does not exceed (i) the principal
amount of (or accreted value, if applicable), plus any accrued and unpaid PIK or
cash interest on, the Indebtedness, the amount of, plus any accrued and unpaid
dividends on, the Preferred Stock, or the liquidation preference of, plus any
accrued and unpaid dividends on, the Disqualified Stock, as the case may be,
being so extended, replaced, refunded, refinanced, renewed or defeased (such
Indebtedness or Disqualified Stock or Preferred Stock, the “Applicable
Refinanced Debt”), plus (ii) an amount equal to the sum of (A) the amount of any
tender premium or penalty or premium required to be paid under the terms of the
instrument or documents governing such Applicable Refinanced Debt and (B) any
defeasance costs and any fees and expenses (including original issue discount,
upfront fees or similar fees) incurred in connection with the issuance of such
new Indebtedness, Preferred Stock or Disqualified Stock or the extension,
replacement, refunding, refinancing, renewal or defeasance of such Applicable
Refinanced Debt;

(2)    such Refinancing Indebtedness has a Weighted Average Life to Maturity at
the time such Refinancing Indebtedness is incurred which is not less than the
remaining Weighted Average Life to Maturity of the Indebtedness, Disqualified
Stock or Preferred Stock being extended, replaced, refunded, refinanced, renewed
or defeased;

 

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(3)    such Refinancing Indebtedness has a final scheduled maturity date equal
to or later than the earlier of (A) the final scheduled maturity date of the
Indebtedness, Preferred Stock or Disqualified Stock being so extended, replaced,
refunded, refinanced, renewed or defeased and (B) the date that is ninety-one
(91) days after the latest Stated Maturity date of the Loans;

(4)    to the extent such Refinancing Indebtedness extends, replaces, refunds,
refinances, renews or defeases (a) Subordinated Indebtedness, such Refinancing
Indebtedness is subordinated to the obligations at least to the same extent as
the Indebtedness being extended, replaced, refunded, refinanced, renewed or
defeased, (b) the Existing Unsecured Notes, such Refinancing Indebtedness shall,
if secured, constitute Junior Priority Lien Debt or Junior Lien Debt (subject,
in each case to the Intercreditor Agreement) or, if initially unsecured, shall
be unsecured at all times and, in each case, no Subsidiary of the Borrower
(other than a Guarantor) shall, directly or indirectly, be an obligor (whether a
borrower or otherwise), guarantor or surety under, or for, such Refinancing
Indebtedness and shall not provide any Guarantee of any such Refinancing
Indebtedness or (c) Disqualified Stock or Preferred Stock, such Refinancing
Indebtedness must be Disqualified Stock or Preferred Stock, respectively; and

(5)    to the extent such Refinancing Indebtedness extends, replaces, refunds,
refinances, renews or defeases the Existing Unsecured Notes, Senior Priority
Lien Debt, Priority Lien Debt, Junior Priority Lien Debt or Junior Lien Debt,
the covenants (affirmative and negative), default and event of default
provisions, interest rate (including interest rate floor and default rate),
repayment, prepayment, repurchase and/or sinking fund provisions, reporting
provisions, and other material provisions of such Refinancing Indebtedness shall
be no more favorable to the creditors thereunder, or more burdensome to the
debtors or guarantors thereunder, than the correlative and/or corresponding
provisions under the Loan Documents (provided, further, that, in all events, for
the avoidance of doubt, such Refinancing Indebtedness shall not contain any
financial maintenance covenants not otherwise contained in the Indebtedness
being refinanced );

Notwithstanding the foregoing, Refinancing Indebtedness shall not include:

(1)    Indebtedness, Disqualified Stock or Preferred Stock of a Subsidiary of
the Borrower that is not a Guarantor that refinances Indebtedness or
Disqualified Stock of the Borrower;

(2)    Indebtedness, Disqualified Stock or Preferred Stock of a Subsidiary of
the Borrower that is not a Guarantor that refinances Indebtedness, Disqualified
Stock or Preferred Stock of a Guarantor; or

(3)    Indebtedness or Disqualified Stock of the Borrower or Indebtedness,
Disqualified Stock or Preferred Stock of a Restricted Subsidiary that refinances
Indebtedness, Disqualified Stock or Preferred Stock of an Unrestricted
Subsidiary.

 

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In addition, with respect to any Refinancing Indebtedness of Refinancing
Indebtedness, all limitations, restrictions, qualifying criteria and other
standards set forth in this definition shall equally apply.

“Register” has the meaning assigned to such term in Section 10.04.

“Registration Rights Agreement” means the registration rights agreement, dated
as of the Effective Date, among the Borrower and the holders of the Borrower’s
Common Stock.

“Related Business” means any Oil and Gas Business and any other business in
which the Borrower or any of the Restricted Subsidiaries was engaged on the
Effective Date and any business related, ancillary or complementary to such
business.

“Related Fund” means, with respect to any Lender that is a fund or commingled
investment vehicle that invests in bank loans, any other fund that invests in
bank loans and is managed or advised by the same investment advisor as such
Lender or by an Affiliate of such investment advisor.

“Related Parties” means, with respect to any specified Person, such Person’s
Affiliates and the respective directors, officers, employees, agents and
advisors of such Person and such Person’s Affiliates.

“Replacement Credit Facility” means any Credit Facility that refunds, refinances
or replaces the RBL Credit Agreement or any other Replacement Credit Facility,
in each case, in whole and with all commitments thereunder terminated.

“Requisite Shareholder Approvals” means the Borrower’s receipt of the requisite
votes or consents of the holders of its shares of Common Stock, (1) to the
issuances of Common Stock represented by the Warrants, the PIK Note Payments (as
defined in the Senior Secured Notes Indenture), the issuance of PIK Shares under
the Senior Secured Notes Indenture and the PIK Shares issued pursuant to the
Loan Documents for purposes of the rules of the New York Stock Exchange to the
extent the Common Stock remains listed on the New York Stock Exchange and such
approval is required for the issuances of the Warrants, the PIK Note Payments
(as defined in the Senior Secured Notes Indenture), the issuance of PIK Shares
under the Senior Secured Notes Indenture and the PIK Shares issued pursuant to
the Loan Documents and (2) with respect to the amendment of the Borrower’s
existing charter to (a) increase its authorized Common Stock or (b) effect a
reverse stock split, in each case under applicable Texas law (the “Charter
Amendment Approval”); provided, that the Borrower may waive, in its sole
discretion, the Charter Amendment Approval.

“Resale Registration Statement” mean a registration statement filed with the SEC
pursuant to Rule 415 under the Securities Act on Form S-3 under the Securities
Act (or in the event that the Borrower is ineligible to use such form, such
other form as the Issuer is eligible to use under the Securities Act provided
that such other form shall be converted into a Form S-3 promptly after Form S-3
becomes available to the Borrower) covering resales by the Lenders as selling
shareholders (not underwriters) of any PIK Shares received as payment of
interest on the Loans.

 

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“Reserve Report” means a report setting forth, as of the end of the Borrower’s
most recent fiscal year, the Proved Reserves attributable to the Oil and Gas
Properties of the Borrower and the Restricted Subsidiaries, together with a
projection of the rate of production and future net income taxes, operating
expenses and capital expenditures with respect thereto as of such date, based
upon the pricing assumptions consistent with SEC reporting requirements at the
time.

“Responsible Officer” means the chief executive officer, president, vice
president, chief financial officer, principal accounting officer, treasurer or
assistant treasurer of a Credit Party. Any document delivered hereunder that is
signed by a Responsible Officer of a Credit Party shall be conclusively presumed
to have been authorized by all necessary corporate, partnership and/or other
action on the part of such Credit Party and such Responsible Officer shall be
conclusively presumed to have acted on behalf of such Credit Party.

“Restricted Payment” means:

(a)    the declaration or payment of any dividends or any other distributions of
any sort in respect of the Borrower’s or any Restricted Subsidiary’s Equity
Interests (including any payment in connection with any merger or consolidation
involving such Person) or similar payment to the direct or indirect holders of
the Borrower’s or any Restricted Subsidiary’s Equity Interests (other than
(1) dividends made or distributions payable solely in the Borrower’s Equity
Interests (other than Disqualified Stock), (2) dividends made or distributions
payable solely to the Borrower or (to the extent made to all equity-holders on a
pro rata basis) a Restricted Subsidiary and (3) pro rata dividends or other
distributions made by a Restricted Subsidiary of the Borrower to the holders of
its common Equity Interests on a pro rata basis);

(b)    the purchase, redemption or other acquisition or retirement for value of
any Equity Interest of (1) the Borrower or (2) a Restricted Subsidiary held by
any Affiliate of the Borrower (other than by a Restricted Subsidiary), including
in connection with any merger or consolidation and including the exercise of any
option to exchange any Equity Interest (other than into Equity Interests of the
Borrower that are not Disqualified Stock);

(c)    the purchase, repurchase, redemption, defeasance or other acquisition or
retirement for value, prior to scheduled maturity, scheduled repayment or
scheduled sinking fund payment of any Subordinated Indebtedness of the Borrower
or any Guarantor or any Existing Unsecured Notes, Junior Priority Lien Debt
(other than the Obligations), Junior Lien Debt or Senior Debt (other than,
except with respect to the Existing Unsecured Notes, (1) from the Borrower or a
Guarantor or (2) in anticipation of satisfying a sinking fund obligation,
principal installment or payment due at final maturity, in each case due within
one year of the date of such purchase, repurchase, redemption, defeasance or
other acquisition); or

(d)    the making of any Investment (other than a Permitted Investment) in any
Person.

 

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“Restricted Subsidiary” means any Subsidiary of the Borrower that is not an
Unrestricted Subsidiary.

“Right of First Refusal” means the bona fide right, but not the obligation, of
the Backstop Commitment Parties, or their permitted transferees or assignees, to
acquire, by way of assignment, on a ratable basis in accordance with the
applicable Backstop Commitment Party’s ROFR Applicable Percentage and in
accordance with Section 10.04(f) of this Agreement, all or a portion of the
rights and obligations of any Lender under this Agreement (including all or a
portion of its Commitment and the Loans at the time owing to it) that are to be
assigned by any such Lender pursuant to the terms of this Agreement, on the same
terms and subject to the same conditions offered by such Lender to the
applicable Eligible Assignee(s) prior to the consummation of such assignment to
such Eligible Assignee(s).

“ROFR Applicable Percentage” means, with respect to Hamblin Watsa Investment
Counsel Ltd. and its Affiliates (including Fairfax Financial Holdings Limited),
50.33%, with respect to ESAS, 23.33%, with respect to Oaktree Capital
Management, 13.17% and with respect to Gen IV, 13.17%; provided that between and
among all or any of the Backstop Commitment Parties, from time to time, such
Backstop Commitment Parties may agree to transfer (as between any two Backstop
Commitment Parties, whether permanently or temporarily), reduce (unilaterally by
any individual Backstop Commitment Parties, whether permanently or temporarily)
or otherwise modify their ROFR Applicable Percentages (as agreed between all
Backstop Commitment Parties).

“ROFR Notice” means written notice from a Backstop Commitment Party notifying
the Administrative Agent that such Backstop Commitment Party intends to exercise
its Right of First Refusal as to a proposed assignment of Loans under this
Agreement.

“S&P” means Standard & Poor’s, a division of The McGraw-Hill Companies, Inc.,
and any successor to its rating agency business.

“Sale/Leaseback Transaction” means an arrangement relating to Property owned by
the Borrower or a Restricted Subsidiary on the Effective Date or thereafter
acquired by the Borrower or a Restricted Subsidiary whereby the Borrower or a
Restricted Subsidiary transfers such property to a Person and the Borrower or a
Restricted Subsidiary leases it from such Person.

“SEC” means the U.S. Securities and Exchange Commission or any successor
thereto.

“Secured Debt Documents” means the Senior Priority Lien Documents, the Priority
Lien Documents, the Junior Priority Lien Documents and the Junior Lien
Documents.

“Secured Indebtedness” means, as of any date, any Indebtedness for borrowed
money secured as (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured as) Senior Priority Lien Debt,
Priority Lien Debt, Junior Priority Lien Debt, Junior Lien Debt (or any
Replacement Credit Facility) or any other Indebtedness for borrowed money which
is secured by a Lien which is not expressly subordinated to the Obligations and
the obligations in respect of the Senior Priority Lien Debt and in respect of
the Priority Lien Debt.

 

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“Secured Party” means the Administrative Agent, Collateral Trustee, any Lender
and any other holder of Obligations.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations of the SEC promulgated thereunder.

“Security Agreement” means a Security Agreement in favor of the Collateral
Trustee for the benefit of the Secured Parties and the other holders of Junior
Priority Lien Obligations covering, among other things, the rights and interests
of Borrower or any Restricted Subsidiary in the property of such Restricted
Subsidiary and in form and substance satisfactory to the Administrative Agent.

“Security Instruments” means collectively, the Collateral Trust Agreement, all
Collateral Trust Joinder Agreements, the Pledge Agreement, the Security
Agreement, the Deposit Account Control Agreements, all Guarantees of the
Obligations evidenced by the Loan Documents and all mortgages, security
agreements, pledge agreements, collateral assignments and other collateral
documents covering the Oil and Gas Properties of the Borrower and the Restricted
Subsidiaries and the Equity Interests of the Restricted Subsidiaries and other
personal property, equipment, oil and gas inventory and proceeds of the
foregoing, all such documents to be in form and substance reasonably
satisfactory to the Administrative Agent and Collateral Trustee.

“Senior Debt” means unsecured Indebtedness of the Borrower or any of its
Restricted Subsidiaries permitted to be Incurred under the terms of this
Agreement, unless the instrument under which such Indebtedness is Incurred
expressly provides that it is subordinated in right of payment to the Loans and
all Obligations with respect to the foregoing. Notwithstanding anything to the
contrary in the preceding sentence, Senior Debt will not include:

(a)    any intercompany Indebtedness between or among the Borrower or any of its
Subsidiaries or any of its Affiliates; or

(b)    any trade payables or taxes owed or owing by the Borrower or any of its
Subsidiaries.

“Senior Priority Lien” means a Lien granted by the Borrower or any Guarantor in
favor of the Senior Priority Lien Collateral Agent at any time, upon any
Property of the Borrower or any Guarantor to secure Senior Priority Lien
Obligations (including Liens on such Collateral under the security documents
associated with any Replacement Credit Facility).

“Senior Priority Lien Cap” means, $200,000,000.

“Senior Priority Lien Collateral Agent” means the First Lien RBL Agent (or other
Person designated by the First Lien RBL Agent), or if the First Lien RBL Credit
Agreement ceases to exist, the collateral agent or other representative of
lenders or holders of Senior Priority Lien Obligations designated pursuant to
the terms of the Senior Priority Lien Documents and the Intercreditor Agreement.

 

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“Senior Priority Lien Debt” means (1) Indebtedness of the Borrower and the
Guarantors under the First Lien RBL Credit Agreement (including letters of
credit (with outstanding letters of credit being deemed to have a principal
amount equal to the stated amount thereof) and reimbursement obligations with
respect thereto) or any Replacement Credit Facility, in each case, that is
subject to the Intercreditor Agreement and permitted to be Incurred under
Section 6.01(b)(1) and secured under each applicable Secured Debt Document;
provided, in the case of Indebtedness under any Replacement Credit Facility,
that:

(a)    on or before the date on which such Indebtedness is Incurred under such
Replacement Credit Facility, such Indebtedness is designated by the Borrower, in
an Officers’ Certificate delivered to the Senior Priority Lien Collateral Agent
and the Collateral Trustee, as “Senior Priority Lien Debt” for the purposes of
the Secured Debt Documents; provided that if such Indebtedness is designated as
“Senior Priority Lien Debt,” it cannot also be designated as Priority Lien Debt,
Junior Priority Lien Debt or Junior Lien Debt (or any combination of the three);

(b)     the collateral agent or other representative with respect to such
Indebtedness, the Senior Priority Lien Collateral Agent, the Collateral Trustee,
the Borrower and each applicable Guarantor have duly executed and delivered the
Intercreditor Agreement (or a joinder to the Intercreditor Agreement or a new
Intercreditor Agreement substantially similar to the Intercreditor Agreement as
in effect on the Effective Date and in a form reasonably acceptable to each of
the parties thereto);

(c)    the aggregate outstanding amount of the Senior Priority Lien Obligations,
after giving effect to such Replacement Credit Facility, shall not exceed the
Senior Priority Lien Cap; and

(d)    all other requirements set forth in the Intercreditor Agreement as to the
confirmation, grant or perfection of the Senior Priority Lien Collateral Agent’s
Liens to secure such Indebtedness or obligations in respect thereof are
satisfied;

(2)    Cash Management Obligations permitted to be secured by Senior Priority
Liens pursuant to clause (a) of the definition of “Permitted Liens;” and

(3)    Hedging Obligations of the Borrower or any Guarantor to the extent that
the Administrative Agent has provided its prior written consent to the
Borrower’s program pursuant to which such Hedging Obligations were incurred and
subject to any limitations (including in amount) contained therein.

For purposes of this definition, all letters of credit will be valued at the
face amount thereof, whether or not drawn.

“Senior Priority Lien Documents” means the First Lien RBL Documents, the
Replacement Credit Facility and all other loan documents, notes, guarantees,
instruments and agreements governing or evidencing, or executed or delivered in
connection with, any Replacement Credit Facility.

 

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“Senior Priority Lien Obligations” means (a) the “Obligations” as defined in the
First Lien RBL Credit Agreement and (b) all other Senior Priority Lien Debt and
principal (including reimbursement obligations and obligations to provide cash
collateral with respect to letters of credit whether or not drawn), interest
(including, to the extent legally permitted, all interest accrued thereon after
the commencement of any insolvency or liquidation proceeding at the rate,
including any applicable post-default rate even if such interest is not
enforceable, allowable or allowed as a claim in such proceeding), premium (if
any), fees, indemnifications, reimbursements, expenses, and other liabilities in
respect thereof, including any make-whole payments, together with any Hedging
Obligations and Cash Management Obligations, in each case, to the extent that
such obligations are secured by Senior Priority Liens. For the avoidance of
doubt, Hedging Obligations shall only constitute Senior Priority Lien
Obligations to the extent that such Hedging Obligations are secured under the
terms of the First Lien RBL Credit Agreement and the security documents creating
Senior Priority Liens. Notwithstanding any other provision hereof, the term
“Senior Priority Lien Obligations” will include accrued interest, fees, and
costs incurred under any Senior Priority Lien Document, whether incurred before
or after commencement of an insolvency or liquidation proceeding, and whether or
not allowable in an insolvency or liquidation proceeding. To the extent that any
payment with respect to the Senior Priority Lien Obligations (whether by or on
behalf of any Guarantor, as proceeds of security, enforcement of any right of
set-off, or otherwise) is declared to be fraudulent or preferential in any
respect, set aside, or required to be paid to a debtor in possession, trustee,
receiver, or similar Person, then the obligation or part thereof originally
intended to be satisfied will be deemed to be reinstated and outstanding as if
such payment had not occurred.

“Senior Priority Lien Representative” means (a) the First Lien RBL Agent or
(b) in the case of any Replacement Credit Facility, the trustee, agent or
representative of the holders of such Senior Priority Lien Debt who maintains
the transfer register for such Senior Priority Lien Debt and is appointed as a
representative of the Senior Priority Lien Debt (for purposes related to the
administration of the security documents related to such Senior Priority Lien
Debt) pursuant to the credit agreement or other agreement governing such Senior
Priority Lien Debt.

“Senior Secured Notes” means the Borrower’s $300 million aggregate principal
amount of its 8.0% / 11.0% 1.5 Lien Senior Secured PIK Toggle Notes due 2022
issued pursuant to the Senior Secured Notes Indenture on the Effective Date and
any PIK Notes.

“Senior Secured Notes Documents” means the Senior Secured Notes, the Senior
Secured Notes Indenture and all other instruments, agreements and other
documents evidencing or governing the Senior Secured Notes or providing for any
guarantee or other right in respect thereof.

“Senior Secured Notes Indenture” means that certain Indenture dated as of
March 15, 2017 among Exco Resources, Inc., as the Issuer, certain subsidiaries
of Exco Resources, Inc., as guarantors, the Senior Secured Notes Trustee and the
Priority Lien Collateral Trustee, as the same may be amended, supplemented,
modified, restated, refinanced or replaced on or prior to the Effective Date and
as may be amended, supplemented, modified, restated, refinanced or replaced from
time to time after the Effective Date in accordance with the Intercreditor
Agreement and with the same and/or different noteholders and/or trustees in
accordance with the Intercreditor Agreement.

 

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“Senior Secured Notes Trustee” means Wilmington Trust, National Association in
its capacity as Trustee (under and as defined in the Senior Secured Notes
Indenture), and any of its assignees or successors permitted in accordance with
the Intercreditor Agreement.

“Series of Junior Lien Debt” means, severally, each issue or series of Junior
Lien Debt for which a single transfer register is maintained.

“Series of Junior Priority Lien Debt” means, severally, each issue or series of
Junior Priority Lien Debt for which a single transfer register is maintained.

“Series of Priority Lien Debt” means, severally, the Senior Secured Notes, the
Guarantees of the Senior Secured Notes and each other issue or series of
Priority Lien Debt for which a single transfer register is maintained.

“Series of Secured Debt” means the Senior Priority Lien Debt, each Series of
Priority Lien Debt, each series of Junior Priority Lien Debt and each Series of
Junior Lien Debt.

“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 Effective
Date.

“Solvent” and “Solvency” mean, with respect to any Person on any date of
determination, that on such date (a) the fair value of the property of such
Person is greater than the total amount of liabilities, including contingent
liabilities, of such Person, (b) the present fair salable value of the assets of
such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (c) such Person does not intend to, and does not believe that it will,
incur debts or liabilities beyond such Person’s ability to pay such debts and
liabilities as they mature, (d) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for which
such Person’s property would constitute an unreasonably small capital, and
(e) such Person is able to pay its debts and liabilities, contingent obligations
and other commitments as they mature in the ordinary course of business. The
amount of contingent liabilities at any time shall be computed as the amount
that, in the light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.

“Stated Maturity” means, with respect to any security, the date specified in
such security as the fixed date on which the final payment of principal of such
security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening of any
contingency unless such contingency has occurred).

“Subordinated Indebtedness” means (a) with respect to the Borrower, any
Indebtedness of the Borrower which is by its terms subordinated in right of
payment to the Loans and the other Obligations and (b) with respect to any
Guarantor, any Indebtedness of such Guarantor which is by its terms subordinated
in right of payment to such Guarantor’s guarantee of the Loans and other
Obligations under the Loan Documents.

 

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“Subsidiary” means, with respect to any Person (the “parent”) at any date, any
corporation, limited liability company, partnership, association or other entity
the accounts of which would be consolidated with those of the parent in the
parent’s consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other entity
(a) of which securities or other ownership interests representing more than
fifty percent (50%) of the equity or more than fifty percent (50%) of the
ordinary voting power or, in the case of a partnership, more than fifty percent
(50%) of the general partnership interests are, as of such date, owned,
controlled or held, or (b) that is, as of such date, otherwise Controlled, by
the parent or one or more subsidiaries of the parent or by the parent and one or
more subsidiaries of the parent. Unless the context otherwise clearly requires,
references herein to a “Subsidiary” refer to a Subsidiary of the Borrower.

“Super-Majority Lenders” means, at any time, Lenders having Credit Exposures
representing at least eighty percent (80%) of the sum of the Aggregate Credit
Exposure at such time. The Credit Exposures of any Defaulting Lender shall be
disregarded in determining Super-Majority Lenders at any time.

“Swap Agreement” means any agreement with respect to any swap, forward, future
or derivative transaction or option or similar agreement involving, or settled
by reference to, one or more rates, currencies, commodities, equity or debt
instruments or securities, or economic, financial or pricing indices or measures
of economic, financial or pricing risk or value or any similar transaction or
any combination of these transactions; provided that in no event shall any
(a) phantom stock or similar plan providing for payments only on account of
services provided by current or former directors, officers, employees or
consultants of any Credit Party or any Restricted Subsidiary or (b) near term
spot market purchase and sale of a commodity in the ordinary course of business
based on a price determined by a rate quoted on an organized exchange for actual
physical delivery, be a Swap Agreement.

“Swap Modification” means the amendment, modification, cancellation,
monetization, sale, transfer, assignment, early termination or other disposition
of any Swap Agreement for Crude Oil or Natural Gas.

“Taxes” means any present or future taxes, levies, imposts, duties, deductions,
withholdings, assessments, fees or other charges imposed by any Governmental
Authority, including any interest, additions to tax or penalties applicable
thereto.

“Temporary Cash Investments” means any of the following:

(a)    any investment in direct obligations of the United States of America or
any agency thereof or obligations guaranteed by the United States of America or
any agency thereof;

(b)    investments in demand and time deposit accounts, certificates of deposit
and money market deposits maturing within 270 days after the date of acquisition
thereof issued by a bank or trust company which is organized under the laws of
the United States of America, any State thereof or any foreign country
recognized by the United States of

 

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America, and which bank or trust company has capital, surplus and undivided
profits aggregating in excess of $50,000,000 million (or the foreign currency
equivalent thereof) and has outstanding debt which is rated “A” (or such similar
equivalent rating) or higher by at least one nationally recognized statistical
rating organization (as defined in Rule 436 under the Securities Act) or any
money-market fund sponsored by a registered broker dealer or mutual fund
distributor;

(c)    investments in deposits available for withdrawal on demand with any
commercial bank that is organized under the laws of any country in which the
Borrower or any Restricted Subsidiary maintains an office or is engaged in the
Oil and Gas Business; provided, however, that (1) all such deposits have been
made in such accounts in the ordinary course of business and (2) such deposits
do not at any one time exceed $12,000,000 in the aggregate;

(d)    repurchase obligations with a term of not more than thirty (30) days for
underlying securities of the types described in clause (a) above entered into
with a bank meeting the qualifications described in clause (b) above;

(e)    investments in commercial paper, maturing not more than ninety (90) days
after the date of acquisition, issued by a corporation (other than an Affiliate
of the Borrower) organized and in existence under the laws of the United States
of America or any foreign country recognized by the United States of America
with a rating at the time as of which any investment therein is made of “P-1”
(or higher) according to Moody’s or “A-1” (or higher) according to S&P;

(f)    investments in securities with maturities of one year or less from the
date of acquisition issued or fully guaranteed by any state, commonwealth or
territory of the United States of America, or by any political subdivision or
taxing authority thereof, and rated at least “A” by S&P or “A” by Moody’s; and

(g)    investments in money market funds that invest 95% or more of their assets
in securities of the types described in clauses (a) through (f) above.

“Term Lenders” means, as of any date of determination, Lenders having a Term
Loan Commitment or a Term Loan.

“Term Loan Commitment” means (a) as to any Tranche A Term Loan Lender, the
commitment of such Tranche A Term Loan Lender to make Tranche A Term Loans in
accordance with its Tranche A Term Loan Commitment, and (b) as to all Term
Lenders, the aggregate Tranche A Term Loan Commitments, which aggregate
commitments on the Effective Date shall be $682,753,719. After advancing an
applicable Term Loan, each reference to a Term Lender’s Term Loan Commitment
shall refer to such Term Lender’s Applicable Percentage of such Term Loan.

“Term Loans” means the Tranche A Term Loans extended by the Tranche A Term Loan
Lenders to the Borrower pursuant to Section 2.01(a) on the Effective Date.

“Term Loan Maturity Date” means October 26, 2020.

 

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“Trading Day” means a day on which the New York Stock Exchange or other exchange
or the over-the-counter-market if the Common Stock is not then listed on the New
York Stock Exchange, is open for trading.

“Tranche A Exchange Term Loan” means the Loans and Commitments under the
Exchange Term Loan Agreement that are held by Tranche A Exchange Term Loan
Lenders and that were exchanged for Term Loans on the Effective Date pursuant to
the Exchange Agreement and this Agreement.

“Tranche A Exchange Term Loan Lender” has the meaning assigned to such term in
the Recitals.

“Tranche A Fairfax Term Loan” means the Loans and Commitments under the Fairfax
Term Loan Agreement that are held by Tranche A Fairfax Term Loan Lenders and
that were exchanged for Term Loans on the Effective Date pursuant to the
Exchange Agreement and this Agreement.

“Tranche A Fairfax Term Loan Lender” has the meaning assigned to such term in
the Recitals.

“Tranche A Term Loan” has the meaning assigned to such term in Section 2.01(a).

“Tranche A Term Loan Commitment” means the several commitments of the Tranche A
Term Loan Lenders to make Tranche A Term Loans as set forth in Schedule 2.01 or
in the most recent Assignment and Assumption executed by such Tranche A Term
Loan Lender, which commitments on the Effective Date shall be $682,753,719 in
the aggregate.

“Tranche A Term Loan Lender” means, as of any date of determination, Lenders
having a Tranche A Term Loan Commitment or a Tranche A Term Loan.

“Transactions” means (a) the execution, delivery and performance by the Credit
Parties of this Agreement and the Loan Documents, (b) the borrowing of Loans,
(c) the use of the proceeds thereof, including the cashless settlement of the
loans and other obligations outstanding on the Effective Date under the Existing
Second Lien Credit Agreements, (e) the grant of Liens by the Credit Parties on
the Mortgaged Properties and the other Collateral pursuant to the Security
Instruments and (f) the amendment of the First Lien RBL Credit Agreement, the
execution of the Senior Secured Notes Documents, the amendment of the Junior
Lien Credit Agreement and the settlement of certain amounts outstanding under
the Junior Lien Credit Agreement with the proceeds of this Agreement.

“Uniform Commercial Code” means the Uniform Commercial Code of the State of New
York or of any other state the laws of which are required to be applied in
connection with the perfection of security interests in any Collateral.

“Unproved Reserves” means probable reserves and/or possible reserves as defined
in Rule 4-10 of Regulation S-X.

 

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“Unrestricted Cash and Cash Equivalents” means, as of any date of determination,
that portion of the Borrower’s and its Subsidiaries’ aggregate cash and Cash
Equivalents that (x) would not appear as “restricted” on a consolidated balance
sheet of the Borrower, (y) is maintained with a depositary bank in the United
States and is subject to perfected Lien in favor of the Collateral Trustee for
the benefit of the Secured Parties and (z) that is not encumbered by or subject
to any Lien (including, without limitation, any Lien permitted hereunder, other
than (a) Liens securing Junior Priority Lien Debt, Priority Lien Debt and Senior
Priority Lien Debt, (b) Liens securing Junior Lien Debt and (c) bankers’ liens),
setoff (other than ordinary course setoff rights of a depository bank arising
under a bank depository agreement for customary fees, charges and other
account-related expenses due to such depository bank thereunder), counterclaim,
recoupment, defense or other right in favor of any Person.

“Unrestricted Subsidiary” means (a) any Subsidiary that at the time of
determination shall be designated an Unrestricted Subsidiary by the Board of
Directors of the Borrower in the manner provided below, (b) any Subsidiary of an
Unrestricted Subsidiary, (c) EBG Resources and any of its Subsidiaries,
(d) Bonchasse Land Company, LLC, a Louisiana limited liability company and any
of its Subsidiaries, (e) the Marcellus JV Operator and any of its Subsidiaries
(f) the Marcellus Midstream Owner and any of its Subsidiaries, and (g) PCMWL,
LLC, Moran Minerals, LLC and Moran Land Company, LLC. The Board of Directors of
the Borrower may designate any Subsidiary (including any newly acquired or newly
formed Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary or
any of its Subsidiaries at the time of such designation or at any time
thereafter (i) is a Material Domestic Subsidiary or owns, directly or
indirectly, a Material Domestic Subsidiary, (ii) owns Oil and Gas Properties or
owns, directly or indirectly, a Subsidiary that owns Oil and Gas Properties or
(iii) guarantees, or is a primary obligor of, any indebtedness, liabilities or
other obligations under any Senior Debt (including the Existing Unsecured
Notes), Senior Priority Lien Debt, Priority Lien Debt, Junior Priority Lien Debt
or Junior Lien Debt (or any Refinancing Indebtedness Incurred to refinance any
of the foregoing) or owns, directly or indirectly, a Subsidiary that provides
such a guarantee, or is such a primary obligor.

“U.S. Person” means a “United States person” within the meaning of
Section 7701(a)(30) of the Code.

“U.S. Tax Compliance Certificate” has the meaning assigned to such term in
Section 2.12(d).

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

“Voting Stock” of a Person means all classes of Capital Stock of such Person
then outstanding and normally entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof.

“Warrants” means those warrants issued to the holders of the Senior Secured
Notes as of the date hereof to purchase shares of Common Stock of the Borrower.

 

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“Weighted Average Life to Maturity” means, when applied to any Indebtedness at
any date, the number of years obtained by dividing: (a) the sum of the products
obtained by multiplying (1) the amount of each then remaining scheduled
installment, sinking fund, serial maturity or other required scheduled payments
of principal, including payment at final scheduled maturity, in respect thereof
by (2) the number of years (calculated to the nearest one-twelfth) that will
elapse between such date and the making of such payment by (b) the then
outstanding principal amount of such Indebtedness; provided that the effects of
any prepayments made on such Indebtedness shall be disregarded in making such
calculation.

“Wholly-Owned Subsidiary” means a Restricted Subsidiary, all the Capital Stock
of which (other than directors’ qualifying shares) is owned by the Borrower or
one or more other Wholly-Owned Subsidiaries.

“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan, as such terms are
defined in Part I of Subtitle E of Title IV of ERISA.

“Withholding Agent” means the Borrower, any other Credit Party and the
Administrative Agent.

“Write-Down and Conversion Powers” means, with respect to any EEA Resolution
Authority, the write-down and conversion powers of such EEA Resolution Authority
from time to time under the Bail-In Legislation for the applicable EEA Member
Country, which write-down and conversion powers are described in the EU Bail-In
Legislation Schedule.

Section 1.02    Terms Generally. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words “include”, “includes” and “including” shall
be deemed to be followed by the phrase “without limitation”. The word “will”
shall be construed to have the same meaning and effect as the word “shall”.
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
restated, amended and restated, supplemented or otherwise modified (subject to
any restrictions on such amendments restatements, amendments and restatements,
supplements or modifications set forth herein or in any other Loan Document),
(b) any reference herein to any Person shall be construed to include such
Person’s successors and assigns, (c) the words “herein”, “hereof” and
“hereunder”, and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (d) all
references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement and (e) the words “asset” and “property” or “Property” shall be
construed to have the same meaning and effect and to refer to any and all
tangible and intangible assets and properties, including cash, securities,
accounts and contract rights, and (f) any reference to any law shall include all
statutory and regulatory provisions consolidating, amending, replacing or
interpreting such law and any reference to any law or regulation shall, unless
otherwise specified, refer to such law or regulation as amended, modified or
supplemented from time to time. No provision of this Agreement or any other Loan
Document shall be construed or interpreted to the disadvantage of any party
hereto by reason of such party’s having, or being deemed to have, drafted,
structured, or dictated such provision.

 

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Section 1.03    Accounting Terms; GAAP. Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time; provided that, if the
Borrower notifies the Administrative Agent that the Borrower requests an
amendment to any provision hereof to eliminate the effect of any change
occurring after the date hereof in GAAP or in the application thereof on the
operation of such provision (or if the Administrative Agent notifies the
Borrower that the Majority Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.

Section 1.04    Time of Day. Unless otherwise specified, all references to times
of day shall be references to Central time (daylight or standard, as
applicable).

ARTICLE II

THE CREDITS

Section 2.01    Term Loans.

(a)    Subject to the terms and conditions set forth herein, each Tranche A Term
Loan Lender severally (and not jointly) agrees to make a Term Loan in connection
with the exchange, pursuant to the Exchange Agreement, of one or both of a
Tranche A Fairfax Term Loan or Tranche A Exchange Term Loan, as applicable,
(each a “Tranche A Term Loan”) to the Borrower on the Effective Date, in an
amount equal to such Lender’s Tranche A Term Loan Commitment, in each case as
provided in subsection (b) below. Amounts repaid or prepaid in respect of
Tranche A Term Loans may not be reborrowed.

(b)    The Borrower agrees that each Lender’s obligation to make a Tranche A
Term Loan to the Borrower as provided hereunder shall be satisfied only by the
deemed exchange by such Lender of 100% of its Existing Exchanged Loans as
provided in the Exchange Agreement, as prepayment in full and on a cashless
basis, for such Lender’s Commitment as specified on Schedule 2.01 pursuant to
the cashless settlement mechanism specified in the Exchange Agreement. The
Borrower hereby directs each Lender to so deliver the proceeds of the Tranche A
Term Loans. For the avoidance of doubt, the deemed exchange and delivery of the
proceeds of the Tranche A Term Loans as described in this Section 2.01(b) shall
be the only means by which the Lenders shall make the Tranche A Term Loans
hereunder, and nothing in this Agreement shall require any Lender to make its
Tranche A Term Loans by making funds available to the Administrative Agent or
the Borrower.

Section 2.02    Termination and Reduction of the Commitments. Unless previously
terminated, the Tranche A Term Loan Commitments shall terminate on the earlier
to occur of (x) 5:00 p.m. on the Effective Date and (y) in the case of any
Lender’s Commitment, the date of termination of the Exchange Agreement.

 

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Section 2.03    Loans and Borrowings. The failure of any Lender to make any Loan
required to be made by it shall not relieve any other Lender of its obligations
hereunder; provided that the Commitments of the Lenders are several and no
Lender shall be responsible for any other Lender’s failure to make Loans as
required.

Section 2.04    Requests for Borrowings. To request a Borrowing, the Borrower
shall notify the Administrative Agent of such request by telephone not later
than 11:00 a.m. New York time, ten (10) Business Days before the date of the
proposed Borrowing (other than the initial Borrowing hereunder, which shall be
deemed funded on the Effective Date). Each such telephonic Borrowing Request
shall be irrevocable and shall be confirmed promptly by hand delivery, telecopy
or electronic mail to the Administrative Agent of a written Borrowing Request in
a form approved by the Administrative Agent and signed by the Borrower. Each
such telephonic and written Borrowing Request shall specify the following
information in compliance with Section 2.03:

(i)    the aggregate amount of the requested Borrowing (which shall be the
aggregate amount of the Commitments of the Lenders);

(ii)    the date of such Borrowing, which shall be the Effective Date and a
Business Day; and

(iii)    the location and number of the Borrower’s account to which funds are to
be disbursed, which shall comply with the requirements of Section 2.05.

Promptly following receipt of a Borrowing Request in accordance with this
Section, the Administrative Agent shall advise each Lender of the details
thereof and of the amount of such Lender’s Loan to be made as part of the
requested Borrowing.

Section 2.05    Deemed Funding of Borrowings.

(a)    Each Lender shall make each Loan to be made by it hereunder on the
Effective Date as provided for in Section 2.01(b) above.

(b)    Unless the Administrative Agent shall have received written notice from a
Lender prior to the Effective Date that such Lender will not make such Lender’s
Loans on the Effective Date, the Administrative Agent may assume that such
Lender has made its Loans on the Effective Date in accordance with clause (a) of
this Section and Section 2.01(b).

Section 2.06    Repayment of Loans; Evidence of Debt.

(a)    The Borrower hereby unconditionally promises to pay to the Administrative
Agent for the account of each Term Lender the then unpaid principal amount of
each Term Loan, together with all accrued and unpaid interest thereon in cash,
on the Term Loan Maturity Date.

 

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(b)    The Borrower and each surety, endorser, guarantor and other party ever
liable for payment of any sums of money payable under this Agreement, jointly
and severally waive presentment and demand for payment, notice of intention to
accelerate the maturity, protest, notice of protest and nonpayment, as to the
payments due under this Agreement or any other Loan Document and as to each and
all installments hereunder and thereunder, and agree that their liability under
this Agreement or any other Loan Document shall not be affected by any renewal
or extension in the time of payment hereof, or in any indulgences, or by any
release or change in any security for the payment of the Obligations, and hereby
consent to any and all such renewals, extensions, indulgences, releases or
changes.

(c)    Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to such Lender
resulting from each Loan made by such Lender, including the amounts of principal
and interest payable and paid to such Lender from time to time hereunder.

(d)    The Administrative Agent shall maintain accounts in which it shall record
(i) the amount of each Loan made hereunder, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to each
Lender hereunder and (iii) the amount of any sum received by the Administrative
Agent hereunder for the account of the Lenders and each Lender’s share thereof.

(e)    The entries made in the accounts maintained pursuant to clauses (c)
or (d) of this Section 2.06 shall be prima facie evidence of the existence and
amounts of the obligations recorded therein; provided that the failure of any
Lender or the Administrative Agent to maintain such accounts or any error
therein shall not in any manner affect the obligation of the Borrower to repay
the Loans in accordance with the terms of this Agreement.

(f)    Any Lender or Participant may request that Loans made by it be evidenced
by a promissory note. In such event, the Borrower shall prepare, execute and
deliver to such Lender or Participant a promissory note payable to the order of
such Lender or Participant (or, if requested by such Lender or Participant, to
such Lender or Participant and its registered assigns) and in the form attached
hereto as Exhibit E. Thereafter, the Loans evidenced by such promissory note and
interest thereon shall at all times (including after assignment pursuant to
Section 10.04) be represented by one or more promissory notes in such form
payable to the order of the payee named therein (or, if such promissory note is
a registered note, to such payee and its registered assigns).

Section 2.07    Optional Prepayment of Loans.

(a)    Tranche A Fairfax Term Loans.

(1)    Subject to Section 2.07(b)(6), the Borrower shall not have the right at
any time to optionally or voluntarily prepay any Borrowing of Term Loans
attributable to the exchange of the Tranche A Fairfax Term Loans (whether in
whole and or in part).

(2)    If, notwithstanding immediately preceding clause (a), an optional or
voluntary prepayment of any Borrowing of Term Loans attributable to the exchange
of the Tranche A Fairfax Term Loans shall occur, each such prepayment shall be
applied

 

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ratably to the Loans included in the prepaid Borrowing of Term Loans
attributable to the exchange of the Tranche A Fairfax Term Loans and each such
prepayment shall be accompanied by accrued interest to the extent required by
Section 2.10 (but, for the avoidance of doubt, which interest shall be paid
entirely in cash) and the Make-Whole Amount.

(b)    Tranche A Exchange Term Loans.

(1)    Subject to clause (b)(6) below, at any time prior to October 26, 2018,
the Borrower may, on one or more occasions, prepay all or any portion of the
Term Loans attributable to the exchange of the Tranche A Exchange Term Loans,
upon notice as provided in Section 2.07(b)(5), at a price equal to 100% of the
principal amount of the Term Loans attributable to the exchange of the Tranche A
Exchange Term Loans prepaid, plus the Make-Whole Amount as of the date of
prepayment, plus accrued and unpaid interest, to, but excluding, the date of
prepayment (subject to the right of the Lenders on the relevant regular record
date to receive interest due on an Interest Payment Date that is prior to the
date of prepayment). Borrower shall calculate the Make-Whole Amount and provide
such calculation to the Administrative Agent and the Lenders at least two
(2) Business Days before the date of any such prepayment; provided that such
calculation shall be subject to the review and approval of the Lenders. In no
event shall the Administrative Agent have any duty, responsibility, or liability
with respect to the calculations of the Make-Whole Amount, which calculations
shall be the sole responsibility of Borrower.

(2)    Subject to clause (b)(6) below, at any time on or after October 26, 2018,
the Borrower may, on one or more occasions, prepay all or any portion of the
Term Loans attributable to the exchange of the Tranche A Exchange Term Loans,
upon notice as provided in Section 2.07(b)(5), at a price equal to 100% of the
principal amount of the Term Loans attributable to the exchange of the Tranche A
Exchange Term Loans prepaid, plus the premium (expressed as percentages of the
principal amount to be prepaid) set forth below if prepaid during the 12-month
period beginning on October 26th of the years indicated below, plus accrued and
unpaid interest, to, but excluding, the date of prepayment (subject to the right
of the Lenders on the relevant regular Record Date to receive interest due on an
Interest Payment Date that is prior to the date of prepayment):

 

Year

   Premium  

2018

     6.25 % 

2019 and thereafter

     0 % 

(3)    For purposes hereof, “Applicable Premium” means either or both of the
Make-Whole Amount and the premium specified in Section 2.07(b)(2), as
applicable.

(4)    Except pursuant to Section 2.07(b)(1) or (2) or (6), or Section 2.08, the
Loans may not be prepaid at the Borrower’s option. Any prepayment made pursuant
to this Section 2.07(b) shall be made pursuant to the provisions of Sections
2.13.

 

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(5)    To make a prepayment, the Borrower shall deliver at least three Business
Days’ prior written or fax notice (or telephone notice promptly confirmed by
written or fax notice) to the Administrative Agent before 12:00 (noon), New York
City time. Each such notice of prepayment shall specify the prepayment date and
the principal amount of Loans to be prepaid, which date may not be more than 30
days after the date of notice of prepayment, shall be irrevocable and shall
commit the Borrower to prepay Tranche A Exchange Term Loans in the amount stated
therein on the date stated therein; provided, however, that (1) if such
prepayment is for all of the then outstanding Tranche A Exchange Term Loans,
then the Borrower may revoke such notice by written notice to the Administrative
Agent no later than 12:00 (noon), New York City time, on the date of prepayment
and/or extend the prepayment date by not more than five Business Days and (2) if
such prepayment is a partial prepayment, it shall be in an amount that is an
integral multiple of $1,000,000 and not less than $5,000,000.

(6)    Notwithstanding anything herein to the contrary, in the event that the
Borrower elects to make a prepayment of Term Loans attributable to the exchange
of the Tranche A Exchange Term Loans pursuant to Section 2.07(b)(1) or (2), the
Borrower shall concurrently, on a ratable basis, make a prepayment of Term Loans
attributable to the exchange of the Tranche A Fairfax Term Loans, together with
accrued interest to the extent required by Section 2.10 (but, for the avoidance
of doubt, which interest shall be paid entirely in cash) and the Make-Whole
Amount in accordance with Section 2.07(a)(2).

Section 2.08    Mandatory Prepayment of Loans.

(a)    If the Borrower or any Restricted Subsidiary receives Net Cash Proceeds
in respect of any Asset Sale or Disposes of any Oil and Gas Properties at any
time (whether pursuant to a Disposition of Equity Interests of a Restricted
Subsidiary permitted pursuant to Section 6.04 or otherwise), subject to clause
(e) of this Section 2.08 and to the terms of the Intercreditor Agreement, the
Borrower shall prepay Term Loans in an amount equal to 100% of the Net Cash
Proceeds of such Disposition on or within two (2) Business Days of the date it
or any Restricted Subsidiary receives the Net Cash Proceeds from such
Disposition; provided, any Net Cash Proceeds from any such Disposition received
by Borrower or any Restricted Subsidiary may be used within three hundred sixty
(360) days after such Disposition to (i) acquire property, plant and equipment
or any business entity used or useful in carrying on the business of the
Borrower and its Restricted Subsidiaries or to improve or replace any existing
property of the Borrower and its Restricted Subsidiaries used or useful in
carrying on the business of the Borrower and its Restricted Subsidiaries (the
foregoing, collectively, “replacement assets”), or to make capital expenditures
in Oil and Gas Properties; provided, further, for purposes of this sub-clause
(i), any Net Cash Proceeds attributable to a Disposition of an asset owned by a
Credit Party must be reinvested in replacement assets owned by one or more
Credit Parties or to make capital expenditures in Oil and Gas Properties owned
by one or more Credit Parties; (ii) subject to Section 2.13(b) (if applicable),
make an offer (an “Asset Sale Offer”) to prepay in cash the Loans, on pro rata
basis, pursuant to prepayment procedures reasonably acceptable to the
Administrative Agent, (iii) to permanently repay, redeem or repurchase (and
permanently reduce the commitments with respect to) any Senior Priority Lien
Debt and other outstanding Senior Priority Lien Obligations or (iv) any
combination of the foregoing. The offer price in any Asset

 

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Sale Offer shall be payable in cash and will be equal to (x) 100% of principal
amount plus accrued and unpaid interest to the date of prepayment plus the
Make-Whole Amount in the case of Term Loans attributable to the exchange of the
Tranche A Fairfax Term Loans and (y) 100% of principal amount plus accrued and
unpaid interest to the date of prepayment in the case of Term Loans attributable
to the exchange of the Tranche A Exchange Term Loans.

Each Lender may accept all or a portion of its pro rata share of any Asset Sale
Offer (any amounts not accepted, the “Declined Amounts”) by providing written
notice (an “Acceptance Notice”) to the Administrative Agent and the Borrower no
later than 5:00 p.m. ten Business Days after the date of delivery of such Asset
Sale Offer. Each Acceptance Notice delivered by a Lender shall specify the
principal amount of the Loans to be prepaid from such Lender; provided that
(i) such amount shall not exceed such Lender’s pro rata share of the Asset Sale
Offer and (ii) if such Lender fails to specify any such amount, it shall be
deemed to have requested its full pro rata share of such Asset Sale Offer. If a
Lender fails to deliver an Acceptance Notice to the Administrative Agent within
the time frame specified above, such failure will be deemed a full rejection of
such Asset Sale Offer. The Borrower shall prepay all Loans required to prepaid
by it under this Section 2.08(a) no later than five Business Days after
expiration of the time period for acceptance by the Lenders of the Asset Sale
Offer. Any Declined Amounts shall no longer be subject to this Section 2.08 and
may be used by the Borrower in any way not prohibited by this Agreement. If the
aggregate principal amount of Loans requested to be repaid exceeds the aggregate
amount to be repaid by the Borrower pursuant to this Section 2.08, the
Administrative Agent shall apply the amounts to be repaid by the Borrower to the
Loans requested to be repaid on a pro rata basis based on the principal amount
of such Loans.

(b)    In the event and on each occasion that any Net Cash Proceeds are received
by or on behalf of any Credit Party in respect of the incurrence of any
Indebtedness after the Effective Date (other than Indebtedness permitted to be
incurred under Section 7.01, subject to clause (e) of this Section 2.08 and to
the terms of the Intercreditor Agreement) the Borrower shall, immediately after
such Net Cash Proceeds are received by any Credit Party, apply such amounts to
prepay pro rata among the Term Lenders (x) Term Loans attributable to the
exchange of the Tranche A Fairfax Term Loans in an aggregate amount equal to
100% of such Net Cash Proceeds, together with the Make-Whole Amount, and (y) the
Term Loans attributable to the exchange of the Tranche A Exchange Term Loans in
an aggregate amount equal to 100% of such Net Cash Proceeds.

(c)    Upon the occurrence of a Change of Control the Borrower shall immediately
prepay, in full, in cash, the aggregate outstanding (x) Term Loans attributable
to the exchange of the Tranche A Fairfax Term Loans, together with accrued and
unpaid interest (if any) to the date of such prepayment and the Make-Whole
Amount, and (y) Term Loans attributable to the exchange of the Tranche A
Exchange Term Loans in an amount equal to 101% of the aggregate principal amount
of such Loans, plus accrued and unpaid interest (if any) to the date of such
prepayment.

(d)    Prepayments pursuant to this Section shall be accompanied by accrued
interest to the extent required by Section 2.10 and any Applicable Premium
(including, for the avoidance of doubt, any Make-Whole Amount), if any, required
under Section 2.09(b), all of

 

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which shall be paid in cash. Each prepayment of a Borrowing shall be applied
ratably to the Loans included in the prepaid Borrowing. Amounts applied to the
payment of Term Loans pursuant to this Section may not be re-borrowed.

(e)    Notwithstanding anything in this Section 2.08 to the contrary, no
prepayments of outstanding Loans that would otherwise be required to be made
under clauses (a) or (b) of this Section 2.08 shall be required if such
prepayment is prohibited by the Intercreditor Agreement.

Section 2.09    Fees and Applicable Premium

(a)    Borrower agrees to pay to the Administrative Agent and the Collateral
Trustee, for their own account, any such fees payable in the amounts and at the
times separately agreed upon between the Borrower, the Administrative Agent
and/or the Collateral Trustee.

(b)    In the event any mandatory or voluntary repayment or prepayment
(including, without limitation, any prepayment pursuant to an Asset Sale Offer)
of the Term Loans is made prior to the Term Loan Maturity Date, including as a
result of the termination of this Agreement and repayment of the Obligations at
any time prior to the Term Loan Maturity Date, for any reason, including
(i) termination upon the election of the Majority Lenders to terminate after the
occurrence and during the continuation of an Event of Default (or, in the case
of the occurrence of any Event of Default described in clauses (g) or (h) of
Article VIII with respect to the Borrower or any Restricted Subsidiary,
automatically upon the occurrence thereof), (ii) foreclosure and sale of
Collateral, (iii) sale of the Collateral in any insolvency proceeding, or
(iv) restructure, reorganization, or compromise of the Obligations by the
confirmation of a plan of reorganization or any other plan of compromise,
restructure, or arrangement in any insolvency proceeding, then, in view of the
impracticability and extreme difficulty of ascertaining the actual amount of
damages to the Term Lenders or profits lost by the Term Lenders as a result of
such early payment or termination, and by mutual agreement of the Borrower and
the Term Lenders as to a reasonable estimation and calculation of the lost
profits or damages of the Term Lenders, the Borrower shall pay in cash, pro rata
among the Term Lenders that hold Term Loans based on their respective
outstanding principal amounts on the date of such prepayment, the Applicable
Premium (including, for the avoidance of doubt, any Make-Whole Amount), measured
as of the date of such payment or termination. Borrower shall calculate the
Applicable Premium (including, for the avoidance of doubt, any Make-Whole
Amount) and provide such calculation to Administrative Agent and the Term
Lenders at least two (2) Business Days before the date any such prepayment is
made; provided that such calculation shall be subject to the review and approval
of the Term Lenders. The Administrative Agent shall disburse any such prepayment
(together with the Applicable Premium (including, for the avoidance of doubt,
any Make-Whole Amount) which has been delivered to Administrative Agent by
Borrower at the time of the prepayment) to the Term Lenders upon Administrative
Agent’s receipt thereof. In no event shall the Administrative Agent have any
duty, responsibility or liability with respect to the calculations of the
Applicable Premium (including, for the avoidance of doubt, any Make-Whole
Amount), which calculation shall be the sole responsibility of Borrower.

 

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(c)    All fees payable hereunder shall be paid on the dates due, in immediately
available funds, to the Administrative Agent. Subject to Section 10.13, fees
paid shall not be refundable under any circumstances.

Section 2.10    Interest.

(a)    Cash Interest Payments. Except as provided in this Section 2.10 (and, for
the avoidance of doubt, including clause (c) below), interest on the outstanding
principal amount of the Tranche A Term Loans shall be payable entirely in cash
(such interest, “Cash Interest”) on the relevant Interest Payment Date. Cash
Interest on the Tranche A Term Loans shall accrue at a rate of 12.5% per annum
and be payable in cash (the “Cash Interest Rate”). Notwithstanding anything in
this Agreement to the contrary, for so long as the Senior Secured Notes are
outstanding, the Borrower shall not be permitted to make payments of Cash
Interest for any applicable Interest Payment Date (and, for the avoidance of
doubt, shall instead be required to make payments of PIK Interest for such
applicable Interest Payment Date) if (i) for such applicable Interest Payment
Date and for the relevant quarterly interest payment period (or for the
immediately prior quarterly interest payment period), the Borrower makes
payments of any amount of PIK Interest (under and as defined in the Senior
Secured Notes Indenture) under the Senior Secured Notes Indenture for such
Interest Payment Date (except with respect to the June 20, 2017 Interest Payment
Date), (ii) a Default or Event of Default (as defined under the Senior Secured
Notes Indenture) has occurred and is continuing under the Senior Secured Notes
or (iii) on a pro forma basis after giving effect to such payment (together with
any payment to be made substantially concurrently therewith under the Senior
Secured Notes Indenture), the Borrower has Liquidity, on a pro forma basis, of
less than $175.0 million (such sentence being herein referred to as the “Cash
Interest Payment Conditions”).

(b)    PIK Interest Payments. Subject to the restrictions in this clause (b) and
in clause (c) below, the Borrower may elect, at its option, to pay all or a
portion of the interest due on the Tranche A Term Loans on the applicable
Interest Payment Date by (1) issuing PIK Shares to the Lenders (such payments,
“PIK Share Payments”) or (2) paying such interest in kind by capitalizing (and
thereby increasing) the outstanding principal amount of the Tranche A Term Loans
(such payments, “PIK Loan Payments”, with the payment of interest through PIK
Share Payments or through PIK Loan Payments being herein referred to as “PIK
Interest”), and in each case, notifying the Administrative Agent as set forth in
Section 2.10(f). Any PIK Interest on the Tranche A Term Loans shall accrue at a
rate of 15.0% per annum (the “PIK Interest Rate”). (ii) The Borrower’s ability
to pay PIK Interest as PIK Share Payments is subject to the following
conditions: (A) the Borrower shall have received the Requisite Shareholder
Approvals, (B) the PIK Share Payment shall not result in a beneficial owner of
Obligations owed under the Term Loans, such beneficial owner’s Affiliates and
any person subject to aggregation with such beneficial owner or its Affiliates
under Sections 13(d) and 14(d) of the Exchange Act, beneficially owning (as
defined in Rules 13d-3 or 13d-5 under the Exchange Act, except that for purposes
of this provision such holder shall be deemed to have “beneficial ownership” of
all shares of Common Stock that any such holder has the right to acquire,
whether such right is exercisable immediately or only after the passage of
time), directly or indirectly, of more than 50% of the total voting power of the
Voting Stock of the Borrower or any of its direct or indirect parent entities
(or their successors by merger, consolidation or purchase of all or
substantially all of their assets), (C) the number of PIK Shares to be issued
shall not be in excess of the

 

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authorized amount of Common Stock available under the Borrower’s charter
therefor, (D) the PIK Shares shall be (x) listed on the New York Stock Exchange
or any other exchange on which the Common Stock is then listed or the over the
counter market and (y) duly authorized, validly issued and non-assessable, and
the issuance of such PIK Shares shall not be subject to any preemptive or
similar rights and (E) the Borrower’s Resale Registration Statement shall have
been declared effective by the SEC subject to any limitations set forth in the
Registration Rights Agreement. If the foregoing conditions are not met and the
Borrower otherwise has the ability to elect to pay PIK Interest, the Borrower
may pay such PIK Interest as PIK Loan Payments. To the extent the Shelf
Registration Statement is not effective and/or any PIK Share Payments are issued
in any manner not involving a registered issuance under the Securities Act of
1933, as amended, and the rules and regulations of the SEC promulgated
thereunder, the certificates or book-entry interests representing such shares
shall bear a legend to such effect which shall be removed at the request of a
lender subject to receipt of customary certificates and opinions. The Borrower
will cooperate with the Lenders with respect to any such request.

(c)    For any Interest Payment Date on or prior to December 31, 2018 and
subject to the Cash Interest Payment Conditions, (1) the Borrower shall be
permitted to pay PIK Interest in its sole discretion and (2) interest on the
outstanding principal amount of the Tranche A Term Loans for the relevant
quarterly interest payment period shall accrue at the PIK Interest Rate unless,
and only unless, the Borrower delivers to the Administrative Agent, no later
than the 20th day prior to each Interest Payment Date, written notification,
executed by a Responsible Officer of the Borrower, of its intention to pay Cash
Interest for the applicable Interest Payment Date, setting forth the amount of
Cash Interest to be paid on such Interest Payment Date and certifying that the
Borrower is permitted to pay Cash Interest in accordance with this Agreement.
For any Interest Payment Date after December 31, 2018 and subject to the Cash
Interest Payment Conditions, interest on the outstanding principal amount of the
Tranche A Term Loans for the relevant quarterly interest payment period shall
accrue at the Cash Interest Rate, unless, and only unless to the extent
applicable, if the Liquidity for such applicable quarter shall:

(1)    equal or exceed $225.0 million, then the Borrower must pay Cash Interest
on 100% of the principal amount of Tranche A Term Loans outstanding, payable at
the applicable Cash Interest Rate, and no PIK Interest may be paid;

(2)    equal or exceed $200.0 million but be less than $225.0 million, then the
Borrower shall pay interest on (x) up to 25% (the applicable percentage
determined by the Borrower) of the then outstanding principal amount of the
Tranche A Term Loans as PIK Interest, such PIK Interest payable at the
applicable PIK Interest Rate (and shall otherwise be deemed to have accrued at
such rate), and (y) 100% (minus the applicable, if any, elected percentage under
immediately preceding clause (x)) of the then outstanding principal amount of
the Term Loans as Cash Interest, payable at the applicable Cash Interest Rate;

(3)    equal or exceed $175.0 million but be less than $200.0 million, then the
Borrower shall pay interest on (x) up to 50% (the applicable percentage
determined by the Borrower) of the then

 

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outstanding principal amount of the Tranche A Term Loans as PIK Interest, such
PIK Interest payable at the applicable PIK Interest Rate (and shall otherwise be
deemed to have accrued at such rate), and (y) 100% (minus the applicable, if
any, elected percentage under immediately preceding clause (x)) of the then
outstanding principal amount of the Term Loans as Cash Interest, payable at the
applicable Cash Interest Rate;

(4)    equal or exceed $150.0 million but be less than $175.0 million, then the
Borrower shall pay interest on (x) up to 75% (the applicable percentage
determined by the Borrower) of the then outstanding principal amount of the
Tranche A Term Loans as PIK Interest, such PIK Interest payable at the
applicable PIK Interest Rate (and shall otherwise be deemed to have accrued at
such rate), and (y) 100% (minus the applicable, if any, elected percentage under
immediately preceding clause (x)) of the then outstanding principal amount of
the Term Loans as Cash Interest, payable at the applicable Cash Interest Rate;
and

(5)    be less than $150.0 million, then the Borrower shall pay interest on
(x) up to 100% (the applicable percentage determined by the Borrower) of the
then outstanding principal amount of the Tranche A Term Loans as PIK Interest,
such PIK Interest payable at the applicable PIK Interest Rate (and shall
otherwise be deemed to have accrued at such rate), and (y) 100% (minus the
applicable, if any, elected percentage under immediately preceding clause (x))
of the then outstanding principal amount of the Term Loans as Cash Interest,
payable at the applicable Cash Interest Rate.

(d)    Payment of PIK Share Payments.

(1)    PIK Share Payments shall be payable in PIK Shares in an amount calculated
by the Borrower by dividing the outstanding balance of the accrued PIK Interest
after giving effect to any interest to be paid in Cash Interest on the
outstanding principal amount of the Tranche A Term Loans by the 20-day volume
weighted average price per share of the Borrower’s Common Stock on the New York
Stock Exchange (or the over-the-counter market or other exchange on which the
Common Stock is then listed) calculated as at the end of the three Trading Days
prior to the Determination Date, rounded up to the nearest share of Common Stock
(a “PIK Share Payment”). With respect to any PIK Share Payments, the Borrower
shall deliver the applicable PIK Shares to the Lenders on the relevant Interest
Payment Date. On the relevant Interest Payment Date, the Borrower shall deliver
to the Administrative Agent (x) written notification, executed by a Responsible
Officer of the Borrower certifying that the issuance of the PIK Shares as
payment of all or a portion of PIK Interest on such Interest Payment Date has
been made in accordance with this Agreement and (y) the written notification,
executed by a Responsible Officer of the Borrower delivered to the applicable
Lenders with respect to such Interest Payment Date pursuant to Section 2.10(f).

 

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(2)    PIK Loan Payments shall be effected, by increasing the principal amount
of the outstanding Tranche A Term Loans by a dollar amount equal to the
percentage of PIK Interest to be paid thereon, after giving effect to any
interest to be paid in Cash Interest, less any PIK Share Payment to be made on
such Interest Payment Date (rounded up to the nearest $1.00), automatically
without any further action by any Person.

(3)    In the event that the Borrower is permitted to and elects to pay a
portion of the interest on the Term Loans as Cash Interest and a portion as PIK
Interest, such Cash Interest and PIK Interest shall be paid to (or for the
account of) Lenders pro rata in accordance with their interests.

(4)    PIK Share Payments shall be made by the Borrower to the respective
Lenders and certified to the Administrative Agent in accordance with Section
2.10(d)(1).

(e)    The insufficiency or lack of funds available to the Borrower to pay Cash
Interest as required pursuant to this Section 2.10 shall not permit the Borrower
to pay PIK Interest in respect of any Interest Payment Date and the sole right
of the Borrower to elect to pay PIK Interest shall be subject to the terms and
conditions set forth in Sections 2.10(b) and (c).

(f)    No later than the 20th day prior to each Interest Payment Date, the
Borrower shall deliver to the Administrative Agent written notification,
executed by a Responsible Officer of the Borrower certifying (i) that the
Borrower is permitted to pay PIK Interest in the amounts set forth in the notice
on the next Interest Payment Date in accordance with this Agreement and is
electing to pay PIK Interest on the next Interest Payment Date, (ii) the amount
of interest to be paid on the next Interest Payment Date, (iii) the amount of
PIK Interest to be paid as PIK Loans, if any, on the next Interest Payment Date
and (iv) the amount of PIK Interest to be paid as PIK Shares, if any, on the
next Interest Payment Date and the number of PIK Shares, if any, to be issued in
connection therewith. The Administrative Agent shall promptly deliver a copy of
such notice to the Lenders.

(g)    (i) If the Borrower shall default in the payment of any principal of or
interest on any Loan or any other amount due hereunder or under any other Loan
Document, by acceleration or otherwise, or (ii) if any Event of Default under
Article VIII (other than clauses (a) or (b) thereunder) has occurred and is
continuing and the Majority Lenders so vote (or, in the case of the occurrence
of any Event of Default described in clauses (g) or (h) of Article VIII with
respect to the Borrower or any Restricted Subsidiary, automatically upon the
occurrence thereof), then, in the case of clause (i) above, until such defaulted
amount shall have been paid in full or, in the case of clause (ii) above, from
the date such vote has been exercised by the Majority Lenders (or, in the case
of the occurrence of any Event of Default described in clauses (g) or (h) of
Article VIII with respect to the Borrower or any Restricted Subsidiary,
automatically upon the occurrence thereof) and for so long as such Event of
Default is continuing, to the extent

 

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permitted by law, all overdue amounts under this Agreement and the other Loan
Documents shall bear interest (after as well as before judgment), payable on
demand (including accrued and unpaid PIK Interest which for the avoidance of
doubt shall be paid in cash), (x) in the case of overdue principal, at the rate
otherwise applicable to such Loan pursuant to Section 2.10 plus 2.00% per annum
and (y) in all other cases, at a rate per annum (computed on the basis of the
actual number of days elapsed over a year of 360 days) equal to the interest
rate applicable to Loans pursuant to Section 2.10 plus 2.00% per annum.

(h)    Accrued interest on each Loan shall be payable in arrears on each
Interest Payment Date for such Loan and on the Term Loan Maturity Date; provided
that (i) interest accrued pursuant to Section 2.10(b) shall be payable on demand
(including accrued and unpaid PIK Interest which for the avoidance of doubt
shall be paid in cash) and (ii) in the event of any repayment or prepayment of
any Loan, accrued interest on the principal amount repaid or prepaid shall be
payable on the date of such repayment or prepayment.

(i)    All interest hereunder shall be computed on the basis of a year of
360 days, and shall be payable for the actual number of days elapsed (including
the first day but excluding the last day).

(j)    Interest on each Loan shall be payable on the Interest Payment Dates
applicable to such Loan except as otherwise provided in this Agreement.

(k)    Notwithstanding anything herein to the contrary, the payment of accrued
interest in connection with any optional or mandatory prepayment of the Tranche
A Term Loans as described under Sections 2.07 or 2.08 shall be payable solely in
cash at the applicable Cash Interest rate for the applicable calendar quarter in
which such Interest Payment Date occurs.

(l)     In the event that any PIK Share Payment is made, the Borrower shall use
its best efforts to keep a Resale Registration Statement continuously effective
until such time as no PIK Shares are held by any Lender, subject to any rights
to delay or suspend or limit such registration pursuant to the Registration
Rights Agreement.

(m)    The Administrative Agent shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of all Lenders. Upon request by the Borrower in respect of an Interest
Payment Date, the Administrative Agent shall furnish to the Borrower, no later
than two Business Days after the related Record Date, a list of names,
addresses, federal tax identification numbers and principal amounts of
Obligations of the Lenders as of such Record Date. Upon request by the Borrower,
in respect of any date that is not an Interest Payment Date, the Administrative
Agent shall furnish such information to the Borrower within two Business Days of
such request.

Section 2.11    Reserve Requirements; Change in Circumstances.

(a)    If any Change in Law shall (1) impose, modify or deem applicable any
reserve, special deposit, compulsory loan, insurance charge or similar
requirement against assets of, deposits with or for the account of, or credit
extended or participated in by, any Lender; (2) subject any Recipient to any
Taxes (other than (i) Indemnified Taxes, (ii) Taxes described in clauses
(b) through (d) of the definition of Excluded Taxes and (iii) Connection Income
Taxes)

 

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on its loans, loan principal, letters of credit, commitments, or other
obligations, or its deposits, reserves, other liabilities or capital
attributable thereto; or (3) impose on any Lender or the London interbank market
any other condition, cost or expense (other than Taxes) affecting this Agreement
or Loans made by such Lender, and the result of any of the foregoing shall be to
increase the cost to such Lender or such other Recipient of making or
maintaining any Loan, or to reduce the amount of any sum received or receivable
by such Lender or other Recipient hereunder (whether of principal, interest or
any other amount) then, upon request of such Lender or other Recipient, the
Borrower will pay to such Lender or other Recipient, as the case may be, such
additional amount or amounts as will compensate such Lender or other Recipient,
as the case may be, for such additional costs incurred or reduction suffered.

(b)    If any Lender determines that any Change in Law affecting such Lender or
any lending office of such Lender or such Lender’s holding company, if any,
regarding capital or liquidity requirements, has or would have the effect of
reducing the rate of return on such Lender’s capital or on the capital of such
Lender’s holding company, if any, as a consequence of this Agreement, the
Commitments of such Lender or the Loans made by such Lender to a level below
that which such Lender or such Lender’s holding company could have achieved but
for such Change in Law (taking into consideration such Lender’s policies and the
policies of such Lender’s holding company with respect to capital adequacy),
then from time to time the Borrower will pay to such Lender such additional
amount or amounts as will compensate such Lender or such Lender’s holding
company for any such reduction suffered.

(c)    A certificate of a Lender setting forth (i) the amount or amounts
reasonably necessary to compensate such Lender or its holding company, as the
case may be, as specified in clause (a) or (b) of this Section 2.11, (ii) the
factual basis for such compensation, and (iii) the manner in which such amount
or amounts were calculated, and delivered to the Borrower, shall be conclusive
absent manifest error. The Borrower shall pay such Lender the amount shown as
due on any such certificate within 10 days after receipt thereof.

(d)    Failure or delay on the part of any Lender to demand compensation
pursuant to this Section 2.11 shall not constitute a waiver of such Lender’s
right to demand such compensation; provided that the Borrower shall not be under
any obligation to compensate any Lender under immediately preceding clauses
(a) or (b) with respect to increased costs or reductions with respect to any
period prior to the date that is 120 days prior to such request if such Lender
knew or could reasonably have been expected to know of the circumstances giving
rise to such increased costs or reductions and of the fact that such
circumstances would result in a claim for increased compensation by reason of
such increased costs or reductions; provided, further, that the foregoing
limitation shall not apply to any increased costs or reductions arising out of
the retroactive application of any Change in Law within such 120-day period. The
protection of this Section 2.11 shall be available to each Lender regardless of
any possible contention of the invalidity or inapplicability of the Change in
Law that shall have occurred or been imposed.

Section 2.12    Taxes.

(a)    Any and all payments by or on account of any obligation of the Borrower
or any other Credit Party under any Loan Document shall be made without
deduction or

 

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withholding for any Taxes, except as required by applicable law. If any
applicable law (as determined in the good faith discretion of an applicable
Withholding Agent) requires the deduction or withholding of any Tax from any
such payment by a Withholding Agent, then the applicable Withholding Agent shall
be entitled to make such deduction or withholding and shall timely pay the full
amount deducted or withheld to the relevant Governmental Authority in accordance
with applicable law and, if such Tax is an Indemnified Tax, then the sum payable
by the applicable Credit Party shall be increased as necessary so that after
such deduction or withholding has been made (including such deductions and
withholdings applicable to additional sums payable under this Section 2.12) the
applicable Recipient receives an amount equal to the sum it would have received
had no such deduction or withholding been made.

(b)    In addition, the Credit Parties shall timely pay to the relevant
Governmental Authority in accordance with applicable law, or at the option of
the Administrative Agent timely reimburse it for the payment of, any Other
Taxes.

(c)    The Credit Parties shall indemnify the Administrative Agent and each
Lender, within 10 days after written demand therefor, for the full amount of any
Indemnified Taxes (including Indemnified Taxes imposed or asserted on or
attributable to amounts payable under this Section 2.12) payable or paid by such
Recipient or required to be withheld or deducted from a payment to such
Recipient and any reasonable expenses arising therefrom or with respect thereto,
whether or not such Indemnified Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority. A certificate as to the amount
of such payment or liability delivered to the Borrower by a Lender (with a copy
to the Administrative Agent), or by the Administrative Agent on its own behalf
or on behalf of a Lender, shall be conclusive absent manifest error.

(d)    As soon as practicable after any payment of Indemnified Taxes or Other
Taxes by the Borrower or any other Credit Party to a Governmental Authority, the
Borrower shall deliver to the Administrative Agent the original or a certified
copy of a receipt issued by such Governmental Authority evidencing such payment,
a copy of the return reporting such payment or other evidence of such payment
reasonably satisfactory to the Administrative Agent.

(1)    Any Lender that is entitled to an exemption from or reduction of
withholding Tax with respect to payments made under any Loan Document shall
deliver to the Borrower and the Administrative Agent, at the time or times
reasonably requested by the Borrower or the Administrative Agent, such properly
completed and executed documentation reasonably requested by the Borrower or the
Administrative Agent as will permit such payments to be made without withholding
or at a reduced rate of withholding. In addition, any Lender, if reasonably
requested by the Borrower or the Administrative Agent, shall deliver such other
documentation prescribed by applicable law or reasonably requested by the
Borrower or the Administrative Agent as will enable the Borrower or the
Administrative Agent to determine whether or not such Lender is subject to
backup withholding or information reporting requirements. Notwithstanding
anything to the contrary in the preceding two sentences, the completion,
execution and submission of such documentation (other than such documentation
set forth in Sections 2.12(d)(2)(i), 2.12(d)(2)(ii) and 2.12(d)(4) below) shall
not be required if in the Lender’s reasonable judgment such completion,
execution or submission would subject such Lender to any material unreimbursed
cost or expense or would materially prejudice the legal or commercial position
of such Lender.

 

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(2)    Without limiting the generality of the foregoing,

(i)    any Lender that is a U.S. Person shall deliver to the Borrower and the
Administrative Agent on or prior to the date on which such Lender becomes a
Lender under this Agreement (and from time to time thereafter upon the
reasonable request of the Borrower or the Administrative Agent), executed
originals of IRS Form W-9 certifying that such Lender is exempt from U.S.
federal backup withholding;

(ii)    any Foreign Lender shall, to the extent it is legally entitled to do so,
deliver to the Borrower and the Administrative Agent (in such number of copies
as shall be requested by the recipient) on or prior to the date on which such
Foreign Lender becomes a Lender under this Agreement (and from time to time
thereafter upon the reasonable request of the Borrower or the Administrative
Agent), whichever of the following is applicable:

(A)    in the case of a Foreign Lender claiming the benefits of an income tax
treaty to which the United States is a party (x) with respect to payments of
interest under any Loan Document, executed originals of IRS Form W-8BEN or
W-8BEN-E (as applicable) establishing an exemption from, or reduction of, U.S.
federal withholding Tax pursuant to the “interest” article of such tax treaty
and (y) with respect to any other applicable payments under any Loan Document,
IRS Form W-8BEN or W-8BEN-E (as applicable) establishing an exemption from, or
reduction of, U.S. federal withholding Tax pursuant to the “business profits” or
“other income” article of such tax treaty;

(B)    executed originals of IRS Form W-8ECI;

(C)    in the case of a Foreign Lender claiming the benefits of the exemption
for portfolio interest under Section 881(c) of the Code, (x) a certificate
substantially in the form of Exhibit H-1 to the effect that such Foreign Lender
is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a
“10 percent shareholder” of the Borrower within the meaning of Section
881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in
Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and
(y) executed originals of IRS Form W-8BEN or W-8BEN-E (as applicable); or

(D)    to the extent a Foreign Lender is not the beneficial owner, executed
originals of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN or
IRS Form W-8BEN-E, a U.S. Tax Compliance Certificate substantially in the form
of Exhibit H-2 or Exhibit H-3, IRS Form W-9, and/or other certification
documents from each beneficial owner, as applicable; provided that if the
Foreign Lender is a partnership and one or more direct or indirect partners of
such Foreign Lender are claiming the portfolio interest exemption, such Foreign
Lender may provide a U.S. Tax Compliance Certificate substantially in the form
of Exhibit H-4 on behalf of each such direct and indirect partner;

 

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(3)    any Foreign Lender shall, to the extent it is legally entitled to do so,
deliver to the Borrower and the Administrative Agent (in such number of copies
as shall be requested by the recipient) on or prior to the date on which such
Foreign Lender becomes a Lender under this Agreement (and from time to time
thereafter upon the reasonable request of the Borrower or the Administrative
Agent), executed originals of any other form prescribed by applicable law as a
basis for claiming exemption from or a reduction in U.S. federal withholding
Tax, duly completed, together with such supplementary documentation as may be
prescribed by applicable law to permit the Borrower or the Administrative Agent
to determine the withholding or deduction required to be made; and

(4)    if a payment made to a Lender under any Loan Document would be subject to
U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to
comply with the applicable reporting requirements of FATCA (including those
contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender
shall deliver to the Borrower and the Administrative Agent at the time or times
prescribed by law and at such time or times reasonably requested by the Borrower
or the Administrative Agent such documentation prescribed by applicable law
(including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such
additional documentation reasonably requested by the Borrower or the
Administrative Agent as may be necessary for the Borrower and the Administrative
Agent to comply with their obligations under FATCA and to determine that such
Lender has complied with such Lender’s obligations under FATCA or to determine
the amount to deduct and withhold from such payment. Solely for purposes of this
clause (4), “FATCA” shall include any amendments made to FATCA after the date of
this Agreement.

(5)    Each Lender agrees that if any form or certification it previously
delivered expires or becomes obsolete or inaccurate in any respect, it shall
update such form or certification or promptly notify the Borrower and the
Administrative Agent in writing of its legal inability to do so.

(e)    Each Lender shall severally indemnify the Administrative Agent, within 10
days after demand therefor, for (1) any Indemnified Taxes attributable to such
Lender (but only to the extent that any Credit Party has not already indemnified
the Administrative Agent for such Indemnified Taxes and without limiting the
obligation of the Credit Parties to do so), (2) any Taxes attributable to such
Lender’s failure to comply with the provisions of Section 10.04 relating to the
maintenance of a Participant Register and (3) any Excluded Taxes attributable to
such Lender, in each case, that are payable or paid by the Administrative Agent
in connection with any Loan Document, and any reasonable expenses arising
therefrom or with respect thereto, whether or not such Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority. A
certificate as to the amount of such payment or liability delivered to any
Lender by the Administrative Agent shall be conclusive absent manifest error.
Each Lender hereby authorizes the Administrative Agent to set off and apply any
and all amounts at any time owing to such Lender under any Loan Document or
otherwise payable by the Administrative Agent to the Lender from any other
source against any amount due to the Administrative Agent under this clause (e).

 

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(f)    If any party determines, in its sole discretion exercised in good faith,
that it has received a refund of any Taxes as to which it has been indemnified
pursuant to this Section 2.12 (including by the payment of additional amounts
pursuant to this Section 2.12), it shall pay to the indemnifying party an amount
equal to such refund (but only to the extent of indemnity payments made under
this Section 2.12 with respect to the Taxes giving rise to such refund), net of
all out-of-pocket expenses (including Taxes) of such indemnified party and
without interest (other than any interest paid by the relevant Governmental
Authority with respect to such refund). Such indemnifying party, upon the
request of such indemnified party, shall repay to such indemnified party the
amount paid over pursuant to this clause (f) (plus any penalties, interest or
other charges imposed by the relevant Governmental Authority) in the event that
such indemnified party is required to repay such refund to such Governmental
Authority. Notwithstanding anything to the contrary in this clause (f), in no
event will the indemnified party be required to pay any amount to an
indemnifying party pursuant to this clause (f) the payment of which would place
the indemnified party in a less favorable net after-Tax position than the
indemnified party would have been in if the Tax subject to indemnification and
giving rise to such refund had not been deducted, withheld or otherwise imposed
and the indemnification payments or additional amounts with respect to such Tax
had never been paid. This clause (f) shall not be construed to require any
indemnified party to make available its Tax returns (or any other information
relating to its Taxes that it deems confidential) to the indemnifying party or
any other Person.

(g)    Each party’s obligations under this Section 2.12 shall survive the
resignation or replacement of the Administrative Agent or any assignment of
rights by, or the replacement of, a Lender, the termination of the Commitments
and the repayment, satisfaction or discharge of all obligations under any Loan
Document. For purposes of this Section 2.12, the term “applicable law” includes
FATCA.

Section 2.13    Payments Generally; Pro Rata Treatment; Sharing of Set-offs.

(a)    The Borrower shall make each payment required to be made by it hereunder
(whether of principal, interest, fees, or of amounts payable under Section 2.11
or Section 2.12, or otherwise) prior to 12:00 noon on the date when due, in
immediately available funds, without set-off or counterclaim. Any amounts
received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made (x) to the Administrative Agent at its offices at Wilmington
Trust, National Association, 50 South Sixth Street, Suite 1290, Minneapolis, MN
55402, or (y) directly to the applicable Lender as may be specified in writing
from time to time by the Administrative Agent, except that payments pursuant to
Section 2.11, Section 2.12 and Section 10.03 shall be made directly to the
Persons entitled thereto. The Administrative Agent shall distribute any such
payments received by it for the account of any other Person to the appropriate
recipient promptly following receipt thereof. If any payment hereunder shall be
due on a day that is not a Business Day, the date for payment shall be extended
to the next succeeding Business Day, and, in the case of any payment accruing
interest, interest thereon shall be payable for the period of such extension.
All payments hereunder shall be made in Dollars.

 

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(b)    Subject to the Intercreditor Agreement, any proceeds of Collateral
received by the Administrative Agent (i) not constituting either (A) a specific
payment of principal, interest, fees or other sum payable under the Loan
Documents (which shall, to the extent not otherwise specified in the Loan
Documents, be applied to the payment of such principal, interest, fees or other
sum payable under the Loan Documents as specified by the Borrower), or (B) a
mandatory prepayment or prepayment pursuant to an Asset Sale Offer (which shall
be applied in accordance with Section 2.08) or (ii) after an Event of Default
has occurred and is continuing, shall be applied ratably first, to pay any fees,
indemnities, or expense reimbursements including amounts then due to the
Administrative Agent from the Borrower or any other Credit Party, second, to pay
any fees or expense reimbursements then due to the Lenders from the Borrower or
any other Credit Party, third, to pay interest then due and payable on the Loans
ratably, fourth, to pay the portion of the Obligations constituting unpaid
principal of the Loans, in each case, ratably among the Administrative Agent and
the Lenders, and fifth, to the payment of any other Obligations due to the
Administrative Agent, any Lender or any other Secured Party by any Credit Party
or any Restricted Subsidiary. The Administrative Agent and the Lenders shall
have the continuing and exclusive right to apply and reverse and reapply any and
all such proceeds and payments to any portion of the Obligations.

(c)    Subject to the Intercreditor Agreement, if any Lender shall, by
exercising any right of set-off or counterclaim or otherwise (including any
right of set-off exercised with respect to a Swap Agreement), obtain payment in
respect of any principal of or interest on any of its Loans resulting in such
Lender receiving payment of a greater proportion of the aggregate amount of its
Loans and accrued interest thereon than the proportion received by any other
Lender, then the Lender receiving such greater proportion shall purchase (for
cash at face value) participations in the Loans of other Lenders to the extent
necessary so that the benefit of all such payments shall be shared by the
Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Loans; provided that (i) if any such
participations are purchased and all or any portion of the payment giving rise
thereto is recovered, such participations shall be rescinded and the purchase
price restored to the extent of such recovery, without interest, and (ii) the
provisions of this clause (c) shall not be construed to apply to any payment
made by the Borrower pursuant to and in accordance with the express terms of
this Agreement or any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Loans to any assignee or
participant, other than to the Borrower or any Subsidiary or Affiliate thereof
(as to which the provisions of this clause (c) shall apply). The Borrower
consents to the foregoing and agrees, to the extent it may effectively do so
under applicable law, that any Lender acquiring a participation pursuant to the
foregoing arrangements may exercise against the Borrower rights of set-off and
counterclaim with respect to such participation as fully as if such Lender were
a direct creditor of the Borrower in the amount of such participation.

(d)    Unless the Administrative Agent shall have received written notice from
the Borrower prior to the date on which any payment is due to the Administrative
Agent for the account of the Lenders hereunder that the Borrower will not make
such payment, the Administrative Agent may assume that the Borrower has made
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accordance herewith and may, in reliance upon such assumption, but shall have no
obligation to do so, distribute to the Lenders the amount due. In such event, if
the Borrower has not in fact made such payment, then each of the Lenders
severally agrees to repay to the Administrative Agent forthwith on demand the
amount so distributed to such Lender with interest thereon, for each day from
and including the date such amount is distributed to it to but excluding the
date of payment to the Administrative Agent, at the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation.

(e)    If any Lender shall fail to make any payment required to be made by it
pursuant to Section 2.13(d) or Section 10.03(c), then the Administrative Agent
may, in its discretion and notwithstanding any contrary provision hereof
(i) apply any amounts thereafter received by the Administrative Agent for the
account of such Lender and for the benefit of the Administrative Agent to
satisfy such Lender’s obligations under such Sections until all such unsatisfied
obligations are fully paid, and/or (ii) hold any such amounts in a segregated
account as cash collateral for, and application to, any future funding
obligations of such Lender under such Sections, in the case of each of (i) and
(ii) above, in any order as determined by the Administrative Agent in its
discretion.

Section 2.14    Mitigation Obligations; Replacement of Lenders; Illegality.

(a)    If any Lender requests compensation under Section 2.11, or if the
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.12,
then such Lender shall use reasonable efforts to designate a different lending
office for funding or booking its Loans hereunder or to assign its rights and
obligations hereunder to another of its offices, branches or Affiliates, if, in
the judgment of such Lender, such designation or assignment (i) would eliminate
or reduce amounts payable pursuant to Section 2.11 or Section 2.12, as the case
may be, in the future and (ii) would not subject such Lender to any unreimbursed
cost or expense and would not otherwise be disadvantageous to such Lender. The
Borrower hereby agrees to pay all documented and reasonable costs and expenses
incurred by any Lender in connection with any such designation or assignment.

(b)    If any Lender requests compensation under Section 2.11, or if the
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.12,
then the Borrower may, at its sole expense and effort, upon notice to such
Lender and the Administrative Agent, require such Lender to assign and delegate,
without recourse (in accordance with and subject to the restrictions contained
in, and consents required by, Section 10.04), all its interests, rights and
obligations under this Agreement to an assignee that shall assume such
obligations (which assignee may be another Lender, if a Lender accepts such
assignment); provided that (i) the Borrower shall have received the prior
written consent of the Administrative Agent, which consent shall not
unreasonably be withheld, (ii) such Lender shall have received payment of an
amount equal to the outstanding principal of its Loans, accrued interest
thereon, accrued fees and all other amounts payable to it hereunder (but
excluding, for the avoidance of doubt, any amounts attributable to the
Applicable Premium), from the assignee (to the extent of such outstanding
principal and accrued interest and fees) or the Borrower (in the case of all
other

 

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amounts) and (iii) in the case of any such assignment resulting from a claim for
compensation under Section 2.11 or payments required to be made pursuant to
Section 2.12, such assignment will result in a reduction in such compensation or
payments. A Lender shall not be required to make any such assignment and
delegation if, prior thereto, as a result of a waiver by such Lender or
otherwise, the circumstances entitling the Borrower to require such assignment
and delegation cease to apply.

(c)    If (i) in connection with any proposed amendment, modification,
termination, waiver or consent with respect to any of the provisions of this
Agreement or any other Loan Document that requires approval of all of the
Lenders under Section 10.02, the consent of Super-Majority Lenders shall have
been obtained but the consent of one or more of such other Lenders (each a
“Non-Consenting Lender”) whose consent is required has not been obtained or
(ii) a Lender is a Defaulting Lender; then, in each case, the Borrower may, at
its sole expense and effort, upon notice to such Lender and the Administrative
Agent, elect to replace such Non-Consenting Lender or Defaulting Lender, as the
case may be, as a Lender party to this Agreement in accordance with and subject
to the restrictions contained in, and consents required by Section 10.04;
provided that (x) the Borrower shall have received the prior written consent of
the Administrative Agent, which consent shall not unreasonably be withheld, and
(y) such Lender shall have received payment of an amount equal to the
outstanding principal of its Loans, accrued interest thereon, accrued fees and
all other amounts payable to it hereunder (but excluding, for the avoidance of
doubt, any amounts attributable to the Applicable Premium), from the assignee
(to the extent of such outstanding principal and accrued interest and fees) or
the Borrower (in the case of all other amounts). A Lender shall not be required
to make any such assignment and delegation if, prior thereto, as a result of a
consent by such Lender or otherwise, the circumstances entitling the Borrower to
require such assignment and delegation cease to apply or, in the case of a
Defaulting Lender, such Lender is no longer a Defaulting Lender.

Section 2.15    Defaulting Lenders. Notwithstanding any provision of this
Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the
following provisions shall apply for so long as such Lender is a Defaulting
Lender:

(a)    Such Defaulting Lender shall not have the right to vote on any issue on
which voting is required (other than to the extent expressly provided in
Section 10.02(b)) and the Credit Exposure of such Defaulting Lender shall not be
included in determining whether the Majority Lenders or the Super-Majority
Lenders have taken or may take any action hereunder.

(b)    If a Defaulting Lender (or a Lender who would be a Defaulting Lender but
for the expiration of the relevant grace period) as a result of the exercise of
a set-off shall have received a payment in respect of its Credit Exposure which
results in its Credit Exposure being less than its Applicable Percentage of the
Aggregate Credit Exposure, then no payments will be made to such Defaulting
Lender until such time as such Defaulting Lender shall have complied with this
Section 2.15 and all amounts due and owing to the Lenders has been equalized in
accordance with each Lender’s respective pro rata share of the Obligations.
Further, if at any time prior to the acceleration or maturity of the Loans, the
Administrative Agent shall receive any payment in respect of principal of a Loan
while one or more Defaulting Lenders shall be party to this Agreement, the

 

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Administrative Agent shall apply such payment first to the Borrowing(s) for
which such Defaulting Lender(s) shall have failed to fund its pro rata share
until such time as such Borrowing(s) are paid in full or each Lender (including
each Defaulting Lender) is owed its Applicable Percentage of all Loans then
outstanding. After acceleration or maturity of the Loans, subject to the first
sentence of this Section 2.15(b), all principal will be paid ratably as provided
in Section 2.15(b).

Section 2.16    Returned Payments. If after receipt of any payment which is
applied to the payment of all or any part of the Obligations, the Administrative
Agent or any Lender is for any reason compelled to surrender such payment or
proceeds to any Person because such payment or application of proceeds is
invalidated, declared fraudulent, set aside, determined to be void or voidable
as a preference, impermissible setoff, or a diversion of trust funds, or for any
other reason, then the Obligations or part thereof intended to be satisfied
shall be revived and continued and this Agreement shall continue in full force
as if such payment or proceeds had not been received by the Administrative Agent
or such Lender. The provisions of this Section 2.16 shall be and remain
effective notwithstanding any contrary action which may have been taken by the
Administrative Agent or any Lender in reliance upon such payment or application
of proceeds. The provisions of this Section 2.16 shall survive the termination
of this Agreement.

Section 2.17    Collection of Proceeds of Production. The Security Instruments
contain an assignment by the Borrower and/or the Guarantors to and in favor of
the Collateral Trustee for the benefit of the Secured Parties of all of the
Borrower’s or each Guarantor’s interest in and to production and all proceeds
attributable thereto which may be produced from or allocated to the Mortgaged
Properties. The Security Instruments further provide in general for the
application of such proceeds to the satisfaction of the Obligations and other
obligations described therein and secured thereby. Notwithstanding the
assignment contained in such Security Instruments, (a) unless an Event of
Default has occurred and is continuing, neither the Collateral Trustee nor the
Administrative Agent nor any Lender will notify the purchaser or purchasers of
such production nor take any other action to cause such proceeds to be remitted
to the Collateral Trustee nor the Administrative Agent nor any Lender, but the
Collateral Trustee, Administrative Agent and each Lender will instead permit
such proceeds to be paid to the relevant Credit Party and (b) the Lenders hereby
authorize the Collateral Trustee to take such actions as may be necessary to
cause such proceeds to be paid to the relevant Credit Party so long as no Event
of Default has occurred and is continuing.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

Each Credit Party represents and warrants to the Lenders that (it being
understood and agreed that such representations and warranties are deemed to be
made concurrently with and after giving effect to the consummation of the
Transactions on the Effective Date):

Section 3.01    Organization; Powers. Each Credit Party is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization, has all requisite power and authority to carry on its business as
now conducted and, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect, is qualified to do business in, and is in good standing in, every
jurisdiction where such qualification is required.

 

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Section 3.02    Authorization; Enforceability. The Transactions are within each
Credit Party’s corporate, limited liability company or partnership powers and
have been duly authorized by all necessary corporate, limited liability company
or partnership and, if required, stockholder action. This Agreement and each of
the Loan Documents to which a Credit Party is party have been duly executed and
delivered by such Credit Party and constitute legal, valid and binding
obligations of such Credit Party, enforceable in accordance with their terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors’ rights generally and subject to general
principles of equity, regardless of whether considered in a proceeding in equity
or at law.

Section 3.03    Governmental Approvals; No Conflicts. The Transactions (a) do
not require any consent or approval of, registration or filing with, or any
other action by, any Governmental Authority, except such as have been obtained
or made and are in full force and effect and, after the Effective Date, the
filing of this Agreement and related Loan Documents by the Borrower with, and
other required disclosures required by, the SEC pursuant to the requirements of
the Exchange Act, (b) will not violate any applicable law or regulation or the
charter, by-laws or other Organizational Documents of the Borrower or any
Restricted Subsidiary or any order of any Governmental Authority, (c) will not
violate or result in a default under any indenture, agreement or other
instrument evidencing Material Indebtedness or a Material Sales Contract binding
upon the Borrower or any Restricted Subsidiary or any of their respective
assets, or give rise to a right thereunder to require any payment to be made by
the Borrower or any Restricted Subsidiary, and (d) will not result in the
creation or imposition of any Lien on any asset of the Borrower or any
Restricted Subsidiary not otherwise permitted under Section 6.07.

Section 3.04    Financial Condition; No Material Adverse Change.

(a)    The Borrower has heretofore furnished to the Lenders the consolidated
balance sheet and related statements of income and cash flows of the Borrower
and its Consolidated Subsidiaries (i) as of and for the fiscal years ended
December 31, 2013, December 31, 2014, and December 31, 2015, reported on by KPMG
LLP, independent public accountants, and (ii) as of and for the fiscal quarters
ended March 31, 2015, June 30, 2015 and September 31, 2015, setting forth in
comparative form the figures for the corresponding period of (or, in the case of
the balance sheet, as of the end of) the previous fiscal year, all certified by
a Responsible Officer. Such financial statements present fairly, in all material
respects, the financial position and results of operations and cash flows of the
Borrower and its Consolidated Subsidiaries as of such dates and for such periods
in accordance with GAAP, subject to year-end audit adjustments and the absence
of footnotes, in the case of the statements referred to in clause (ii) above.

(b)    Since December 31, 2015, there has been no material adverse change in the
business, assets, operations, prospects or condition, financial or otherwise, of
the Borrower and its Restricted Subsidiaries, taken as a whole (it being
understood that changes in commodity prices for Hydrocarbons affecting the oil
and gas industry as a whole do not constitute a material adverse change).

 

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Section 3.05    Properties.

(a)    Except as otherwise provided in Section 3.15 with respect to Proved
Reserves included in the Oil and Gas Properties of the Borrower and each
Restricted Subsidiary, the Borrower and each Restricted Subsidiary has good
title to, or valid leasehold interests in, all such real and personal property
material to its business, except for minor defects in title that do not
interfere with its ability to conduct its business as currently conducted or to
utilize such properties for their intended purposes.

(b)    All material leases and agreements (excluding oil and gas leases which
are addressed in Section 3.15) necessary for the conduct of the business of the
Borrower and the Restricted Subsidiaries are valid and subsisting, in full force
and effect, and there exists no default or event of default, or event or
circumstance which with the giving of notice or the passage of time or both
would give rise to a default or event of default, under any such lease or
agreement which could reasonably be expected to have a Material Adverse Effect.

(c)    The rights and Properties presently owned, leased or licensed by the
Credit Parties including all easements and rights of way, include all material
rights and Properties necessary to permit the Borrower and the Restricted
Subsidiaries to conduct their business.

(d)    All of the material Properties of the Borrower and the Restricted
Subsidiaries (other than the Oil and Gas Properties, which are addressed in
Section 3.15) which are reasonably necessary for the operation of their
businesses are in good working condition and are maintained in accordance with
prudent business standards.

(e)    The Borrower and each Restricted Subsidiary owns, or is licensed to use,
all trademarks, trade-names, copyrights, patents and other intellectual property
material to its business, and the use thereof by the Borrower and such
Restricted Subsidiaries, as the case may be, does not infringe upon the rights
of any other Person, except for any such infringements that, individually or in
the aggregate, could not reasonably be expected to result in a Material Adverse
Effect.

Section 3.06    Litigation and Environmental Matters.

(a)    There are no actions, suits, investigations or proceedings by or before
any arbitrator or Governmental Authority pending against or, to the knowledge of
the Borrower, threatened against or affecting the Borrower or any Restricted
Subsidiary, (i) as to which there is a reasonable possibility of an adverse
determination and that, if adversely determined, could reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect (other
than the Disclosed Matters) or (ii) that involve this Agreement or the
Transactions.

(b)    Except for the Disclosed Matters and except with respect to any other
matters that, individually or in the aggregate, could not reasonably be expected
to result in a Material Adverse Effect, neither the Borrower nor any Restricted
Subsidiary to the Borrower’s knowledge (i) has failed to comply with any
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comply with any permit, license or other approval required under any
Environmental Law, (ii) has become subject to any Environmental Liability,
(iii) has received notice of any claim with respect to any Environmental
Liability or (iv) knows of any basis for any Environmental Liability.

(c)    Since the date of this Agreement, there has been no change in the status
of the Disclosed Matters that, individually or in the aggregate, has resulted
in, or materially increased the likelihood of, a Material Adverse Effect.

Section 3.07    Compliance with Laws and Agreements. The Borrower and each
Restricted Subsidiary is in compliance with all Governmental Requirements
applicable to it, its Oil and Gas Business, and its Property and there are no
pending, or to the knowledge of the Borrower or any Restricted Subsidiary,
threatened or anticipated complaints, investigations, enforcement actions or
other proceedings (formal or informal, public or non-public) alleging that
Borrower or any Restricted Subsidiary is not in compliance with any Governmental
Requirements applicable to it, its Oil and Gas Business, or its Property which
could reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect. The Borrower and each Restricted Subsidiary are in
compliance with all indentures, agreements and other instruments binding upon it
or its Property, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect. No Default or Event of Default has occurred and is continuing. As of the
Effective Date and immediately after giving effect to any extensions of credit
hereunder, no default or event of default has occurred and is then continuing
under any of the First Lien RBL Documents, Senior Secured Notes Documents, the
Existing Second Lien Credit Agreements or under any indenture or similar
document related to the Existing Unsecured Notes.

Section 3.08    Investment Company Status; Energy Regulatory Status.

(a)    Neither the Borrower nor any Restricted Subsidiary is an “investment
company” as defined in, or subject to regulation under, the Investment Company
Act of 1940.

(b)    Neither the Borrower nor any Restricted Subsidiary (i) is subject to
regulation as a “natural-gas company,” under the Natural Gas Act or the
regulations of the Federal Energy Regulatory Commission (“FERC”) thereunder,
(ii) subject to regulation as a “gas utility company,” a “public-utility
company,” or a “holding company” under the Public Utility Holding Company Act of
2005, or FERC’s regulations thereunder, or (iii) subject to regulation as a
“public utility, “ a “natural gas utility,” a “natural gas company,” a “holding
company,” or similar term under any state law or regulation.

Section 3.09    Taxes. The Borrower and each Restricted Subsidiary has timely
filed or caused to be filed all Tax returns and reports required to have been
filed and has paid or caused to be paid all Taxes required to have been paid by
it, except (a) Taxes that are being contested in good faith by appropriate
proceedings and for which the Borrower or such Restricted Subsidiary, as
applicable, has set aside on its books adequate reserves or (b) to the extent
that the failure to do so could not reasonably be expected to result in a
Material Adverse Effect.

 

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Section 3.10    ERISA. No ERISA Event has occurred or is reasonably expected to
occur that, when taken together with all other such ERISA Events for which
liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of FASB Statement 87) did not, as of the date of the most recent financial
statements reflecting such amounts, exceed by more than $5,000,000 the fair
market value of the assets of such Plan, and the present value of all
accumulated benefit obligations of all underfunded Plans (based on the
assumptions used for purposes of FASB Statement 87) did not, as of the date of
the most recent financial statements reflecting such amounts, exceed by more
than $5,000,000 the fair market value of the assets of all such underfunded
Plans.

Section 3.11    Disclosure. The Borrower has disclosed to the Lenders all
agreements, instruments and corporate or other restrictions to which it or any
Restricted Subsidiary is subject, and all other matters known to it, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect. None of the other reports, financial statements,
certificates or other information furnished by or on behalf of the Borrower or
any Restricted Subsidiary to the Administrative Agent or any Lender in
connection with the negotiation of this Agreement or delivered hereunder (as
modified or supplemented by other information so furnished) contains any
material misstatement of fact or omits to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.

Section 3.12    Labor Matters. There are no strikes, lockouts or slowdowns
against the Borrower or any of its Restricted Subsidiaries pending or, to the
knowledge of the Borrower, threatened that could reasonably be expected to have
a Material Adverse Effect. The hours worked by and payments made to employees of
the Borrower and its Restricted Subsidiaries have not been in violation of the
Fair Labor Standards Act or any other Law dealing with such matters to the
extent that such violation could reasonably be expected to have a Material
Adverse Effect.

Section 3.13    Capitalization and Credit Party Information. Schedule 3.13
lists, as of the Effective Date (a) each Subsidiary that is an Unrestricted
Subsidiary and for each Unrestricted Subsidiary (x) the full legal name, its
jurisdiction of organization, its organizational identification number, its
federal tax identification number, the number of shares of capital stock or
other Equity Interests outstanding and the owner(s) of such Equity Interests and
(y) each Subsidiary of each such Unrestricted Subsidiary and each such
Subsidiary, the full legal name, its jurisdiction of organization, its
organizational identification number, its federal tax identification number, the
number of shares of capital stock or other Equity Interests outstanding and the
owner(s) of such Equity Interests, (b) for the Borrower, its full legal name,
its jurisdiction of organization, its organizational identification number and
its federal tax identification number, and (c) each Restricted Subsidiary and
for each Restricted Subsidiary its full legal name, its jurisdiction of
organization, its organizational identification number, its federal tax
identification number, the number of shares of capital stock or other Equity
Interests outstanding and the owner(s) of such Equity Interests.

Section 3.14    Margin Stock. Neither the Borrower nor any Restricted Subsidiary
is engaged principally, or as one of its important activities, in the business
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extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulation U issued by the Board), and no part of the proceeds of
any Loan will be used to purchase or carry any margin stock or to extend credit
to others for the purpose of purchasing or carrying margin stock.

Section 3.15    Oil and Gas Properties. Each Credit Party has good and
defensible title to all Proved Reserves included in the Oil and Gas Properties
(for purposes of this Section 3.15, “proved Oil and Gas Properties”) described
in the most recent Reserve Report provided to the Administrative Agent, free and
clear of all Liens except Liens permitted pursuant to Section 6.07. All such
proved Oil and Gas Properties are valid, subsisting, and in full force and
effect, and all rentals, royalties, and other amounts due and payable in respect
thereof have been duly paid. Without regard to any consent or non-consent
provisions of any joint operating agreement covering any Credit Party’s proved
Oil and Gas Properties, such Credit Party’s share of (a) the costs for each
proved Oil and Gas Property described in the Reserve Report is not materially
greater than the decimal fraction set forth in the Reserve Report, before and
after payout, as the case may be, and described therein by the respective
designations “working interests,” “WI,” “gross working interest,” “GWI,” or
similar terms (except in such cases where there is a corresponding increase in
the net revenue interest), and (b) production from, allocated to, or attributed
to each such proved Oil and Gas Property is not materially less than the decimal
fraction set forth in the Reserve Report, before and after payout, as the case
may be, and described therein by the designations “net revenue interest,” “NRI,”
or similar terms. Each well drilled in respect of proved producing Oil and Gas
Properties described in the Reserve Report (1) is capable of, and is presently,
either producing Hydrocarbons in commercially profitable quantities or in the
process of being worked over or enhanced, and the Credit Party that owns such
proved producing Oil and Gas Properties is currently receiving payments for its
share of production, with no funds in respect of any thereof being presently
held in suspense, other than any such funds being held in suspense pending
delivery of appropriate division orders, and (2) has been drilled, bottomed,
completed, and operated in compliance with all applicable laws, in the case of
clauses (1) and (2), except where any failure to satisfy clause (1) or to comply
with clause (2) would not have a Material Adverse Effect, and no such well which
is currently producing Hydrocarbons is subject to any penalty in production by
reason of such well having produced in excess of its allowable production.

Section 3.16    Insurance. Each Credit Party has (a) all insurance policies
sufficient for the compliance by each of them with all material Governmental
Requirements and all material agreements to which such Credit Party is a party
and (b) insurance coverage in such amounts and against such risk (including,
without limitation, public liability) that are usually insured against by
companies similarly situated and engaged in the same or a similar business for
the assets and operations of the Credit Parties. The Administrative Agent and
the Lenders have been named as additional insureds in respect of such liability
insurance policies and the Administrative Agent has been named as loss payee
with respect to Property loss insurance.

Section 3.17    Solvency. After giving effect to the Transactions and any
contribution provisions contained in any Loan Document, the Credit Parties and
each of the Restricted Subsidiaries, taken as a whole, are Solvent.

 

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Section 3.18    Deposit Accounts. Except for the Excluded Accounts, no Credit
Party maintains any deposit or investment account other than such accounts
listed on Schedule 3.18.

Section 3.19    Maintenance of Properties. Except for such acts or failures to
act as could not be reasonably expected to have a Material Adverse Effect, the
Oil and Gas Properties (and Properties unitized therewith) of the Borrower and
the Restricted Subsidiaries have been maintained, operated and developed in a
good and workmanlike manner and in conformity with all Governmental Requirements
and in conformity with the provisions of all leases, subleases or other
contracts comprising a part of the Oil and Gas Properties and other contracts
and agreements forming a part of the Oil and Gas Properties of the Borrower and
the Restricted Subsidiaries. Specifically in connection with the foregoing,
except for those as could not be reasonably expected to have a Material Adverse
Effect, (a) no Oil and Gas Property of the Borrower or any Restricted Subsidiary
is subject to having allowable production reduced below the full and regular
allowable (including the maximum permissible tolerance) because of any
overproduction (whether or not the same was permissible at the time) and
(b) none of the wells comprising a part of the Oil and Gas Properties (or
Properties unitized therewith) of the Borrower and the Restricted Subsidiaries
is deviated from the vertical more than the maximum permitted by Governmental
Requirements, and such wells are, in fact, bottomed under and are producing
from, and the well bores are wholly within, the Oil and Gas Properties (or in
the case of wells located on Properties unitized therewith, such unitized
Properties) of the Borrower and the Restricted Subsidiaries. The wells drilled
in respect of proved producing Oil and Gas Properties described in the Reserve
Report (other than wells drilled in respect of such proved producing Oil and Gas
Properties that have been subsequently Disposed of in accordance with the terms
of this Agreement) are capable of, and are presently, either producing
Hydrocarbons in commercially profitable quantities or in the process of being
worked over or enhanced, and the Credit Party that owns such proved producing
Oil and Gas Properties is currently receiving payments for its share of
production, with no funds in respect of any thereof being presently held in
suspense, other than any such funds being held in suspense pending delivery of
appropriate division orders. All pipelines, wells, gas processing plants,
platforms and other material improvements, fixtures and equipment owned in whole
or in part by the Borrower or any Restricted Subsidiary that are necessary to
conduct normal operations are being maintained in a state adequate to conduct
normal operations, and with respect to such of the foregoing which are operated
by the Borrower or any Restricted Subsidiary, in a manner consistent with the
past practices of the Borrower and the Restricted Subsidiaries (other than those
the failure of which to maintain in accordance with this Section 3.19 could not
reasonably be expected to have a Material Adverse Effect).

Section 3.20    Foreign Corrupt Practices; OFAC.

(a)    No Credit Party, nor any director, officer, agent, employee or Affiliate
of any Credit Party is aware of or has taken any action, directly or indirectly,
that would result in a material violation by such Persons of the FCPA, including
without limitation, making use of the mails or any means or instrumentality of
interstate commerce corruptly in furtherance of an offer, payment, promise to
pay or authorization of the payment of any money, or other property, gift,
promise to give, or authorization of the giving of anything of value to any
“foreign official” (as such term is defined in the FCPA) or any foreign
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candidate for foreign political office, in contravention of the FCPA; and, the
Credit Parties and their Affiliates have conducted their business in material
compliance with the FCPA and have instituted and maintained policies and
procedures designed to ensure, and which are reasonably expected to continue to
ensure, continued compliance therewith.

(b)    No Credit Party, nor any director, officer, agent, employee or Affiliate
of any Credit Party is currently subject to any material U.S. sanctions
administered by OFAC, and the Borrower will not directly or indirectly use the
proceeds from the Loans or lend, contribute or otherwise make available such
proceeds to any Subsidiary, Affiliate, joint venture partner or other Person,
for the purpose of financing the activities of any Person currently subject to
any U.S. sanctions administered by OFAC.

Section 3.21    USA PATRIOT Act. The Borrower and each of the Subsidiaries is in
compliance in all material respects with all applicable statutes, regulations
and orders of (including any laws relating to terrorism, money laundering,
embargoed persons or the Act), and all applicable restrictions imposed by, all
governmental bodies, domestic or foreign, in respect of the conduct of its
business and the ownership of its property (including, without limitation,
applicable statutes, regulations, orders and restrictions relating to
environmental standards and controls).

Section 3.22    Security Interest in Collateral.

(a)    The provisions of the Mortgages create legal and valid Liens on all the
Collateral described therein in favor of the Collateral Trustee, for the benefit
of the Secured Parties, and when the Mortgages are filed in the offices
specified on Schedule 3.22 (in the case of Mortgages to be executed and
delivered on the Effective Date) or in the recording office designated by the
Borrower (in the case of any Mortgage to be executed and delivered pursuant to
Section 5.12), each Mortgage shall constitute perfected and continuing Liens on
the Borrower’s and the Restricted Subsidiaries’ right, title and interest in the
Collateral described therein, securing the Obligations, enforceable against the
applicable Credit Party and all third parties, and having priority over all
other Liens on the Collateral, subject to the Intercreditor Agreement and
Permitted Prior Liens.

(b)    Each of the Pledge Agreement and the Security Agreement creates legal and
valid Liens on all the Collateral described therein in favor of the Collateral
Trustee, for the benefit of the Secured Parties, and when financing statements
in appropriate form are filed in the offices specified on Schedule 3.22 at any
time, each of the Pledge Agreement and the Security Agreement shall constitute
perfected and continuing Liens on each Credit Party’s right, title and interest
in the Collateral described therein, securing the Obligations, enforceable
against the applicable Credit Party and all third parties, and having priority
over all other Liens on the Collateral except for Liens permitted by
Section 6.02.

 

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ARTICLE IV

CONDITIONS

Section 4.01    Effective Date. This Agreement shall take effect upon, and the
rights and obligations (other than the obligations of the Lenders to make Loans
hereunder) of each party under this Agreement are subject to, the satisfaction
of the following conditions precedent:

(a)    The Administrative Agent and the Lenders shall have received from each
party hereto either (A) a counterpart of this Agreement (together with the
Schedules hereto) signed on behalf of such party or (B) written evidence
satisfactory to the Lenders (which may include telecopy or electronic
transmission of a signed signature page of this Agreement) that such party has
signed a counterpart of this Agreement.

(b)    The Administrative Agent and the Lenders shall have received duly
executed copies of the Loan Documents (other than this Agreement) and such other
certificates, documents, instruments and agreements as the Administrative Agent
and the Lenders shall reasonably request in connection with the transactions
contemplated by this Agreement and the other Loan Documents.

(c)    The Administrative Agent and the Lenders shall have received such
documents and certificates as the Administrative Agent and the Lenders may
reasonably request relating to the organization, existence and good standing of
each Credit Party, the authorization of the Transactions and any other legal
matters relating to the Credit Parties, this Agreement or the Transactions, all
in form and substance satisfactory to the Administrative Agent and the Lenders.

(d)    (x) Each of the First Lien RBL Amendment, Senior Secured Notes Indenture,
the Exchange Term Loan Amendment (which shall include the Junior Lien Credit
Agreement), the Collateral Trust Agreement, the Intercreditor Agreement
Amendment and the Exchange Agreement shall have become effective and (y) the
Administrative Agent and the Lenders shall have received a certificate from a
Responsible Officer of the Borrower (1) certifying that the conditions precedent
set forth in Section 5 (other than, in each case, clauses (d) and (f) thereof)
of the Exchange Agreement has been satisfied and (2) attaching a duly executed
and delivered copy of each of the First Lien RBL Amendment, Senior Secured Notes
Indenture, the Exchange Term Loan Amendment (which shall include the Junior Lien
Credit Agreement), the Collateral Trust Agreement, the Intercreditor Agreement
Amendment and the Exchange Agreement, in each case certified by such Responsible
Officer as being a true, correct and complete copy of each such agreement.

(e)    The Administrative Agent and the Lenders shall have received a favorable
written opinion (addressed to the Administrative Agent and the Lenders and dated
the Effective Date) of Kirkland & Ellis LLP, counsel for the Credit Parties, and
such local counsel to the Credit Parties as the Majority Lenders may reasonably
request, in form and substance reasonably satisfactory to the Majority Lenders
and, in each case, covering such other matters relating to the Credit Parties
and this Agreement as the Majority Lenders shall reasonably request.

 

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(f)    The Administrative Agent and the Lenders shall have received a
certificate, dated the Effective Date and signed by a Responsible Officer of the
Borrower, confirming that the Credit Parties have (i) complied with the
conditions set forth in clauses (g) and (h) of this Section 4.01, (ii) complied
with the covenants set forth in Section 5.06 (and demonstrating such compliance
by the attachment of insurance certificates and endorsements) and (iii) complied
with the requirements of Section 5.12 and Section 5.13.

(g)    The representations and warranties of each Credit Party set forth in the
Loan Documents shall be true and correct in all material respects (without
duplication of any materiality qualifier contained therein) on and as of the
Effective Date (at the time of and immediately after giving effect to the
Borrower hereunder), except to the extent that such representations and
warranties specifically refer to an earlier date, in which case they shall be
true and correct as of such earlier date.

(h)    At the time of and immediately after giving effect to such Borrowing, no
Default or Event of Default shall have occurred and be continuing.

(i)    The Administrative Agent and the Collateral Trustee and the Lenders shall
have received all fees and other amounts due and payable on or prior to the
Effective Date, and, to the extent invoiced, reimbursement or payment of all
out-of-pocket expenses required to be reimbursed or paid by the Borrower
hereunder, including all fees, expenses and disbursements of counsel for the
Administrative Agent and the Collateral Trustee to the extent invoiced on or
prior to the Effective Date, together with such additional amounts as shall
constitute such counsel’s reasonable estimate of expenses and disbursements to
be incurred by such counsel in connection with the recording and filing of
Mortgages (and/or Mortgage amendments) and financing statements and the
completion of post-closing matters contemplated by the Loan Documents (it being
understood that such estimate shall not thereafter preclude further settling of
accounts between the Borrower and the Administrative Agent).

(j)    The Lenders shall have received the Initial Reserve Report, which report
shall be identical to the report most recently delivered under the First Lien
RBL Credit Agreement and certified by the Chief Operating Officer of the
Borrower as being true, correct and complete.

(k)    The Administrative Agent and the Lenders shall have received the results
of a Lien search, in form and substance reasonably satisfactory thereto, made
against the Credit Parties under the Uniform Commercial Code (or applicable
judicial docket) as in effect in each jurisdiction in which filings or
recordations under the Uniform Commercial Code should be made to evidence or
perfect security interests in all assets of such Credit Party, indicating among
other things that the assets of each such Credit Party are free and clear of any
Lien (except for Liens permitted by Section 6.02 or discharged on or prior to
the Effective Date pursuant to a pay-off letter or other documentation
satisfactory to the Majority Lenders).

(l)    The Administrative Agent and the Lenders shall have received the
Intercreditor Agreement Amendment and the Collateral Trust Agreement, in each
case, duly executed by and delivered by each party thereto.

 

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(m)    Prior to, or concurrently with, the making of the Loans on the Effective
Date, (x) the Lenders shall have exchanged 100% of their respective Existing
Exchanged Loans as a lender under the Existing Second Lien Credit Agreements, as
applicable, as prepayment, in full and on a cashless basis, for each such
Lender’s Commitment as specified on Schedule 2.01 pursuant to the cashless
settlement mechanism specified in the Exchange Agreement (and such outstanding
Existing Exchanged Loans shall have been deemed exchanged pursuant to the terms
of the Exchange Agreement and such Existing Exchanged Loans shall have been
deemed prepaid and satisfied in full) such that (i) the outstanding term loans
under the Junior Lien Credit Agreement, immediately upon giving effect to the
transactions contemplated by the Exchange Agreement, shall be in an aggregate
principal amount of no more than $17,250,000 and (ii) the outstanding term loans
under the Fairfax Credit Agreement, immediately upon giving effect to the
transactions contemplated by the Exchange Agreement, shall be in an aggregate
principal amount of no more than $0.

(n)    The applicable Lenders shall have received promissory notes duly executed
by the Borrower for each such Lender that has requested the delivery of a
promissory note pursuant to and in accordance with Section 2.06(f).

(o)    [Reserved].

(p)    [Reserved].

(q)    The Administrative Agent and the Lenders shall have received a
certificate from the chief financial officer of the Borrower that (i) after
giving effect to the Transactions, (A) the Borrower’s unrestricted cash
(including, for the avoidance of doubt, undrawn availability under the First
Lien RBL Credit Agreement) on the Effective Date is not less than $50,000,000
and (B) the aggregate amount of revolving commitments available to the Borrower
under the First Lien RBL Credit Agreement are equal to $150,000,000 and
(ii) that no Credit Party has made any Swap Modifications in respect of proved
developed producing reserves attributable to the Oil and Gas Properties of such
Credit Party that would be adverse to any Lender in any material respect.

(r)    The Administrative Agent and the Lenders shall have received such UCC
financing statements as the Majority Lenders shall specify to fully evidence and
perfect all Liens contemplated by the Loan Documents, all of which shall be
filed of record in such jurisdictions as the Majority Lenders shall require in
its sole discretion.

(s)    The Administrative Agent and the Lenders shall have received a Solvency
Certificate in the form attached hereto as Exhibit D, dated the Effective Date,
and signed by a Responsible Officer of the Borrower.

(t)    Each Credit Party shall have obtained all approvals required from any
Governmental Authority and all consents of other Persons, in each case that are
necessary or advisable in connection with the Transactions and each of the
foregoing shall be in full force and effect and in form and substance reasonably
satisfactory to the Majority Lenders. All applicable waiting periods shall have
expired without any action being taken or threatened by any competent authority
which would restrain, prevent or otherwise impose adverse conditions on

 

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the transactions contemplated by the Loan Documents or the financing thereof and
no action, request for stay, petition for review or rehearing, reconsideration,
or appeal with respect to any of the foregoing shall be pending, and the time
for any applicable agency to take action to set aside its consent on its own
motion shall have expired.

(u)    There shall not exist any action, suit, investigation, litigation or
proceeding or other legal or regulatory developments, pending or threatened in
any court or before any arbitrator or Governmental Authority that, in the
reasonable opinion of the Majority Lenders, singly or in the aggregate,
materially impairs the Transactions, the financing thereof or any of the other
transactions contemplated by the Loan Documents or that could reasonably be
expected to result in a Material Adverse Effect.

(v)    All partnership, corporate and other proceedings taken or to be taken in
connection with the Transactions and all documents incidental thereto shall be
reasonably satisfactory in form and substance to the Majority Lenders, and the
Majority Lenders shall have received all such counterpart originals or certified
copies of such documents as the Majority Lenders may reasonably request.

(w)    The Administrative Agent and the Lenders shall have received all of the
financial statements described in Section 3.04(a).

(x)    The Borrower shall have delivered to the Administrative Agent and the
Lenders a description of the sources and uses of funding for the Transactions
that is consistent with the terms of the Loan Documents and otherwise
satisfactory to the Administrative Agent and the Lenders and the capitalization,
structure and equity ownership of the Borrower after the Transactions shall be
satisfactory to the Lenders in all respects.

(y)    The Lenders shall have received such other instruments and documents
incidental and appropriate to the transactions provided for herein as the
Lenders may reasonably request prior to the Effective Date, and all such
documents shall be in form and substance satisfactory to the Lenders.

(z)    The Backstop Commitment Parties shall be reasonably satisfied that, as of
the Effective Date and after giving effect to the Transactions and the
effectiveness of the Exchange Term Loan Amendment and the Exchange Agreement
and, in each case, the transactions contemplated thereby, there shall not have
occurred and be continuing any “going concern” or similar default or event of
default under the documentation governing the First Lien RBL Credit Agreement,
the Existing Second Lien Credit Agreements or the Senior Secured Notes.

Each Borrowing shall be deemed to constitute a representation and warranty by
the Borrower on the date thereof as to the matters specified in the conditions
set forth in clauses (g) and (h) of this Section 4.01.

Section 4.02    Compliance with Conditions to Effective Date. For purposes of
determining compliance with the conditions specified in this Article IV, each
Lender shall be deemed to have consented to approved or accepted or to be
satisfied with each document or other matter required thereunder to be consented
to or approved by or acceptable or satisfactory to the Lenders unless the
Administrative Agent shall have received written notice from such Lender prior
to the Effective Date specifying its objection thereto.

 

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ARTICLE V

AFFIRMATIVE COVENANTS

Until the Commitments have expired or been terminated and the principal of and
interest and premium on each Loan and all fees payable hereunder shall have been
paid in full, each Credit Party covenants and agrees with the Lenders that:

Section 5.01    Financial Statements; Other Information. The Borrower will
furnish to the Administrative Agent and each Lender:

(a)    within ninety (90) days after the end of each fiscal year of the
Borrower, the audited consolidated (and unaudited consolidating) balance sheet
and related consolidated (and with respect to statements of operations,
consolidating) statements of operations, stockholders’ equity and cash flows of
the Borrower and its Consolidated Subsidiaries as of the end of and for such
year, setting forth in each case in comparative form the figures for the
previous fiscal year, all reported on by a firm of independent public
accountants registered with the PCAOB (and following the fiscal year ending
December 31, 2017, without a “going concern” or like qualification or exception
and without any qualification or exception as to the scope of such audit) to the
effect that such consolidated and consolidating financial statements present
fairly in all material respects the financial condition and results of
operations of the Borrower and its Consolidated Subsidiaries on a consolidated
and consolidating basis in accordance with GAAP consistently applied; provided,
that if the Borrower has established any Unrestricted Subsidiaries, such
consolidated statements shall be accompanied by a balance sheet as of such date,
and a statement of income and cash flows for such period, reflecting on a
combined basis, for Restricted Subsidiaries and on a combined basis for
Unrestricted Subsidiaries, the consolidating entries for each of such types of
Subsidiaries;

(b)    within forty-five (45) days after the end of each fiscal quarter of the
Borrower, the consolidated (and unaudited consolidating) balance sheet and
related consolidated (and with respect to statements of operations,
consolidating) statements of operations and cash flows of the Borrower and its
Consolidated Subsidiaries as of the end of and for such fiscal quarter and the
then elapsed portion of the fiscal year, setting forth in each case in
comparative form the figures for the corresponding period or periods of (or, in
the case of the balance sheet, as of the end of) the previous fiscal year, all
certified by a Responsible Officer as presenting fairly in all material respects
the financial condition and results of operations of the Borrower and its
Consolidated Subsidiaries on a consolidated and consolidating basis in
accordance with GAAP consistently applied, subject to normal year-end audit
adjustments and the absence of footnotes; provided, that if the Borrower has
established any Unrestricted Subsidiaries, such consolidated statements shall be
accompanied by a balance sheet as of such date, and a statement of income and
cash flows for such period, reflecting on a combined basis, for Restricted
Subsidiaries and on a combined basis for Unrestricted Subsidiaries, the
consolidating entries for each of such types of Subsidiaries;

 

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(c)    concurrently with any delivery of financial statements under clause (a)
or (b) above, a certificate in a form reasonably acceptable to Administrative
Agent signed by a Responsible Officer of the Borrower certifying as to whether a
Default has occurred and, if a Default has occurred, specifying the details
thereof and any action taken or proposed to be taken with respect thereto;

(d)    promptly after the same become publicly available, copies of all periodic
and other reports, proxy statements and other materials filed by the Borrower or
any Subsidiary with the SEC, or any Governmental Authority succeeding to any or
all of the functions of said Commission, or with any national securities
exchange, or distributed by the Borrower to its shareholders generally, as the
case may be; provided, however that this clause (d) shall be deemed satisfied by
the filing with the SEC of the documentation required within the time periods
specified in the applicable rules and regulations of the SEC;

(e)    as soon as available, the Reserve Report required pursuant to
Section 5.11 together with a certificate in a form reasonably acceptable to
Administrative Agent signed by a Responsible Officer of the Borrower certifying
as to whether a Default has occurred and, if a Default has occurred, specifying
the details thereof and any action taken or proposed to be taken with respect
thereto;

(f)    together with the Reserve Report required under clause (e) above, a
report, in reasonable detail, setting forth the Commodity Agreements then in
effect, the notional volumes of and prices for, on a monthly basis and in the
aggregate, the Crude Oil and Natural Gas for each such Commodity Agreement and
the term of each such Commodity Agreement;

(g)    if requested by the Administrative Agent (acting at the written direction
of the Majority Lenders) and within thirty (30) days of such request, a monthly
report, in form and substance satisfactory to the Administrative Agent,
indicating the next preceding month’s sales volumes, sales revenues, production
taxes, operating expenses and net operating income from the Oil and Gas
Properties, with detail, calculations and worksheets, all in form and substance
reasonably satisfactory to the Administrative Agent;

(h)    prompt written notice (and in any event within thirty (30) days prior
thereto) of any change (1) in any Credit Party’s corporate, partnership or
limited liability company name or status, (2) in the location of any Credit
Party’s chief executive office or principal place of business, (3) in any Credit
Party’s corporate structure, (4) in any Credit Party’s jurisdiction of
organization or such Person’s organizational identification number in such
jurisdiction of organization, and (5) in any Credit Party’s federal taxpayer
identification number;

(i)    promptly, but in any event within five (5) Business Days after the
execution thereof, copies of any amendment, modification or supplement to the
certificate or articles of incorporation, by-laws, any preferred stock
designation or any other Organizational Document of any Credit Party;

(j)    [Reserved];

 

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(k)    promptly, but in any event within five (5) Business Days after the
designation thereof, any designation of any Subsidiary as an Unrestricted
Subsidiary by the Board of Directors of the Borrower; and

(l)    promptly following any request therefor, such other information regarding
the operations, business affairs and financial condition of any Credit Party, or
compliance with the terms of this Agreement, as the Administrative Agent or any
Lender may reasonably request.

Section 5.02    Lender Conference Calls. Concurrently with the distribution of
the financial statements required under Sections 5.01(a) and (b), notice of the
date and time of a conference call with Lenders to discuss such financial
information, which conference calls the Borrower shall host not later than 10
Business Days after such distribution (provided that any conference call hosted
by the Borrower which is generally available to holders of its debt or equity
securities shall satisfy this covenant).

Section 5.03    Notices of Material Events. The Borrower will furnish to the
Administrative Agent and each Lender prompt written notice of the following:

(a)    the occurrence of any Default or Event of Default;

(b)    the filing or commencement of any action, suit or proceeding by or before
any arbitrator or Governmental Authority against or affecting any Credit Party
or any Affiliate thereof that, if adversely determined, could reasonably be
expected to result in a Material Adverse Effect;

(c)    the occurrence of any ERISA Event that, alone or together with any other
ERISA Events that have occurred, could reasonably be expected to result in
liability of the Borrower and the Restricted Subsidiaries in an aggregate amount
exceeding $6,000,000;

(d)    any written notice or written claim to the effect that any Credit Party
is or may be liable to any Person as a result of the release by any Credit
Party, or any other Person of any Hazardous Materials into the environment,
which could reasonably be expected to have a Material Adverse Effect;

(e)    any written notice alleging any violation of any Environmental Law by any
Credit Party, which could reasonably be expected to have a Material Adverse
Effect;

(f)    the occurrence of any material breach or default under, or repudiation or
termination of, any Material Sales Contract that results in, or could reasonably
be expected to result in, a Material Adverse Effect;

(g)    the receipt by the Borrower or any Restricted Subsidiary of any
management letter or comparable analysis prepared by the auditors for the
Borrower or any such Restricted Subsidiary;

 

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(h)    promptly, and in any event within two (2) Business Days after receiving
notice thereof or a Responsible Officer becoming aware of, the occurrence of any
material breach or default under, or repudiation or termination of, or notice of
any material dispute or claim arising under or in connection with the BG JV
Documents and the Marcellus JV Documents by any party thereto, including any
Default Notice under and as defined in Section 5.1 of the BG Joint Development
Agreement and Section 5.1 of the Marcellus Joint Development Agreement;

(i)    promptly, and in any event within two (2) Business Days after receiving
notice thereof or a Responsible Officer becoming aware of, the occurrence of any
default or event of default under the First Lien RBL Documents, the indenture or
any similar documents related to the Existing Unsecured Notes or under any
Senior Priority Lien Documents, Priority Lien Documents, Junior Priority Lien
Documents or Junior Lien Documents; and

(j)    any other development that results in, or could reasonably be expected to
result in, a Material Adverse Effect.

Each notice delivered under this Section shall be accompanied by a statement of
a Responsible Officer or other executive officer of the Borrower setting forth
the details of the event or development requiring such notice and any action
taken or proposed to be taken with respect thereto.

Section 5.04    Existence; Conduct of Business. The Borrower will, and will
cause each Restricted Subsidiary to, do or cause to be done all things necessary
to preserve, renew and keep in full force and effect its legal existence and the
rights, licenses, permits, privileges and franchises material to the conduct of
its business; provided that the foregoing shall not prohibit any merger,
consolidation, liquidation or dissolution that is otherwise permitted under this
Agreement.

Section 5.05    Payment of Obligations. The Borrower will, and will cause each
Restricted Subsidiary to, pay its obligations, including Tax liabilities, that,
if not paid, could result in a Material Adverse Effect before the same shall
become delinquent or in default, except where (a) the validity or amount thereof
is being contested in good faith by appropriate proceedings, (b) the Borrower or
such Restricted Subsidiary has set aside on its books adequate reserves with
respect thereto in accordance with GAAP and (c) the failure to make payment
pending such contest could not reasonably be expected to result in a Material
Adverse Effect.

Section 5.06    Insurance. The Borrower will, and will cause each Restricted
Subsidiary and use commercially reasonable efforts to cause each operator of Oil
and Gas Properties to, maintain, with financially sound and reputable insurance
companies, insurance in such amounts and against such risks as are customarily
maintained by companies engaged in the same or similar businesses operating in
the same or similar locations. On or prior to the Effective Date and thereafter,
upon request of the Administrative Agent, the Borrower will furnish or cause to
be furnished to the Administrative Agent from time to time a summary of the
respective insurance coverage of the Borrower and its Restricted Subsidiaries in
form and substance reasonably satisfactory to the Administrative Agent, and, if
requested, will furnish the

 

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Administrative Agent copies of the applicable policies. Upon demand by
Administrative Agent (acting at the written direction of the Majority Lenders),
the Borrower will cause any insurance policies covering any such property to be
endorsed (a) to provide that such policies may not be cancelled, reduced or
affected in any manner for any reason without fifteen (15) days prior notice to
Administrative Agent, (b) to include the Administrative Agent as loss payee with
respect to all property/casualty policies and additional insured with respect to
all liability policies and (c) to provide for such other matters as the
Administrative Agent or the Lenders may reasonably require.

Section 5.07    Operation and Maintenance of Properties. The Borrower will, and
will cause each of its Restricted Subsidiaries to:

(a)    operate its Oil and Gas Properties and other material Properties or cause
such Oil and Gas Properties and other material Properties to be operated in a
careful and efficient manner in accordance with the practices of the industry
and in compliance with all applicable contracts and agreements and in compliance
with all Governmental Requirements, including, without limitation, applicable
pro ration requirements and Environmental Laws, and all applicable laws, rules
and regulations of every other Governmental Authority from time to time
constituted to regulate the development and operation of its Oil and Gas
Properties and the production and sale of Hydrocarbons and other minerals
therefrom, except, in each case, where the failure to comply could not
reasonably be expected to have a Material Adverse Effect;

(b)    keep and maintain all Property material to the conduct of its business in
good working order and condition (ordinary wear and tear excepted); preserve,
maintain and keep in good repair, working order and efficiency (ordinary wear
and tear and obsolescence excepted) all of its material Oil and Gas Properties
and other material Properties, including, without limitation, all equipment,
machinery and facilities;

(c)    promptly pay and discharge, or make reasonable and customary efforts to
cause to be paid and discharged, all delay rentals, royalties, expenses and
indebtedness accruing under the leases or other agreements affecting or
pertaining to its Oil and Gas Properties and will do all other things necessary
to keep materially unimpaired its rights with respect thereto and prevent any
forfeiture thereof or default thereunder, except, in each case, where the
failure to comply could not reasonably be expected to have a Material Adverse
Effect;

(d)    promptly perform, or make reasonable and customary efforts to cause to be
performed, in accordance with industry standards, the obligations required by
each and all of the assignments, deeds, leases, sub-leases, contracts and
agreements affecting its interests in its Oil and Gas Properties and other
material Properties, except, in each case, where the failure to comply could not
reasonably be expected to have a Material Adverse Effect;

(e)    operate its Oil and Gas Properties and other material Properties or cause
or make reasonable and customary efforts to cause such Oil and Gas Properties
and other material Properties to be operated in accordance with the practices of
the industry and in

 

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material compliance with all applicable contracts and agreements and in
compliance in all material respects with all Governmental Requirements; and to
the extent that a Credit Party is not the operator of any Property, the Borrower
shall use commercially reasonable efforts to cause the operator to comply with
this Section 5.07.

Section 5.08    Books and Records; Inspection Rights. The Borrower will, and
will cause each Restricted Subsidiary to, keep proper books of record and
account in which full, true and correct entries are made of all dealings and
transactions in relation to its business and activities. The Borrower will, and
will cause each Restricted Subsidiary to, permit any representatives designated
by the Administrative Agent or any Lender, upon reasonable prior notice, to
visit and inspect its properties, to examine and make extracts from its books
and records, and to discuss its affairs, finances and condition with its
officers and, provided an officer of the Borrower has the reasonable opportunity
to participate, its independent accountants, all at such reasonable times and as
often as reasonably requested.

Section 5.09    Compliance with Laws. The Borrower will, and will cause each
Restricted Subsidiary to, comply with all Governmental Requirements applicable
to it, its Oil and Gas Business and its Property, except where the failure to do
so, individually or in the aggregate, could not reasonably be expected to result
in a Material Adverse Effect.

Section 5.10    Use of Proceeds.

(a)    The proceeds of the Tranche A Term Loans will be used as provided for in
Section 2.01(b).

(b)    No part of the proceeds of any Loan will be used, whether directly or
indirectly, for any purpose that entails a violation of any of the Regulations
of the Board, including Regulations T, U and X.

Section 5.11    Reserve Reports.

(a)    On or before March 15th of each year, commencing on March 15, 2018, the
Borrower shall furnish to the Administrative Agent and the Lenders a Reserve
Report, which Reserve Report shall be prepared or audited by one or more
Approved Petroleum Engineers.

(b)    With the delivery of each Reserve Report, the Borrower shall provide to
the Administrative Agent and the Lenders a certificate from a Responsible
Officer certifying that to his knowledge, after reasonable investigation, in all
material respects: (1) the information contained in the Reserve Report and any
other information delivered in connection therewith is based on information that
was prepared in good faith based upon assumptions believed to be reasonable at
the time, (2) the Borrower or its Subsidiaries owns good and defensible title to
the Proved Reserves evaluated in such Reserve Report and such Proved Reserves
are free of all Liens except for Liens permitted by Section 6.07, (3) except as
set forth on an exhibit to the certificate, on a net basis there are no material
gas imbalances, take or pay or other prepayments with respect to its Oil and Gas
Properties evaluated in such Reserve Report which would require the Borrower or
any Restricted Subsidiary to deliver Hydrocarbons either generally or produced
from such Oil and Gas Properties at some future time without then or thereafter
receiving full payment therefor, (4) none of the Borrower’s and its
Subsidiaries’ Proved Reserves have been

 

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sold since the date of the last Reserve Report except as set forth on an exhibit
to the certificate, which certificate shall list all of its Proved Reserves sold
and in such detail as reasonably required by the Administrative Agent and
(5) attached thereto is a schedule of the Proved Reserves evaluated by such
Reserve Report that are Mortgaged Properties.

(c)    On or before March 15th of each year, commencing on March 15, 2018, the
Borrowers shall furnish to the Administrative Agent and the Lenders a Collateral
Coverage Reserve Report.

Section 5.12    Liens on Collateral and Additional Property.

(a)    The Borrower and each of the Guarantors shall do or cause to be done all
acts and things that may be required to assure and confirm that the Collateral
Trustee holds, for the benefit of the holders of Junior Priority Lien
Obligations, duly created and enforceable and perfected first-priority Liens
upon the Collateral (subject to the Intercreditor Agreement and Permitted Prior
Liens) (including any acquired Property or other Property required by any Junior
Priority Lien Document to become Collateral after the Effective Date), in each
case, as contemplated by, and with the Lien priority required under, the Junior
Priority Lien Documents, and in connection with any merger, consolidation or
sale of assets of the Borrower or any Guarantor, the property and assets of the
Person which is consolidated or merged with or into any Borrower or any
Guarantor, to the extent that they are property or assets of the types which
would constitute Collateral under the Security Instruments, shall be treated as
after-acquired property and the Borrower or such Guarantor shall take such
action as may be reasonably necessary to cause such property and assets to be
made subject to the Junior Priority Liens, in the manner and to the extent
required under the Junior Priority Lien Documents.

(b)    Upon the request of the Collateral Trustee or any Junior Priority Lien
Representative at any time and from time to time, the Borrower and each of the
Guarantors shall promptly execute, acknowledge and deliver such Security
Instruments, instruments, certificates, financing statements, notices and other
documents, and take such other actions as shall be required, or that the
Collateral Trustee may reasonably request, to create, perfect, protect, assure
or enforce the Liens and benefits intended to be conferred, in each case as
contemplated by the Junior Priority Lien Documents for the benefit of the
holders of Junior Priority Lien Obligations; provided that no such Security
Instrument, instrument or other document shall be materially more burdensome
upon the Borrower and the Guarantors than the Junior Priority Lien Documents
executed and delivered by the Borrower and the Guarantors in connection with the
making of the Loans on the Effective Date.

(c)    From and after the Effective Date, if the Borrower or any Guarantor
acquires any Property that constitutes (x) Collateral or (y) collateral for the
Senior Priority Lien Debt, Priority Lien Debt or Junior Lien Debt, if and to the
extent that any Priority Lien Document, Senior Priority Lien Document, Junior
Priority Lien Document or Junior Lien Document, as applicable, requires any
supplemental security document for such collateral or other actions to achieve a
perfected Lien on such collateral, the Borrower shall, or shall cause the
applicable Guarantor to, promptly (but not in any event no later than the date
that is ten (10) Business Days after which such supplemental security documents
are executed and delivered (or other action taken) under such Priority Lien
Document, Senior Priority Lien Document, Junior

 

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Priority Lien Document or Junior Lien Documents, as applicable), to the extent
permitted by applicable law, execute and deliver to the Collateral Trustee
appropriate Security Instruments (or amendments thereto) in such form as shall
be necessary to grant the Collateral Trustee a valid and enforceable perfected
first-priority Lien (subject to the Intercreditor Agreement and to Permitted
Prior Liens) on such Collateral or take such other actions in favor of the
Collateral Trustee as shall be reasonably necessary to grant a valid and
enforceable perfected first-priority Lien (subject to the Intercreditor
Agreement and to Permitted Prior Liens) on such Collateral to the Collateral
Trustee, for the benefit of the Secured Parties and holders of any other Junior
Priority Lien Obligations, subject to the terms of this Agreement, the
Intercreditor Agreement, the Collateral Trust Agreement and the other Loan
Documents. Additionally, subject to this Agreement, the Intercreditor Agreement,
the Collateral Trust Agreement and the other Loan Documents, if the Borrower or
any Guarantor creates any additional Lien upon any Property that would
constitute Collateral, or takes any additional actions to perfect any existing
Lien on Collateral, in each case for the benefit of the holders of the Senior
Priority Lien Debt, the holders of the Junior Priority Lien Debt, or the holders
of Junior Priority Lien Debt, after the Effective Date, the Borrower or such
Guarantor, as applicable, must, to the extent permitted by applicable law,
within ten (10) Business Days after such Lien is granted or other action taken,
grant a valid and enforceable perfected first-priority Lien (subject to the
Intercreditor Agreement and to Permitted Prior Liens) upon such Property, or
take such additional perfection actions, as applicable, for the benefit of the
Secured Parties and obtain all related deliverables as those delivered to the
Senior Priority Lien Representative, the Junior Priority Lien Representative or
Junior Lien Representative, as applicable, in each case as security for the
Obligations. Notwithstanding the foregoing, to the extent that any Lien on any
Collateral is perfected by the possession or control of such Collateral or of
any account in which such Collateral is held, and if such Collateral or any such
account is in fact in the possession or under the control of the Senior Priority
Lien Representative, or of agents or bailees of the Senior Priority Lien
Representative, the perfection actions and related deliverables described in
this Section 5.12(c) shall not be required with respect to such Collateral.

(d)    The Borrower will deliver to the Administrative Agent semi-annually on or
before March 20 and September 20 in each calendar year, an Officers’ Certificate
certifying that, as of the date of such certificate, the Collateral includes Oil
and Gas Properties that include not less than (i) 95% of the PV-10 of Proved
Reserves, (ii) 95% of the PV-10 of Unproved Reserves and (iii) 95% of the value
of net undeveloped acres, in each case attributable to the Oil and Gas
Properties of the Borrower and the Guarantors, as evaluated in the most recent
Collateral Coverage Reserve Report after giving effect to exploration and
production activities, acquisitions, dispositions and production since the date
of such Collateral Coverage Reserve Report (the “Minimum Mortgaged Value”). In
the event that the Collateral does not represent at least 95% of such value,
then the Borrower shall, or shall cause the applicable Guarantor to, within 30
days of delivery of the certificate required under this Section 5.12(d), execute
and deliver to the Collateral Trustee: (1) such executed Mortgages or amendments
or supplements to prior Mortgages naming the Collateral Trustee, as mortgagee or
beneficiary, as may be necessary to cause the minimum mortgage requirement to be
satisfied, (2) satisfactory evidence of the completion of all recordings and
filings of such Mortgages, amendments or supplements in the proper recorders’
offices or appropriate public records (and payment of any taxes or fees in
connection therewith) and (3) local counsel opinion or opinions (each, subject
to customary assumptions and qualifications) to the effect that the Collateral
Trustee has a valid and perfected

 

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first-priority Lien (subject to the Intercreditor Agreement and to Permitted
Prior Liens) with respect to the real property that is subject to the applicable
Mortgage; provided that, to the extent (i) corresponding mortgages securing the
Senior Priority Lien Obligations are being delivered and (ii) Mortgages have
previously been recorded in the public records of the state applicable to such
additional Mortgages or amendments or supplements to prior Mortgages, no such
opinion shall be required unless a corresponding opinion will be delivered to
the Senior Priority Lien Collateral Agent.

Section 5.13    Title Data.

(a)    Within thirty (30) days (or such longer time period as acceptable to the
Administrative Agent (acting at the written direction of the Majority Lenders))
after the delivery to the Administrative Agent and the Lenders of the Collateral
Coverage Reserve Report required by Section 5.11, the Borrower will deliver
title information in form and substance acceptable to the Majority Lenders
covering enough of the Oil and Gas Properties evaluated by such Collateral
Coverage Reserve Report that were not included in the immediately preceding
Collateral Coverage Reserve Report so that the Administrative Agent and the
Lenders shall have received, together with title information previously
delivered to the Administrative Agent and the Lenders, satisfactory title
information on at least 95% of the Minimum Mortgaged Value of the Oil and Gas
Properties evaluated by such Collateral Coverage Reserve Report.

(b)    If title information for additional Properties has been provided under
Section 5.13(a), the Borrower shall, within sixty (60) days of notice from the
Administrative Agent that title defects or exceptions exist with respect to such
additional Properties that are not permitted by Section 6.07, either (1) cure
any such title defects or exceptions (including defects or exceptions as to
priority), (2) substitute acceptable Mortgaged Properties with no title defects
or exceptions (other than Liens which are permitted by Section 6.07) having an
equivalent value or (3) deliver title information in form and substance
reasonably acceptable to the Administrative Agent so that the Administrative
Agent shall have received, together with title information previously delivered
to the Administrative Agent, satisfactory title information on at least 95% of
the Minimum Mortgaged Value of the Oil and Gas Properties evaluated by such
Collateral Coverage Reserve Report.

Section 5.14    Additional Guarantors. If the Borrower or any of its Restricted
Subsidiaries (x) acquires or creates any wholly-owned Domestic Subsidiary (other
than an Unrestricted Subsidiary) (y) acquires or creates a Restricted Subsidiary
after the Effective Date and, for purposes of this clause (y), that Subsidiary
(a) guarantees any Indebtedness of the Borrower or any Guarantor under any
Credit Facility or (b) is a Domestic Subsidiary and becomes an obligor with
respect to any Indebtedness under any Credit Facility, then, in the case of
either of the foregoing clauses (x) or (y), within 10 Business Days after the
date that Subsidiary was acquired or created or on which it became obligated
with respect to such Indebtedness the Borrower: (1) will cause that Subsidiary
to become a Guarantor and a party to this Agreement and Guarantee the
Obligations by executing and delivering to the Administrative Agent a
Counterpart Agreement in the form of Exhibit C, (2) will deliver to the
Collateral Trustee stock certificates or other instruments representing all the
Equity Interests of such Restricted Subsidiary and stock powers and instruments
of transfer, endorsed in blank, with respect to such stock certificates or other
instruments, or, if any Equity Interests pledged

 

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pursuant to such Security Instrument are uncertificated securities, confirmation
and evidence satisfactory to the Majority Lenders that the security interest in
such uncertificated securities has been transferred to and perfected by the
Administrative Agent in accordance with the Uniform Commercial Code, (3) will
deliver to the Collateral Trustee all agreements, deeds of trust, mortgages,
documents and instruments, including Uniform Commercial Code Financing
Statements (Form UCC-1), required by law or reasonably requested by the
Administrative Agent (acting at the written direction of the Majority Lenders)
to be executed, filed, registered or recorded to create or perfect the Liens on
the Property of such Subsidiary (except to the extent not required under the
applicable Security Instrument), (4) will deliver to the Administrative Agent
Uniform Commercial Code searches, all dated reasonably close to the date of the
joinder agreement and in form and substance satisfactory to the Majority
Lenders, and evidence reasonably satisfactory to the Majority Lenders that any
Liens indicated in such Uniform Commercial Code searches are Liens permitted
pursuant to Section 6.07 or have been released, (5) will deliver to the
Administrative Agent the corporate resolutions or similar approval documents of
such Restricted Subsidiary approving the execution and delivery of the joinder
agreement and the performance by such Restricted Subsidiary of the Security
Instruments, the Guaranty and any other Loan Document to which it is a party and
(6) will deliver to the Administrative Agent a legal opinion reasonably
acceptable to the Administrative Agent and the Majority Lenders, opining
favorably on the execution, delivery and enforceability of the Loan Documents to
which such Restricted Subsidiary is a party, and the grant and perfection of the
security interest or trust lien purported to be made or effected by any such
Loan Document and otherwise being in form and substance reasonably satisfactory
to the Administrative Agent and the Majority Lenders. For the avoidance of
doubt, the Borrower shall cause any Subsidiary which Guarantees obligations
under any Senior Priority Lien Document to contemporaneously become a Guarantor
hereunder. Each Credit Party expressly agrees that its obligations arising
hereunder shall not be affected or diminished by the addition or release of any
other Credit Party hereunder. This Agreement shall be fully effective as to any
Credit Party that is or becomes a party hereto regardless of whether any other
Person becomes or fails to become or ceases to be a Credit Party hereunder.

Section 5.15    Deposit Accounts. On or within thirty (30) days following the
date hereof (or such longer time as acceptable to the Administrative Agent
(acting at the written direction of the Majority Lenders)), each Credit Party
shall, to the extent not prohibited by a Governmental Authority, cause each
deposit account established or maintained for the benefit of such Credit Party,
other than Excluded Accounts, at all times to be subject to a Deposit Account
Control Agreement among such Credit Party, the First Lien RBL Agent and the
Collateral Trustee, and cause all revenue derived by any such Credit Party and
all distributions and dividends on any Equity Interests owned by any such Credit
Party to be paid and deposited into deposit accounts.

Section 5.16    Credit Ratings. Borrower shall use commercially reasonable
efforts to maintain a corporate and a credit facility credit rating for the Term
Loans (but not a specific credit rating).

 

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Section 5.17    Further Assurances.

(a)    Each Credit Party at its sole expense will, and will cause each of its
Restricted Subsidiaries to, promptly execute and deliver to the Administrative
Agent or the Collateral Trustee, as applicable, all such other documents,
agreements and instruments reasonably requested by the Administrative Agent or
the Collateral Trustee (acting at the written direction of the Majority Lenders)
to comply with, cure any defects or accomplish the conditions precedent,
covenants and agreements of the Borrower or any other Credit Party, as the case
may be, in the Loan Documents, including the Notes, or to further evidence and
more fully describe the Collateral intended as security for the Obligations, or
to correct any omissions in this Agreement or the Security Instruments, or to
state more fully the obligations secured therein, or to perfect, protect or
preserve any Liens created pursuant to this Agreement or any of the Security
Instruments or the priority thereof, or to make any recordings, file any notices
or obtain any consents, all as may be reasonably necessary or appropriate, in
the reasonable discretion of the Administrative Agent or the Collateral Trustee,
as applicable (acting at the written direction of the Majority Lenders), in
connection therewith.

(b)    Each Credit Party hereby authorizes the Collateral Trustee to file one or
more financing or continuation statements, and amendments thereto, relative to
all or any part of the Collateral without the signature of such Credit Party or
any other Credit Party where permitted by law. A carbon, photographic or other
reproduction of the Security Instruments or any financing statement covering the
Collateral or any part thereof shall be sufficient as a financing statement
where permitted by law. Each Credit Party acknowledges and agrees that any such
financing statement may describe the collateral as “all assets” of the
applicable Credit Party or words of similar effect as may be required by the
Collateral Trustee.

Section 5.18    Post-Closing Matters. The Borrower will (a) deliver or cause to
be delivered to the Administrative Agent each of the agreements, documents,
instruments or certificates described on Schedule 5.18, all in form and
substance reasonably satisfactory to Administrative Agent and the Majority
Lenders; (b) perform each of the actions described on Schedule 5.18 in a manner
reasonably satisfactory to the Administrative Agent and the Majority Lenders,
and (c) cause all such matters described in clauses (a) and (b) to be completed
within the time periods set forth opposite each such item or action on such
Schedule 5.18 (in each case, unless otherwise agreed to by the Administrative
Agent (acting at the written direction of the Majority Lenders)).

ARTICLE VI

NEGATIVE COVENANTS

Until the Commitments have expired or terminated and the principal of and
interest and premium on each Loan and all fees payable hereunder have been paid
in full, each Credit Party covenants and agrees with the Lenders that:

Section 6.01    Limitation on Indebtedness.

(a)    The Borrower shall not, and shall not permit any Restricted Subsidiary
to, Incur, directly or indirectly, any Indebtedness, and the Borrower will not
issue any shares of Disqualified Stock and will not permit any Restricted
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Disqualified Stock or Preferred Stock; provided, however, that the Borrower
shall be entitled to Incur Indebtedness and issue shares of Disqualified Stock,
and any Guarantor may incur Indebtedness, issue shares of Disqualified Stock and
issue shares of Preferred Stock to the extent permitted pursuant to Section
6.01(b).

(b)    Section 6.01(a) will not prohibit the Incurrence of any of the following
items of Indebtedness (collectively, “Permitted Indebtedness”):

(1)    the Incurrence of Senior Priority Lien Debt by the Borrower or any
Guarantor, including Senior Priority Lien Debt consisting of Refinancing
Indebtedness Incurred to refinance, refund or replace any such Indebtedness, in
each case, to the extent subject to and not prohibited by the Intercreditor
Agreement; provided that immediately after giving effect to such Incurrence (and
the application of proceeds therefrom) the aggregate amount of all such
Indebtedness Incurred under this clause (1) and then outstanding (with
outstanding letters of credit being deemed to have a principal amount equal to
the stated amount thereof), when combined with the aggregate amount of all other
Senior Priority Lien Obligations then outstanding, does not exceed $200,000,000;

(2)    the Incurrence by the Borrower and the Guarantors of (x) the Indebtedness
represented by the Senior Secured Notes and any Guarantee thereof Incurred on
the Effective Date or any PIK Notes, and (y) to the extent subject to and not
prohibited by the Intercreditor Agreement, other Priority Lien Debt, including
Priority Lien Debt consisting of Refinancing Indebtedness Incurred to refinance,
refund or replace Indebtedness Incurred pursuant to this clause (2), in an
aggregate amount outstanding (with outstanding letters of credit being deemed to
have a principal amount equal to the stated amount thereof) under this clause
(2) not to exceed $360,000,000 plus the aggregate principal amount of any PIK
Notes (as defined in the Senior Secured Notes Indenture) issued from time to
time in respect of any PIK Interest (as defined in the Senior Secured Notes
Indenture) in accordance with the terms of the Senior Secured Notes Indenture;

(3)    the Incurrence by the Borrower or any Guarantor of (x) Junior Priority
Lien Debt represented by the Term Loans and other Obligations Incurred on the
Effective Date and, to the extent subject to and not prohibited by the
Intercreditor Agreement, Junior Priority Lien Debt consisting of Refinancing
Indebtedness Incurred to refinance, refund or replace Indebtedness Incurred
pursuant to this clause (x), (y) Junior Lien Debt represented by the Junior Lien
Credit Agreement in an aggregate principal amount not to exceed $17,250,000 less
the aggregate amount of principal payments made in respect thereof after the
Effective Date and, to the extent subject to and not prohibited by the
Intercreditor Agreement or the Collateral Trust Agreement, Junior Lien Debt
consisting of Refinancing Indebtedness Incurred to refinance, refund or replace
Indebtedness Incurred pursuant to the immediately preceding clause (x) or this
clause (y) and (z) Junior Lien Debt, to the extent subject to and not prohibited
by the Intercreditor Agreement or the Collateral Trust Agreement, or Senior
Debt, in each case, consisting of Refinancing Indebtedness Incurred to refinance
the Existing Unsecured Notes;

 

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(4)    Indebtedness of the Borrower owing to and held by any Restricted
Subsidiary or Indebtedness of a Restricted Subsidiary owing to and held by the
Borrower or any other Restricted Subsidiary; provided, that (i) any subsequent
issuance or transfer of any Equity Interests which results in any such
Restricted Subsidiary ceasing to be a Restricted Subsidiary or any subsequent
transfer of such Indebtedness (other than to the Borrower or a Restricted
Subsidiary) shall be deemed, in each case, to constitute the Incurrence of such
Indebtedness by the obligor thereon not permitted by this clause (4), (ii) if a
non-Credit Party is the obligor with respect to such Indebtedness and a Credit
Party is the obligee, such Indebtedness shall be subject to the limitation set
forth in clause (a)(iv) of the definition of “Permitted Investment” and (iii) if
the Borrower or a Guarantor is the obligor on such Indebtedness, such
Indebtedness shall be expressly subordinated to the prior payment in full in
cash of all Obligations of such obligor pursuant to a subordinated intercompany
note in form and substance reasonably satisfactory to the Administrative Agent;

(5)    Indebtedness (other than the Indebtedness Incurred pursuant to Sections
6.01(b)(1), (2) and (3)) outstanding on the Effective Date and set forth in
Schedule 6.01;

(6)    Permitted Acquisition Indebtedness;

(7)    Refinancing Indebtedness in respect of Indebtedness Incurred pursuant to
clauses (5), (6) or (12) of this Section 6.01(b) or this clause (7); provided,
that to the extent such Refinancing Indebtedness directly or indirectly
Refinances Indebtedness of a Subsidiary Incurred pursuant to clause (6), such
Refinancing Indebtedness shall be Incurred only by such Subsidiary;

(8)    Hedging Obligations of the Borrower or any Restricted Subsidiary pursuant
to contracts entered into in the ordinary course of business for the purpose of
limiting risks that arise in the ordinary course of business of the Borrower and
its Restricted Subsidiaries;

(9)    the Incurrence by the Borrower or any of its Restricted Subsidiaries of
Indebtedness in respect of workers’ compensation claims, payment obligations in
connection with health or other types of social security benefits, unemployment
or other insurance or self-insurance obligations, reclamation, statutory
obligations, banks’ acceptances and obligations in respect of performance, bid
and surety bonds and completion guarantees provided by the Borrower or any
Restricted Subsidiary in the ordinary course of business;

(10)    Indebtedness of the Borrower or any Restricted Subsidiary (i) arising
from the honoring by a bank or other financial institution of a check, draft or
similar instrument drawn against insufficient funds in the ordinary course of
business and (ii) pursuant to Cash Management Obligations Incurred in the
ordinary course of business;

 

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(11)    Non-Recourse Purchase Money Indebtedness at any time outstanding not to
exceed $30,000,000;

(12)    any Guarantee by the Borrower or a Credit Party of Indebtedness or other
obligations of any Credit Party so long as the Incurrence of such Indebtedness
incurred by such Credit Party is permitted to be incurred under this covenant,
or any Guarantee by a Credit Party of Indebtedness of the Borrower so long as
the Incurrence of such Indebtedness by the Borrower is permitted under this
covenant;

(13)    in-kind obligations relating to net oil or natural gas balancing
positions arising in the ordinary course of business

(14)    Indebtedness of the Borrower or any Restricted Subsidiary represented by
Capital Lease Obligations, mortgage financings or purchase money obligations
Incurred to finance all or any part of the design, development, installation,
construction, purchase or lease of, or repairs, improvements or additions to,
property, plant or equipment used in the business of the Borrower or any of its
Restricted Subsidiaries not more than one hundred and eighty (180) days after
the later of the acquisition, completion of construction, repair, improvement,
addition or commencement of full operation of such property, plant or equipment,
in an aggregate principal amount which, in an aggregate principal amount
outstanding, taken together with all Refinancing Indebtedness in respect
thereof, not to exceed at any time outstanding $24,000,000;

(15)    Permitted Marketing Obligations;

(16)    Indebtedness of the Borrower or any Restricted Subsidiary consisting of
the financing of insurance premiums in customary amounts consistent with the
operations and business of the Borrower and the Restricted Subsidiaries;

(17)    Guarantees by the Borrower of the obligations of EOC to pay the BG
Development Costs under Section 2.3 of the BG Joint Development Agreement with
respect to Oil and Gas Properties owned by the Borrower or the Guarantors or any
of the Borrower’s Unrestricted Subsidiaries;

(18)    Guarantees by the Borrower of the obligations of certain of its
Subsidiaries to pay such Subsidiaries’ share of the Marcellus Development Costs
with respect to the Marcellus JV Oil and Gas Assets in accordance with the terms
of the Marcellus JV Documents;

(19)    Indebtedness arising from agreements of the Borrower or a Restricted
Subsidiary providing for indemnification, adjustment of purchase price or
similar obligations, in each case, Incurred or assumed in connection with the
disposition of any business or assets of the Borrower or any business, assets or
Capital Stock of a Restricted Subsidiary, other than Guarantees of Indebtedness
Incurred by any Person

 

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acquiring all or any portion of such business, assets or a Subsidiary for the
purpose of financing such acquisition; provided that:

(i)    the maximum aggregate liability in respect of all such Indebtedness shall
at no time exceed the gross proceeds, including non-cash proceeds (the Fair
Market Value of such non-cash proceeds being measured at the time received and
without giving effect to subsequent changes in value), actually received by the
Borrower and its Restricted Subsidiaries in connection with such disposition;
and

(ii)    such Indebtedness is not reflected on the balance sheet of the Borrower
or any of its Restricted Subsidiaries (contingent obligations referred to in a
footnote to financial statements and not otherwise reflected on the balance
sheet will not be deemed to be reflected on such balance sheet for purposes of
this clause (19)); and

(20)    Indebtedness of, or Disqualified Stock issued by, the Borrower or any
Restricted Subsidiary or Preferred Stock issued by any Restricted Subsidiary not
otherwise permitted pursuant to this clause (b), in an aggregate principal
amount not to exceed at any time outstanding $24,000,000;

(21)    Indebtedness arising from Guarantees by the Borrower or any Restricted
Subsidiary of Indebtedness incurred in connection with Permitted Business
Investments at any time outstanding not to exceed $72,000,000.

(c)    Notwithstanding the foregoing, neither the Borrower nor any Guarantor
shall Incur any Indebtedness pursuant to Section 6.01(b) if the proceeds thereof
are used, directly or indirectly, to Refinance any Subordinated Indebtedness of
the Borrower or a Guarantor unless such Indebtedness shall be subordinated to
the Indebtedness or to the applicable Guarantee to at least the same extent as
such Subordinated Indebtedness.

(d)    For purposes of determining compliance with this Section 6.01: (1) all
Indebtedness outstanding under the First Lien RBL Credit Agreement or under any
Replacement Credit Facility shall be deemed Incurred under Section 6.01(b)(1);
(2) in the event that an item of Indebtedness (or any portion thereof) meets the
criteria of more than one of the types of Indebtedness described above, the
Borrower, in its sole discretion, shall classify such item of Indebtedness (or
any portion thereof) at the time of Incurrence and may later reclassify such
item of Indebtedness in any manner that complies with this Section 6.01 and
shall only be required to include the amount and type of such Indebtedness in
one of the above clauses; (3) at the time of Incurrence, the Borrower shall be
entitled to divide and classify (or later classify, reclassify or re-divide in
whole or in part in its sole discretion) an item of Indebtedness in more than
one of the types of Indebtedness described above; (4) Guarantees of or
obligations in respect of letters or credit relating to Indebtedness which is
otherwise included in the determination of a particular amount of Indebtedness
shall not be included; (5) if obligations in respect of letters of credit are
Incurred pursuant to the First Lien RBL Credit Agreement and are being treated
as Incurred pursuant to Section 6.01(b)(1) and the letters of credit relate to
other Indebtedness, then such other Indebtedness shall not be included; (6) the
amount of Indebtedness issued at a price that is less than the principal amount
thereof shall be equal to the amount of the liability in respect thereof
determined in accordance with GAAP; and (7) Indebtedness of any Person existing
at the time such Person becomes a Restricted Subsidiary shall be deemed to have
been Incurred by the Borrower and the Restricted Subsidiary at the time such
Person becomes a Restricted Subsidiary.

 

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(e)    For purposes of determining compliance with any Dollar-denominated
restriction on the Incurrence of Indebtedness where the Indebtedness Incurred is
denominated in a different currency, the amount of such Indebtedness shall be
the Dollar Equivalent determined on the date of the Incurrence of such
Indebtedness; provided, however, that if any such Indebtedness denominated in a
different currency is subject to a Currency Agreement with respect to Dollars
covering all principal, premium, if any, and interest payable on such
Indebtedness, the amount of such Indebtedness expressed in Dollars shall be as
provided in such Currency Agreement. The principal amount of any Refinancing
Indebtedness Incurred in the same currency as the Indebtedness being Refinanced
shall be the Dollar Equivalent of the Indebtedness Refinanced, except to the
extent that (1) such Dollar Equivalent was determined based on a Currency
Agreement, in which case the Refinancing Indebtedness shall be determined in
accordance with the preceding sentence, and (2) the principal amount of the
Refinancing Indebtedness exceeds the principal amount of the Indebtedness being
Refinanced, in which case the Dollar Equivalent of such excess shall be
determined on the date such Refinancing Indebtedness is Incurred.

Section 6.02    Limitation on Restricted Payments.

(a)    The Borrower shall not, and shall not permit any Restricted Subsidiary,
directly or indirectly, to make a Restricted Payment if at the time the Borrower
or such Restricted Subsidiary makes such Restricted Payment:

(1)    a Default or Event of Default shall have occurred and be continuing (or
would result therefrom);

(2)     immediately after giving effect to such Restricted Payment, on a pro
forma basis, the Consolidated Coverage Ratio is equal to or less than 2.25 to
1.0; or

(3)    the aggregate amount of such Restricted Payment and all other Restricted
Payments since the Effective Date (excluding Restricted Payments permitted by
clauses (3), (5), (6), (7), (8), (9), (10) and (13), (other than, in the case of
such clause (13), Restricted Payments in the form of dividends) of
Section 6.02(b)) would exceed the sum of (without duplication):

(i)    100% of the aggregate Net Cash Proceeds and 100% of the fair market value
(as determined by the Board of Directors in good faith) of property other than
cash received by the Borrower from the issuance or sale of its Capital Stock or
of debt securities of the Borrower that have been converted into or exchanged
for such Capital Stock (other than Disqualified Stock) subsequent to the
Effective Date (other than an issuance or sale to a Subsidiary of the Borrower
and other than an issuance or sale financed directly or indirectly with
Indebtedness to an employee stock ownership plan or to a trust established by
the Borrower or any of its Subsidiaries for the benefit of their employees) and
100% of any cash capital contribution received by the Borrower from its
shareholders subsequent to the Effective Date; plus

 

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(ii)    the amount by which Indebtedness is reduced on the Borrower’s
consolidated balance sheet upon the conversion or exchange (other than by a
Subsidiary of the Borrower) subsequent to the Effective Date of any Indebtedness
convertible or exchangeable for Capital Stock (other than Disqualified Stock) of
the Borrower (plus the amount of any accrued interest then outstanding on such
Indebtedness to the extent the obligation to pay such interest is extinguished
less the amount of any cash, or the fair market value of any other property,
distributed by the Borrower upon such conversion or exchange) provided, that the
foregoing amount shall not exceed the Net Cash Proceeds received by the Borrower
or any Restricted Subsidiary from the sale of such Indebtedness (excluding Net
Cash Proceeds from sales to a Subsidiary of the Borrower or, in the case of a
sale financed directly or indirectly with Indebtedness, to an employee stock
ownership plan or to a trust established by the Borrower or any of its
Subsidiaries for the benefit of their employees); plus

(iii)    an amount equal to the sum of (A) the net reduction in the Investments
(other than Permitted Investments) made subsequent to the Effective Date by the
Borrower or any Restricted Subsidiary in any Person resulting from repurchases,
repayments or redemptions of such Investments by such Person, proceeds realized
on the sale of such Investment and proceeds representing the return of capital
(excluding dividends and distributions), in each case received by the Borrower
or any Restricted Subsidiary; provided, that such amount shall not exceed the
amount of Investments (excluding Permitted Investments) previously made (and
treated as a Restricted Payment) by the Borrower or any Restricted Subsidiary in
such Person, and (B) to the extent such Person is an Unrestricted Subsidiary,
the portion (proportionate to the Borrower’s equity interest in such Subsidiary)
of the fair market value of the net assets of such Unrestricted Subsidiary at
the time such Unrestricted Subsidiary is designated a Restricted Subsidiary or
is sold; provided, that (x) such amount shall not exceed, in the case of any
Unrestricted Subsidiary other than the Marcellus Midstream Owner, the amount of
Investments (excluding Permitted Investments) previously made (and treated as a
Restricted Payment) by the Borrower or any Restricted Subsidiary in such
Unrestricted Subsidiary and (y) in the case of the Marcellus Midstream Owner,
the amount of any Permitted Investments made since the Effective Date by the
Borrower or any Restricted Subsidiary in the Marcellus Midstream Owner shall be
deducted from such amount; and provided, further, that such amounts under this
clause (iii) may not be applied toward Restricted Payments of the types
described in clauses (a) and (b) of the definition thereof.

(b)    The provisions of Section 6.02(a) shall not prohibit:

(1)    the payment of any dividends by the Borrower within 60 days after the
date of declaration thereof, if at such date of declaration such dividend would
have complied with this Section 6.02 (and such payment shall be deemed to be
paid on the date of payment for purposes of any calculation required by this
Section 6.02);

 

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(2)    any Restricted Payment made out of the Net Cash Proceeds of a
substantially concurrent sale (other than to a Subsidiary of the Borrower or an
employee stock ownership plan or to a trust established by the Borrower or any
of its Subsidiaries for the benefit of their employees) of Capital Stock (other
than Disqualified Stock) or a cash capital contribution received by the Borrower
from its shareholders; provided, that the Net Cash Proceeds from such sale or
such cash capital contribution (to the extent so used for such Restricted
Payment) shall be excluded from the calculation of amounts under
Section 6.02(a)(3)(i);

(3)    the defeasance, redemption, repurchase, retirement or other acquisition
of any Subordinated Indebtedness of the Borrower or any Guarantor, Existing
Unsecured Notes, Senior Debt, Junior Priority Lien Debt or Junior Lien Debt, in
each case with the Net Cash Proceeds from or in exchange for Indebtedness
constituting Refinancing Indebtedness permitted to be incurred under
Section 6.01 or in exchange for an issuance of Capital Stock of the Borrower
(other than Disqualified Stock);

(4)    the payment of any dividend or other distribution by a wholly-owned
Restricted Subsidiary of the Borrower to the Borrower or another wholly-owned
Restricted Subsidiary;

(5)    so long as no Default or Event of Default has occurred and is continuing,
Restricted Payments to effect the repurchase or other acquisition of shares of
Capital Stock of the Borrower or any of its Subsidiaries from employees, former
employees, directors or former directors of the Borrower or any of its
Subsidiaries (or heirs, estates or other permitted transferees of such
employees, former employees, directors or former directors), pursuant to the
terms of the agreements (including employment agreements or management equity
subscription agreements), stock options or plans (or amendments thereto)
approved by the Board of Directors under which such individuals purchase or sell
or are granted the option to purchase or sell, shares of such Capital Stock;
provided, that the aggregate amount of such repurchases and other acquisitions
(excluding amounts representing cancelation of Indebtedness) shall not exceed
$2,400,000 in any 12-month period plus any unused amount permitted under this
clause (5) for the immediately preceding year, but not to exceed $3,600,000 in
any 12-month period;

(6)     (i) repurchases, redemptions or other acquisitions of Capital Stock
deemed to occur upon exercise of stock options, warrants or other convertible
securities if such Capital Stock represents a portion of the exercise or
exchange price thereof and (ii) repurchases or other acquisitions of Capital
Stock made in lieu of withholding taxes in connection with any such exercise or
exchange; provided that the aggregate amount of such repurchases, redemptions or
acquisitions to satisfy federal income tax obligations shall not exceed
$2,400,000 in any 12-month period;

 

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(7)    cash payments in lieu of the issuance of fractional shares in connection
with the exercise of warrants, options or other securities convertible into or
exchangeable for Capital Stock of the Borrower; provided, that any such cash
payment shall not be for the purpose of evading this Section 6.02 (as determined
in good faith by the Board of Directors);

(8)    payments of intercompany Indebtedness that was permitted to be Incurred
under this Agreement; provided, that no Default or Event of Default has occurred
and is continuing or would otherwise result therefrom;

(9)    payments to dissenting stockholders (i) pursuant to applicable law or
(ii) in connection with the settlement or other satisfaction of legal claims
made pursuant to or in connection with a consolidation, merger or transfer of
assets in connection with a transaction that is not prohibited by this
Agreement;

(10)    repurchases, redemptions or other acquisitions of value of Existing
Unsecured Notes in exchange for Junior Lien Debt to the extent permitted to be
incurred under Section 6.01(b)(3) and/or with the Net Cash Proceeds of any such
Junior Lien Debt; provided, that no Default or Event of Default has occurred and
is continuing or would otherwise result immediately therefrom;

(11)    repurchases, exchanges, redemptions or other acquisitions of value of
Existing Unsecured Notes for consideration for all such repurchases, exchanges,
redemptions or acquisitions not exceeding $84,000,000 in the aggregate since the
Issue Date; provided, that no Default or Event of Default has occurred and is
continuing or would otherwise result immediately therefrom;

(12)    repurchases, exchanges, redemptions or other acquisitions of value of
the 2018 Notes for consideration for all such repurchases, exchanges,
redemptions or acquisitions not exceeding $25,000,000 in the aggregate since the
Effective Date Date; provided, that no Default or Event of Default has occurred
and is continuing or would otherwise result immediately therefrom; and

(13)    other Restricted Payments not to exceed $30,000,000 in the aggregate;
provided, that no Default or Event of Default has occurred and is continuing or
would otherwise result immediately therefrom.

(c)    For purposes of determining compliance with this Section 6.02, at the
time a Restricted Payment is made, the Borrower shall be entitled to divide and
classify such Restricted Payment in more than one of the types of Restricted
Payments described above. The amount of all Restricted Payments (other than
cash) shall be the fair market value on the date of the Restricted Payment of
the asset(s) or securities proposed to be transferred by the Borrower or the
applicable Restricted Subsidiary, as the case may be, pursuant to the Restricted
Payment. The amount of any Restricted Payment paid in cash shall be equal to its
face amount. The fair market value of any assets or securities that are required
to be valued at the time of such Restricted Payment by this Section 6.02 shall
be evidenced by an Officers’ Certificate which shall be delivered to the
Administrative Agent not later than ten (10) Business Days following the date of
the making of any Restricted Payment. Such certificate shall state that such
Restricted Payment is permitted together with a copy of any related resolutions
of the Board of Directors.

 

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(d)    Notwithstanding anything to the contrary contained herein, the Borrower
shall not, and shall not permit any Restricted Subsidiary, directly or
indirectly, to (1) repurchase, exchange, redeem or otherwise acquire for value
or Refinance any Existing Unsecured Notes in exchange for, or with the Net Cash
Proceeds of, any Indebtedness other than (i) Junior Lien Debt in reliance on
Section 6.02(b)(3) or (ii) additional unsecured Indebtedness (provided that such
unsecured Indebtedness does not mature prior to ninety-one (91) days after the
Term Loan Maturity Date) (in the case of each of clauses (i) and (ii), to the
extent such Indebtedness is permitted to be incurred under this Agreement) or
(iii) with the issuance of Capital Stock of the Issuer (other than Disqualified
Stock) or (2) repurchase, exchange, redeem or otherwise acquire for value or
Refinance any Junior Priority Lien Debt, Junior Lien Debt or Senior Debt (other
than the Existing Unsecured Notes) in exchange for, or with the Net Cash
Proceeds of, any Senior Priority Lien Debt or Priority Lien Debt. For the
avoidance of doubt, nothing in this clause (d) shall prohibit repurchases of any
Existing Unsecured Notes otherwise permitted under this Section 6.02 for cash;
provided, however, that any such repurchase shall also comply with Section 6.06
hereof.

Section 6.03    Limitation on Restrictions on Distributions from Restricted
Subsidiaries. The Borrower shall not, and shall not permit any Restricted
Subsidiary to, create or otherwise cause or permit to exist or become effective
any consensual encumbrance or restriction on the ability of any Restricted
Subsidiary to:

(a)    pay dividends or make any other distributions on its Capital Stock to the
Borrower or a Restricted Subsidiary or pay any Indebtedness owed to the
Borrower; provided that the priority of any Preferred Stock in receiving
dividends or liquidating distributions being paid on Common Stock shall not be
deemed a restriction of the ability to make distributions of Capital Stock;

(b)    make any loans or advances to the Borrower; provided that the
subordination of loans or advances made to the Borrower or any Restricted
Subsidiary to other Indebtedness Incurred by the Borrower or any Restricted
Subsidiary shall not be deemed a restriction of the ability to make loans or
advances; or

(c)    transfer any of its Property or assets to the Borrower,

except with respect to clauses (a), (b) and (c) above:

(1)    any encumbrance or restriction pursuant to an agreement in effect at or
entered into on the Effective Date including, for the avoidance of doubt, the
First Lien RBL Credit Agreement, Senior Secured Notes Documents, the Junior Lien
Credit Agreement and the Existing Unsecured Notes;

(2)    any encumbrance or restriction with respect to a Restricted Subsidiary
pursuant to an agreement relating to any Indebtedness Incurred by such
Restricted Subsidiary, or otherwise binding on such Restricted Subsidiary,

 

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on or prior to the date on which such Restricted Subsidiary was acquired or was
so designated by the Borrower or any Restricted Subsidiary (other than
Indebtedness Incurred as consideration in, or to provide all or any portion of
the funds or credit support utilized to consummate, and other than any
encumbrance or restriction entered into in contemplation of, the transaction or
series of related transactions pursuant to which such Restricted Subsidiary
became a Restricted Subsidiary or was acquired by the Borrower) and outstanding
on such date;

(3)    any encumbrance or restriction pursuant to an agreement effecting a
Refinancing of Indebtedness Incurred pursuant to an agreement referred to in
clause (1) or (2) above; provided, that the encumbrances and restrictions with
respect to such Restricted Subsidiary contained in any such Refinancing
agreement or amendment are no more restrictive than the encumbrances and
restrictions with respect to such Restricted Subsidiary contained in such
predecessor agreements;

(4)    any encumbrance or restriction with respect to a Restricted Subsidiary
(or any of its Property or assets) imposed pursuant to an agreement entered into
for the sale or disposition of all or substantially all the Capital Stock or
assets of such Restricted Subsidiary (or the Property or assets subject to such
restrictions) pending the closing of such sale or disposition;

(5)    customary encumbrances and restrictions contained in agreements of the
type described in the definition of the term “Permitted Business Investments”;

(6)    any encumbrance or restriction pursuant to an agreement relating to any
Capital Lease Obligations or purchase money Indebtedness, in each case not
Incurred in violation of this Agreement; provided, that with respect to purchase
money Indebtedness or Capital Lease Obligations, such restrictions relate only
to the Property financed with such Indebtedness;

(7)    any encumbrance or restriction pursuant to provisions in agreements or
instruments which prohibit the payment of dividends or the making of other
distributions with respect to any Capital Stock of a Person other than on a pro
rata basis;

(8)    any encumbrance or restriction existing pursuant to applicable law, rule,
regulation, order, approval, license, permit or similar restriction;

(9)    any encumbrance or restriction pursuant to supermajority voting
requirements under corporate charters, bylaws, stockholders agreements and
similar documents and agreements; and

(10)    any encumbrance or restriction pursuant to an instrument or agreement
governing Indebtedness permitted by the terms of this Agreement to be Incurred
by a Restricted Subsidiary to fund, in whole or in part, the acquisition of any
Property or assets; provided such Indebtedness is repaid or otherwise refinanced
in full with Refinancing Indebtedness on or prior to the date twelve (12) months
after the date such Indebtedness was initially Incurred; and

 

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and except, with respect to clause (c) only:

(1)    any encumbrance or restriction consisting of customary non-assignment
provisions (including provisions forbidding subletting) in leases governing
leasehold interests or Farm-In Agreements or Farm-Out Agreements to the extent
such provisions restrict the transfer of the lease or the Property leased
thereunder;

(2)    any encumbrance or restriction contained in Capital Lease Obligations,
security agreements, mortgages, purchase money agreements or similar instruments
securing Indebtedness of a Restricted Subsidiary to the extent such encumbrance
or restriction restricts the transfer of the Property (including Capital Stock)
subject to such Capital Lease Obligations, security agreements, mortgages,
purchase money agreements or similar instruments;

(3)    Permitted Liens or Liens securing Indebtedness otherwise permitted to be
Incurred pursuant to Section 6.07 that limit the right of the Borrower or any of
its Restricted Subsidiaries to dispose of the assets subject to such Lien;

(4)    customary restrictions contained in asset sale agreements limiting the
transfer of such assets pending the closing of such sale;

(5)    customary restrictions on the subletting, assignment or transfer of any
Property or asset that is subject to a lease, license, sub-license or similar
contract, or the assignment or transfer of any such lease, license, sub-license
or other contract;

(6)    encumbrances and restrictions contained in contracts entered into in the
ordinary course of business, not relating to any Indebtedness, and that do not,
individually or in the aggregate, detract from the value of, or from the ability
of the Borrower and the Restricted Subsidiaries to realize the value of,
Property or assets of the Borrower or any Restricted Subsidiary in any manner
material to the Borrower or any Restricted Subsidiary; and

(7)    any encumbrance or restriction pursuant to provisions with respect to the
disposition or distribution of assets or Property in operating agreements,
sale-leaseback agreements, joint venture agreements, development agreements,
area of mutual interest agreements and other agreements that are customary in
the Oil and Gas Business and entered into in the ordinary course of business.

Section 6.04    Fundamental Changes and Dispositions.

(a)    The Borrower will not, nor will it permit any of its Restricted
Subsidiaries to, merge into or consolidate with any other Person, or permit any
other Person to merge into or

 

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consolidate with it, or Dispose of (in one transaction or in a series of
transactions, including any Asset Sale) all or any substantial part of its
assets, or any of its Oil and Gas Properties or any of the Equity Interests of
any Restricted Subsidiary (in each case, whether now owned or hereafter
acquired), or liquidate or dissolve, except that, the Borrower or any Restricted
Subsidiary may sell Hydrocarbons produced from its Oil and Gas Properties in the
ordinary course of business, and if at the time thereof and immediately after
giving effect thereto no Default or Event of Default shall have occurred and be
continuing:

(1)    any Restricted Subsidiary may merge into the Borrower in a transaction in
which the Borrower is the surviving entity;

(2)    (i) any Credit Party may merge into any other Credit Party (provided
that, in the case of the Borrower, the Borrower shall be the surviving entity);
(ii) any Non-Credit Party Restricted Subsidiary may merge into any other
non-Credit Party Restricted Subsidiary and (iii) any non-Credit Party may merge
into any Credit Party in a transaction in which the surviving entity is a Credit
Party;

(3)    any Restricted Subsidiary may sell, transfer, lease or otherwise dispose
of its assets to the Borrower or to another Restricted Subsidiary; provided,
that the aggregate fair market value of all assets sold, transferred, leased or
otherwise disposed of by a Credit Party to a non-Credit Party during the term of
this Agreement pursuant to this clause (3) shall not exceed $12,000,000 in the
aggregate;

(4)    the Borrower may sell, transfer, lease or otherwise dispose of its assets
to any Guarantor;

(5)    any Restricted Subsidiary may liquidate or dissolve if the Borrower
determines in good faith that such liquidation or dissolution is in the best
interests of the Borrower and such Restricted Subsidiary and is not materially
disadvantageous to interests of the Lenders;

(6)    the Borrower or any Restricted Subsidiary may sell, transfer, lease or
otherwise dispose of equipment and related items in the ordinary course of
business, that are obsolete or no longer necessary in the business of the
Borrower or any of its Restricted Subsidiaries or that is being replaced by
equipment of comparable value and utility;

(7)    subject to Section 2.08(a), to the extent permitted under the terms of
the First Lien RBL Credit Agreement and the other Senior Priority Lien
Documents, the Borrower or any Restricted Subsidiary may Dispose of Oil and Gas
Properties (whether pursuant to a Disposition of all, but not less than all, of
the Equity Interests of any Restricted Subsidiary or otherwise) so long as:

(i)     the Borrower or such Restricted Subsidiary receives consideration
(including by way of relief from, or by any Person assuming responsibilities for
any liabilities, contingent or otherwise) at the time of such Asset Sale at
least equal to the fair market value (including as to the value of all non-cash
consideration), as determined in good faith by the

 

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Board of Directors or an executive officer of the Borrower or such Restricted
Subsidiary with the responsibility for such transaction, which determination
shall be conclusive evidence of compliance with this provision, of the shares
and assets subject to such Asset Sale; and

(ii)     unless such Disposition is in connection with a joint development
arrangement, drilling agreement or similar arrangement contemplating a
contribution or conveyance of Oil and Gas Properties in exchange for a
commitment to bear future development costs in respect of such Oil and Gas
Properties, at least 85% of the consideration thereof received by the Borrower
or such Restricted Subsidiary is in the form of cash or Cash Equivalents;
provided that the following are deemed to be cash or Cash Equivalents: (i) any
liabilities (as shown on the Borrower’s or such Restricted Subsidiary’s most
recent balance sheet) of the Borrower or any Restricted Subsidiary (other than
(1) liabilities that are subordinated to the Obligations, (2) Junior Priority
Lien Obligations, (3) Junior Lien Obligations or (4) Senior Debt) that are
assumed by the transferee of any such assets pursuant to a customary novation
agreement or similar agreement that releases the Borrower or such Restricted
Subsidiary from all further liability; (ii) securities received by the Borrower
or any Restricted Subsidiary from the transferee that are converted within one
hundred and eighty (180) days by the Borrower or such Restricted Subsidiary into
cash, to the extent of cash received in that conversion; and (iii) accounts
receivable of a business retained by the Borrower or any Restricted Subsidiary,
as the case may be, following the sale of such business, provided that such
accounts receivable (c) are not past due more than thirty (30) days and (y) do
not have a payment greater than ninety (90) days from the date of the invoice
creating such accounts receivable.

provided, that for purposes of this clause (a)(7), the Credit Parties may not
sell, transfer, lease, exchange, abandon or otherwise Dispose of (in one
transaction or a series of related transactions) all or substantially all of the
Oil and Gas Properties (whether pursuant to a Disposition of Equity Interests of
a Restricted Subsidiary or otherwise) without the prior written consent of all
of the Lenders.

(8)    the Borrower may consummate the following Dispositions:

(i)    the sale, transfer or assignment by the Borrower, EXCO PA, EXCO WV or any
other Restricted Subsidiary of an undivided interest in Oil and Gas Properties
acquired by the Borrower, EXCO PA, EXCO WV or any other Restricted Subsidiary in
the Appalachian Area to the extent required pursuant to and in accordance with
the right of first refusal provisions of the Marcellus JV Documents; and

(ii)    the sale, transfer or assignment by the Borrower, EOC or any other
Restricted Subsidiary of an undivided interest in Oil and Gas Properties
acquired by the Borrower, EOC or any other Restricted Subsidiary in the East
Texas/North Louisiana Area to the extent required pursuant to and in accordance
with the right of first refusal provisions of the BG Joint Development
Agreement.

 

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(b)    The Borrower will not, nor will it permit any of its Restricted
Subsidiaries to, engage to any material extent in any business other than
businesses of the type conducted by the Borrower and its Restricted Subsidiaries
on the date of execution of this Agreement and after giving effect to the
Transactions and businesses reasonably related thereto.

Section 6.05    Limitation on Affiliate Transactions.

(a)    The Borrower will not, nor will it permit any of its Restricted
Subsidiaries to, sell, lease or otherwise transfer any property or assets to, or
purchase, lease or otherwise acquire any property or assets from, or otherwise
engage in any other transactions with, any of its Affiliates (an “Affiliate
Transaction”), (1) except (i) in the ordinary course of business at prices and
on terms and conditions not less favorable to the Borrower or such Restricted
Subsidiary than could be obtained on an arm’s-length basis from unrelated third
parties, (ii) transactions between or among the Borrower and the other Credit
Parties not involving any other Affiliate, (iii) any Restricted Payment
permitted by Section 6.02 or (iv) Permitted Investments of the kind referred to
in clauses (a)(i) and (a)(ii) of the definition thereof; and (2) unless (i) the
terms of the Affiliate Transaction are no less favorable to the Borrower or such
Restricted Subsidiary than those that could be obtained at the time of the
Affiliate Transaction in arm’s-length dealings with a Person who is not an
Affiliate and if, in the good faith judgment of the Board of Directors, such
Affiliate Transaction is commercially reasonable and otherwise fair to the
Borrower or the relevant Restricted Subsidiary from a financial point of view;
and (ii)(x) the Borrower delivers to the Administrative Agent with respect to
any Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration to or from the Borrower or a Restricted Subsidiary in
excess of $12,000,000, an Officers’ Certificate certifying that such Affiliate
Transaction complies with the requirements of clause (1) above, and (y) with
respect to any Affiliate Transaction or series of related Affiliate Transactions
involving aggregate consideration to or from the Borrower or a Restricted
Subsidiary in excess of $30,000,000, a majority of the Disinterested Members of
the Board of Directors (or, if there is only one Disinterested Member, such
Disinterested Member) have determined that the criteria set forth in clause
(1) are satisfied with respect to such Affiliate Transaction(s) and have
approved such Affiliate Transaction(s), as evidenced by a resolution delivered
to the Administrative Agent and certified by an officers’ certificate as having
been adopted by the Board of Directors.

(b)    Section 6.05(a) shall not prohibit or apply to:

(1)    any Investment by a Credit Party in another Credit Party or other
Restricted Payment between Credit Parties;

(2)    any issuance of securities, or other payments, awards or grants in cash,
securities or otherwise pursuant to, or the funding of, employment arrangements,
stock options and stock ownership plans approved by the Board of Directors;

(3)    loans or advances to officers or employees in the ordinary course of
business in accordance with the past practices of the Borrower or the Restricted
Subsidiaries, in each case, only as permitted by Section 402 of the
Sarbanes-Oxley Act of 2002;

 

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(4)    the payment of reasonable fees to directors of the Borrower and the
Restricted Subsidiaries who are not employees of the Borrower or the Restricted
Subsidiaries, the reimbursement of reasonable out-of-pocket expenses incurred
by, directors of the Borrower and the Restricted Subsidiaries in attending
meetings of such directors and indemnification payments made to officers,
directors and employees of the Borrower or any Subsidiary pursuant to charter,
bylaw, statutory or contractual provisions;

(5)    the issuance or sale of any Capital Stock (other than Disqualified Stock)
of the Borrower to, or the receipt by the Borrower of any capital contribution
from, its stockholders or Affiliates;

(6)    any agreement as in effect on the Effective Date (including each of the
agreements in respect of the Transactions) and described on Schedule 6.05 or any
amendments or other modifications, renewals or extensions of any such agreement
(so long as such amendments or other modifications, renewals or extensions are
not materially less favorable to the Borrower or the Restricted Subsidiaries)
and the transactions evidenced thereby;

(7)    transactions contemplated by the Marcellus JV Documents, the BG JV
Documents or the Bluescape Agreement, in each case as in effect on the Effective
Date, in the ordinary course of business and otherwise in compliance with the
terms of this Agreement, which are fair to the Borrower and its Restricted
Subsidiaries in the reasonable determination of the Board of Directors of the
Borrower, an executive officer of the Borrower or an executive officer of such
Restricted Subsidiary with responsibility for such transaction (whose
determination shall be conclusive evidence of compliance with this provision)
and amendments, modifications, supplements, extensions or renewals of such
agreements from time to time, so long as any such amendment, modification,
supplement, extension or renewal is not more disadvantageous to the Lenders in
any material respect in the good faith judgment of the Board of Directors of the
Borrower, when taken as a whole, than the terms of such agreements in effect on
the Effective Date;

(8)    transactions with customers, clients, suppliers, or purchasers or sellers
of goods or services in each case in the ordinary course of business and
otherwise in compliance with this Agreement, which are fair to the Borrower and
its Restricted Subsidiaries, in the reasonable determination of the Board of
Directors of the Borrower, an executive officer of the Borrower or an executive
officer of such Restricted Subsidiary with responsibility for such transaction
(whose determination shall be conclusive evidence of compliance with this
provision) or are on terms at least as favorable as might reasonably have been
obtained at such time from an unaffiliated party;

(9)    transactions between the Borrower or any Restricted Subsidiary and any
Person, a director of which is also a director of the Borrower and such director
is the sole cause for such Person to be deemed an Affiliate of the Borrower or
any Restricted Subsidiary, provided, however, that such director shall abstain
from voting as a director of the Borrower on any matter involving such other
Person;

 

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(10)    any transaction in which the Borrower or any of its Restricted
Subsidiaries as the case may be, delivers to the Administrative Agent a written
opinion from an Independent Qualified Party to the effect that such Affiliate
Transaction is fair, from a financial standpoint, to the Borrower and the
Restricted Subsidiaries or is not less favorable to the Borrower and the
Restricted Subsidiaries than could reasonably be expected to be obtained at the
time in an arm’s-length transaction with a Person who was not an Affiliate;

(11)    guarantees of performance by the Borrower and its Restricted
Subsidiaries of the Borrower’s Unrestricted Subsidiaries in the ordinary course
of business, except for guarantees of Indebtedness in respect of borrowed money;
or

(12)    if such Affiliate Transaction is with a Person in its capacity as a
holder of Indebtedness or Capital Stock of the Borrower or any Restricted
Subsidiary where such Person is treated no more favorably than the holders of
Indebtedness or Capital Stock of the Borrower or any Restricted Subsidiary.

Section 6.06    Prepayment of Junior Lien Credit Agreement. Notwithstanding
anything to the contrary herein, the Borrower shall not, and shall not permit
any Restricted Subsidiary to, directly or indirectly, to make any payment at
maturity of the outstanding term loans under the Junior Lien Credit Agreement
prior to payment in full at maturity of the Obligations.

Section 6.07    Limitation on Liens. The Borrower shall not, and shall not
permit any Restricted Subsidiary to, directly or indirectly, Incur or permit to
exist any Lien of any nature whatsoever on any of its Properties (including
Capital Stock of a Restricted Subsidiary), whether owned at the Effective Date
or thereafter acquired, other than Permitted Liens.

Section 6.08    Limitation on Sale/Leaseback Transactions. The Borrower shall
not, and shall not permit any Restricted Subsidiary to, enter into any
Sale/Leaseback Transaction with respect to any Property unless (a) the Borrower
or such Restricted Subsidiary would be entitled to (1) Incur Indebtedness in an
amount equal to the Attributable Debt with respect to such Sale/Leaseback
Transaction pursuant to Section 6.01 and (2) create a Lien on such Property
securing such Attributable Debt; (b) the net proceeds received by the Borrower
or any Restricted Subsidiary in connection with such Sale/Leaseback Transaction
are at least equal to the fair market value (as determined by the Board of
Directors) of such Property and (c) the Borrower applies the proceeds of such
transaction in compliance with Sections 2.08 and 6.04.

Section 6.09    Payment of Fees. The Borrower shall not, and shall not permit
any Restricted Subsidiary to, directly or indirectly, pay or cause to be paid
any consideration to or for the benefit of any Lender or holder of any Junior
Priority Lien Debt for or as an inducement to any consent, waiver or amendment
of any of the terms or provisions of any Junior Priority Lien Document unless
(a) in the case of any consent, waiver or amendment of any

 

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Loan Document, such consideration is offered to be paid and is paid to all
Lenders that consent, waive or agree to amend any comparable provisions of the
Loan Documents and (b) in the case of any consent, waiver or amendment of any
Junior Priority Lien Document (other than any Loan Documents), the Borrower
shall also pay such consideration, in the amount and in the same form as that
paid to such other lenders or holders of Junior Priority Lien Debt.

ARTICLE VII

GUARANTEE OF OBLIGATIONS

Section 7.01    Guarantee of Payment. Each Guarantor unconditionally and
irrevocably guarantees to the Administrative Agent for the benefit of the
Secured Parties, the punctual payment of all Obligations now or which may in the
future be owing by any Credit Party (the “Guaranteed Liabilities”). This
Guarantee is a guaranty of payment and not of collection only. The
Administrative Agent shall not be required to exhaust any right or remedy or
take any action against the Borrower or any other Person or any collateral. The
Guaranteed Liabilities include interest accruing after the commencement of a
proceeding under bankruptcy, insolvency or similar laws of any jurisdiction at
the rate or rates provided in the Loan Documents, regardless of whether such
interest is an allowed claim. Each Guarantor agrees that, as between the
Guarantor and the Administrative Agent, the Guaranteed Liabilities may be
declared to be due and payable for the purposes of this Guarantee
notwithstanding any stay, injunction or other prohibition which may prevent,
delay or vitiate any declaration as regards the Borrower or any other Guarantor
and that in the event of a declaration or attempted declaration, the Guaranteed
Liabilities shall immediately become due and payable by each Guarantor for the
purposes of this Guarantee.

Section 7.02    Guarantee Absolute. Each Guarantor guarantees that the
Guaranteed Liabilities shall be paid strictly in accordance with the terms of
this Agreement The liability of each Guarantor hereunder is absolute and
unconditional irrespective of: (a) any change in the time, manner or place of
payment of, or in any other term of, all or any of the Loan Documents or the
Guaranteed Liabilities, or any other amendment or waiver of or any consent to
departure from any of the terms of any Loan Document or Guaranteed Liability,
including any increase or decrease in the rate of interest thereon; (b) any
release or amendment or waiver of, or consent to departure from, any other
guaranty or support document, or any exchange, release or non-perfection of any
collateral, for all or any of the Loan Documents or Guaranteed Liabilities;
(c) any present or future law, regulation or order of any jurisdiction (whether
of right or in fact) or of any agency thereof purporting to reduce, amend,
restructure or otherwise affect any term of any Loan Document or Guaranteed
Liability; (d) without being limited by the foregoing, any lack of validity or
enforceability of any Loan Document or Guaranteed Liability; and (e) any other
setoff, defense or counterclaim whatsoever (in any case, whether based on
contract, tort or any other theory) with respect to the Loan Documents or the
transactions contemplated thereby which might constitute a legal or equitable
defense available to, or discharge of, the Borrower or a Guarantor.

Section 7.03    Guarantee Irrevocable. This Guarantee is a continuing guaranty
of the payment of all Guaranteed Liabilities now or hereafter existing under
this Agreement and shall remain in full force and effect until payment in full
of all Guaranteed

 

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Liabilities and other amounts payable hereunder and until this Agreement are no
longer in effect or, if earlier, when the Guarantor has given the Administrative
Agent written notice that this Guarantee has been revoked; provided that any
notice under this Section shall not release the revoking Guarantor from any
Guaranteed Liability, absolute or contingent, existing prior to the
Administrative Agent’s actual receipt of the notice at its branches or
departments responsible for this Agreement and reasonable opportunity to act
upon such notice.

Section 7.04    Reinstatement. This Guarantee shall continue to be effective or
be reinstated, as the case may be, if at any time any payment of any of the
Guaranteed Liabilities is rescinded or must otherwise be returned by any Secured
Party on the insolvency, bankruptcy or reorganization of the Borrower, or any
other Credit Party, or otherwise, all as though the payment had not been made.

Section 7.05    Subrogation. No Guarantor shall exercise any rights which it may
acquire by way of subrogation, by any payment made under this Guarantee or
otherwise, until all the Guaranteed Liabilities have been paid in full and this
Agreement is no longer in effect. If any amount is paid to the Guarantor on
account of subrogation rights under this Guarantee at any time when all the
Guaranteed Liabilities have not been paid in full, the amount shall be held in
trust for the benefit of the Lenders and shall be promptly paid to the
Administrative Agent to be credited and applied to the Guaranteed Liabilities,
whether matured or unmatured or absolute or contingent, in accordance with the
terms of this Agreement. If any Guarantor makes payment to the Administrative
Agent or Lenders of all or any part of the Guaranteed Liabilities and all the
Guaranteed Liabilities are paid in full and this Agreement is no longer in
effect, the Administrative Agent and Lenders shall, at such Guarantor’s request,
execute and deliver to such Guarantor appropriate documents, without recourse
and without representation or warranty, necessary to evidence the transfer by
subrogation to such Guarantor of an interest in the Guaranteed Liabilities
resulting from the payment.

Section 7.06    Subordination. Without limiting the rights of the Administrative
Agent and the Lenders under any other agreement, any liabilities owed by the
Borrower to any Guarantor in connection with any extension of credit or
financial accommodation by any Guarantor to or for the account of the Borrower,
including but not limited to interest accruing at the agreed contract rate after
the commencement of a bankruptcy or similar proceeding, are hereby subordinated
to the Guaranteed Liabilities, and such liabilities of the Borrower to such
Guarantor, if the Administrative Agent so requests, shall be collected, enforced
and received by any Guarantor as trustee for the Administrative Agent and shall
be paid over to the Administrative Agent on account of the Guaranteed
Liabilities but without reducing or affecting in any manner the liability of the
Guarantor under the other provisions of this Guarantee.

Section 7.07    Payments Generally. All payments by the Guarantors shall be made
in the manner, at the place and in the currency (the “Payment Currency”)
required by the Loan Documents; provided, however, that (if the Payment Currency
is other than Dollars) any Guarantor may, at its option (or, if for any reason
whatsoever any Guarantor is unable to effect payments in the foregoing manner,
such Guarantor shall be obligated to) pay to the Administrative Agent at its
principal office the equivalent amount in Dollars computed at the selling rate
of the Administrative Agent or a selling rate chosen by the Administrative
Agent,

 

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most recently in effect on or prior to the date the Guaranteed Liability becomes
due, for cable transfers of the Payment Currency to the place where the
Guaranteed Liability is payable. In any case in which any Guarantor makes or is
obligated to make payment in Dollars, the Guarantor shall hold the
Administrative Agent and the Lenders harmless from any loss incurred by the
Administrative Agent or any Lender arising from any change in the value of
Dollars in relation to the Payment Currency between the date the Guaranteed
Liability becomes due and the date the Administrative Agent or such Lender is
actually able, following the conversion of the Dollars paid by such Guarantor
into the Payment Currency and remittance of such Payment Currency to the place
where such Guaranteed Liability is payable, to apply such Payment Currency to
such Guaranteed Liability.

Section 7.08    Setoff. Each Guarantor agrees that, in addition to (and without
limitation of) any right of setoff, banker’s lien or counterclaim the
Administrative Agent or any Lender may otherwise have, the Administrative Agent
or such Lender shall be entitled, at its option, to offset balances (general or
special, time or demand, provisional or final) held by it for the account of any
Guarantor at any office of the Administrative Agent or such Lender, in Dollars
or in any other currency, against any amount payable by such Guarantor under
this Guarantee which is not paid when due (regardless of whether such balances
are then due to such Guarantor), in which case it shall promptly notify such
Guarantor thereof; provided that the failure of the Administrative Agent or such
Lender to give such notice shall not affect the validity thereof.

Section 7.09    Formalities. Each Guarantor waives presentment, notice of
dishonor, protest, notice of acceptance of this Guarantee or incurrence of any
Guaranteed Liability and any other formality with respect to any of the
Guaranteed Liabilities or this Guarantee.

Section 7.10    Limitations on Guarantee. The provisions of the Guarantee under
this Article VII are severable, and in any action or proceeding involving any
state corporate law, or any state, federal or foreign bankruptcy, insolvency,
reorganization or other law affecting the rights of creditors generally, if the
obligations of any Guarantor under this Guarantee would otherwise be held or
determined to be avoidable, invalid or unenforceable on account of the amount of
such Guarantor’s liability under this Guarantee, then, notwithstanding any other
provision of this Guarantee to the contrary, the amount of such liability shall,
without any further action by the Guarantors, the Administrative Agent or any
Lender, be automatically limited and reduced to the highest amount that is valid
and enforceable as determined in such action or proceeding (such highest amount
determined hereunder being the relevant Guarantor’s “Maximum Liability”). This
Section 7.10, with respect to the Maximum Liability of the Guarantors, is
intended solely to preserve the rights of the Administrative Agent and the
Lenders hereunder to the maximum extent not subject to avoidance under
applicable law, and no Guarantor nor any other Person shall have any right or
claim under this Section 7.10 with respect to the Maximum Liability, except to
the extent necessary so that none of the obligations of any Guarantor hereunder
shall be rendered voidable under applicable law.

 

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ARTICLE VIII

EVENTS OF DEFAULT

If any of the following events (“Events of Default”) shall occur:

(a)    the Borrower shall fail to pay any principal of any Loan (including any
payments required under Section 2.08) when and as the same shall become due and
payable, whether at the due date thereof or at a date fixed for prepayment
thereof or otherwise;

(b)    the Borrower shall fail to pay any interest on any Loan or any fee or any
other amount (other than an amount referred to in clause (a) of this Article)
payable under this Agreement, when and as the same shall become due and payable,
and such failure shall continue unremedied for a period of three (3) days;

(c)    any representation or warranty made or deemed made by or on behalf of the
Borrower or any Restricted Subsidiary in or in connection with this Agreement or
any amendment or modification hereof or waiver hereunder, or in any report,
certificate, financial statement or other document furnished pursuant to or in
connection with this Agreement or any amendment or modification hereof or waiver
hereunder or in any Loan Document furnished pursuant to or in connection with
this Agreement or any amendment or modification thereof or waiver hereunder,
shall prove to have been incorrect in any material respect when made or deemed
made;

(d)    the Borrower or any Restricted Subsidiary shall fail to observe or
perform any covenant, condition or agreement contained in Article VI;

(e)    the Borrower or any Restricted Subsidiary shall fail to observe or
perform any covenant, condition or agreement contained in this Agreement (other
than those specified in clause (a), (b) or (d) of this Article) or any Loan
Document, and such failure shall continue unremedied for a period of 30 days
after notice thereof from the Administrative Agent to the Borrower (which notice
will be given at the request of any Lender);

(f)    the occurrence of the following:

(1)    the Borrower or any Restricted Subsidiary shall fail to make any payment
(whether of principal or interest and regardless of amount) in respect of any
Material Indebtedness, when and as the same shall become due and payable;

(2)    any event or condition occurs that results in any Material Indebtedness
becoming due prior to its scheduled maturity or that enables or permits the
holder or holders of any Material Indebtedness or any trustee or agent on its or
their behalf to cause any Material Indebtedness to become due, or to require the
prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled
maturity; provided that this clause (f) shall not apply to secured Indebtedness
(other than the Senior Priority Lien Debt, Priority Lien Debt, Junior Priority
Lien Debt and Junior Lien Debt) that

 

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becomes due as a result of the voluntary sale or transfer of the property or
assets by the Borrower or any of its Restricted Subsidiaries securing such
Indebtedness to the extent such voluntary sale or transfer of property is
permitted hereunder;

(g)    an involuntary proceeding shall be commenced or an involuntary petition
shall be filed seeking (1) liquidation, reorganization or other relief in
respect of the Borrower or any Restricted Subsidiary or its debts, or of a
substantial part of its assets, under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect or (2) the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Borrower or any Restricted Subsidiary or for a
substantial part of its assets, and, in any such case, such proceeding or
petition shall continue undismissed for sixty (60) days or an order or decree
approving or ordering any of the foregoing shall be entered;

(h)    the Borrower or any Restricted Subsidiary shall (1) voluntarily commence
any proceeding or file any petition seeking liquidation, reorganization or other
relief under any Federal, state or foreign bankruptcy, insolvency, receivership
or similar law now or hereafter in effect, (2) consent to the institution of, or
fail to contest in a timely and appropriate manner, any proceeding or petition
described in clause (g) of this Article, (3) apply for or consent to the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Borrower or any Restricted Subsidiary or for a
substantial part of its assets, (4) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (5) make a
general assignment for the benefit of creditors or (6) take any action for the
purpose of effecting any of the foregoing;

(i)    the Borrower or any Restricted Subsidiary shall become unable, admit in
writing its inability or fail generally to pay its debts as they become due;

(j)    one or more judgments for the payment of money in an aggregate amount in
excess of $6,000,000 shall be rendered against the Borrower or any Restricted
Subsidiary or any combination thereof and the same shall remain undischarged for
a period of 30 consecutive days during which execution shall not be effectively
stayed, or any action shall be legally taken by a judgment creditor to attach or
levy upon any assets of the Borrower or any Restricted Subsidiary to enforce any
such judgment;

(k)    an ERISA Event shall have occurred that, in the opinion of the Majority
Lenders, when taken together with all other ERISA Events that have occurred,
could reasonably be expected to result in a Material Adverse Effect;

(l)    any Guarantee of a Guarantor shall be held in any judicial proceeding to
be unenforceable or invalid or, except as permitted by the Agreement, shall
cease for any reason to be in full force and effect or any Guarantor, or any
Person acting on behalf of any Guarantor, shall deny or disaffirm its
obligations under its Guarantee, in each case with respect to any Guarantor that
is also a Significant Subsidiary or any group of Guarantors that, taken
together, would constitute a Significant Subsidiary;

 

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(m)    the occurrence of the following:

(1)    except as permitted by the Loan Documents, any Loan Document establishing
the Junior Priority Liens ceases for any reason to be enforceable; provided that
it will not be an Event of Default under this clause (m)(1) if the sole result
of the failure of one or more Loan Documents to be fully enforceable is that any
Junior Priority Lien purported to be granted under such Loan Documents on
Collateral, individually or in the aggregate, having a fair market value of not
more than $18,000,000, ceases to be an enforceable and perfected Junior Priority
Lien; provided, that if such failure is susceptible to cure, no Event of Default
shall arise with respect thereto until forty-five (45) days after any officer of
the Borrower or any Restricted Subsidiary becomes aware of such failure, which
failure has not been cured during such time period;

(2)    except as permitted by the Loan Documents, any Junior Priority Lien
purported to be granted under any Loan Document on Collateral, individually or
in the aggregate, having a fair market value in excess of $18,000,000, ceases to
be an enforceable and perfected first-priority Lien, subject to the
Intercreditor Agreement and Permitted Prior Liens; provided that if such failure
is susceptible to cure, no Event of Default shall arise with respect thereto
until forty-five (45) days after any officer of the Borrower or any Restricted
Subsidiary becomes aware of such failure, which failure has not been cured
during such time period; or

(3)    the Borrower or any Guarantor, or any Person acting on behalf of any of
them, denies or disaffirms, in writing, any obligation of the Borrower or any
Guarantor set forth in or arising under any Loan Document establishing Junior
Priority Liens; or

(n)    a Change of Control shall occur;

then, and in every such event (other than an event with respect to the Borrower
or any Restricted Subsidiary described in clause (g) or (h) of this Article),
and at any time thereafter during the continuance of such event, the
Administrative Agent may, and at the request of the Majority Lenders shall, by
notice to the Borrower, take either or both of the following actions, at the
same or different times: (i) terminate the Commitments, and thereupon the
Commitments shall terminate immediately, and (ii) declare the Loans then
outstanding to be due and payable in whole (or in part, in which case any
principal not so declared to be due and payable may thereafter be declared to be
due and payable), and thereupon the principal of the Loans so declared to be due
and payable, together with accrued interest thereon (which shall be payable in
cash) and all fees and other obligations (including, for the avoidance of doubt,
the Applicable Premium (including any Make-Whole Amount)) of the Borrower
accrued hereunder, shall become due and payable immediately, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower; and in case of any event with respect to the
Borrower described in clause (g) or (h) of this Article, the Commitments shall
automatically terminate and the principal of the Loans then outstanding,
together with accrued interest thereon (which shall be payable in cash) and all
fees and other obligations (including, for the avoidance of doubt, the
Applicable Premium (including

 

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any Make-Whole Amount)) of the Borrower accrued hereunder, shall automatically
become due and payable, without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by the Borrower. Without limiting the
foregoing, upon the occurrence and during the continuance of an Event of
Default, subject to the Intercreditor Agreement the Administrative Agent, the
Collateral Trustee and each Lender may protect and enforce its rights under this
Agreement and the other Loan Documents by any appropriate proceedings, including
proceedings for specific performance of any covenant or agreement contained in
this Agreement or any other Loan Document, and the Administrative Agent, the
Collateral Trustee and each Lender may enforce payment of any Obligations due
and payable hereunder or enforce any other legal or equitable right and remedies
which it may have.

ARTICLE IX

THE AGENTS

Section 9.01    Appointment and Authority. Each Lender hereby irrevocably
appoints the Administrative Agent and the Collateral Trustee (for purposes of
this Article IX, each of the Administrative Agent and the Collateral Trustee are
referred to as an “Agent” and collectively as the “Agents”) its agent and
authorizes the Agents to take such actions on its behalf and to exercise such
powers as are delegated to such Agent by the terms of the Loan Documents,
together with such actions and powers as are reasonably incidental thereto.
Without limiting the generality of the foregoing, the Agents are hereby
expressly authorized to (a) execute any and all documents (including releases of
Liens, termination statements, assignments or other documents reasonably
requested by the Borrower in connection with any sale or other disposition of
Collateral to the extent such sale or other disposition is permitted by the
terms hereof or is otherwise authorized by the terms of the Loan Documents) with
respect to the Collateral and the rights of the Lenders with respect thereto, as
contemplated by and in accordance with the provisions of this Agreement, the
Security Instruments, the Collateral Trust Agreement and the Intercreditor
Agreement and (b) negotiate, enforce or the settle any claim, action or
proceeding affecting the Lenders in their capacity as such, at the direction of
the Majority Lenders, which negotiation, enforcement or settlement will be
binding upon each Lender.

Section 9.02    Rights as a Lender. The institution serving as the
Administrative Agent and/or the Collateral Trustee hereunder shall have the same
rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not an Agent, and such bank and its
Affiliates may accept deposits from, lend money to and generally engage in any
kind of business with the Borrower or any Subsidiary or other Affiliate thereof
as if it were not an Agent hereunder.

Section 9.03    Exculpatory Provisions.

(a)    No Agent shall have any duties or obligations except those expressly set
forth in the Loan Documents. Without limiting the generality of the foregoing,
(1) no Agent shall be subject to any fiduciary or other implied duties,
regardless of whether a Default has occurred and is continuing, (2) no Agent
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exercise any discretionary powers, except discretionary rights and powers
expressly contemplated hereby that such Agent is instructed in writing to
exercise by the Majority Lenders (or such other number or percentage of the
Lenders as shall be necessary under the circumstances as provided in
Section 10.02), and (3) except as expressly set forth in the Loan Documents, no
Agent shall have any duty to disclose, nor shall it be liable for the failure to
disclose, any information relating to the Borrower or any of the Subsidiaries
that is communicated to or obtained by the bank serving as Administrative Agent
and/or Collateral Trustee or any of its Affiliates in any capacity.

(b)    Notwithstanding anything to the contrary set forth in this Agreement or
any other Loan Document, (i) no Agent shall be liable for any action taken or
not taken by it with the consent, instruction, direction or at the request of
the Majority Lenders (or such other number or percentage of the Lenders as shall
be necessary under the circumstances as provided in Section 10.02); and (ii) no
Agent shall be liable for any action taken or not taken by it in the absence of
its own gross negligence or willful misconduct as determined by a final
non-appealable judgment of a court of competent jurisdiction. No Agent shall be
deemed to have knowledge of any Default unless and until written notice thereof
is given to such Agent by the Borrower or a Lender.

(c)    No Agent shall be responsible for or have any duty to ascertain or
inquire into (1) any statement, warranty or representation made in or in
connection with any Loan Document, (2) the contents of any certificate, report
or other document delivered thereunder or in connection therewith, (3) the
performance or observance of any of the covenants, agreements or other terms or
conditions set forth in any Loan Document, (4) the validity, enforceability,
effectiveness or genuineness of any Loan Document or any other agreement,
instrument or document, or (5) the satisfaction of any condition set forth in
Article IV or elsewhere in any Loan Document, other than to confirm receipt of
items expressly required to be delivered to such Agent.

(d)    No Agent shall be responsible for (i) perfecting, maintaining,
monitoring, preserving or protecting the security interest or Lien granted under
this Agreement, any other Loan Document or any agreement or instrument
contemplated hereby or thereby, (ii) the filing, re-filing, recording,
re-recording or continuing or any document, financing statement, Mortgage,
assignment, notice, instrument of further assurance or other instrument in any
public office at any time or times or (iii) providing, maintaining, monitoring
or preserving insurance on or the payment of taxes with respect to any of the
Collateral. The actions described in items (i) through (iii) shall be the sole
responsibility of the Borrower.

(e)    No Agent shall be responsible or liable for any failure or delay in the
performance of its obligations under this Agreement or the other Loan Documents
arising out of or caused, directly or indirectly, by circumstances beyond its
reasonable control, including, without limitation, acts of God; earthquakes;
fire; flood; terrorism; wars and other military disturbances; sabotage;
epidemics; riots; business interruptions; loss or malfunctions of utilities,
computer (hardware or software) or communication services; accidents; labor
disputes; acts of civil or military authority and governmental action.

 

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(f)    No Agent shall be (i) required to qualify in any jurisdiction in which it
is not presently qualified to perform its obligations as such Agent or
(ii) required to take any enforcement action against a Credit Party or any other
obligor outside of the United States.

Section 9.04    Reliance by Agent. Each Agent shall be entitled to rely upon,
and shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing
(including any electronic message, Internet or intranet website posting or other
distribution) believed by it to be genuine and to have been signed or sent by
the proper Person. Each Agent may also rely upon any statement made to it orally
or by telephone and believed by it to have been made by the proper Person, and
shall not incur any liability for relying thereon. Each Agent may consult with
legal counsel (who may be counsel for the Borrower), independent accountants and
other experts selected by it, and shall not be liable for any action taken or
not taken by it in accordance with the advice of any such counsel, accountants
or experts.

Section 9.05    Delegation of Duties. Each Agent may perform any and all its
duties and exercise its rights and powers by or through any one or more
sub-agents appointed by it. Each Agent and any such sub-agent may perform any
and all its duties and exercise its rights and powers by or through their
respective Related Parties. The exculpatory provisions of Sections 9.03, 9.04
and 9.05 shall apply to any such sub-agent and to the Related Parties of each
Agent and any such sub-agent, and shall apply to their respective activities in
connection with the syndication of the credit facility provided for herein as
well as activities as Agent. No Agent shall be responsible for the negligence or
misconduct of any sub-agents except to the extent that a court of competent
jurisdiction determines in a final and non-appealable judgment that the
applicable Agent acted with gross negligence or willful misconduct in the
selection of such sub agents.

Section 9.06    Resignation of Agent. The Administrative Agent may resign at any
time by notifying the Lenders and the Borrower. Upon any such resignation, the
Majority Lenders shall have the right, in consultation with the Borrower, to
appoint a successor. If no successor shall have been so appointed by the
Majority Lenders and shall have accepted such appointment within 30 days after
the retiring Administrative Agent gives notice of its resignation, then the
retiring Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent which shall be a bank with an office in New York, New York,
or an Affiliate of any such bank. If no successor Administrative Agent has been
appointed pursuant to the immediately preceding sentence by the 30th day after
the date such notice of resignation was given by such Administrative Agent, such
Administrative Agent’s resignation shall become effective immediately, such
retiring Administrative Agent shall be discharged from its duties and
obligations hereunder, and the Majority Lenders shall thereafter perform all the
duties of such Administrative Agent hereunder and/or under any other Loan
Document until such time, if any, as the Majority Lenders appoint a successor
Administrative Agent. Upon the acceptance of its appointment as Administrative
Agent hereunder by a successor, such successor shall succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Administrative Agent. The fees payable by the Borrower to a successor
Administrative Agent shall be the same as those payable to its predecessor
unless otherwise agreed between the Borrower and such successor. After an
Administrative Agent’s resignation hereunder, the provisions of this Article and
Section 10.03 shall continue in effect for the benefit of such retiring
Administrative Agent, its sub-agents and their respective Related Parties in
respect of any actions taken or omitted to be taken by any of them while acting
as Administrative Agent.

 

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Section 9.07    Non-Reliance on Agent and Other Lenders. Each Lender
acknowledges that it has, independently and without reliance upon the Agents or
any other Lender and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon the Agents or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement
or any other Loan Document, any related agreement or any document furnished
hereunder or thereunder.

Section 9.08    Right to Request and Act on Instructions. The Administrative
Agent may at any time request instructions from the Lenders with respect to any
actions or approvals which by the terms of this Agreement or of any of the Loan
Documents the Administrative Agent is permitted or desires to take or to grant,
and if such instructions are promptly requested, the Administrative Agent shall
be absolutely entitled to refrain from taking any action or to withhold any
approval and shall not be under any liability whatsoever to any Person for
refraining from any action or withholding any approval under any of the Loan
Documents until it shall have received such instructions from the Majority
Lenders or all or such other portion of the Lenders as shall be prescribed by
this Agreement. Without limiting the foregoing, no Person shall have any right
of action whatsoever against the Administrative Agent as a result of the
Administrative Agent acting or refraining from acting under this Agreement or
any of the other Loan Documents in accordance with the instructions of the
Majority Lenders (or all or such other portion of the Lenders as shall be
prescribed by this Agreement) and, notwithstanding the instructions of the
Majority Lenders (or such other applicable portion of the Lenders), the
Administrative Agent shall have no obligation to take any action if it believes,
in good faith, that such action would violate applicable law or exposes the
Administrative Agent to any liability for which it has not received satisfactory
indemnification in accordance with the provisions of Section 10.03.

ARTICLE X

MISCELLANEOUS

Section 10.01    Notices.

(a)    Except in the case of notices and other communications expressly
permitted to be given by telephone or electronic mail (and subject to clause (b)
below), all notices and other communications provided for herein shall be in
writing and shall be delivered by hand or overnight courier service, mailed by
certified or registered mail or sent by telecopy, as follows:

 

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(1)    if to the Borrower, to EXCO Resources, Inc., 12377 Merit Drive, Suite
1700, Dallas, Texas 75251, Attention: Tyler Farquharson, Vice President, Chief
Financial Officer and Treasurer Telecopy No. (214) 368-2087, E-mail:
tfarquharson@excoresources.com, with a copy to EXCO Resources, Inc., 12377 Merit
Drive, Suite 1700, Dallas, Texas 75251, Attention: Heather Lamparter, Vice
President, General Counsel and Secretary, Telecopy No. (214) 368-2087, E-mail:
hlamparter@excoresources.com. For purposes of delivering the documents pursuant
to Section 5.01(a), (b) and (d), the website address is www.excoresources.com;

(2)    if to the Administrative Agent, to Wilmington Trust, National
Association, 50 South Sixth Street, Suite 1290, Minneapolis, MN 55402,
Attention: Meghan McCauley, Telecopy No.: (612) 217-5651, E-mail:
mmccauley@wilmingtontrust.com with a copy to Lindquist & Vennum LLP, 2000 IDS
Center, 80 South 8th St., Minneapolis, MN 55402, Attention: Mark Dietzen,
Telecopy No.: (612) 371-3207, E-mail: mdietzen@lindquist.com.

(3)    if to any other Lender, to it at its address (or telecopy number) set
forth in its Administrative Questionnaire.

All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by fax
or on the date five Business Days after dispatch by certified or registered mail
if mailed, in each case delivered, sent or mailed (properly addressed) to such
party as provided in this Section 10.01 or in accordance with the latest
unrevoked direction from such party given in accordance with this Section 10.01.
As agreed to among the Borrower, the Administrative Agent and the applicable
Lenders from time to time, notices and other communications may also be
delivered by e-mail to the e-mail address of a representative of the applicable
Person provided from time to time by such Person.

The Borrower hereby agrees, unless directed otherwise by the Administrative
Agent or unless the electronic mail address referred to below has not been
provided by the Administrative Agent to the Borrower, that it will, or will
cause its Subsidiaries to, provide to the Administrative Agent all information,
documents and other materials that it is obligated to furnish to the
Administrative Agent pursuant to the Loan Documents or to the Lenders under
Article V, including all notices, requests, financial statements, financial and
other reports, certificates and other information materials, but excluding any
such communication that (a) relates to the payment of any principal or other
amount due under this Agreement prior to the scheduled date therefor,
(b) provides notice of any Default or Event of Default under this Agreement or
any other Loan Document or (c) is required to be delivered to satisfy any
condition precedent to the effectiveness of this Agreement and/or any Borrowing
or other extension of credit hereunder (all such non-excluded communications
being referred to herein collectively as “Communications”), by transmitting the
Communications in an electronic/soft medium that is properly identified in a
format acceptable to the Administrative Agent to an electronic mail address as
directed by the Administrative Agent. In addition, the Borrower agrees, and
agrees to cause its Subsidiaries, to continue to provide the Communications to
the Administrative Agent or the Lenders, as the case may be, in the manner
specified in the Loan Documents but only to the extent requested by the
Administrative Agent.

 

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The Borrower hereby acknowledges that (a) the Administrative Agent will make
available to the Lenders materials and/or information provided by or on behalf
of the Borrower hereunder (collectively, the “Borrower Materials”) by posting
the Borrower Materials on Intralinks or another similar electronic system (the
“Platform”) and (b) certain of the Lenders may be “public-side” Lenders (i.e.,
Lenders that do not wish to receive material non-public information with respect
to the Borrower or its securities) (each, a “Public Lender”). The Borrower
hereby agrees that (w) all Borrower Materials that are to be made available to
Public Lenders shall be clearly and conspicuously marked “PUBLIC” which, at a
minimum, shall mean that the word “PUBLIC” shall appear prominently on the first
page thereof; (x) by marking Borrower Materials “PUBLIC,” the Borrower shall be
deemed to have authorized the Lenders to treat such Borrower Materials as not
containing any material non-public information with respect to the Borrower or
its securities for purposes of United States federal and state securities laws
(provided, that to the extent such Borrower Materials constitute Information,
they shall be treated as set forth in Section 10.14); (y) all Borrower Materials
marked “PUBLIC” are permitted to be made available through a portion of the
Platform designated as “Public Investor” and (z) the Administrative Agent shall
be entitled to treat any Borrower Materials that are not marked “PUBLIC” as
being suitable only for posting on a portion of the Platform not marked as
“Public Investor.” Notwithstanding the foregoing, the following Borrower
Materials shall be deemed to be marked “PUBLIC”, unless the Borrower notifies
the Administrative Agent promptly that any such document contains material
non-public information: (1) the Loan Documents, (2) notification of changes in
the terms of the Credit Facilities and (3) all financial statements and
accompanying information and certificates delivered pursuant to Section 5.01.

Each Public Lender agrees to cause at least one individual at or on behalf of
such Public Lender to at all times have selected the “Private Side Information”
or similar designation on the content declaration screen of the Platform in
order to enable such Public Lender or its delegate, in accordance with such
Public Lender’s compliance procedures and applicable law, including United
States Federal and state securities laws, to make reference to Communications
that are not made available through the “Public Side Information” portion of the
Platform and that may contain material non-public information with respect to
the Borrower or its securities for purposes of United States Federal or state
securities laws.

THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE”. NEITHER THE ADMINISTRATIVE
AGENT NOR ANY OF ITS RELATED PARTIES WARRANTS THE ACCURACY OR COMPLETENESS OF
THE COMMUNICATIONS OR THE ADEQUACY OF THE PLATFORM AND EACH EXPRESSLY DISCLAIMS
LIABILITY FOR ERRORS OR OMISSIONS IN THE COMMUNICATIONS. NO WARRANTY OF ANY
KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR
FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS IS MADE BY THE ADMINISTRATIVE AGENT
OR ANY OF ITS RELATED PARTIES IN CONNECTION WITH THE COMMUNICATIONS OR THE
PLATFORM. IN NO EVENT SHALL THE ADMINISTRATIVE AGENT OR ANY OF ITS RELATED
PARTIES HAVE ANY LIABILITY TO ANY RESTRICTED PERSON, ANY LENDER OR ANY OTHER
PERSON FOR DAMAGES OF ANY KIND, WHETHER OR NOT BASED ON STRICT LIABILITY AND
INCLUDING DIRECT OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES,
LOSSES OR EXPENSES (WHETHER IN TORT,

 

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CONTRACT OR OTHERWISE) ARISING OUT OF ANY RESTRICTED PERSON’S OR THE
ADMINISTRATIVE AGENT’S TRANSMISSION OF COMMUNICATIONS THROUGH THE INTERNET,
EXCEPT TO THE EXTENT THE LIABILITY OF ANY SUCH PERSON IS FOUND IN A FINAL RULING
BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED PRIMARILY FROM SUCH
PERSON’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

The Administrative Agent agrees that the receipt of the Communications by the
Administrative Agent at its e-mail address set forth above shall constitute
effective delivery of the Communications to the Administrative Agent for
purposes of the Loan Documents. Each Lender agrees that receipt of notice to it
(as provided in the next sentence) specifying that the Communications have been
posted to the Platform shall constitute effective delivery of the Communications
to such Lender for purposes of the Loan Documents. Each Lender agrees to notify
the Administrative Agent in writing (including by electronic communication) from
time to time of such Lender’s e-mail address to which the foregoing notice may
be sent by electronic transmission and that the foregoing notice may be sent to
such e-mail address.

Nothing herein shall prejudice the right of the Administrative Agent or any
Lender to give any notice or other communication pursuant to any Loan Document
in any other manner specified in such Loan Document.

Section 10.02    Waivers; Amendments.

(a)    No failure or delay by the Administrative Agent, the Collateral Trustee
or any Lender in exercising any right or power hereunder or under any other Loan
Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The rights and remedies of
the Administrative Agent, the Collateral Trustee and the Lenders hereunder and
under any other Loan Document are cumulative and are not exclusive of any rights
or remedies that they would otherwise have. No waiver of any provision of this
Agreement or consent to any departure by the Borrower therefrom shall in any
event be effective unless the same shall be permitted by clause (b) of this
Section 10.02, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. Without limiting the
generality of the foregoing, the making of a Loan shall not be construed as a
waiver of any Default, regardless of whether the Administrative Agent, any
Lender or the Collateral Trustee may have had notice or knowledge of such
Default at the time.

(b)    Neither this Agreement nor any other Loan Document nor any other
provision hereof or thereof may be waived, amended or modified except pursuant
to an agreement or agreements in writing entered into by the Credit Party or
Credit Parties that are party thereto, the Administrative Agent and the Majority
Lenders or by the Credit Party or Credit Parties that are party thereto and the
Administrative Agent with the consent of the Majority Lenders; provided that no
such agreement shall:

(1)    increase the Commitment of any Lender without the written consent of such
Lender (including any such Lender that is a Defaulting Lender);

 

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(2)    reduce or forgive the principal amount of any Loan or reduce the rate of
interest thereon, reduce the Applicable Premium, the Make-Whole Amount or reduce
or forgive any interest or fees payable hereunder, without the written consent
of each Lender (including any such Lender that is a Defaulting Lender other than
fees to which such Defaulting Lender is not entitled to receive as a result of
being a Defaulting Lender) affected thereby;

(3)    postpone any scheduled date of payment of the principal amount of any
Loan, or any date for the payment of any interest, fees or other Obligations
hereunder, or reduce the amount of, waive or excuse any such payment, or
postpone the scheduled date of expiration of any Commitment, without the written
consent of each Lender (including any such Lender that is a Defaulting Lender)
affected thereby (it being understood that waiver of a mandatory prepayment of
the Loans shall not constitute a postponement or waiver of a scheduled payment
or date of expiration);

(4)    change Section 2.07, Section 2.08, Section 2.13(a), Section 2.13(b),
Section 2.13(c) or Section 2.13(e) in a manner that would alter the manner in
which payments are shared, without the written consent of each Lender (including
any such Lender that is a Defaulting Lender);

(5)    change Section 2.13(b) or Section 10.02(b)(5) in any material respect
without the consent of each Lender adversely affected thereby (including any
such Lender that is a Defaulting Lender);

(6)    change any of the provisions of this Section 10.02(b), 10.02(c) or the
definition of “Majority Lender”, “Super-Majority Lenders” or any other provision
of any Loan Document specifying the number or percentage of Lenders required to
waive, amend or modify any rights thereunder or make any determination or grant
any consent thereunder, without the written consent of each Lender (including
any such Lender that is a Defaulting Lender) directly affected thereby;

(7)    change the definition of “Change of Control” without the written consent
of Super-Majority Lenders (other than any Defaulting Lender);

(8)    release any Guarantor from its obligation under its Guaranty (except as
otherwise permitted herein or in the other Loan Documents), without the written
consent of each Lender (other than any Defaulting Lender); or

(9)    except as provided in Article IX or in any Security Instrument, release
all or substantially all of the Collateral, without the written consent of each
Lender (other than any Defaulting Lender);

provided further that no such agreement shall amend, modify or otherwise affect
the rights or duties of the Administrative Agent or the Collateral Trustee
hereunder without the prior written consent of the Administrative Agent or the
Collateral Trustee, as the case may be. The Administrative Agent may also amend
Schedule 2.01 to reflect assignments entered into pursuant to Section 10.04.

 

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(c)    Notwithstanding anything herein to the contrary, the Intercreditor
Agreement and the Collateral Trust Agreement may be amended in accordance with
their terms, including to add additional Indebtedness as Senior Priority Lien
Debt, Priority Lien Debt, Junior Priority Lien Debt or Junior Lien Debt and add
other parties (or any authorized agent thereof or trustee therefor) holding such
Indebtedness thereto and to establish that the Liens on any Collateral securing
such Indebtedness shall rank equally with the Liens on such Collateral securing
the other Senior Priority Lien Debt, Priority Lien Debt, Junior Priority Lien
Debt or Junior Lien Debt, as applicable, then outstanding.

(d)    Notwithstanding anything to the contrary contained in this Section 10.02,
the Administrative Agent may, with the consent of the Borrower only, amend,
modify or supplement this Agreement or any of the other Loan Documents to
correct any clerical errors or cure any ambiguity, omission, mistake, defect or
inconsistency.

Section 10.03    Expenses; Indemnity; Damage Waiver.

(a)    The Borrower shall pay (1) all reasonable and documented out-of-pocket
expenses incurred by the Administrative Agent, the Collateral Trustee and their
respective Affiliates, including the reasonable fees, charges and disbursements
of counsel for the Administrative Agent and the Collateral Trustee, in
connection with the syndication of the credit facilities provided for herein,
the preparation and administration of this Agreement and the other Loan
Documents or any amendments, modifications or waivers of the provisions hereof
(whether or not the transactions contemplated hereby or thereby shall be
consummated) and (2) all out-of-pocket expenses incurred by the Administrative
Agent, the Collateral Trustee or any Lender, including the fees, charges and
disbursements of any counsel for the Administrative Agent, the Collateral
Trustee or any Lender in connection with the enforcement or protection of its
rights in connection with the Loan Documents, including its rights under this
Section, or in connection with the Loans made hereunder, including all such
out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans.

(b)    THE CREDIT PARTIES SHALL INDEMNIFY THE ADMINISTRATIVE AGENT, THE
COLLATERAL TRUSTEE AND EACH LENDER, AND EACH RELATED PARTY OF ANY OF THE
FOREGOING PERSONS (EACH SUCH PERSON BEING CALLED AN “INDEMNITEE”) AGAINST, AND
HOLD EACH INDEMNITEE HARMLESS FROM, ANY AND ALL LOSSES, CLAIMS, DAMAGES,
PENALTIES, LIABILITIES AND RELATED EXPENSES, INCLUDING THE FEES, CHARGES AND
DISBURSEMENTS OF ANY COUNSEL FOR ANY INDEMNITEE, INCURRED BY OR ASSERTED AGAINST
ANY INDEMNITEE ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF (1) THE
EXECUTION OR DELIVERY OF THIS AGREEMENT OR ANY AGREEMENT OR INSTRUMENT
CONTEMPLATED HEREBY, THE PERFORMANCE BY THE PARTIES HERETO OF THEIR RESPECTIVE
OBLIGATIONS HEREUNDER OR THE CONSUMMATION OF THE TRANSACTIONS OR ANY OTHER
TRANSACTIONS CONTEMPLATED HEREBY, (2) ANY LOAN OR THE USE OF THE PROCEEDS
THEREFROM, (3) ANY ACTUAL OR ALLEGED PRESENCE OR RELEASE OF HAZARDOUS MATERIALS
ON OR FROM ANY PROPERTY OWNED OR OPERATED BY THE BORROWER OR ANY SUBSIDIARY, OR
ANY ENVIRONMENTAL LIABILITY RELATED IN ANY

 

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WAY TO THE BORROWER OR ANY SUBSIDIARY, OR (4) ANY ACTUAL OR PROSPECTIVE CLAIM,
LITIGATION, INVESTIGATION OR PROCEEDING RELATING TO ANY OF THE FOREGOING,
WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY AND REGARDLESS OF WHETHER
ANY INDEMNITEE IS A PARTY THERETO; PROVIDED THAT SUCH INDEMNITY SHALL NOT, AS TO
ANY INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH LOSSES, CLAIMS, DAMAGES,
LIABILITIES OR RELATED EXPENSES ARE DETERMINED BY A COURT OF COMPETENT
JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED FROM THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNITEE.

(c)    To the extent that any Credit Party fails to pay any amount required to
be paid by it to the Administrative Agent or the Collateral Trustee under
clauses (a) or (b) of this Section 10.03, each Lender severally agrees to pay to
the Administrative Agent or the Collateral Trustee, as the case may be, such
Lender’s pro rata share of such unpaid amount with respect to the amounts to be
paid to the Collateral Trustee and such Lender’s Applicable Percentage of such
unpaid amount with respect to amounts to be paid to the Administrative Agent (in
each case, determined as of the time that the applicable unreimbursed expense or
indemnity payment is sought) of such unpaid amount; provided that the
unreimbursed expense or indemnified loss, claim, damage, liability or related
expense, as the case may be, was incurred by or asserted against the
Administrative Agent or the Collateral Trustee in its capacity as such. For
purposes hereof, a Lender’s “pro rata share” shall be determined based upon its
share of outstanding Loans (or, if all Loans have been paid in full, the
aggregate remaining Obligations), determined as if no Lender were a Defaulting
Lender).

(d)    TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, THE CREDIT PARTIES
SHALL NOT ASSERT, AND HEREBY WAIVE, ANY CLAIM AGAINST ANY INDEMNITEE, ON ANY
THEORY OF LIABILITY, FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES
(AS OPPOSED TO DIRECT OR ACTUAL DAMAGES) ARISING OUT OF, IN CONNECTION WITH, OR
AS A RESULT OF, THIS AGREEMENT OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED
HEREBY, THE TRANSACTIONS, ANY LOAN OR THE USE OF THE PROCEEDS THEREOF.

(e)    All amounts due under this Section shall be payable not later than ten
(10) days after written demand therefor.

Section 10.04    Successors and Assigns.

(a)    The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns
permitted hereby, except that (i) no Credit Party may assign or otherwise
transfer any of its rights or obligations hereunder without the prior written
consent of the Administrative Agent and each Lender (and any attempted
assignment or transfer by such Credit Party without such consent shall be null
and void) and (ii) no Lender may assign or otherwise transfer its rights or
obligations hereunder except in accordance with this Section. Nothing in this
Agreement, expressed or implied, shall be construed to confer upon any Person
(other than the parties hereto, their respective successors

 

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and assigns permitted hereby, Participants (to the extent provided in clause
(c) of this Section 10.04) and, to the extent expressly contemplated hereby, the
Related Parties of each of the Administrative Agent and the Lenders) any legal
or equitable right, remedy or claim under or by reason of this Agreement.

(b)    

(1)    Subject to the conditions set forth in clause (b)(2) below, any Lender
may assign to one or more Eligible Assignees all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Commitment
and the Loans at the time owing to it) with the prior written consent (such
consent not to be unreasonably withheld or delayed) of the Administrative Agent
and the Backstop Commitment Parties.

(2)    Assignments shall be subject to the following additional conditions:

(i)    except in the case of an assignment to a Lender, an Affiliate of a
Lender, an Approved Fund or an assignment of the entire remaining amount of the
assigning Lender’s Commitment or Loans, the amount of the Commitment or Loans of
the assigning Lender subject to each such assignment (determined as of the date
the Assignment and Assumption with respect to such assignment is delivered to
the Administrative Agent) shall not be less than $5,000,000 (or, if less, the
entire remaining amount, unless the Administrative Agent otherwise consents);

(ii)    each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender’s rights and obligations in
respect of such Lender’s Commitment and such Lender’s Loans under this
Agreement;

(iii)    the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Assumption, together with a processing
and recordation fee of $3,500;

(iv)    the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire; and

(v)    each assignment shall be subject to the exercise of the Right of First
Refusal by the Backstop Commitment Parties, as set forth in Section 10.04(f).

For the purposes of this Section 10.04(b), the term “Approved Fund” has the
following meaning:

“Approved Fund” means (x) any Person (other than a natural person) that is
engaged in making, purchasing, holding or investing in bank loans and similar
extensions of credit in the ordinary course of its business and that is
administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an
entity or an Affiliate of an entity that administers or manages a Lender and
(y) Fairfax.

 

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(3)    Subject to acceptance and recording thereof pursuant to clause (b)(4) of
this Section 10.04, from and after the effective date specified in each
Assignment and Assumption the assignee thereunder shall be a party hereto and,
to the extent of the interest assigned by such Assignment and Assumption, have
the rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Assumption, be released from its obligations under this Agreement
(and, in the case of an Assignment and Assumption covering all of the assigning
Lender’s rights and obligations under this Agreement, such Lender shall cease to
be a party hereto but shall continue to be entitled to the benefits of
Section 2.11, Section 2.12 and Section 10.03). Any assignment or transfer by a
Lender of rights or obligations under this Agreement that does not comply with
this Section 10.04 shall be treated for purposes of this Agreement as a sale by
such Lender of a participation in such rights and obligations in accordance with
clause (c) of this Section 10.04 except that any attempted assignment or
transfer by any Lender that does not comply with clause (C) of
Section 10.04(b)(ii) shall be null and void.

(4)    The Administrative Agent, acting for this purpose as an agent of the
Borrower, shall maintain at one of its offices a copy of each Assignment and
Assumption delivered to it and a register for the recordation of the names and
addresses of the Lenders, and the Commitment and Applicable Percentage of, and
principal amount of the Loans owing to, each Lender pursuant to the terms hereof
from time to time (the “Register”). The entries in the Register shall be
conclusive absent manifest error, and the Credit Parties, the Administrative
Agent and the Lenders may treat each Person whose name is recorded in the
Register pursuant to the terms hereof as a Lender hereunder for all purposes of
this Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Credit Parties and any Lender, at any reasonable
time and from time to time upon reasonable prior notice.

(5)    Upon its receipt of a duly completed Assignment and Assumption executed
by an assigning Lender and an assignee, the assignee’s completed Administrative
Questionnaire (unless the assignee shall already be a Lender hereunder), the
processing and recordation fee referred to in clause (b) of this Section 10.04
any written consent to such assignment required by clause (b) of this
Section 10.04, the Administrative Agent shall accept such Assignment and
Assumption and record the information contained therein in the Register;
provided that if either the assigning Lender or the assignee shall have failed
to make any payment required to be made by it pursuant to Section 2.05,
Section 2.13(d) or Section 10.03(c), the Administrative Agent shall have no
obligation to accept such Assignment and Assumption and record the information
therein in the Register unless and until such payment shall have been made in
full, together with all accrued interest thereon (which shall be payable in
cash). No assignment shall be effective for purposes of this Agreement unless it
has been recorded in the Register as provided in this clause (b).

 

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(c)    

(1)    Any Lender may, without the consent of the Borrower or the Administrative
Agent, sell participations to one or more banks or other entities (a
“Participant”) in all or a portion of such Lender’s rights and obligations under
this Agreement (including all or a portion of its Commitment and the Loans owing
to it); provided that (A) such Lender’s obligations under this Agreement shall
remain unchanged, (B) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations and (C) the Borrower, the
Administrative Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement. Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided that such
agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver
described in the first proviso to Section 10.02(b) that affects such
Participant. The Borrower agrees that each Participant shall be entitled to the
benefits of Sections 2.11 and 2.12 (subject to the requirements and limitations
therein, including the requirements under Section 2.12(d) (it being understood
that the documentation required under Section 2.12(d) shall be delivered to the
participating Lender)) to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to clause (b) of this Section;
provided that such Participant (A) agrees to be subject to the provisions of
Section 2.12 as if it were an assignee under clause (b) of this Section; and
(B) shall not be entitled to receive any greater payment under Section 2.11 or
Section 2.12, with respect to any participation, than its participating Lender
would have been entitled to receive, except to the extent such entitlement to
receive a greater payment results from a Change in Law that occurs after the
Participant acquired the applicable participation.

(2)    (ii) To the extent permitted by law, each Participant also shall be
entitled to the benefits of Section 10.08 as though it were a Lender, provided
such Participant agrees to be subject to Section 2.13(c) as though it were a
Lender. Each Lender that sells a participation shall, acting solely for this
purpose as a non-fiduciary agent of the Borrower, maintain a register on which
it enters the name and address of each Participant and the principal amounts
(and stated interest) of each Participant’s interest in the Loans or other
obligations under this Agreement (the “Participant Register”); provided that no
Lender shall have any obligation to disclose all or any portion of the
Participant Register to any Person (including the identity of any Participant or
any information relating to a Participant’s interest in any Commitments, Loans
or its other obligations under any Loan Document) except to the extent that such
disclosure is necessary to establish that such Commitment, Loan or other
obligation is in registered form under Section 5f.103-1(c) of the United States
Treasury Regulations. The entries in the Participant Register shall be
conclusive absent manifest error, and such Lender shall treat each person whose
name is recorded in the Participant Register as the owner of such participation
for all purposes of this Agreement notwithstanding any notice to the contrary.
For the avoidance of doubt, the Administrative Agent (in its capacity as
Administrative Agent) shall have no responsibility for maintaining a Participant
Register.

 

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(d)    Any Lender may at any time pledge or assign a security interest in all or
any portion of its rights under this Agreement to secure obligations of such
Lender, including without limitation any pledge or assignment to secure
obligations to a Federal Reserve Bank or central bank having jurisdiction over
such Lender, and this Section shall not apply to any such pledge or assignment
of a security interest; provided that no such pledge or assignment of a security
interest shall release a Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto.

(e)    Borrower Buybacks. Notwithstanding anything in this Agreement to the
contrary, but subject to (i) the Right of First Refusal and (ii) approval by a
majority of the Holders (as defined in the Senior Secured Notes Indenture) of
the aggregate principal amount of the then-outstanding Senior Secured Notes or
payment of the Priority Lien Obligations, any Lender may, at any time, assign
all or a portion of its Loans on a non-pro rata basis to the Borrower in
accordance with procedures to be agreed, pursuant to an offer made by the
Borrower available to all Lenders on a pro rata basis (a “Dutch Auction”),
subject to the following limitations:

(1)    the Borrower shall represent and warrant, as of the date of the launch of
the Dutch Auction and on the date of any such assignment, that neither it, its
Affiliates nor any of its respective directors or officers has any Excluded
Information that has not been disclosed to the Lenders generally (other than to
the extent any such Lender does not wish to receive material non-public
information with respect to the Borrower or its Subsidiaries or any of their
respective securities) prior to such date;

(2)    immediately and automatically, without any further action on the part of
the Borrower, any Lender, the Administrative Agent or any other Person, upon the
effectiveness of such assignment of Loans from a Lender to the Borrower, such
Loans and all rights and obligations as a Lender related thereto shall, for all
purposes under this Agreement, the other Loan Documents and otherwise, be deemed
to be irrevocably prepaid (together with the payment of any applicable Premium
(including any Make-Whole Amount)), terminated, extinguished, cancelled and of
no further force and effect and the Borrower shall neither obtain nor have any
rights as a Lender hereunder or under the other Loan Documents by virtue of such
assignment;

(3)    the Borrower shall not use the proceeds of any Loans for any such
assignment; and

(4)    no Default or Event of Default shall have occurred and be continuing
before or immediately after giving effect to such assignment.

(f)    Right of First Refusal of Backstop Commitment Parties.

(1)    Grant. The Borrower and each Lender hereby unconditionally and
irrevocably grants (and the Administrative Agent hereby acknowledges and agrees
to such grant) to each Backstop Commitment Party, in accordance with its ROFR
Applicable Percentage, a Right of First Refusal, from and after the Effective
Date until the Term Loan Maturity Date.

 

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(2)    Notice and Forfeiture. In connection with the consent solicitation
required to be delivered to the Backstop Commitment Parties pursuant to Section
10.04(b)(1) above, an assigning Lender must deliver all assignment documentation
providing for any proposed assignment of all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Commitment
and the Loans at the time owing to it) to the Backstop Commitment Parties. Such
delivered assignment documentation shall consist of a completed, but unexecuted
or unsigned, Assignment and Assumption, identifying, among other things, the
material terms and conditions (including the price and form of consideration) of
the proposed assignment and the identity of the Eligible Assignee(s). To
exercise its Right of First Refusal under this Section, the applicable Backstop
Commitment Party must deliver a ROFR Notice to the Administrative Agent within
ten (10) days after receipt of the consent solicitation and assignment
documentation required to be delivered to the Backstop Commitment Parties under
Section 10.04(b)(1) and this subsection (f)(2). The applicable accepting
Backstop Commitment Party, if any, shall consummate the proposed assignment in
accordance with its ROFR Applicable Percentage, within a reasonable period of
time following delivery of the ROFR Notice to the Administrative Agent, and in
no event more than fifteen (15) calendar days following such delivery, or as
otherwise agreed between the applicable accepting Backstop Commitment Party and
the assigning Lender. Upon receipt of such ROFR Notice, the Administrative Agent
shall deliver a copy of such ROFR Notice to the applicable Lender(s) and
Eligible Assignee(s). Failure to deliver a ROFR Notice within the time period
provided for in this subsection will result in the forfeiture of the applicable
Backstop Commitment Party’s exercise of the Right of First Refusal as it applies
to the proposed assignment which occasioned its application and will otherwise
authorize the consummation of the proposed assignment, on the terms provided to
the Backstop Commitment Parties, between the applicable Lender(s) and Eligible
Assignee(s).

Section 10.05    Survival. All covenants, agreements, representations and
warranties made by the Credit Parties herein and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement shall be
considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement and the making of any
Loans, regardless of any investigation made by any such other party or on its
behalf and notwithstanding that the Administrative Agent, the Collateral Trustee
or any Lender may have had notice or knowledge of any Default or incorrect
representation or warranty at the time any credit is extended hereunder, and
shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan or any fee or any other amount payable under this
Agreement is outstanding and unpaid and so long as the Commitments have not
expired or terminated. The provisions of Section 2.11, Section 2.12 and
Section 10.03 and Article IX shall survive and remain in full force and effect
regardless of the consummation of the transactions contemplated hereby, the
repayment of the Loans, the expiration or termination of the Commitments or the
termination of this Agreement or any provision hereof.

Section 10.06    Counterparts; Integration; Effectiveness. This Agreement may be
executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement, the other
Loan Documents and any separate letter agreements

 

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with respect to fees payable to the Administrative Agent and/or the Collateral
Trustee constitute the entire contract among the parties relating to the subject
matter hereof and supersede any and all previous agreements and understandings,
oral or written, relating to the subject matter hereof. THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG 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 BETWEEN THE
PARTIES. Except as provided in Section 4.01, this Agreement shall become
effective when it shall have been executed by the Administrative Agent and when
the Administrative Agent shall have received counterparts hereof which, when
taken together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed counterpart
of a signature page of this Agreement by telecopy or other electronic means
shall be effective as delivery of a manually executed counterpart of this
Agreement.

Section 10.07    Severability. Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.

Section 10.08    Right of Setoff. Subject to the Intercreditor Agreement, if an
Event of Default shall have occurred and be continuing, each Lender and each of
its Affiliates is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other obligations at any time owing by such Lender or Affiliate to or for the
credit or the account of the Borrower against any of and all the obligations of
any Credit Party now or hereafter existing under this Agreement held by such
Lender, irrespective of whether or not such Lender shall have made any demand
under this Agreement and although such obligations may be unmatured. The rights
of each Lender under this Section 10.08 and Section 7.08 are in addition to
other rights and remedies (including other rights of setoff) which such Lender
may have.

Section 10.09    GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS.

(a)    THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAW OF THE STATE OF NEW YORK.

(b)    EACH CREDIT PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR
ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF ANY UNITED STATES
FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK, NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR FOR RECOGNITION OR
ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
AND UNCONDITIONALLY AGREES

 

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THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN SUCH NEW YORK STATE OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH
FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY
SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
NOTHING IN THIS AGREEMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT,
THE COLLATERAL TRUSTEE OR ANY LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT AGAINST ANY CREDIT PARTY OR ITS PROPERTIES
IN THE COURTS OF ANY JURISDICTION.

(c)    EACH CREDIT PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE
FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT IN ANY COURT REFERRED TO IN
PARAGRAPH (B) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT
FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

(d)    EACH PARTY TO THIS AGREEMENT IRREVOCABLY CONSENTS TO SERVICE OF PROCESS
IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.01. NOTHING IN THIS AGREEMENT
WILL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW.

Section 10.10    WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

Section 10.11    Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.

Section 10.12    Confidentiality. Each of the Administrative Agent, the
Collateral Trustee and the Lenders agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its and its Affiliates’ directors,

 

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officers, employees and agents, including accountants, legal counsel and other
advisors (it being understood that the Persons to whom such disclosure is made
will be informed of the confidential nature of such Information and instructed
to keep such Information confidential), (b) to the extent requested by any
regulatory authority or any self-regulatory authority or agency possessing
investigative powers and the ability to sanction members for non-compliance,
(c) to the extent required by applicable laws or regulations or by any subpoena
or similar legal process, (d) to any other party to this Agreement, (e) in
connection with the exercise of any remedies hereunder or any suit, action or
proceeding relating to this Agreement or the enforcement of rights hereunder,
(f) subject to an agreement containing provisions substantially the same as, or
otherwise consistent with, those of this Section, to (1) any assignee of or
Participant in, or any prospective assignee of or Participant in, any of its
rights or obligations under this Agreement or (2) any actual or prospective
counterparty (or its advisors) to any swap or derivative transaction relating to
the Credit Parties and their obligations, (g) with the consent of the Borrower,
(h) to the extent such Information (1) becomes publicly available other than as
a result of a breach of this Section or (2) becomes available to the
Administrative Agent, the Collateral Trustee or any Lender on a nonconfidential
basis from a source other than a Credit Party and (i) to the CUSIP Service
Bureau or any similar agency in connection with the issuance and monitoring of
CUSIP numbers with respect to the facilities or to market data collectors,
similar service providers to the lending industry and service providers to the
Administrative Agent in connection with the administration and management of
this Agreement and the Loan Documents. For the purposes of this Section,
“Information” means all information received from any Credit Party relating to
any Credit Party or its business, other than any such information that is
available to the Administrative Agent, the Collateral Trustee or any Lender on a
nonconfidential basis prior to disclosure by any Credit Party; provided that, in
the case of information received from any Credit Party after the date hereof,
such information is clearly identified at the time of delivery as confidential.
Any Person required to maintain the confidentiality of Information as provided
in this Section shall be considered to have complied with its obligation to do
so if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information. In addition, the Administrative Agent, the Collateral
Trustee and each Lender may disclose the existence of this Agreement and the
information about this Agreement to service providers to the Administrative
Agent, the Collateral Trustee and the Lenders in connection with the
administration and management of this Agreement and the other Loan Documents.
Neither the Borrower nor any of its Affiliates shall issue or cause the
publication of any press release or other public announcement (excluding, for
the avoidance of doubt, public filings made with the SEC) with respect to this
Agreement without the prior written consent of the Administrative Agent if
Fairfax is mentioned in such press release or public announcement.

Section 10.13    Interest Rate Limitation. Notwithstanding anything herein to
the contrary, if at any time the interest rate applicable to any Loan, together
with all fees, charges and other amounts which are treated as interest on such
Loan under applicable law (collectively the “Charges”), shall exceed the maximum
lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken,
received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated

 

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and the interest and Charges payable to such Lender in respect of other Loans or
periods shall be increased (but not above the Maximum Rate therefor) until such
cumulated amount, together with interest thereon at the Federal Funds Effective
Rate to the date of repayment, shall have been received by such Lender.

Section 10.14    USA PATRIOT Act. Each Lender that is subject to the
requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into
law October 26, 2001)) (the “Act”) hereby notifies each Credit Party that
pursuant to the requirements of the Act, it is required to obtain, verify and
record information that identifies each Credit Party, which information includes
the name and address of each Credit Party and other information that will allow
such Lender to identify each Credit Party in accordance with the Act. The
Borrower shall, upon the request of the Administrative Agent, the Collateral
Trustee or any Lender, provide all documentation and other information that the
Administrative Agent, the Collateral Trustee or such Lender reasonably requires
to comply with its ongoing obligations under applicable “know your customer” and
anti-money laundering rules and regulations, including the Act.

Section 10.15    Flood Insurance Regulation. Notwithstanding any provision in
any Mortgage to the contrary, in no event is any Building (as defined in the
applicable Flood Insurance Regulation) or Manufactured (Mobile) Home (as defined
in the applicable Flood Insurance Regulation) located on the Mortgaged
Properties within an area having special flood hazards and in which flood
insurance is available under the National Flood Insurance Act of 1968 included
in the definition of “Mortgaged Properties” and no such Building or Manufactured
(Mobile) Home shall be encumbered by any such Mortgage. As used herein, “Flood
Insurance Regulations” shall mean (i) the National Flood Insurance Act of 1968
as now or hereafter in effect or any successor statute thereto, (ii) the Flood
Disaster Protection Act of 1973 as now or hereafter in effect or any successor
statue thereto, (iii) the National Flood Insurance Reform Act of 1994 (amending
42 USC 4001, et seq.), as the same may be amended or recodified from time to
time, and (iv) the Flood Insurance Reform Act of 2004 and any regulations
promulgated thereunder.

Section 10.16    No Fiduciary Duty. In connection with all aspects of each
transaction contemplated hereby (including in connection with any amendment,
waiver or other modification hereof or of any other Loan Document), the Borrower
and each other Credit Party acknowledges and agrees that: (a) (1) the arranging
and other services regarding this Agreement provided by the Administrative Agent
and by any lead arranger, syndication agent, documentation agent or similar
agent hereunder, the Collateral Trustee, and the Lenders and each of their
respective Affiliates (collectively, solely for purposes of this Section 10.16,
the “Lenders”) are arm’s-length commercial transactions between the Borrower,
each other Credit Party and their respective Affiliates, on the one hand, and
the Administrative Agent, the other agents, the Collateral Trustee and the
Lenders, on the other hand, (2) each of the Borrower and the other Credit
Parties has consulted its own legal, accounting, regulatory and tax advisors to
the extent it has deemed appropriate, and (3) the Borrower and each other Credit
Party is capable of evaluating, and understands and accepts, the terms, risks
and conditions of the transactions contemplated hereby and by the other Loan
Documents; (b) (1) the Administrative Agent, each other agent, the Collateral
Trustee and each Lender is and has been acting solely as a principal and, except
as expressly agreed in writing by the relevant parties, has not been, is not,
and will not be acting as an advisor, agent or fiduciary for the Borrower, any
other Credit Party or any of

 

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their respective Affiliates, or any other Person and (2) neither the
Administrative Agent, any other agent, the Collateral Trustee nor any Lender has
any obligation to the Borrower, any other Credit Party or any of their
respective Affiliates with respect to the transactions contemplated hereby
except those obligations expressly set forth herein and in the other Loan
Documents; and (c) the Administrative Agent, the other agents, the Collateral
Trustee and the Lenders and their respective Affiliates may be engaged in a
broad range of transactions that involve interests that differ from those of the
Borrower, the other Credit Parties and their respective Affiliates, and neither
the Administrative Agent, any other agent, the Collateral Trustee nor any Lender
has any obligation to disclose any of such interests to the Borrower, any other
Credit Party or any of their respective Affiliates. The Administrative Agent,
the other agents, the Collateral Trustee and the Lenders may have economic
interests that conflict with those of the Credit Parties and their respective
Subsidiaries and their stockholders and/or their affiliates. Each Credit Party,
for itself and on behalf of its Subsidiaries, agrees that nothing in this
Agreement or the Loan Documents or otherwise will be deemed to create an
advisory, fiduciary or agency relationship or fiduciary or other implied duty
between the Administrative Agent, the other agents, the Collateral Trustee and
any Lender, on the one hand, and any Credit Party or its Subsidiaries, their
stockholders or their affiliates, on the other. To the fullest extent permitted
by law, each of the Borrower and each other Credit Party hereby waives and
releases any claims that it may have against the Administrative Agent, the other
agents, the Collateral Trustee or any Lender with respect to any breach or
alleged breach of agency or fiduciary duty in connection with any aspect of any
transaction contemplated hereby. Each Credit Party, for itself and its
Subsidiaries, agrees that it will not claim that any Lender has rendered
advisory services of any nature or respect, or owes a fiduciary or similar duty
to such Credit Party or Subsidiary, in connection with such transaction or the
process leading thereto.

Section 10.17    Intercreditor Agreement and Collateral Trust Agreement. Each
Lender hereunder (a) acknowledges that it has received a copy of the
Intercreditor Agreement and the Collateral Trust Agreement, (b) consents to the
subordination of Liens provided for in the Intercreditor Agreement, (c) agrees
that it will be bound by, and will take no actions contrary to, the provisions
of the Intercreditor Agreement or to the provisions of the Collateral Trust
Agreement, in each case, as if it was a signatory thereto and (d) authorizes and
instructs (1) the Administrative Agent to enter into the Collateral Trust
Agreement (including any and all amendments, amendments and restatements,
modifications, supplements and acknowledgements thereto permitted hereby from
time to time) as Administrative Agent and (2) the Collateral Trustee to enter
into the Intercreditor Agreement and the Collateral Trust Agreement (including,
in each case, any and all amendments, amendments and restatements,
modifications, supplements and acknowledgements thereto permitted hereby from
time to time) as Collateral Trustee, in each case, on behalf of such Lender, and
by its acceptance of the benefits of the Security Instruments, hereby
acknowledges and agrees to be bound by all such provisions. Notwithstanding
anything herein to the contrary, each Lender, the Administrative Agent and the
Collateral Trustee acknowledges that the Lien and security interest granted to
the Collateral Trustee pursuant to the Security Instruments and the exercise of
any right or remedy by the Administrative Agent and/or the Collateral Trustee
thereunder, are subject to the provisions of the Intercreditor Agreement and the
Collateral Trust Agreement. In the event of a conflict or any inconsistency
between the terms of the Intercreditor Agreement or the Collateral Trust
Agreement and the Security Instruments, the terms of the Intercreditor Agreement
or the Collateral Trust Agreement, as applicable, shall prevail. In the event of
a conflict or any

 

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inconsistency between the terms of the Intercreditor Agreement and the
Collateral Trust Agreement, the terms of the Intercreditor Agreement shall
prevail. The foregoing provisions are intended as an inducement to the First
Lien RBL Lenders and holders of the Senior Secured Notes to permit the
incurrence of Obligations under this Agreement and to extend credit to the
Borrower and such lenders are intended third party beneficiaries of such
provisions.

Section 10.18    Additional Indebtedness. In connection with the incurrence by
any Credit Party of any Junior Priority Lien Obligations permitted to be
incurred pursuant to the terms hereof and of any other then outstanding Junior
Priority Lien Documents, each of the Administrative Agent and the Collateral
Trustee agree to execute and deliver any necessary supplements, joinders or
confirmations to the Intercreditor Agreement and Collateral Trust Agreement and
any amendments, amendments and restatements, restatements or waivers of or
supplements to or other modifications to any Security Instrument, and to make or
consent to any filings or take any other actions in connection therewith, as may
be reasonably deemed by the Borrower to be necessary or reasonably desirable for
any Lien on the assets of any Credit Party permitted to secure such Indebtedness
to become a valid, perfected lien (with such priority as may be designated by
the relevant Credit Party to the extent such priority is permitted by the Loan
Documents) pursuant to the Security Instrument being so amended, amended and
restated, restated, waived, supplemented or otherwise modified or otherwise.

Section 10.19    Compliance with Provisions in this Agreement. For purposes of
determining compliance with the provisions specified in this Agreement, each
Lender shall be deemed to have consented to approved or accepted or to be
satisfied with each document or other matter required thereunder to be consented
to or approved by or acceptable or satisfactory to the Lenders (or any required
subset thereof) unless the Administrative Agent shall have received prompt
written notice from such Lender specifying its objection thereto. This provision
is intended solely for the benefit of the Administrative Agent and its
successors and permitted assigns and is not intended to and will not entitle the
other parties hereto to any defense, claim or counterclaim, or confer any rights
or benefits on any party hereto.

Section 10.20    Acknowledgement and Consent to Bail-In of EEA Financial
Institutions. Notwithstanding anything to the contrary in any Loan Document or
in any other agreement, arrangement or understanding among any such parties,
each party hereto acknowledges that any liability of any EEA Financial
Institution arising under any Loan Document, to the extent such liability is
unsecured, may be subject to the Write-Down and Conversion Powers of an EEA
Resolution Authority and agrees and consents to, and acknowledges and agrees to
be bound by:

(a)    the application of any Write-Down and Conversion Powers by an EEA
Resolution Authority to any such liabilities arising hereunder which may be
payable to it by any party hereto that is an EEA Financial Institution; and

(b)    the effects of any Bail-in Action on any such liability, including, if
applicable:

(1)    a reduction in full or in part or cancellation of any such liability;

 

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(2)    a conversion of all, or a portion of, such liability into shares or other
instruments of ownership in such EEA Financial Institution, its parent
undertaking, or a bridge institution that may be issued to it or otherwise
conferred on it, and that such shares or other instruments of ownership will be
accepted by it in lieu of any rights with respect to any such liability under
this Agreement or any other Loan Document; or

(3)    the variation of the terms of such liability in connection with the
exercise of the Write-Down and Conversion Powers of any EEA Resolution
Authority.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.

 

BORROWER: EXCO RESOURCES, INC. By:  

/s/ Tyler Farquharson

  Name:   Tyler Farquharson   Title:   Vice President, Chief Financial Officer
and Treasurer GUARANTORS: EXCO HOLDING (PA), INC. EXCO PRODUCTION COMPANY (PA),
LLC EXCO PRODUCTION COMPANY (WV), LLC EXCO RESOURCES (XA), LLC EXCO SERVICES,
INC. EXCO MIDCONTINENT MLP, LLC EXCO PARTNERS GP, LLC EXCO PARTNERS OLP GP, LLC
EXCO HOLDING MLP, INC. EXCO LAND COMPANY, LLC By:  

/s/ Tyler Farquharson

  Name:   Tyler Farquharson   Title:   Vice President, Chief Financial Officer
and Treasurer EXCO OPERATING COMPANY, LP By:   EXCO Partners OLP GP, LLC   its
general partner By:  

/s/ Tyler Farquharson

  Name:   Tyler Farquharson   Title:   Vice President, Chief Financial Officer
and Treasurer

 

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EXCO GP PARTNERS OLD, LP By:   EXCO Partners GP, LLC   its general partner By:  

/s/ Tyler Farquharson

  Name:   Tyler Farquharson   Title:   Vice President, Chief Financial Officer
and Treasurer RAIDER MARKETING, LP By:  

/s/ Tyler Farquharson

  Name:   Tyler Farquharson   Title:   Vice President, Chief Financial Officer
and Treasurer RAIDER MARKETING GP, LLC By:  

/s/ Tyler Farquharson

  Name:   Tyler Farquharson   Title:   Vice President, Chief Financial Officer
and Treasurer

--------------------------------------------------------------------------------

WILMINGTON TRUST, NATIONAL ASSOCIATION, as Administrative Agent By:  

/s/ Renee Kuhl

  Name:   Renee Kuhl   Title:   Vice President

--------------------------------------------------------------------------------

WILMINGTON TRUST, NATIONAL ASSOCIATION, as Collateral Trustee By:  

/s/ Renee Kuhl

  Name:   Renee Kuhl   Title:   Vice President

--------------------------------------------------------------------------------

  BRIT INSURANCE (GIBRALTAR) PCC LIMITED   BRIT SYNDICATES LIMITED   CLEARWATER
SELECT INSURANCE COMPANY   FAIRFAX FINANCIAL HOLDINGS MASTER TRUST FUND  
FEDERATED INSURANCE COMPANY OF CANADA   NEWLINE CORPORATE NAME LIMITED
(SYNDICATE)   NORTHBRIDGE GENERAL INSURANCE CORPORATION   NORTHBRIDGE PERSONAL
INSURANCE CORPORATION   ODYSSEY REINSURANCE COMPANY   TIG INSURANCE (BARBADOS)
LTD.   UNITED STATES FIRE INSURANCE COMPANY   WENTWORTH INSURANCE COMPANY LTD.  
ZENITH INSURANCE COMPANY   ZENITH INSURANCE COMPANY, as lenders   By: Hamblin
Watsa Investment Counsel Ltd., its Investment Manager By:  

/s/ Paul Rivett

Name:   Paul Rivett Title:   Chief Operating Officer

--------------------------------------------------------------------------------

Avenue Energy Opportunities Fund, L.P., as a Lender By:  

/s/ Sonia Gardner

Name:   Sonia Gardner Title:   Member

--------------------------------------------------------------------------------

Bank of America, N.A., as a Lender By:  

/s/ Tracey-Ann Scarlett

Name:   Tracey-Ann Scarlett Title:   Assistant Vice President

--------------------------------------------------------------------------------

ENERGY STRATEGIC ADVISORY SERVICES LLC, as a Lender By:  

/s/ Jonathan Siegler

Name:   Jonathan Siegler Title:   Chief Financial Officer

--------------------------------------------------------------------------------

Canadian Imperial Bank of Commerce, as a Lender By:  

/s/ David Evelyn

Name:   David Evelyn Title:   General Manager By:  

/s/ Neermala Hurry

Name:   Neermala Hurry Title:   Assistant General Manager

--------------------------------------------------------------------------------

Chou Associates Fund, as a Lender By:  

/s/ Francis Chou

Name:   Francis Chou Title:   Portfolio Manager Chou RRSP Fund, as a Lender By:
 

/s/ Francis Chou

Name:   Francis Chou Title:   Portfolio Manager Chou Bond Fund, as a Lender By:
 

/s/ Francis Chou

Name:   Francis Chou Title:   Portfolio Manager Chou Income Fund, as a Lender
By:  

/s/ Francis Chou

Name:   Francis Chou Title:   Portfolio Manager Chou Opportunity Fund, as a
Lender By:  

/s/ Francis Chou

Name:   Francis Chou Title:   Portfolio Manager

--------------------------------------------------------------------------------

JPMORGAN STRATEGIC INCOME OPPORTUNITIES, as a Lender By:  

/s/ Amy Ronca

Name:   Amy Ronca Title:   Vice President, JP Morgan Investment Management

--------------------------------------------------------------------------------

ADVANCED SERIES TRUST – AST J.P. MORGAN STRATEGIC OPPORTUNITIES PORTOFLIO, as a
Lender By:  

/s/ Amy Ronca

Name:   Amy Ronca Title:   Vice President, JP Morgan Investment Management

--------------------------------------------------------------------------------

JPMORGAN TOTAL RETURN FUND, as a Lender By:  

/s/ Amy Ronca

Name:   Amy Ronca Title:   Vice President, JP Morgan Investment Management

--------------------------------------------------------------------------------

JPMORGAN TAX AWARE INCOME OPPORTUNITIES FUND, as a Lender By:  

/s/ Amy Ronca

Name:   Amy Ronca Title:   Vice President, JP Morgan Investment Management

--------------------------------------------------------------------------------

GEN IV INVESTMENT OPPORTUNITIES, LLC By:  

/s/ Paul Segal

Name:   Paul Segal Title:   President

--------------------------------------------------------------------------------

VEGA ASSET PARTNERS, L.P. By:  

/s/ Paul Segal

Name:   Paul Segal Title:   President

--------------------------------------------------------------------------------

NB DISTRESSED DEBT INVESTMENT FUND LIMITED, as a Lender By: Neuberger Berman
Investment Advisers LLC as Investment Manager By:  

/s/ Michael Holmberg

Name:   Michael Holmberg Title:   Managing Director

--------------------------------------------------------------------------------

NB DISTRESSED DEBT MASTER FUND LP,

as a Lender

By: Neuberger Berman Investment Advisers LLC as Investment Manager By:  

/s/ Michael Holmberg

Name:   Michael Holmberg Title:   Managing Director