Exhibit 10.3

COLLATERAL TRUST AGREEMENT

dated as of October 26, 2015

among

EXCO RESOURCES, INC.,

as the Company,

the Grantors and Guarantors from time to time party hereto,

HAMBLIN WATSA INVESTMENT COUNSEL LTD.,

as Administrative Agent under the Second Lien Credit Agreement,

the other Parity Lien Debt Representatives from time to time party hereto

and

WILMINGTON TRUST, NATIONAL ASSOCIATION,

as Collateral Trustee

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TABLE OF CONTENTS

 

         Page   ARTICLE 1 DEFINITIONS; PRINCIPLES OF CONSTRUCTION   

Section 1.1

 

Defined Terms

     1   

Section 1.2

 

Rules of Interpretation

     10    ARTICLE 2 THE TRUST ESTATE   

Section 2.1

 

Declaration of Trust

     11   

Section 2.2

 

Collateral Shared Equally and Ratably

     12   

Section 2.3

 

Similar Collateral and Agreements

     12    ARTICLE 3 OBLIGATIONS AND POWERS OF COLLATERAL TRUSTEE   

Section 3.1

 

Appointment and Undertaking of the Collateral Trustee

     12   

Section 3.2

 

Release or Subordination of Liens

     14   

Section 3.3

 

Enforcement of Liens

     14   

Section 3.4

 

Application of Proceeds

     14   

Section 3.5

 

Powers of the Collateral Trustee

     16   

Section 3.6

 

Documents and Communications

     16   

Section 3.7

 

For Sole and Exclusive Benefit of Holders of Parity Lien Obligations

     16   

Section 3.8

 

Additional Parity Lien Debt

     16    ARTICLE 4 OBLIGATIONS ENFORCEABLE BY THE COMPANY AND THE OTHER
GRANTORS   

Section 4.1

 

Release of Liens on Collateral

     19   

Section 4.2

 

Delivery of Copies to Parity Lien Representatives

     21   

Section 4.3

 

Collateral Trustee not Required to Serve, File or Record

     21   

Section 4.4

 

Reserved

     21   

Section 4.5

 

Release of Liens

     21    ARTICLE 5 IMMUNITIES OF THE COLLATERAL TRUSTEE   

Section 5.1

 

No Implied Duty

     21   

Section 5.2

 

Appointment of Agents and Advisors

     22   

Section 5.3

 

Other Agreements

     22   

Section 5.4

 

Solicitation of Instructions

     22   

Section 5.5

 

Limitation of Liability

     23   

Section 5.6

 

Documents in Satisfactory Form

     23   

Section 5.7

 

Entitled to Rely

     23   

Section 5.8

 

Parity Lien Debt Default

     24   

Section 5.9

 

Actions by Collateral Trustee

     24   

Section 5.10

 

Security or Indemnity in favor of the Collateral Trustee

     24   

Section 5.11

 

Rights of the Collateral Trustee

     24   

 

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Section 5.12

 

Limitations on Duty of Collateral Trustee in Respect of Collateral

     24   

Section 5.13

 

Assumption of Rights, Not Assumption of Duties

     25   

Section 5.14

 

No Liability for Clean Up of Hazardous Materials

     25   

Section 5.15

 

Other Relationships with the Company, Grantors or Guarantors

     26    ARTICLE 6 RESIGNATION AND REMOVAL OF THE COLLATERAL TRUSTEE   

Section 6.1

 

Resignation or Removal of Collateral Trustee

     26   

Section 6.2

 

Appointment of Successor Collateral Trustee

     26   

Section 6.3

 

Succession

     27   

Section 6.4

 

Merger, Conversion or Consolidation of Collateral Trustee

     27   

Section 6.5

 

Concerning the Collateral Trustee and the Parity Lien Representatives

     28    ARTICLE 7 MISCELLANEOUS PROVISIONS   

Section 7.1

 

Amendment

     29   

Section 7.2

 

Voting

     30   

Section 7.3

 

Further Assurances

     31   

Section 7.4

 

Successors and Assigns

     32   

Section 7.5

 

Delay and Waiver

     32   

Section 7.6

 

Notices

     32   

Section 7.7

 

Entire Agreement

     34   

Section 7.8

 

Compensation; Expenses

     34   

Section 7.9

 

Indemnity

     35   

Section 7.10

 

Severability

     36   

Section 7.11

 

Headings

     36   

Section 7.12

 

Obligations Secured

     36   

Section 7.13

 

Governing Law

     36   

Section 7.14

 

Consent to Jurisdiction

     36   

Section 7.15

 

Waiver of Jury Trial

     36   

Section 7.16

 

Counterparts, Electronic Signatures

     37   

Section 7.17

 

Effectiveness

     37   

Section 7.18

 

Grantors and Additional Grantors

     37   

Section 7.19

 

Insolvency

     38   

Section 7.20

 

Rights and Immunities of Parity Lien Representatives

     38   

Section 7.21

 

Intercreditor Agreement

     38   

Section 7.22

 

Force Majeure

     39   

Section 7.23

 

U.S.A. Patriot Act

     39   

 

Exhibit A

  

[Form of] Additional Parity Lien Debt Certificate

Exhibit B

  

[Form of] Collateral Trust Joinder – Additional Debt

Exhibit C

  

[Form of] Collateral Trust Joinder – Additional Grantor

 

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This Collateral Trust Agreement (as amended, supplemented, amended and restated
or otherwise modified form time to time in accordance with Section 7.1 hereof,
this “Agreement”) is dated as of October 26, 2015 and is by and among EXCO
Resources, Inc., a Texas corporation (the “Company”), the Grantors and
Guarantors from time to time party hereto, Hamblin Watsa Investment Counsel
Ltd., as Administrative Agent (as defined below), and Wilmington Trust, National
Association, as Collateral Trustee (in such capacity and together with its
successors in such capacity, the “Collateral Trustee”).

RECITALS

The Company intends to incur term loans (the “Term Loans”), from time to time,
pursuant to a Term Loan Credit Agreement dated as of October 19, 2015 (as
amended, supplemented, amended and restated or otherwise modified and in effect
from time to time, the “Second Lien Credit Agreement”) among the Company, the
guarantors party thereto from time to time, the lenders party thereto from time
to time and Hamblin Watsa Investment Counsel Ltd., as Administrative Agent (in
such capacity and together with its successors in such capacity, the
“Administrative Agent”).

The Company, the Grantors and the Guarantors intend to secure their Obligations
under the Second Lien Credit Agreement, any future Parity Lien Debt and any
other Parity Lien Obligations with Liens on all present and future Collateral to
the extent that such Liens have been provided for in the applicable Parity Lien
Security Documents.

This Agreement sets forth the terms on which each Parity Lien Secured Party
(other than the Collateral Trustee) has appointed the Collateral Trustee to act
as the collateral trustee for the present and future holders of the Parity Lien
Obligations to receive, hold, maintain, administer and distribute the Collateral
at any time delivered to the Collateral Trustee or the subject of the Parity
Lien Security Documents, and to enforce the Parity Lien Security Documents and
all interests, rights, powers and remedies of the Collateral Trustee with
respect thereto or thereunder and the proceeds thereof.

Capitalized terms used in this Agreement have the meanings assigned to them
above or in Article 1 below.

AGREEMENT

In consideration of the premises and the mutual agreements herein set forth, the
receipt and sufficiency of which are hereby acknowledged, the parties to this
Agreement hereby agree as follows:

ARTICLE 1

DEFINITIONS; PRINCIPLES OF CONSTRUCTION

Section 1.1 Defined Terms. The following terms will have the following meanings:

“Act of Parity Lien Debtholders” means, as to any matter at any time, a
direction in writing delivered to the Collateral Trustee by or with the written
consent of the holders of Parity Lien Debt representing the Required Parity Lien
Debtholders.

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“Additional Parity Lien Debt” has the meaning set forth in Section 3.8(b).

“Additional Parity Lien Debt Certificate” means a notice in substantially the
form of Exhibit A.

“Additional Secured Debt Designation” means the written agreement of the Parity
Lien Representative of holders of any Series of Parity Lien Debt as set forth in
the indenture, credit agreement or other agreement governing such Series of
Parity Lien Debt, for the benefit of all holders of existing and future Priority
Lien Debt, the Priority Lien Collateral Agent, each existing and future holder
of Priority Liens, all holders of each existing and future Series of Parity Lien
Debt, the Collateral Trustee and each existing and future holder of Parity
Liens:

(1) that all Parity Lien Obligations will be and are secured equally and ratably
by all Parity Liens at any time granted by the Company, any Grantor or any
Guarantor to secure any Obligations in respect of such Series of Parity Lien
Debt, whether or not upon property otherwise constituting Collateral for such
Series of Parity Lien Debt, and that all such Parity Liens will be enforceable
by the Collateral Trustee for the benefit of all holders of Parity Lien
Obligations equally and ratably;

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

(3) appointing the Collateral Trustee and consenting to the terms of the
Intercreditor Agreement and the performance by the Collateral Trustee of, and
directing the Collateral Trustee to perform, its obligations under this
Agreement, the Parity Lien Security Documents and the Intercreditor Agreement,
together with all such powers as are reasonably incidental thereto.

“Administrative Agent” has the meaning set forth in the recitals.

“Affiliate” means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by or under direct or indirect common control
with such Person. For purposes of this definition, a Person shall be deemed to
control another Person if such Person possesses, directly or indirectly, the
power to direct or cause the direction of the management and policies of such
other Person, whether through the ownership of voting securities, by contract or
otherwise. For purposes of this definition, “controlling” and “controlled” shall
have meanings correlative thereto.

“Agreement” has the meaning set forth in the preamble.

“Bankruptcy Code” means Title 11 of the United States Code, as amended.

 

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“Bankruptcy Law” means the Bankruptcy Code and any similar federal, state or
foreign law for the relief of debtors.

“Board of Directors” means: (1) with respect to a corporation, the board of
directors of the corporation; (2) with respect to a partnership, the Board of
Directors of the general partner of the partnership; and (3) with respect to any
other Person, the board or committee of such Person serving a similar function.

“Business Day” means any day excluding Saturday, Sunday and any other day on
which banking institutions in New York City or any other place of payment are
authorized or required by law or other governmental actions to close.

“Capital Stock” means:

(1) in the case of a corporation, corporate stock or shares in the capital of
such corporation;

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

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

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

“Collateral” means all assets and property of the Company or a Grantor, whether
real, personal or mixed, wherever located and whether now owned or at any time
acquired after the date of the Second Lien Credit Agreement by the Company or a
Grantor as to which a Lien has been granted under the Parity Lien Security
Documents to secure the Parity Lien Obligations.

“Collateral Trustee” has the meaning set forth in the preamble.

“Collateral Trust Joinder” means (1) with respect to the provisions of this
Agreement relating to any Additional Parity Lien Debt, an agreement
substantially in the form of Exhibit B and (2) with respect to the provisions of
this Agreement relating to the addition of additional Grantors, an agreement
substantially in the form of Exhibit C.

“Company” has the meaning set forth in the preamble.

“Credit Agreement” means the “Priority Credit Agreement” as defined in the
Intercreditor Agreement.

 

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“Exchange Term Loan Agreement” means that certain Term Loan Credit Agreement
dated as of October 19, 2015, among the Company, the Subsidiaries of the Company
party thereto from time to time as guarantors, the lenders party thereto and
Wilmington Trust, National Association, as collateral agent and as
administrative agent thereunder, as the same may be amended, supplemented,
modified, restated, refinanced or replaced from time to time in accordance with
the Intercreditor Agreement.

“Financial Officer” of any Person means the Chief Financial Officer, Chief
Accounting Officer, principal accounting officer, Controller, Treasurer or
Assistant Treasurer of such Person.

“Grantor” means each of and “Grantors” means, collectively, the Company and the
Guarantors and any other Person (if any) that at any time provides collateral
security for any Parity Lien Obligations.

“Guarantee” means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including by way of a pledge of assets or through
letters of credit or reimbursement agreements in respect thereof), of all or any
part of any Indebtedness or other obligations (and “Guaranteed” and
“Guaranteeing” shall have meanings that correspond to the foregoing).

“Guarantor” means any Person who has Guaranteed payment of any Parity Lien
Obligations, and their respective successors and assigns.

“Indebtedness” has the meaning assigned to such term in the Second Lien Credit
Agreement or to such term or other similar term in any applicable Parity Lien
Document.

“Indemnified Liabilities” means any and all liabilities (including all
environmental liabilities), obligations, losses, damages, penalties, actions,
judgments, suits, costs, taxes, expenses or disbursements of any kind or nature
whatsoever with respect to the execution, delivery, performance, administration
or enforcement of this Agreement or any of the other Parity Lien Security
Documents, including any of the foregoing relating to the use of proceeds of any
Parity Lien Debt or the violation of, noncompliance with or liability under, any
law (including environmental laws) applicable to or enforceable against the
Company, any Subsidiary of the Company or any Grantor or Guarantor or any of the
Collateral and all reasonable costs and expenses (including reasonable fees and
expenses of legal counsel selected by the Indemnitee) incurred by any Indemnitee
in connection with any claim, action, investigation or proceeding in any respect
relating to any of the foregoing, whether or not suit is brought.

“Indemnitee” has the meaning set forth in Section 7.9(a).

“Insolvency or Liquidation Proceeding” means:

(1) any case commenced by or against the Company, any Grantor or any Guarantor
under the Bankruptcy Code or any other Bankruptcy Law, any other proceeding for
the reorganization, recapitalization or adjustment or marshaling of the assets
or liabilities of the Company, any Grantor or any Guarantor, any receivership or

 

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assignment for the benefit of creditors relating to the Company, any Grantor or
any Guarantor or any similar case or proceeding relative to the Company, any
Grantor or any Guarantor or its creditors, as such, in each case whether or not
voluntary;

(2) any liquidation, dissolution, marshaling of assets or liabilities or other
winding up of or relating to the Company, any Grantor or any Guarantor, in each
case whether or not voluntary and whether or not involving bankruptcy or
insolvency; or

(3) any other proceeding of any type or nature in which substantially all claims
of creditors of the Company, any Grantor or any Guarantor are determined and any
payment or distribution is or may be made on account of such claims.

“Intercreditor Agreement” means that certain Intercreditor Agreement, dated as
of the date hereof, among the Collateral Trustee, on behalf of itself and the
holders of the Term Loans and any other Parity Lien Obligations, the Priority
Lien Collateral Agent, and the other parties from time to time party thereto, as
the same may be amended, restated, supplemented or otherwise modified or
replaced from time to time.

“Junior Lien” has the meaning assigned to the term “Third Lien” in the
Intercreditor Agreement.

“Junior Lien Agent” has the meaning assigned to the term “Third Lien Collateral
Agent” in the Intercreditor Agreement.

“Junior Lien Debt” has the meaning assigned to the term “Third Lien Debt” in the
Intercreditor Agreement.

“Junior Lien Documents” has the meaning assigned to the term “Third Lien
Documents” in the Intercreditor Agreement.

“Lien” means, with respect to any asset, any mortgage, lien (statutory or
otherwise), pledge, hypothecation, charge, security interest or encumbrance of
any kind in respect of such asset, whether or not filed, recorded or otherwise
perfected under applicable law, including any conditional sale or other title
retention agreement, any lease in the nature thereof, any option or other
agreement to give a security interest therein and any filing of or agreement to
give any financing statement under the Uniform Commercial Code (or equivalent
statutes) of any jurisdiction or Production Payments and Reserve Sales and the
like payable out of Oil and Gas Properties; provided that in no event shall an
operating lease be deemed to constitute a Lien.

“Obligations” means any 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 payable under the documentation governing any
Indebtedness.

 

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“Officers’ Certificate” means a certificate signed by two officers of the
Company, one of whom must be either the principal executive officer or a
Financial Officer, as applicable.

“Oil and Gas Properties” has the meaning assigned to such term in the
Intercreditor Agreement.

“Opinion of Counsel” means a written opinion, in form and substance reasonably
acceptable to the Collateral Trustee, of counsel who shall be reasonably
acceptable to the Collateral Trustee. Opinions of Counsel required to be
delivered under this Agreement may have qualifications customary for opinions of
the type required and counsel delivering such Opinions of Counsel may rely as to
factual matters on certificates of the Company or governmental or other
officials customary for opinions of the type required.

“Parity Lien” means a Lien granted by the Company or any Grantor in favor of the
Collateral Trustee pursuant to a Parity Lien Security Document, at any time,
upon any property of the Company or such Grantor to secure Parity Lien
Obligations.

“Parity Lien Debt” means:

(1) the Term Loans, the “Obligations” (as defined in the Second Lien Credit
Agreement) and Second Lien Credit Agreement Guarantees thereof (including
replacements of such Parity Lien Debt with other Parity Lien Debt to the extent
contemplated and permitted by the Intercreditor Agreement); and

(2) any other Indebtedness (other than intercompany Indebtedness owing to the
Company or its Subsidiaries) of the Company, any Grantor or any Guarantor
(including replacements of Parity Lien Debt with other Parity Lien Debt to the
extent contemplated and permitted by the Intercreditor Agreement) that is
permitted to be incurred under Section 6.01(b)(2)(y) of the Second Lien Credit
Agreement that is secured equally and ratably with the Term Loans by a Parity
Lien that was permitted to be incurred under clause (b)(y) of the definition of
“Permitted Liens” (as defined in the Second Lien Credit Agreement) and also
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 (2) of this definition, that:

(a) on or before the date on which such Indebtedness is incurred by the Company,
any Grantor or any Guarantor, such Indebtedness is designated by the Company, in
an Additional Parity Lien Debt Certificate executed and delivered in accordance
with Section 3.8(b), as “Parity Lien Debt” for the purposes of the Second Lien
Credit Agreement and this Agreement; provided, further, that no such
Indebtedness may be designated as both Parity Lien Debt and Priority Lien Debt
or Junior Lien Debt;

(b) such Indebtedness is governed by an indenture, credit agreement or other
agreement that includes an Additional Secured Debt Designation;

(c) the Parity Lien Representative for such Indebtedness executes and delivers a
Collateral Trust Joinder in accordance with Section 3.8(b); and

 

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(d) all other requirements set forth in Section 3.8 have been complied with.

“Parity Lien Debt Default” means any “Event of Default” as defined in the Second
Lien Credit Agreement, or any similar event or condition set forth in any other
Parity Lien Document that causes, or permits holders of the applicable Series of
Parity Lien Debt outstanding thereunder (with or without the giving of notice or
lapse of time, or both, and whether or not notice has been given or time has
lapsed) to cause, the Parity Lien Debt outstanding thereunder to become
immediately due and payable.

“Parity Lien Documents” means, collectively, the Second Lien Credit Agreement
Documents and any additional indenture, supplemental indenture, credit agreement
or other agreement governing each other Series of Parity Lien Debt and the
Parity Lien Security Documents.

“Parity Lien Obligations” means Parity Lien Debt and all other Obligations in
respect thereof.

“Parity Lien Premium Obligations” means Parity Lien Obligations that constitute
premium on indebtedness or amounts payable to one or more holders of Parity Lien
Debt in connection with the repayment or prepayment of Parity Lien Debt as a
means of fully or partially compensating such holders for the loss of yield on
such Parity Lien Debt resulting from such repayment or prepayment. As of the
date hereof, the Make-Whole Amount (as defined in the Second Lien Credit
Agreement as of the date hereof) and the Applicable Premium (as defined in the
Exchange Term Loan Agreement as of the date hereof) constitute Parity Lien
Premium Obligations.

“Parity Lien Representative” means:

(1) in the case of the Term Loans, the Administrative Agent; or

(2) in the case of any other Series of Parity Lien Debt, the trustee, agent or
representative of the holders of such Series of Parity Lien Debt who (A) is
appointed to act for the holders of such Series of Parity Lien Debt (for
purposes related to the administration of the Parity Lien Security Documents)
pursuant to the indenture, credit agreement or other agreement governing such
Series of Parity Lien Debt, together with its successors in such capacity, and
(B) that has executed a Collateral Trust Joinder.

“Parity Lien Secured Parties” means the holders of Parity Lien Obligations
(including, for the avoidance of doubt, the “Secured Parties” under and as
defined in the Second Lien Credit Agreement), the Collateral Trustee and each
Parity Lien Representative.

“Parity Lien Security Documents” means this Agreement, each Collateral Trust
Joinder, the Second Lien Credit Agreement (but only insofar as, and solely to
the extent that, the same grants a Lien on the Collateral), the Second Lien
Credit Agreement Security Documents, and all other 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 Company, any Grantor or any Guarantor creating (or
purporting to

 

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create) a Parity Lien upon Collateral in favor of the Collateral Trustee, for
the benefit of any of the Parity Lien Secured Parties, in each case, as amended,
modified, renewed, restated or replaced, in whole or in part, from time to time,
in accordance with its terms and Section 7.1.

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

“Priority Lien” has the meaning assigned to such term in the Intercreditor
Agreement.

“Priority Lien Collateral Agent” means JPMorgan Chase Bank, N.A., as agent under
the Credit Agreement and any successor thereof in such capacity under the Credit
Agreement, and, from and after the date of execution and delivery of a Priority
Substitute Facility (as defined in the Intercreditor Agreement), the agent,
collateral agent, trustee or other representative of the lenders or holders of
the indebtedness and other Obligations evidenced thereunder or governed thereby,
in each case, together with its successors in such capacity.

“Priority Lien Debt” has the meaning assigned to such term in the Intercreditor
Agreement.

“Priority Lien Documents” has the meaning assigned to such term in the
Intercreditor Agreement.

“Priority Lien Obligations” has the meaning assigned to such term in the
Intercreditor Agreement.

“Priority Lien Representative” has the meaning assigned to such term in the
Second Lien Credit Agreement.

“Production Payments and Reserve Sales” has the meaning assigned to such term in
the Intercreditor Agreement.

“Reaffirmation Agreement” means an agreement reaffirming the security interests
granted to the Collateral Trustee in substantially the form attached as Exhibit
1 to Exhibit A of this Agreement.

“Required Parity Lien Debtholders” means, at any time, the holders of 66 2/3% in
aggregate principal amount of all Parity Lien Debt then outstanding, calculated
in accordance with the provisions of Section 7.2. For purposes of this
definition, Parity Lien Debt registered in the name of, or beneficially owned
by, the Company or any Affiliate of the Company will be deemed not to be
outstanding; provided, that for purposes of such restriction Fairfax Financial
Holdings Limited and its Affiliates and subsidiaries (other than the Company and
its Subsidiaries) shall not be deemed to be Affiliates of the Company.

“Second Lien Credit Agreement” has the meaning set forth in the recitals.

 

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“Second Lien Credit Agreement Documents” means the Second Lien Credit Agreement,
the Intercreditor Agreement, the Second Lien Credit Agreement Security Documents
and all other loan documents (including the Loan Documents (as defined in the
Second Lien Credit Agreement)), notes, guarantees, instruments and agreements
governing or evidencing the Term Loans and other obligations under the Second
Lien Credit Agreement.

“Second Lien Credit Agreement Guarantees” means any guarantee of the obligations
of the Company under the Second Lien Credit Agreement and the Term Loans by any
Restricted Subsidiary in accordance with the provisions of the Second Lien
Credit Agreement.

“Second Lien Credit Agreement Security Agreement” means the Security Agreement,
dated as of the date hereof, among the Company, the Grantors and Guarantors
party thereto and the Collateral Trustee, on behalf of itself and the Secured
Parties (as defined in the Second Lien Credit Agreement), as the same may be
amended, supplemented or otherwise modified or replaced from time to time.

“Second Lien Credit Agreement Security Documents” means this Agreement, each
Collateral Trust Joinder, the Second Lien Credit Agreement Security Agreement
and all other 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 Company,
any Grantor or any Guarantor creating (or purporting to create) a Lien upon
Collateral in favor of the Collateral Trustee, for the benefit of the Secured
Parties (as defined in the Second Lien Credit Agreement), in each case, as
amended, modified, renewed, restated or replaced, in whole or in part, from time
to time, in accordance with its terms and Section 7.1.

“Secured Debt” means Priority Lien Debt, Parity Lien Debt and Junior Lien Debt.

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

“Security Documents” has the meaning assigned to such term in the Intercreditor
Agreement.

“Series of Parity Lien Debt” means, severally, the Term Loans and each other
issue or series of Parity Lien Debt for which a single transfer register is
maintained.

“Subsidiary” means, with respect to any specified Person: (1) any corporation,
association, limited liability company or other business entity (other than a
partnership, joint venture, limited liability company or similar entity) of
which more than fifty percent (50.0%) of the total voting power of Voting Stock
is at the time owned or controlled, directly or through another subsidiary, by
that Person or one or more of the other subsidiaries of that Person (or a
combination thereof); and (2) any partnership, joint venture, limited liability
company or similar entity of which (a) more than fifty percent (50.0%) of the
capital accounts, distribution rights, total equity and voting interests or
general or limited partnership interests, as applicable, are owned or
controlled, directly or indirectly, by such Person or one or more of the other

 

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subsidiaries of that Person (or a combination thereof) whether in the form of
membership, general, special or limited partnership or otherwise, and (b) such
Person or any Restricted Subsidiary of such Person is a controlling general
partner or otherwise controls such entity.

“Term Loans” has the meaning set forth in the recitals and, for the avoidance of
doubt, shall include the “Loans” under and as defined in the Second Lien Credit
Agreement.

“Trust Estate” has the meaning set forth in Section 2.1.

“UCC” means the Uniform Commercial Code as in effect from time to time in the
State of New York or any other applicable jurisdiction.

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

Section 1.2 Rules of Interpretation.

(a) All capitalized terms used in this Agreement and not otherwise defined
herein have the meanings assigned to them in the Second Lien Credit Agreement.

(b) Unless otherwise indicated, any reference to any agreement or instrument
will be deemed to include a reference to that agreement or instrument as
assigned, amended, supplemented, amended and restated, or otherwise modified and
in effect from time to time or replaced in accordance with the terms of this
Agreement.

(c) The use in this Agreement or any of the other Parity Lien Security
Documents, the word “include” or “including,” when following any general
statement, term or matter, will not be construed to limit such statement, term
or matter to the specific items or matters set forth immediately following such
word or to similar items or matters, whether or not non-limiting language (such
as “without limitation” or “but not limited to” or words of similar import) is
used with reference thereto, but will be deemed to refer to all other items or
matters that fall within the broadest possible scope of such general statement,
term or matter. The word “will” shall be construed to have the same meaning and
effect as the word “shall.”

(d) References to “Sections,” “clauses,” “recitals” and the “preamble” will be
to Sections, clauses, recitals and the preamble, respectively, of this Agreement
unless otherwise specifically provided. References to “Articles” will be to
Articles of this Agreement unless otherwise specifically provided. References to
“Exhibits” and “Schedules” will be to Exhibits and Schedules, respectively, to
this Agreement unless otherwise specifically provided.

(e) Notwithstanding anything to the contrary in this Agreement, any references
contained herein to any section, clause, paragraph, definition or other
provision of the Second Lien Credit Agreement (including any definition
contained therein) shall be deemed to be a reference to such section, clause,
paragraph, definition or other provision as in effect on the date of this
Agreement; provided that any reference to any such section, clause, paragraph or
other provision shall refer to such section, clause, paragraph or other
provision of the Second Lien Credit Agreement (including any definition
contained therein) as amended or modified from time to time if such amendment or
modification has been made in accordance with the Second Lien Credit Agreement.

 

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(f) This Agreement and the other Parity Lien Security Documents will be
construed without regard to the identity of the party who drafted it and as
though the parties participated equally in drafting it. Consequently, each of
the parties acknowledges and agrees that any rule of construction that a
document is to be construed against the drafting party will not be applicable
either to this Agreement or the other Parity Lien Security Documents.

ARTICLE 2

THE TRUST ESTATE

Section 2.1 Declaration of Trust.

(a) To secure the payment of the Parity Lien Obligations and in consideration of
the premises and the mutual agreements set forth herein, each of the Grantors
hereby confirms the grant of Liens in favor of the Collateral Trustee, and the
Collateral Trustee hereby accepts and agrees to hold, in trust under this
Agreement for the benefit of all current and future Parity Lien Secured Parties,
on all of such Grantor’s right, title and interest in, to and under all
Collateral and on all Liens now or hereafter granted to the Collateral Trustee
by each Grantor under any Parity Lien Security Document for the benefit of the
Parity Lien Secured Parties, together with all of the Collateral Trustee’s
right, title and interest in, to and under the Parity Lien Security Documents,
and all interests, rights, powers and remedies of the Collateral Trustee
thereunder or in respect thereof and all cash and non-cash proceeds thereof
(collectively, the “Trust Estate”).

(b) The Collateral Trustee and its successors and assigns under this Agreement
will hold the Trust Estate in trust for the benefit solely and exclusively of
all current and future Parity Lien Secured Parties as security for the payment
of all present and future Parity Lien Obligations.

(c) Notwithstanding the foregoing, if at any time:

(i) all Liens securing the Parity Lien Obligations have been released as
provided in Section 4.1;

(ii) the Collateral Trustee holds no other property in trust as part of the
Trust Estate;

(iii) no monetary obligation (other than indemnification and other contingent
obligations not then due and payable and outstanding letters of credit, if any,
constituting Parity Lien Debt that have been cash collateralized at the lower of
(A) 105% of the aggregate undrawn amount and (B) the percentage of the aggregate
undrawn amount required for release of Liens under the terms of the applicable
Parity Lien Documents) is outstanding and payable under this Agreement to the
Collateral Trustee or any of its co-trustees or agents (whether in an individual
or representative capacity); and

 

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(iv) the Company delivers to the Collateral Trustee an Officers’ Certificate
stating that all Parity Liens of the Collateral Trustee have been released in
compliance with all applicable provisions of the Parity Lien Documents and that
the Grantors are not required by any Parity Lien Document to grant any Parity
Lien upon any property,

then the Trust Estate arising hereunder will terminate, except that all
provisions set forth in Sections 7.8 and 7.9 that are enforceable by the
Collateral Trustee or any of its co-trustees or agents (whether in an individual
or representative capacity) will remain enforceable in accordance with their
terms.

The parties further declare and covenant that the Trust Estate will be held and
distributed by the Collateral Trustee subject to the further agreements herein.

Section 2.2 Collateral Shared Equally and Ratably. The parties to this Agreement
agree that the payment and satisfaction of all of the Parity Lien Obligations
will be secured equally and ratably by the Parity Lien established in favor of
the Collateral Trustee for the benefit of the Parity Lien Secured Parties,
notwithstanding the time of incurrence of any Parity Lien Obligations or time or
method of creation or perfection of any Parity Liens securing such Parity Lien
Obligations.

Section 2.3 Similar Collateral and Agreements. The parties to this Agreement
agree that it is their intention that the Parity Liens be identical. In
furtherance of the foregoing, the parties hereto agree that the Parity Lien
Security Documents (other than the Second Lien Credit Agreement Security
Documents) shall be in all material respects the same forms of documents as the
respective Second Lien Credit Agreement Security Documents creating Liens on the
Collateral.

ARTICLE 3

OBLIGATIONS AND POWERS OF COLLATERAL TRUSTEE

Section 3.1 Appointment and Undertaking of the Collateral Trustee.

(a) Each Parity Lien Secured Party (other than the Collateral Trustee) acting
through its respective Parity Lien Representative hereby appoints the Collateral
Trustee to serve as collateral trustee hereunder on the terms and conditions set
forth herein. Subject to, and in accordance with, this Agreement, the Collateral
Trustee will, as collateral trustee, for the benefit solely and exclusively of
the present and future Parity Lien Secured Parties:

(i) accept, enter into, hold, maintain, administer and enforce all Parity Lien
Security Documents, including all Collateral subject thereto, and all Liens
created thereunder, perform its obligations hereunder and under the Parity Lien
Security Documents and protect, exercise and enforce the interests, rights,
powers and remedies granted or available to it under, pursuant to or in
connection with the Parity Lien Security Documents;

 

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(ii) take all lawful and commercially reasonable actions permitted under the
Parity Lien Security Documents necessary or advisable to protect or preserve its
interest in the Collateral subject thereto and such interests, rights, powers
and remedies;

(iii) deliver and receive notices pursuant to this Agreement and the Parity Lien
Security Documents;

(iv) sell, assign, collect, assemble, foreclose on, institute legal proceedings
with respect to, or otherwise exercise or enforce the rights and remedies of a
secured party (including a mortgagee, trust deed beneficiary and insurance
beneficiary or loss payee) with respect to the Collateral under the Parity Lien
Security Documents and its other interests, rights, powers and remedies;

(v) remit as provided in Section 3.4 all cash proceeds received by the
Collateral Trustee from the collection, foreclosure or enforcement of its
interest in the Collateral under the Parity Lien Security Documents or any of
its other interests, rights, powers or remedies;

(vi) execute and deliver amendments to the Parity Lien Security Documents as
from time to time authorized pursuant to Section 7.1 accompanied by an Officers’
Certificate and Opinion of Counsel to the effect that the amendment was
permitted under Section 7.1;

(vii) release or subordinate any Lien granted to it by any Parity Lien Security
Document upon any Collateral if and as required by Section 3.2; and

(viii) enter into and perform its obligations and protect, exercise and enforce
its interest, rights, powers and remedies under the Intercreditor Agreement.

(b) Each party to this Agreement acknowledges and consents to the undertaking of
the Collateral Trustee set forth in Section 3.1(a) and agrees to each of the
other provisions of this Agreement applicable to the Collateral Trustee.

(c) Notwithstanding anything to the contrary contained in this Agreement, the
Collateral Trustee will not commence any exercise of remedies or any foreclosure
actions or otherwise take any action or proceeding against any of the Collateral
unless and until it shall have been directed by written notice of an Act of
Parity Lien Debtholders and then only in accordance with the provisions of this
Agreement and the Intercreditor Agreement; provided, however, that Collateral
Agent may, but shall have no obligation to do so, take actions in its reasonable
business judgment, as it deems necessary or desirable, necessary to prove,
protect or preserve the Liens securing the Parity Lien Obligations to the extent
permitted pursuant to the Intercreditor Agreement.

(d) Notwithstanding anything to the contrary contained in this Agreement,
neither the Company nor any of its Affiliates may serve as Collateral Trustee;
provided, that for purposes of determining such eligibility standards Fairfax
Financial Holdings Limited and its Affiliates and subsidiaries (other than the
Company and its Subsidiaries) shall not be deemed to be Affiliates of the
Company.

 

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Section 3.2 Release or Subordination of Liens. The Collateral Trustee will not
release or subordinate any Lien of the Collateral Trustee or consent to the
release or subordination of any Lien of the Collateral Trustee, except:

(a) as directed by an Act of Parity Lien Debtholders accompanied by an Officers’
Certificate to the effect that the release or subordination was permitted by
each applicable Parity Lien Document and otherwise setting forth the
requirements of Section 4.1(b)(i) and 4.1(b)(ii);

(b) as required by Article 4;

(c) to release or subordinate Liens on Collateral to the extent permitted by
each applicable Parity Lien Document; provided that the Collateral Trustee
receives an Officers’ Certificate confirming the foregoing;

(d) as ordered pursuant to applicable law under a final and nonappealable order
or judgment of a court of competent jurisdiction; or

(e) for the subordination of the Trust Estate and the Parity Liens to the extent
required by the Intercreditor Agreement.

Section 3.3 Enforcement of Liens. If the Collateral Trustee at any time receives
written notice from a Parity Lien Representative stating that any event has
occurred that constitutes a default under any Parity Lien Document entitling the
Collateral Trustee to foreclose upon, collect or otherwise enforce its Liens
under the Parity Lien Security Documents, the Collateral Trustee will promptly
deliver written notice thereof to each Parity Lien Representative. Thereafter,
the Collateral Trustee may await direction by an Act of Parity Lien Debtholders
and, subject to the terms of the Intercreditor Agreement, will act, or decline
to act, as directed by an Act of Parity Lien Debtholders, in the exercise and
enforcement of the Collateral Trustee’s interests, rights, powers and remedies
in respect of the Collateral or under the Parity Lien Security Documents or
applicable law and, following the initiation of such exercise of remedies, the
Collateral Trustee will act, or decline to act, with respect to the manner of
such exercise of remedies as directed by an Act of Parity Lien Debtholders.
Unless it has been directed to the contrary by an Act of Parity Lien
Debtholders, the Collateral Trustee in any event may (but will not be obligated
to) take or refrain from taking such action with respect to any default under
any Parity Lien Document as it may deem advisable and in the interest of the
holders of Parity Lien Obligations; provided, however, nothing in this
Section 3.3 shall require Collateral Agent to take any action, or refrain to
take any action which, in its judgment or the judgment of its counsel, may
expose Collateral Agent to liability or that is contrary to any Parity Lien
Documents or applicable Governmental Requirement.

Section 3.4 Application of Proceeds.

(a) Subject to the terms of the Intercreditor Agreement, the Collateral Trustee
will apply the proceeds of any collection, sale, foreclosure or other
realization upon, or exercise

 

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of any right or remedy with respect to, any Collateral and the proceeds of any
title insurance or other insurance policy required under any Parity Lien
Document or otherwise covering the Collateral, and any condemnation proceeds
with respect to the Collateral, in the following order of application:

FIRST, to the payment of all amounts payable under this Agreement on account of
the Collateral Trustee’s fees and any reasonable legal fees, costs and expenses
or other liabilities of any kind incurred by the Collateral Trustee or any
co-trustee or agent of the Collateral Trustee in connection with any Parity Lien
Security Document (including, but not limited to, indemnification obligations);

SECOND, to the respective Parity Lien Representatives equally and ratably for
application to the payment of all outstanding Parity Lien Debt and any other
Parity Lien Obligations (other than fifty percent (50%) of the Parity Lien
Premium Obligations due and payable under the Second Lien Credit Agreement and
50% of the Parity Lien Premium Obligations due and payable under the Exchange
Term Loan Agreement and any other series of Parity Lien Debt) that are then due
and payable in such order as may be provided in the Parity Lien Documents in an
amount sufficient to pay in full in cash all outstanding Parity Lien Debt and
all other Parity Lien Obligations (other than fifty percent (50%) of the Parity
Lien Premium Obligations) that are then due and payable (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, specified in the Parity Lien Documents, even if such interest
is not enforceable, allowable or allowed as a claim in such proceeding);

THIRD, to the respective Parity Lien Representatives, equally and ratably for
application to the payment of the remaining Parity Lien Premium Obligations that
are then due and payable to the holders of Parity Lien Debt in an amount
sufficient to pay in full in cash all remaining Parity Lien Premium Obligations;

FOURTH, to the repayment of Junior Lien Debt and other Obligations secured by a
permitted Junior Lien on the Collateral sold or realized upon or as otherwise
required by the Intercreditor Agreement; and

FIFTH, any surplus remaining after the payment in full in cash of the amounts
described in the preceding clauses will be paid to the Company or the applicable
Grantor or Guarantor, as the case may be, its successors or assigns, and as
directed in writing by the Company, or as a court of competent jurisdiction may
direct.

(b) This Section 3.4 is intended for the benefit of, and will be enforceable as
a third party beneficiary by, each present and future holder of Parity Lien
Obligations, each present and future Parity Lien Representative and the
Collateral Trustee as holder of Parity Liens. The Parity Lien Representative of
each future Series of Parity Lien Debt will be required to deliver a Collateral
Trust Joinder including an Additional Secured Debt Designation as provided in
Section 3.8 at the time of incurrence of such Series of Parity Lien Debt.

 

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(c) In connection with the application of proceeds pursuant to Section 3.4(a),
except as otherwise directed by an Act of Parity Lien Debtholders, the
Collateral Trustee may sell any non-cash proceeds for cash prior to the
application of the proceeds thereof.

(d) In making the determinations and allocations in accordance with
Section 3.4(a), the Collateral Trustee may conclusively rely upon information
supplied by the relevant Parity Lien Representative as to the amounts of unpaid
principal and interest and other amounts outstanding with respect to its
respective Parity Lien Debt and any other Parity Lien Obligations.

Section 3.5 Powers of the Collateral Trustee.

(a) The Collateral Trustee is irrevocably authorized and empowered to enter into
and perform its obligations and protect, perfect, exercise and enforce its
interest, rights, powers and remedies under the Parity Lien Security Documents
and applicable law and in equity and to act as set forth in this Article 3 or,
subject to the other provisions of this Agreement, as requested in any
directions given to it in writing from time to time in respect of any matter by
an Act of Parity Lien Debtholders.

(b) No Parity Lien Representative or holder of Parity Lien Obligations (other
than the Collateral Trustee) will have any liability whatsoever for any act or
omission of the Collateral Trustee, and the Collateral Trustee will have no
liability whatsoever for any act or omission of any Parity Lien Representative
or any holder of Parity Lien Obligations.

Section 3.6 Documents and Communications. The Collateral Trustee will permit
each Parity Lien Representative and each holder of Parity Lien Obligations upon
reasonable written notice and at reasonable times from time to time to inspect
and copy, at the cost and expense of the party requesting such copies, any and
all Parity Lien Security Documents and other documents, notices, certificates,
instructions or communications received by the Collateral Trustee in its
capacity as such.

Section 3.7 For Sole and Exclusive Benefit of Holders of Parity Lien
Obligations. The Collateral Trustee will accept, hold, administer and enforce
all Liens on the Collateral at any time transferred or delivered to it and all
other interests, rights, powers and remedies at any time granted to or
enforceable by the Collateral Trustee and all other property of the Trust Estate
solely and exclusively for the benefit of the present and future holders of
present and future Parity Lien Obligations, and will distribute all proceeds
received by it in realization thereon or from enforcement thereof solely and
exclusively pursuant to the provisions of Section 3.4.

Section 3.8 Additional Parity Lien Debt.

(a) The Collateral Trustee will, as trustee hereunder, perform its undertakings
set forth in Section 3.1(a) with respect to any Parity Lien Obligations
constituting a Series of Parity Lien Debt that is issued or incurred on or after
the date hereof, provided that:

(i) such Parity Lien Obligations are identified as Parity Lien Debt in
accordance with the procedures set forth in Section 3.8(b); and

 

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(ii) the designated Parity Lien Representative identified pursuant to
Section 3.8(b) signs a Collateral Trust Joinder and delivers the same to the
Collateral Trustee.

(b) The Company will be permitted to designate as an additional holder of Parity
Lien Debt hereunder each Person who is, or who becomes, the registered holder of
Parity Lien Debt incurred by the Company, any Grantor or any Guarantor on or
after the date of this Agreement in accordance with the terms of all applicable
Parity Lien Documents. The Company may only effect such designation by
delivering to the Collateral Trustee an Additional Parity Lien Debt Certificate
that:

(i) states that the Company or applicable Grantor intends to incur additional
Parity Lien Debt (“Additional Parity Lien Debt”) that is permitted by each
applicable Parity Lien Document to be secured with a Parity Lien equally and
ratably with all previously existing and future Parity Lien Debt;

(ii) specifies the name, address and contact information of the Parity Lien
Representative for such series of Additional Parity Lien Debt for purposes of
Section 7.6;

(iii) attaches as Exhibit 1 to such Additional Parity Lien Debt Certificate a
Reaffirmation Agreement in substantially the form attached as Exhibit 1 to
Exhibit A of this Agreement, which Reaffirmation Agreement has been duly
executed by the Company and each Grantor and Guarantor; and

(iv) states that the Company has caused a copy of the Additional Parity Lien
Debt Certificate and the related Collateral Trust Joinder to be delivered to
each then existing Parity Lien Representative.

Although the Company shall be required to deliver a copy of each Additional
Parity Lien Debt Certificate and each Collateral Trust Joinder to each then
existing Parity Lien Representative, the failure to so deliver a copy of the
Additional Parity Lien Debt Certificate and/or Collateral Trust Joinder to any
then existing Parity Lien Representative shall not affect the status of such
debt as Additional Parity Lien Debt if the other requirements of this
Section 3.8 are complied with. Each of the Collateral Trustee and the other then
existing Parity Lien Representatives shall receive a legal opinion or opinions
of counsel (subject to customary assumptions and qualifications) from the
Company as to the Additional Parity Lien Debt being permitted by the terms of
the Parity Lien Documents and secured by a valid and perfected security interest
in the Collateral; provided that (i) such legal opinion or opinions need not
address any Collateral of a type not previously covered by any legal opinion
delivered by or on behalf of the Company and (ii) nothing shall preclude such
legal opinion or opinions from being delivered on a post-closing basis after the
incurrence of such Additional Parity Lien Debt if permitted by the Parity Lien
Representative for such Additional Parity Lien Debt. Notwithstanding the
foregoing, nothing in this Agreement will be construed to allow the Company, any
Grantor or any Guarantor to incur additional Indebtedness unless otherwise
permitted by the terms of all applicable Parity Lien Documents.

 

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(c) With respect to any Parity Lien Obligations constituting a Series of Parity
Lien Debt that is issued or incurred after the date hereof, the Company and each
of the Grantors and Guarantors agrees to take such actions (if any) as necessary
and as may from time to time reasonably be requested by the Collateral Trustee,
any Parity Lien Representative or any Act of Parity Lien Debtholders, and enter
into such technical amendments, modifications and/or supplements to the then
existing Guarantees and Parity Lien Security Documents (or execute and deliver
such additional Parity Lien Security Documents) as necessary and as may from
time to time be reasonably requested by such Persons (including as contemplated
by clause (d) below), to ensure that the Additional Parity Lien Debt is secured
by, and entitled to the benefits of, the Parity Lien Security Documents, and
each Parity Lien Secured Party (by its acceptance of the benefits hereof) hereby
agrees to, and authorizes the Collateral Trustee to enter into, any such
technical amendments, modifications and/or supplements (and additional Parity
Lien Security Documents). The Company and each Grantor and Guarantor hereby
further agrees that, if there are any recording, filing or other similar fees
payable in connection with any of the actions to be taken pursuant to this
Section 3.8(c) or Section 3.8(d), all such amounts shall be paid by, and shall
be for the account of, the Company and the respective Grantors and Guarantors,
on a joint and several basis.

(d) Without limitation of the foregoing, each Grantor agrees to take the
following actions with respect to any real property Collateral (including Oil
and Gas Properties) with respect to all Additional Parity Lien Debt (it being
understood that any such actions may be taken following the incurrence of any
such Additional Parity Lien Debt on a post-closing basis if permitted by the
Parity Lien Representative for such Additional Parity Lien Debt):

(i) each applicable Grantor shall enter into, and deliver to the Collateral
Trustee a mortgage modification or new mortgage or deed of trust with regard to
each real property subject to a mortgage or deed of trust (each such mortgage or
deed of trust a “Mortgage” and each such property a “Mortgaged Property”), in
proper form for recording in all applicable jurisdictions;

(ii) each applicable Grantor will cause to be delivered a local counsel opinion
(subject to customary assumptions and qualifications) to the effect that the
Collateral Trustee has a valid and perfected Lien with respect to each such
Mortgaged Property; and

(iii) each applicable Grantor will cause a title company to have delivered to
the Collateral Trustee an endorsement to each title insurance policy for any
real property Collateral (excluding Oil and Gas Properties), if any, then in
effect for the benefit of the Parity Lien Secured Parties, date down(s) or other
evidence (which may include a new title insurance policy) (each such delivery, a
“Title Datedown Product”), in each case insuring that (i) the priority of the
Liens of the applicable Mortgage(s) as security for the Parity Lien Obligations
has not changed and, if a new Mortgage is entered into, that the Lien of such
new Mortgage securing the Parity Lien Debt then being incurred shall have the
same priority vis-a-vis any other outstanding indebtedness (other than Parity
Lien Obligations) as any existing Mortgage securing then existing Parity Lien
Obligations, (ii) since the later of the original date of such title insurance
product and the date of the Title Datedown Product delivered most recently prior
to (and not in

 

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connection with) such additional Indebtedness, there has been no change in the
condition of title and (iii) there are no intervening liens or encumbrances
which may then or thereafter take priority over the Lien of the applicable
Mortgage(s), in each case other than with respect to Liens permitted by each
Parity Lien Document; provided, however, to the extent the real property
Collateral is located in Texas, the foregoing shall only apply to the extent
permitted by the procedural rules promulgated by the Texas department of
insurance.

The Company will deliver an Officers’ Certificate to the Collateral Trustee
confirming that the foregoing conditions have been satisfied.

(e) Each party to this Agreement acknowledges and agrees that the Indebtedness
created under the Exchange Term Loan Agreement constitutes Parity Lien Debt.

ARTICLE 4

OBLIGATIONS ENFORCEABLE BY THE COMPANY AND THE OTHER GRANTORS

Section 4.1 Release of Liens on Collateral.

(a) The Collateral Trustee’s Liens upon the Collateral will be automatically
released:

(i) in whole, upon (A) payment in full in cash and discharge of all outstanding
Parity Lien Debt and all other Parity Lien Obligations that are outstanding, due
and payable at the time all of the Parity Lien Debt is paid in full in cash and
discharged, (B) termination or expiration of all commitments to extend credit
under all Parity Lien Documents and (C) the cancellation or termination or cash
collateralization (at the lower of (1) 105% of the aggregate undrawn amount of
outstanding letters of credit and (2) the percentage of the aggregate undrawn
amount required for release of Liens under the terms of the applicable Parity
Lien Documents) of all outstanding letters of credit issued pursuant to any
Parity Lien Documents;

(ii) as to any Collateral of a Grantor or Guarantor that is (A) released as a
Grantor or Guarantor, as applicable, under each Parity Lien Document and (B) is
not obligated (as primary obligor or guarantor) with respect to any other Parity
Lien Obligations and so long as the respective release does not violate the
terms of any Parity Lien Document which then remains in effect;

(iii) as to any Collateral of the Company, any Grantor or any Guarantor that is
sold, transferred or otherwise disposed of by the Company, any Grantor or any
Guarantor to a Person that is not (either before or after such sale, transfer or
disposition) the Company or a Restricted Subsidiary of the Company in a
transaction or other circumstance that complies with Section 6.04 of the Second
Lien Credit Agreement (other than any sale, disposition or other transaction
solely between or among any Grantors or any Guarantors and other than the
obligation to apply proceeds of such Asset Sale as provided in such Section) and
is permitted by all of the other Parity Lien Documents, at the time of such
sale, transfer or other disposition or to the extent of the interest sold,
transferred or otherwise disposed of;

 

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(iv) as to a release of less than all or substantially all of the Collateral, if
consent to the release of all Parity Liens on such Collateral has been given by
an Act of Parity Lien Debtholders;

(v) in whole, if the Liens on such Collateral have been released in accordance
with the terms of each Series of Parity Lien Debt;

(vi) as to a release of all or substantially all of the Collateral, if
(A) consent to the release of that Collateral has been given by the requisite
percentage or number of holders of each Series of Parity Lien Debt at the time
outstanding as provided for in the applicable Parity Lien Documents and (B) the
Company has delivered an Officers’ Certificate to the Collateral Trustee
certifying that all such necessary consents have been obtained;

(vii) as to a release of Collateral effected in connection with the enforcement
or exercise of rights or remedies by the Collateral Trustee with respect to its
Liens in such Collateral, if direction of such enforcement or exercise has been
given by an Act of Parity Lien Debtholders; or

(viii) if and to the extent, and in the manner, required by Section 4.01(a)(ii)
or (iii) of the Intercreditor Agreement.

(b) The Collateral Trustee agrees for the benefit of the Company and the other
Grantors that if the Collateral Trustee at any time receives:

(i) an Officers’ Certificate and an Opinion of Counsel each stating that (A) the
signing Officer has read Article 4 of this Agreement and understands the
provisions and the definitions relating hereto, (B) such officer has made such
examination or investigation as is necessary to enable him or her to express an
informed opinion as to whether or not the conditions precedent in this
Agreement, the Intercreditor Agreement and all other Parity Lien Documents, if
any, relating to the release of the Collateral have been complied with and
(C) in the opinion of such Officer, such conditions precedent, if any, have been
complied with; and

(ii) the proposed instrument or instruments releasing such Lien as to such
property in recordable form, if applicable; then, promptly following receipt by
the Collateral Trustee of the items required by this Section 4.1(b), upon
written request of the Company, the Collateral Trustee will execute (with such
acknowledgements and/or notarizations as are required) and deliver evidence of
such release to the Company or other applicable Grantor; provided that, in the
case of a release of Liens under Section 4.1(a)(vii), the Collateral Trustee
shall execute and deliver such proposed instruments releasing its Liens
contemporaneously with the execution and delivery of such similar instruments by
the Priority Lien Collateral Agent in accordance with the terms of the
Intercreditor Agreement.

 

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(c) The Collateral Trustee hereby agrees that:

(i) in the case of any release pursuant to Section 4.1(a)(iii), if the terms of
any such sale, transfer or other disposition require the payment of the purchase
price to be contemporaneous with the delivery of the applicable release, then,
subject to the Intercreditor Agreement and at the written request of and at the
expense of the Company or other applicable Grantor, the Collateral Trustee will
either (A) be present at and deliver the release at the closing of such
transaction or (B) deliver the release under customary escrow arrangements that
permit such contemporaneous payment and delivery of the release; and

(ii) at any time when a Parity Lien Debt Default has occurred and is continuing,
within three Business Days of the receipt by it of any Act of Parity Lien
Debtholders, the Collateral Trustee, pursuant to Section 4.1(a)(iv), will
deliver a copy of such Act of Parity Lien Debtholders to each Parity Lien
Representative.

Section 4.2 Delivery of Copies to Parity Lien Representatives. The Company will
deliver to each Parity Lien Representative (a) a copy of each Officers’
Certificate delivered to the Collateral Trustee pursuant to Section 4.1(b),
together with copies of all documents delivered to the Collateral Trustee with
such Officers’ Certificate and (b) copies of all Parity Lien Security Documents
delivered to the Collateral Trustee. The Parity Lien Representatives will not be
obligated to take notice thereof or to act thereon.

Section 4.3 Collateral Trustee not Required to Serve, File or Record. Subject to
Section 3.2, the Collateral Trustee is not required to serve, file, register or
record any instrument releasing or subordinating its Liens on any Collateral;
provided that if the Company or any other Grantor shall make a written demand
for a termination statement under Section 9-513(c) of the UCC, the Collateral
Trustee shall comply with the written request of the Company or Grantor to
comply with the requirements of such UCC provision as determined by the Company
or Grantor.

Section 4.4 Reserved.

Section 4.5 Release of Liens. In addition to any release pursuant to Section 4.1
hereof, as to any Series of Parity Lien Debt (including the Term Loans), the
Collateral Trustee’s Parity Lien will no longer secure such Series of Parity
Lien Debt if such Parity Lien Debt has been paid in full, all commitments to
extend credit in respect of such Series of Parity Lien Debt have been terminated
and all other Parity Lien Obligations related thereto that are outstanding and
unpaid at the time such Series of Parity Lien Debt is paid are also paid in
full, or if otherwise required by the terms of such Parity Lien Debt or the
Intercreditor Agreement.

ARTICLE 5

IMMUNITIES OF THE COLLATERAL TRUSTEE

Section 5.1 No Implied Duty. The Collateral Trustee will not have any duties nor
will it have responsibilities or obligations other than those expressly assumed
by it in this Agreement, the other Parity Lien Security Documents and the
Intercreditor Agreement. No implied covenants, functions, responsibilities,
duties, obligations or liabilities shall be read into

 

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this Agreement, the other Parity Lien Documents or the Intercreditor Agreement,
or otherwise exist against the Collateral Trustee. Without limiting the
generality of the foregoing sentences, the use of the term “trustee” in this
Agreement with reference to the Collateral Trustee is not intended to connote
any fiduciary or other implied (or express) obligations arising under agency
doctrine of any applicable law. Instead, such term is used merely as a matter of
market custom, and is intended to create or reflect only an administrative
relationship between independent contracting parties. The Collateral Trustee
will not be required to take any action that is contrary to applicable law or
any provision of this Agreement, the other Parity Lien Security Documents or the
Intercreditor Agreement.

Section 5.2 Appointment of Agents and Advisors. The Collateral Trustee may
execute any of the trusts or powers hereunder or perform any duties hereunder
either directly or by or through agents, attorneys, accountants, appraisers or
other experts or advisors selected by it in good faith as it may reasonably
require and will not be responsible for any misconduct or negligence on the part
of any of them.

Section 5.3 Other Agreements. The Collateral Trustee has accepted its
appointment as collateral trustee hereunder and is bound by the Parity Lien
Security Documents executed by the Collateral Trustee as of the date of this
Agreement, and the Collateral Trustee shall at the written request of the
Company or the applicable Parity Lien Representative execute additional Parity
Lien Security Documents delivered to it after the date of this Agreement
(including to secure Obligations arising under Additional Parity Lien Debt to
the extent such Obligations are permitted to be incurred and secured under the
Parity Lien Documents); provided that such additional Parity Lien Security
Documents do not adversely affect the rights, privileges, benefits and
immunities of the Collateral Trustee or conflict with the terms of the
Intercreditor Agreement. The Collateral Trustee will not otherwise be bound by,
or be held obligated by, the provisions of any credit agreement, indenture or
other agreement governing Parity Lien Debt (other than this Agreement and the
other Parity Lien Security Documents to which it is a party).

Section 5.4 Solicitation of Instructions.

(a) The Collateral Trustee may at any time solicit written confirmatory
instructions, in the form of an Act of Parity Lien Debtholders, an Officers’
Certificate or an order of a court of competent jurisdiction, as to any action
that it may be requested or required to take, or that it may propose to take, in
the performance of any of its obligations under this Agreement or the other
Parity Lien Security Documents, and Collateral 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 Parity Lien Documents until
it shall have received such instructions in the form of an Act of Parity Lien
Debtholders as to any action that it may be requested or required to take.

 

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(b) No written direction given to the Collateral Trustee by an Act of Parity
Lien Debtholders that in the sole judgment of the Collateral Trustee imposes,
purports to impose or might reasonably be expected to impose upon the Collateral
Trustee any obligation not set forth in or arising under this Agreement and the
other Parity Lien Security Documents or that in Collateral Agent’s judgment or
the judgment of its counsel, may expose Collateral Agent to liability or that is
contrary to any applicable Governmental Authority will be binding upon the
Collateral Trustee.

(c) The Collateral Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement at the request, order or
direction of the Required Parity Lien Debtholders pursuant to the provisions of
this Agreement, unless such holders shall have furnished to the Collateral
Trustee reasonable security or indemnity satisfactory to it against the costs,
expenses and liabilities including attorneys’ fees and expenses which may be
incurred therein or thereby.

Section 5.5 Limitation of Liability. The Collateral Trustee will not be
responsible or liable for any action taken or omitted to be taken by it
hereunder or under any other Parity Lien Security Document, except for its own
gross negligence or willful misconduct as determined by a final non-appealable
judgment of a court of competent jurisdiction.

Section 5.6 Documents in Satisfactory Form. The Collateral Trustee will be
entitled, but not obligated, to require that all agreements, certificates,
opinions, instruments and other documents at any time submitted to it, including
those expressly provided for in this Agreement, be delivered to it in a form
reasonably satisfactory to it.

Section 5.7 Entitled to Rely. The Collateral Trustee may seek and conclusively
rely upon, and shall be fully protected in conclusively relying upon, any
judicial order or judgment, upon any advice, opinion or statement of legal
counsel, independent consultants and other experts selected by it in good faith
and upon any certification, instruction, notice or other writing delivered to it
by the Company, any Grantor or any Guarantor in compliance with the provisions
of this Agreement or delivered to it by any Parity Lien Representative as to the
holders of Parity Lien Obligations for whom it acts, without being required to
determine the authenticity thereof or the correctness of any fact stated therein
or the propriety or validity of service thereof. The Collateral Trustee may act
in reliance upon any instrument comporting with the provisions of this Agreement
or any signature believed by it in good faith to be genuine and may assume that
any Person purporting to give notice or receipt or advice or make any statement
or execute any document in connection with the provisions hereof or the other
Parity Lien Security Documents has been duly authorized to do so. To the extent
an Officers’ Certificate or Opinion of Counsel is required or permitted under
this Agreement to be delivered to the Collateral Trustee in respect of any
matter, the Collateral Trustee may rely conclusively on an Officers’ Certificate
or Opinion of Counsel as to such matter and such Officers’ Certificate or
Opinion of Counsel shall be full warranty and protection to the Collateral
Trustee for any action taken, suffered or omitted by it under the provisions of
this Agreement and the other Parity Lien Security Documents.

 

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Section 5.8 Parity Lien Debt Default. The Collateral Trustee will not be
required to inquire as to the occurrence or absence of any Parity Lien Debt
Default and will not be affected by or required to act upon any notice or
knowledge as to the occurrence of any Parity Lien Debt Default unless and until
it is directed by an Act of Parity Lien Debtholders.

Section 5.9 Actions by Collateral Trustee. As to any matter not expressly
provided for by this Agreement or the other Parity Lien Security Documents, the
Collateral Trustee will act or refrain from acting as directed by an Act of
Parity Lien Debtholders and will be fully protected if it does so, and any
action taken, suffered or omitted pursuant to hereto or thereto shall be binding
on the holders of Parity Lien Obligations.

Section 5.10 Security or Indemnity in favor of the Collateral Trustee. The
Collateral Trustee will not be required to advance or expend any funds or
otherwise incur any financial liability in the performance of its duties or the
exercise of its powers or rights hereunder unless it has been provided with
security or indemnity reasonably satisfactory to it against any and all
liability or expense which may be incurred by it by reason of taking or
continuing to take such action.

Section 5.11 Rights of the Collateral Trustee. In the event of any conflict
between any terms and provisions set forth in this Agreement and those set forth
in any other Parity Lien Security Document, the terms and provisions of this
Agreement shall supersede and control the terms and provisions of such other
Parity Lien Security Document. In the event there is any bona fide, good faith
disagreement between the other parties to this Agreement or any of the other
Parity Lien Security Documents resulting in adverse claims being made in
connection with Collateral held by the Collateral Trustee and the terms of this
Agreement or any of the other Parity Lien Security Documents do not
unambiguously mandate the action the Collateral Trustee is to take or not to
take in connection therewith under the circumstances then existing, or the
Collateral Trustee is in doubt as to what action it is required to take or not
to take hereunder or under the other Parity Lien Security Documents, it will be
entitled to refrain from taking any action (and will incur no liability for
doing so) until directed otherwise in writing by a request signed jointly by the
parties hereto entitled to give such direction or by order of a court of
competent jurisdiction.

Section 5.12 Limitations on Duty of Collateral Trustee in Respect of Collateral.

(a) Beyond the exercise of reasonable care in the custody of Collateral in its
possession, the Collateral Trustee will have no duty as to any Collateral in its
possession or control or in the possession or control of any agent or bailee or
any income thereon or as to preservation of rights against prior parties or any
other rights pertaining thereto and the Collateral Trustee will not be
responsible for filing any financing or continuation statements or recording any
documents or instruments in any public office at any time or times or otherwise
perfecting or maintaining the perfection of any Liens on the Collateral;
provided that, notwithstanding the foregoing, the Collateral Trustee will
execute, file or record UCC-3 continuation statements and other documents and
instruments to preserve, protect or perfect the security interests granted to
the Collateral Trustee (subject to the priorities set forth herein) if it shall
receive a specific written request to execute, file or record the particular
continuation statement or other specific document or instrument by any Parity
Lien Representative, it being

 

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understood that the Company and/or the applicable Grantor shall be responsible
for all filings required in connection with any Parity Lien Security Document
and the continuation, maintenance and/or perfection of any such filing or the
lien and security interest granted in connection therewith. The Collateral
Trustee shall deliver to each other Parity Lien Representative a copy of any
such written request. The Collateral Trustee will be deemed to have exercised
reasonable care in the custody of the Collateral in its possession if the
Collateral is accorded treatment substantially equal to that which it accords
its own property, and the Collateral Trustee will not be liable or responsible
for any loss or diminution in the value of any of the Collateral by reason of
the act or omission of any carrier, forwarding agency or other agent or bailee
selected by the Collateral Trustee in good faith.

(b) Except as provided in paragraph 5.12(a), the Collateral Trustee will not be
responsible for the existence, genuineness or value of any of the Collateral or
for the validity, perfection, priority or enforceability of the Liens in any of
the Collateral, for the validity or sufficiency of the Collateral or any
agreement or assignment contained therein, for the validity of the title of any
Grantor to the Collateral, for insuring the Collateral or for the payment of
taxes, charges, assessments or Liens upon the Collateral or otherwise as to the
maintenance of the Collateral. The Collateral Trustee hereby disclaims any
representation or warranty to the current and future holders of the Parity Lien
Obligations concerning the perfection of the security interests granted to it or
in the value of any Collateral. The Collateral Trustee shall not be under any
obligation to the Trustee or any holder of Parity Lien Debt to ascertain or to
inquire as to the observance or performance of any of the agreements contained
in, or conditions of, this or any other Parity Lien Security Document or the
Intercreditor Agreement or to inspect the properties, books or records of the
Company, any Grantor or any Guarantor.

Section 5.13 Assumption of Rights, Not Assumption of Duties. Notwithstanding
anything to the contrary contained herein:

(a) each of the parties thereto will remain liable under each of the Parity Lien
Security Documents (other than this Agreement) to the extent set forth therein
to perform all of their respective duties and obligations thereunder to the same
extent as if this Agreement had not be executed;

(b) the exercise by the Collateral Trustee of any of its rights, remedies or
powers hereunder will not release such parties from any of their respective
duties or obligations under the other Parity Lien Security Documents; and

(c) the Collateral Trustee will not be obligated to perform any of the
obligations or duties of the Company or any Grantor.

Section 5.14 No Liability for Clean Up of Hazardous Materials. In the event that
the Collateral Trustee is required to acquire title to an asset for any reason,
or take any managerial action of any kind in regard thereto, in order to carry
out any trust obligation for the benefit of another, which in the Collateral
Trustee’s sole discretion may cause the Collateral Trustee to be considered an
“owner or operator” under any environmental laws or otherwise cause the
Collateral Trustee to incur, or be exposed to, any environmental liability or
any liability under any other federal, state or local law, the Collateral
Trustee reserves the right,

 

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instead of taking such action, either to immediately resign as Collateral
Trustee or to arrange for the transfer of the title or control of the asset to a
court appointed receiver. The Collateral Trustee will not be liable to any
Person for any environmental liability or any environmental claims or
contribution actions under any federal, state or local law, rule or regulation
by reason of the Collateral Trustee’s actions or inactions and conduct as
authorized, empowered and directed hereunder or relating to any kind of
discharge or release or threatened discharge or release of any hazardous
materials into the environment.

Section 5.15 Other Relationships with the Company, Grantors or Guarantors.
Wilmington Trust, National Association and its Affiliates (and any successor
Collateral Trustee and its Affiliates) may make loans to, issue letters of
credit for the account of, accept deposits from, acquire equity interests in and
generally engage in any kind of banking, trust, financial advisory, underwriting
or other business with the Company, any Grantor or any Guarantor and its
Affiliates as though it was not the Collateral Trustee hereunder and without
notice to or consent of the Administrative Agent or holders of any of the Parity
Lien Obligations. The Administrative Agent and the holders of the Parity Lien
Obligations acknowledge that, pursuant to such activities, Wilmington Trust,
National Association or its Affiliates (and any successor Collateral Trustee and
its Affiliates) may receive information regarding the Company, any Grantor or
any Guarantor or its Affiliates (including information that may be subject to
confidentiality obligations in favor of the Company, such Grantor or Guarantor
or such Affiliate) and acknowledge that the Collateral Trustee shall not be
under any obligation to provide such information to the Administrative Agent or
the holders of the Parity Lien Obligations. Nothing herein shall impose or imply
any obligation on the part of Wilmington Trust, National Association (or any
successor Collateral Trustee) to advance funds.

ARTICLE 6

RESIGNATION AND REMOVAL OF THE COLLATERAL TRUSTEE

Section 6.1 Resignation or Removal of Collateral Trustee. Subject to the
appointment of a successor Collateral Trustee as provided in Section 6.2 and the
acceptance of such appointment by the successor Collateral Trustee:

(a) the Collateral Trustee may resign at any time by giving not less than
30 days’ notice of resignation to each Parity Lien Representative and the
Company; and

(b) the Collateral Trustee may be removed at any time, with or without cause, by
an Act of Parity Lien Debtholders.

Section 6.2 Appointment of Successor Collateral Trustee. Upon any such
resignation or removal, a successor Collateral Trustee may be appointed by an
Act of Parity Lien Debtholders. If no successor Collateral Trustee has been so
appointed and accepted such appointment within 30 days after the predecessor
Collateral Trustee gave notice of resignation or was removed, the retiring
Collateral Trustee may (at the expense of the Company), at its option, appoint a
successor Collateral Trustee, or petition a court of competent jurisdiction for
appointment of a successor Collateral Trustee, which must be a bank or trust
company:

(a) authorized to exercise corporate trust powers; and

 

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(b) having a combined capital and surplus of at least $250,000,000.

Until the appointment of a successor Collateral Agent as provided for in this
Section 6.2 after the resignation or removal of the Collateral Trustee, all
communications and determinations required to be made by, to or through
Collateral Agent shall instead be made by or through the Parity Lien
Representatives. From and following the expiration of such thirty (30) day
period, Collateral Agent shall have the exclusive right, upon one (1) Business
Days’ notice to the Parity Lien Representatives, to make its resignation
effective immediately. From and following the effectiveness of such notice, the
retiring or removed Collateral Agent shall be discharged from its duties and
obligations hereunder and under the other Parity Lien Documents.

Section 6.3 Succession. When the Person so appointed as successor Collateral
Trustee accepts such appointment:

(a) such Person will succeed to and become vested with all the rights, powers,
privileges and duties of the predecessor Collateral Trustee, and the predecessor
Collateral Trustee will be discharged from its duties and obligations hereunder;
and

(b) the predecessor Collateral Trustee will (at the expense of the Company)
promptly transfer all Liens and collateral security and other property of the
Trust Estate within its possession or control to the possession or control of
the successor Collateral Trustee and will execute instruments and assignments as
may be necessary or desirable or reasonably requested by the successor
Collateral Trustee to transfer to the successor Collateral Trustee all Liens,
interests, rights, powers and remedies of the predecessor Collateral Trustee in
respect of the Parity Lien Security Documents or the Trust Estate.

Thereafter the predecessor Collateral Trustee will remain entitled to enforce
the immunities granted to it in Article 5 and the provisions of Sections 7.8 and
7.9, and said provisions will survive termination of this Agreement for the
benefit of the predecessor of the Collateral Trustee.

Section 6.4 Merger, Conversion or Consolidation of Collateral Trustee. Any
Person into which the Collateral Trustee may be merged or converted or with
which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which the Collateral Trustee shall be a party, or
any Person succeeding to the business of the Collateral Trustee shall be the
successor of the Collateral Trustee pursuant to Section 6.3, provided that
(i) without the execution or filing of any paper with any party hereto or any
further act on the part of any of the parties hereto, except where an instrument
of transfer or assignment is required by law to effect such succession, anything
herein to the contrary notwithstanding, such Person satisfies the eligibility
requirements specified in clauses (a) and (b) of Section 6.2 and (ii) prior to
any such merger, conversion or consolidation, the Collateral Trustee shall have
notified the Company and each Parity Lien Representative thereof in writing.

 

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Section 6.5 Concerning the Collateral Trustee and the Parity Lien
Representatives.

(a) Notwithstanding anything contained herein to the contrary, it is expressly
understood and agreed by the parties hereto that this Agreement has been signed
by each Parity Lien Representative not in its individual capacity or personally
but solely in its capacity as trustee, representative or agent for the benefit
of the related holders of the applicable Series of Parity Lien Debt in the
exercise of the powers and authority conferred and vested in it under the
related Parity Lien Documents, and in no event shall such Parity Lien
Representative, in its individual capacity, have any liability for the
representations, warranties, covenants, agreements or other obligations of any
other party under this Agreement, any Parity Lien Document or in any of the
certificates, reports, documents, data notices or agreements delivered by such
other party pursuant hereto or thereto.

(b) Notwithstanding anything contained herein to the contrary, it is expressly
understood and agreed by the parties hereto that this Agreement has been signed
by Wilmington Trust, National Association, not in its individual capacity or
personally but solely in its capacity as Collateral Trustee, and in no event
shall Wilmington Trust, National Association, in its individual capacity, have
any liability for the representations, warranties, covenants, agreements or
other obligations of any other party under this Agreement, any Parity Lien
Document or in any of the certificates, reports, documents, data notices or
agreements delivered by such other party pursuant hereto or thereto.

(c) Notwithstanding anything contained herein to the contrary, it is expressly
understood and agreed by the parties hereto that this Agreement has been signed
by Hamblin Watsa Investment Counsel Ltd. not in its individual capacity or
personally but solely in its capacity as Administrative Agent, and in no event
shall Hamblin Watsa Investment Counsel Ltd. or any other Parity Lien
Representative, in its individual capacity, have any liability for the
representations, warranties, covenants, agreements or other obligations of any
other party under this Agreement, any Parity Lien Document or in any of the
certificates, reports, documents, data notices or agreements delivered by such
other party pursuant hereto or thereto.

(d) In entering into this Agreement, the Collateral Trustee shall be entitled to
the benefit of every provision of the Second Lien Credit Agreement relating to
the rights, exculpations or conduct of, affecting the liability of or otherwise
affording protection to the “Collateral Trustee” thereunder. In no event will
the Collateral Trustee be liable for any act or omission on the part of the
Grantors or any Parity Lien Representative.

(e) Except as otherwise set forth herein, neither the Collateral Trustee nor any
Parity Lien Representative shall be required to exercise any discretion or take
any action, but shall be required to act or refrain from acting (and shall be
fully protected in so acting or refraining from acting) solely upon the
instructions of the Required Parity Lien Debtholders; provided that neither the
Collateral Trustee nor any Parity Lien Representative shall be required to take
any action that (i) it in good faith believes exposes it to liability unless it
receives an indemnification satisfactory to it from the applicable holders of
the Parity Lien Obligations with respect to such action or (ii) is contrary to
this Agreement, the Intercreditor Agreement or applicable law.

 

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ARTICLE 7

MISCELLANEOUS PROVISIONS

Section 7.1 Amendment.

(a) Except as provided in the Intercreditor Agreement, no amendment or
supplement to the provisions of any Parity Lien Security Document will be
effective without the approval of the Collateral Trustee acting as directed by
an Act of Parity Lien Debtholders, except that:

(i) any amendment or supplement that has the effect solely of:

(A) adding or maintaining Collateral, securing additional Parity Lien Debt that
was otherwise permitted by the terms of the Parity Lien Documents to be secured
by the Collateral or preserving, perfecting or establishing the Liens thereon or
the rights of the Collateral Trustee therein, or

(B) providing for the assumption of the Company, any Grantor or any Guarantor’s
obligations under any Parity Lien Document in the case of a merger or
consolidation or sale of all or substantially all of the properties or assets of
the Company, any Grantor or such Guarantor to the extent permitted by the terms
of the Second Lien Credit Agreement and the other Parity Lien Documents, as
applicable,

will become effective when executed and delivered by the Company or any other
applicable Grantor party thereto and the Collateral Trustee;

(ii) no amendment or supplement that reduces, impairs or adversely affects the
right of any holder of Parity Lien Obligations:

(A) to vote its outstanding Parity Lien Debt as to any matter described as
subject to an Act of Parity Lien Debtholders or direction by the Required Parity
Lien Debtholders (or amends the provisions of this clause (ii) or the definition
of “Act of Parity Lien Debtholders” or “Required Parity Lien Debtholders”),

(B) to share in the order of application described in Section 3.4 in the
proceeds of enforcement of or realization on any Collateral, or

(C) to require that Liens securing Parity Lien Obligations be released only as
set forth in the provisions described in Sections 4.1, 4.4 or 4.5,

will become effective without the consent of the requisite percentage or number
of holders of each Series of Parity Lien Debt adversely affected thereby under
the applicable Parity Lien Document; and

 

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(iii) no amendment or supplement that imposes any obligation upon the Collateral
Trustee or any Parity Lien Representative or adversely affects the rights of the
Collateral Trustee or any Parity Lien Representative, respectively, in its
individual capacity as such will become effective without the consent of the
Collateral Trustee or such Parity Lien Representative, respectively.

(b) Notwithstanding Section 7.1(a) but subject to Sections 7.1(a)(ii) and
7.1(a)(iii):

(i) any mortgage or other Parity Lien Security Document may be amended or
supplemented with the approval of the Collateral Trustee acting as directed in
writing by the Required Parity Lien Debtholders, unless such amendment or
supplement would not be permitted under the terms of this Agreement, the
Intercreditor Agreement or any Priority Lien Document;

(ii) any amendment or waiver of, or any consent under, any provision of any
security document that secures Priority Lien Obligations will apply
automatically to any comparable provision of any comparable Parity Lien Security
Document without the consent of or notice to any holder of Parity Lien
Obligations and without any action by the Company, any Grantor or any Guarantor
or any holder of Parity Lien Obligations; and

(iii) any mortgage or other Parity Lien Security Document may be amended or
supplemented with the approval of the Collateral Trustee (but without the
consent of or notice to any holder of Parity Lien Obligations and without any
action by any holder of Parity Lien Obligations) (i) to cure any ambiguity,
defect or inconsistency, or (ii) to make other changes that do not have an
adverse effect on the validity of the Lien created thereby.

(c) The Collateral Trustee will not enter into any amendment or supplement
unless it has received an Officers’ Certificate to the effect that such
amendment or supplement will not result in a breach of any provision or covenant
contained in the Intercreditor Agreement or any of the Parity Lien Documents.
Prior to executing any amendment or supplement pursuant to this Section 7.1, the
Collateral Trustee shall receive an Opinion of Counsel of the Company to the
effect that the execution of such document is authorized or permitted hereunder
and is the legal, valid and binding obligation of the Company, and with respect
to amendments adding Collateral, an Opinion of Counsel of the Company addressing
customary creation and perfection, and if such additional Collateral consists of
equity interests of any Person which equity interests constitute certificated
securities, priority matters with respect to such additional Collateral (which
opinion may be subject to customary assumptions and qualifications).

Section 7.2 Voting. In connection with any matter under this Agreement requiring
a vote of holders of Parity Lien Debt, each Series of Parity Lien Debt will cast
its votes in accordance with the Parity Lien Documents governing such Series of
Parity Lien Debt. The amount of Parity Lien Debt to be voted by a Series of
Parity Lien Debt will equal (1) the aggregate principal amount of Parity Lien
Debt held by such Series of Parity Lien Debt (including outstanding letters of
credit whether or not then available or drawn), plus (2) other

 

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than in connection with an exercise of remedies, the aggregate unfunded
commitments to extend credit which, when funded, would constitute Indebtedness
of such Series of Parity Lien Debt (to the extent such unfunded commitments have
not been terminated by the holders of such Series of Parity Lien Debt).
Following and in accordance with the outcome of the applicable vote under its
Parity Lien Documents, the Parity Lien Representative of each Series of Parity
Lien Debt will vote the total amount of Parity Lien Debt under that Series of
Parity Lien Debt as a block in respect of any vote under this Agreement.

Section 7.3 Further Assurances.

(a) The Company and each of the Grantors and Guarantors will 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 Parity Lien
Obligations, duly created and enforceable and perfected Liens upon the
Collateral (including any property or assets that are acquired or otherwise
become, or are required by any Parity Lien Document to become, Collateral after
the date hereof), in each case, as contemplated by, and with the Lien priority
required under, the Parity Lien Documents and in connection with any merger,
consolidation or sale of assets of the Company, any Grantor or any Guarantor,
the property and assets of the Person which is consolidated or merged with or
into the Company, any Grantor or any Guarantor, to the extent that they are
property or assets of the types which would constitute Collateral under the
security documents, shall be treated as after-acquired property and the Company,
any Grantor or such Guarantor shall take such action as may be reasonably
necessary to cause such property and assets to be made subject to the Parity
Liens, in the manner and to the extent required under the Parity Lien Documents.

(b) Upon the reasonable request of the Collateral Trustee or any Parity Lien
Representative at any time and from time to time, the Company and each of the
Grantors and Guarantors will promptly execute, acknowledge and deliver such
Parity Lien Security Documents, instruments, certificates, notices and other
documents, and take such other actions as may be reasonably required, or that
the Collateral Trustee may request, to create, perfect, protect, assure or
enforce the Liens and benefits intended to be conferred, in each case as
contemplated by the Parity Lien Documents for the benefit of holders of Parity
Lien Obligations; provided that no such Parity Lien Security Document,
instrument or other document shall be materially more burdensome upon the
Company, any Grantor and the Guarantors than the Parity Lien Documents executed
and delivered (or required to be executed and delivered promptly after the date
hereof) by the Company, the Grantors and the Guarantors in connection with the
borrowing of the Term Loans on or about the date hereof.

(c) From and after the date hereof, the Company shall, or shall cause the
applicable Grantor or Guarantor to, deliver such documents and takes such
actions as are required by the Second Lien Credit Agreement and the other Parity
Lien Documents.

(d) Upon the request of the Collateral Trustee, the Company, the Grantors and
the Guarantors will permit the Collateral Trustee or any of its agents or
representatives, at reasonable times and intervals upon reasonable prior notice,
to visit their offices and sites and inspect any of the Collateral and to
discuss matters relating to the Collateral with their respective officers and
independent public accountants. The Company, the Grantors and the Guarantors

 

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shall, at any reasonable time and from time to time upon reasonable prior
notice, permit the Collateral Trustee or any of its agents or representatives to
examine and make copies of and abstracts from the records and books of account
of the Company, the Grantors and the Guarantors and their Subsidiaries, all at
the Company’s expense.

Section 7.4 Successors and Assigns.

(a) Except as provided in Section 5.2, the Collateral Trustee may not, in its
capacity as such, delegate any of its duties or assign any of its rights
hereunder, and any attempted delegation or assignment of any such duties or
rights will be null and void. All obligations of the Collateral Trustee
hereunder will inure to the sole and exclusive benefit of, and be enforceable
by, each Parity Lien Representative and each present and future holder of Parity
Lien Obligations, each of whom will be entitled to enforce this Agreement as a
third-party beneficiary hereof, and all of their respective successors and
assigns.

(b) Neither the Company nor any Grantor or Guarantor may delegate any of its
duties or assign any of its rights hereunder, and any attempted delegation or
assignment of any such duties or rights will be null and void. All obligations
of the Company, the Grantors and the Guarantors hereunder will inure to the sole
and exclusive benefit of, and be enforceable by, the Collateral Trustee, each
Parity Lien Representative and each present and future holder of Parity Lien
Obligations, each of whom will be entitled to enforce this Agreement as a
third-party beneficiary hereof, and all of their respective successors and
assigns.

Section 7.5 Delay and Waiver. No failure to exercise, no course of dealing with
respect to the exercise of, and no delay in exercising, any right, power or
remedy arising under this Agreement or any of the other Parity Lien Security
Documents will impair any such right, power or remedy or operate as a waiver
thereof. No single or partial exercise of any such right, power or remedy will
preclude any other or future exercise thereof or the exercise of any other
right, power or remedy. The remedies herein are cumulative and are not exclusive
of any remedies provided by law.

Section 7.6 Notices. Any communications, including notices and instructions,
between the parties hereto or notices provided herein to be given may be given
to the following addresses:

 

If to the Collateral Trustee:      Wilmington Trust, N.A.         50 South Sixth
Street, Suite 1290         Minneapolis, MN 55402         Attention: Meghan
McCauley         Telephone: (612) 217-5647         Facsimile: (612) 217-5651   
     Email: MMcCauley@WilmingtonTrust.com    with a copy to:             
Lindquist & Vennum LLP        

4200 IDS Center 80 South Eighth Street

Minneapolis, MN 55402

 

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Attention: Mark C. Dietzen, Esq. Telephone:

(612) 371-2452 Facsimile: (612) 371-3207

        Email: MDietzen@Lindquist.com If to the Company or any other Grantor:
        EXCO Resources, Inc.            12377 Merit Drive, Suite 1700           
Dallas, TX 75251            Attention:     Treasurer            Facsimile:
    (214) 706-3409    with a copy to:                    EXCO Resources, Inc.   
        12377 Merit Drive, Suite 1700            Dallas, TX 75251           
Attention:     General Counsel            Facsimile:     (214) 706-3409 If to
the Administrative Agent:      Hamblin Watsa Investment Counsel Ltd.         95
Wellington Street West         Suite 802         Toronto, Ontario, Canada M5J
2N7         Attention:             Paul Rivett         Facsimile:
            (416) 367-4946         Email:                   privet@hwic.ca   
with a copy to:              Hamblin Watsa Investment Counsel Ltd.         95
Wellington Street West         Suite 802         Toronto, Ontario, Canada M5J
2N7         Attention:             Derek Bulas         Facsimile:
            (416) 367-4946         Email:                   dbulas@fairfax.ca
mailto:privet@hwic.ca        

and if to any other Parity Lien Representative, to such address as it may
specify by written notice to the parties named above.

All notices and communications will be mailed by first class mail, certified or
registered, return receipt requested, by overnight air courier guaranteeing next
day delivery, or delivered by facsimile to the relevant address or number set
forth above or, as to holders of Parity Lien Debt, its address shown on the
register kept by the office or agency where the relevant Parity Lien Debt may be
presented for registration of transfer or for exchange. Failure to mail or
delivery by facsimile a notice or communication to a holder of Parity Lien Debt
or any defect in it will not affect its sufficiency with respect to other
holders of Parity Lien Debt.

 

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

Section 7.7 Entire Agreement. This Agreement states the complete agreement of
the parties relating to the undertaking of the Collateral Trustee set forth
herein and supersedes all oral negotiations and prior writings in respect of
such undertaking.

Section 7.8 Compensation; Expenses. The Grantors jointly and severally agree to
pay, promptly upon demand:

(i) such compensation, fees, costs and expenses to the Collateral Trustee and
its agents including attorneys as the Company and the Collateral Trustee may
agree in writing from time to time;

(ii) all reasonable and documented out-of-pocket costs and expenses incurred by
the Collateral Trustee and its agents including attorneys in the preparation,
execution, delivery, filing, recordation, administration or enforcement of this
Agreement or any other Parity Lien Security Document or any consent, amendment,
waiver or other modification relating hereto or thereto;

(iii) all reasonable and documented out-of-pocket fees, expenses and
disbursements of legal counsel and any auditors, accountants, consultants or
appraisers or other professional advisors and agents engaged by the Collateral
Trustee or any Parity Lien Representative incurred in connection with the
negotiation, preparation, closing, administration, performance or enforcement of
this Agreement and the other Parity Lien Security Documents or any consent,
amendment, waiver or other modification relating hereto or thereto and any other
document or matter requested by the Company, any Grantor or any Guarantor;

(iv) all reasonable and documented out-of-pocket costs and expenses incurred by
the Collateral Trustee and its agents in creating, perfecting, preserving,
releasing or enforcing the Collateral Trustee’s Liens on the Collateral,
including filing and recording fees, expenses and taxes, stamp or documentary
taxes, search fees, and title insurance premiums;

(v) all other reasonable and documented out-of-pocket costs and expenses
incurred by the Collateral Trustee and its agents in connection with the
negotiation, preparation and execution of the Parity Lien Security Documents and
any consents, amendments, waivers or other modifications thereto and the
transactions contemplated thereby or the exercise of rights or performance of
obligations by the Collateral Trustee thereunder; and

(vi) after the occurrence of any Parity Lien Debt Default, all costs and
expenses incurred by the Collateral Trustee, its agents and any Parity Lien
Representative in connection with the preservation, collection, foreclosure or
enforcement of the Collateral subject to the Parity Lien Security Documents or
any interest, right, power or remedy of the Collateral Trustee or in connection
with the collection or enforcement of

 

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any of the Parity Lien Obligations or the proof, protection, administration or
resolution of any claim based upon the Parity Lien Obligations in any Insolvency
or Liquidation Proceeding, including all fees and disbursements of attorneys,
accountants, auditors, consultants, appraisers and other professionals engaged
by the Collateral Trustee, its agents or the Parity Lien Representatives.

The agreements in this Section 7.8 will survive repayment of all other Parity
Lien Obligations and the removal or resignation of the Collateral Trustee and
termination of this Agreement.

Section 7.9 Indemnity.

(a) The Grantors jointly and severally agree to defend, indemnify, pay and hold
harmless the Collateral Trustee, each Parity Lien Representative, each holder of
Parity Lien Obligations and each of their respective Affiliates and each and all
of the directors, officers, partners, trustees, employees, attorneys and agents,
and (in each case) their respective heirs, representatives, successors and
assigns (each of the foregoing, an “Indemnitee”) from and against any and all
Indemnified Liabilities; provided that no Indemnitee will be entitled to
indemnification hereunder with respect to any Indemnified Liability to the
extent such Indemnified Liability is found by a final and nonappealable decision
of a court of competent jurisdiction to have resulted from the gross negligence
or willful misconduct of such Indemnitee. THIS INDEMNITY COVERS ORDINARY
NEGLIGENCE OF ANY OF THE FOREGOING PARTIES.

(b) All amounts due under this Section 7.9 will be payable within 10 days upon
written demand.

(c) Each Person that is secured hereunder, by accepting the benefits of the
security provided hereby, agrees on a pro rata basis, to indemnify Collateral
Agent (to the extent not reimbursed by Grantors within ten (10) days) upon
demand to the extent required by Section 10.03(c) of the Second Lien Credit
Agreement (or any similar provision of any other Parity Lien Document).

(d) To the extent that the undertakings to defend, indemnify, pay and hold
harmless set forth in Section 7.9(a) may be unenforceable in whole or in part
because they violate any law or public policy, each of the Grantors will
contribute the maximum portion that it is permitted to pay and satisfy under
applicable law to the payment and satisfaction of all Indemnified Liabilities
incurred by Indemnitees or any of them.

(e) No Grantor will ever assert any claim against any Indemnitee, on any theory
of liability, for any lost profits or special, indirect or consequential damages
or (to the fullest extent a claim for punitive damages may lawfully be waived)
any punitive damages arising out of, in connection with, or as a result of, this
Agreement or any other Parity Lien Document or any agreement or instrument or
transaction contemplated hereby or relating in any respect to any Indemnified
Liability, and each of the Grantors hereby forever waives, releases and agrees
not to sue upon any claim for any such lost profits or special, indirect,
consequential or (to the fullest extent lawful) punitive damages, whether or not
accrued and whether or not known or suspected to exist in its favor.

 

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(f) The agreements in this Section 7.9 will survive repayment of all other
Parity Lien Obligations and the removal or resignation of the Collateral Trustee
and termination of this Agreement.

Section 7.10 Severability. If any provision of this Agreement is invalid,
illegal or unenforceable in any respect or in any jurisdiction, the validity,
legality and enforceability of such provision in all other respects and of all
remaining provisions, and of such provision in all other jurisdictions, will not
in any way be affected or impaired thereby.

Section 7.11 Headings. Section headings herein have been inserted for
convenience of reference only, are not to be considered a part of this Agreement
and will in no way modify or restrict any of the terms or provisions hereof.

Section 7.12 Obligations Secured. All obligations of the Grantors set forth in
or arising under this Agreement will be Parity Lien Obligations and are secured
by all Liens granted by the Parity Lien Security Documents.

Section 7.13 Governing Law. THE INTERNAL LAW OF THE STATE OF NEW YORK WILL
GOVERN AND BE USED TO CONSTRUE THIS AGREEMENT.

Section 7.14 Consent to Jurisdiction. All judicial proceedings brought against
any party hereto arising out of or relating to this Agreement or any of the
other Parity Lien Security Documents may be brought in any state or federal
court of competent jurisdiction in the State, County and City of New York. By
executing and delivering this Agreement, each party hereto irrevocably:

(i) accepts generally and unconditionally the exclusive jurisdiction and venue
of such courts;

(ii) waives any defense of forum non conveniens;

(iii) agrees that service of all process in any such proceeding in any such
court may be made by registered or certified mail, return receipt requested, to
such party at its address provided in accordance with Section 7.6;

(iv) agrees that service as provided in clause (3) above is sufficient to confer
personal jurisdiction over such party in any such proceeding in any such court
and otherwise constitutes effective and binding service in every respect; and

(v) agrees each party hereto retains the right to serve process in any other
manner permitted by law or to bring proceedings against any party in the courts
of any other jurisdiction.

Section 7.15 Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT WAIVES ITS
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION

 

36

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BASED UPON OR ARISING UNDER THIS AGREEMENT OR ANY OF THE OTHER PARITY LIEN
SECURITY DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER
OF THIS AGREEMENT OR THE INTENTS AND PURPOSES OF THE OTHER PARITY LIEN SECURITY
DOCUMENTS. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY
AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT
MATTER OF THIS AGREEMENT AND THE OTHER PARITY LIEN SECURITY DOCUMENTS, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND
STATUTORY CLAIMS. EACH PARTY TO THIS AGREEMENT ACKNOWLEDGES THAT THIS WAIVER IS
A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH PARTY
HERETO HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT, AND
THAT EACH PARTY HERETO WILL CONTINUE TO RELY ON THIS WAIVER IN ITS RELATED
FUTURE DEALINGS. EACH PARTY HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS
REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY
REFERRING TO THIS SECTION 7.15 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND
THIS WAIVER WILL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS OF OR TO THIS AGREEMENT OR ANY OF THE OTHER PARITY LIEN SECURITY
DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING THERETO. IN THE EVENT
OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY
THE COURT.

Section 7.16 Counterparts, Electronic Signatures. This Agreement may be executed
in any number of counterparts (including by facsimile), each of which when so
executed and delivered will be deemed an original, but all such counterparts
together will constitute but one and the same instrument. The parties hereto may
sign this Agreement and any Collateral Trust Joinder and transmit the executed
copy by electronic means, including facsimile or noneditable .pdf files. The
electronic copy of the executed Agreement and any Collateral Trust Joinder is
and shall be deemed an original signature.

Section 7.17 Effectiveness. This Agreement will become effective upon the
execution of a counterpart hereof by each of the parties hereto and receipt by
each party of written notification of such execution and written or telephonic
authorization of delivery thereof.

Section 7.18 Grantors and Additional Grantors. Each Grantor represents and
warrants that it has duly executed and delivered this Agreement. The Company
will cause each Person that hereafter becomes a Grantor or is required by any
Parity Lien Document to become a party to this Agreement to become a party to
this Agreement, for all purposes of this Agreement, by causing such Person to
execute and deliver to the Collateral Trustee a Collateral Trust Joinder,
whereupon such Person will be bound by the terms hereof to the same extent as if
it had executed and delivered this Agreement as of the date hereof. The Company
shall promptly provide each Parity Lien Representative with a copy of each
Collateral Trust Joinder executed

 

37

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and delivered pursuant to this Section 7.18; provided that the failure to so
deliver a copy of the Collateral Trust Joinder to any then existing Parity Lien
Representative shall not affect the inclusion of such Person as a Grantor if the
other requirements of this Section 7.18 are complied with.

Section 7.19 Insolvency. This Agreement will be applicable both before and after
the commencement of any Insolvency or Liquidation Proceeding by or against any
Grantor. The relative rights, as provided for in this Agreement, will continue
after the commencement of any such Insolvency or Liquidation Proceeding on the
same basis as prior to the date of the commencement of any such case, as
provided in this Agreement.

Section 7.20 Rights and Immunities of Parity Lien Representatives. The
Administrative Agent and the Collateral Trustee will be entitled, to the extent
applicable to such entity, to all of the rights, protections, immunities and
indemnities set forth in the Second Lien Credit Agreement and any future Parity
Lien Representative will be entitled to all of the rights, protections,
immunities and indemnities set forth in the credit agreement, indenture or other
agreement governing the applicable Parity Lien Debt with respect to which such
Person will act as representative, in each case as if specifically set forth
herein. In no event will any Parity Lien Representative be liable for any act or
omission on the part of the Grantors or the Collateral Trustee hereunder. In no
event will the Collateral Trustee be liable for any act or omission on the part
of the Grantors or any Parity Lien Representative hereunder.

Section 7.21 Intercreditor Agreement. Each Person that is secured hereunder, by
accepting the benefits of the security provided hereby, (i) consents (or is
deemed to consent), to the subordination of Liens in favor of the Collateral
Trustee as provided for in the Intercreditor Agreement, (ii) agrees (or is
deemed to agree) that it will be bound by, and will take no actions contrary to,
the provisions of the Intercreditor Agreement, (iii) authorizes (or is deemed to
authorize) and instructs (or is deemed to instruct) the Collateral Trustee on
behalf of such Person to enter into, and perform under, the Intercreditor
Agreement as “Second Lien Collateral Agent” (as defined in the Intercreditor
Agreement). The Collateral Trustee agrees to enter into any amendments or
joinders to the Intercreditor Agreement, without the consent of any Holder or
the Administrative Agent, to add additional Indebtedness as Priority Lien Debt,
Parity Lien Debt or Junior Lien Debt (to the extent permitted to be incurred and
secured by the applicable Secured Debt Documents and subject to the provisions
of Article 5 of this Agreement) and add other parties (or any authorized agent
or trustee therefor) holding such Indebtedness thereto and to establish that the
Lien on any Collateral securing such Indebtedness ranks equally with the Liens
on such Collateral securing the other Priority Lien Debt, Parity Lien Debt or
Junior Lien Debt, as applicable, then outstanding. The foregoing provisions are
intended as an inducement to the lenders under the Parity Lien Documents to
extend credit to the Company, as the borrower under the Parity Lien Debt , and
such lenders are intended third party beneficiaries of this provision and the
provisions of the Intercreditor Agreement. Notwithstanding anything to the
contrary contained herein, 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 Priority Lien Representative,
or of agents or bailees of the Priority Lien Representative, the perfection
actions and related deliverables described in this Agreement or the other Parity
Lien Security Documents shall not be required.

 

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Section 7.22 Force Majeure. In no event shall the Collateral Trustee be
responsible or liable for any failure or delay in the performance of its
obligations hereunder arising out of or caused by, directly or indirectly,
forces beyond its control, including, without limitation, strikes, work
stoppages, accidents, acts of war or terrorism, civil or military disturbances,
nuclear or natural catastrophes or acts of God, and interruptions, loss or
malfunctions of utilities, communications or computer (software and hardware)
services; it being understood that the Collateral Trustee shall use reasonable
efforts which are consistent with accepted practices in the banking industry to
resume performance as soon as practicable under the circumstances.

Section 7.23 U.S.A. Patriot Act. The parties hereto acknowledge that in
accordance with Section 326 of the U.S.A. Patriot Act, the Collateral Trustee,
like all financial institutions and in order to help fight the funding of
terrorism and money laundering, is required to obtain, verify, and record
information that identifies each person or legal entity that establishes a
relationship or opens an account with the Collateral Trustee. The parties to
this Collateral Trust Agreement agree that they will provide the Collateral
Trustee with such information as it may request in order for the Collateral
Trustee to satisfy the requirements of the U.S.A. Patriot Act.

[Remainder of page intentionally left blank; signature pages follow.]

 

39

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IN WITNESS WHEREOF, the parties hereto have caused this Collateral Trust
Agreement to be executed by their respective officers or representatives as of
the day and year first above written.

 

COMPANY: EXCO RESOURCES, INC. By:  

/s/ William L. Boeing

Name:   William L. Boeing Title:   Vice President, General Counsel, and
Secretary

 

[Signature Page to Collateral Trust Agreement]

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GRANTORS: 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/ William L. Boeing

Name:   William L. Boeing Title:   Vice President, General Counsel, and
Secretary EXCO OPERATING COMPANY, LP By:   EXCO Partners OLP GP, LLC   its
general partner By:  

/s/ William L. Boeing

Name:   William L. Boeing Title:   Vice President, General Counsel, and
Secretary EXCO GP PARTNERS OLD, LP By:   EXCO Partners GP, LLC   its general
partner By:  

/s/ William L. Boeing

Name:   William L. Boeing Title:   Vice President, General Counsel, and
Secretary

 

[Signature Page to Collateral Trust Agreement]

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HAMBLIN WATSA INVESTMENT COUNSEL LTD., Administrative Agent under the Second
Lien Credit Agreement By:  

/s/ Paul Rivett

Name:   Paul Rivett Title:   Chief Operating Officer

 

[Signature Page to Collateral Trust Agreement]

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WILMINGTON TRUST, NATIONAL ASSOCIATION,
as Collateral Trustee By:  

/s/ Meghan H. McCauley

Name:   Meghan H. McCauley Title:   Assistant Vice President

 

[Signature Page to Collateral Trust Agreement]

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EXHIBIT A

[FORM OF]

ADDITIONAL PARITY LIEN DEBT CERTIFICATE

Reference is made to the Collateral Trust Agreement, dated as of October 26,
2015 (as amended, supplemented, amended and restated or otherwise modified and
in effect from time to time, the “Collateral Trust Agreement”), among EXCO
Resources, Inc. (the “Company”), the Grantors and Guarantors from time to time
party thereto, Hamblin Watsa Investment Counsel Ltd., as Administrative Agent
under the Second Lien Credit Agreement (as defined therein), and Wilmington
Trust, National Association, as Collateral Trustee. Capitalized terms used but
not otherwise defined herein have the meanings assigned to them in the
Collateral Trust Agreement. This Additional Parity Lien Debt Certificate is
being executed and delivered in order to designate additional secured debt as
Parity Lien Debt entitled to the benefit of the Collateral Trust Agreement.

The undersigned, the duly appointed [specify title] of the Company hereby
certifies on behalf of [the Company or applicable Grantor] that:

(A) [the Company or applicable Grantor] intends to incur additional Parity Lien
Debt (“Additional Parity Lien Debt”) which will be permitted by each applicable
Parity Lien Document to be secured by a Parity Lien equally and ratably with all
previously existing and future Parity Lien Debt;

(B) the name and address of the Parity Lien Debt Representative for the
Additional Parity Lien Debt for purposes of Section 7.6 of the Collateral Trust
Agreement is:

 

 

 

     

 

      Telephone:  

 

   

          Fax:                                          
                               

(C) attached as Exhibit 1 hereto is a Reaffirmation Agreement duly executed by
the Company, each Grantor and each Guarantor, and

(D) the Company has caused a copy of this Additional Parity Lien Debt
Certificate and the related Collateral Trust Joinder to be delivered to each
existing Parity Lien Representative.

 

1

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IN WITNESS WHEREOF, the Company has caused this Additional Parity Lien Debt
Certificate to be duly executed by the undersigned officer as of             ,
20    .

 

[TO COME] By:  

 

Name:   Title:  

ACKNOWLEDGEMENT OF RECEIPT

The undersigned, the duly appointed Collateral Trustee under the Collateral
Trust Agreement, hereby acknowledges receipt of an executed copy of this
Additional Parity Lien Debt Certificate.

 

WILMINGTON TRUST, NATIONAL ASSOCIATION, as Collateral Trustee By:  

 

Name:   Title:  

 

2

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EXHIBIT 1 TO ADDITIONAL PARITY LIEN DEBT CERTIFICATE

[FORM OF]

REAFFIRMATION AGREEMENT

Reference is made to the Collateral Trust Agreement, dated as of October 26,
2015 (as amended, supplemented, amended and restated or otherwise modified and
in effect from time to time, the “Collateral Trust Agreement”), among EXCO
Resources, Inc. (the “Company”), the Grantors and Guarantors from time to time
party thereto, Hamblin Watsa Investment Counsel Ltd., as Administrative Agent
under the Second Lien Credit Agreement (as defined therein), and Wilmington
Trust, National Association, as Collateral Trustee. Capitalized terms used but
not otherwise defined herein have the meanings assigned to them in the
Collateral Trust Agreement. This Reaffirmation Agreement is being executed and
delivered as of             , 20     in connection with an Additional Parity
Lien Debt Certificate of even date herewith which Additional Parity Lien Debt
Certificate has designated additional Parity Lien Debt entitled to the benefit
of the Collateral Trust Agreement.

Each of the undersigned hereby consents to the designation of additional secured
debt as Parity Lien Debt as set forth in the Additional Parity Lien Debt
Certificate of even date herewith and hereby confirms its respective guarantees,
pledges, grants of security interests and other obligations, as applicable,
under and subject to the terms of each of the Parity Lien Documents to which it
is party, and agrees that, notwithstanding the designation of such additional
indebtedness or any of the transactions contemplated thereby, such guarantees,
pledges, grants of security interests and other obligations, and the terms of
each Parity Lien Document to which it is a party, shall continue to be in full
force and effect and such additional secured debt shall be entitled to all of
the benefits of such Parity Lien Documents.

Governing Law and Miscellaneous Provisions. The provisions of Article 7 of the
Collateral Trust Agreement will apply with like effect to this Reaffirmation
Agreement.

IN WITNESS WHEREOF, each of the undersigned has caused this Reaffirmation
Agreement to be duly executed as of the date written above.

 

[names of the Company, Grantors and Guarantors]

 

Name:   Title:  

 

3

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EXHIBIT B

[FORM OF]

COLLATERAL TRUST JOINDER – ADDITIONAL DEBT

Reference is made to the Collateral Trust Agreement, dated as of June 24, 2015
(as amended, supplemented, amended and restated or otherwise modified and in
effect from time to time, the “Collateral Trust Agreement”), among EXCO
Resources, Inc. (the “Company”), the Grantors and Guarantors from time to time
party thereto, Hamblin Watsa Investment Counsel Ltd., as Administrative Agent
under the Second Lien Credit Agreement (as defined therein), and Wilmington
Trust, National Association, as Collateral Trustee. Capitalized terms used but
not otherwise defined herein have the meanings assigned to them in the
Collateral Trust Agreement. This Collateral Trust Joinder is being executed and
delivered pursuant to Section 3.8 of the Collateral Trust Agreement as a
condition precedent to the debt for which the undersigned is acting as agent
being entitled to the benefits of being additional Parity Lien Debt under the
Collateral Trust Agreement.

1. Joinder. The undersigned,                     , a                     , (the
“New Representative”) as [trustee, administrative agent] under that certain
[described applicable indenture, credit agreement or other document governing
the additional secured debt] hereby agrees to become party as a Parity Lien
Representative under the Collateral Trust Agreement for all purposes thereof on
the terms set forth therein, and to be bound by the terms of the Collateral
Trust Agreement as fully as if the undersigned had executed and delivered the
Collateral Trust Agreement as of the date thereof.

2. Additional Secured Debt Designation

The undersigned, on behalf of itself and each holder of Obligations in respect
of the Series of Parity Lien Debt for which the undersigned is acting as Parity
Lien Representative hereby agrees, for the enforceable benefit of each existing
and future holder of Priority Lien Obligations, the Priority Lien Collateral
Agent, all holders of each current and future Series of Parity Lien Debt, each
other current and future Parity Lien Representative and each current and future
holder of Parity Lien Obligations and as a condition to being treated as Parity
Lien Debt under the Collateral Trust Agreement that:

(a) all Parity Lien Obligations will be and are secured equally and ratably by
all Parity Liens at any time granted by the Company or any other Grantor to
secure any Obligations in respect of any Series of Parity Lien Debt, whether or
not upon property otherwise constituting collateral for such Series of Parity
Lien Debt, and that all such Parity Liens will be enforceable by the Collateral
Trustee for the benefit of all holders of Parity Lien Obligations equally and
ratably;

(b) the undersigned and each holder of Obligations in respect of the Series of
Parity Lien Debt for which the undersigned is acting as Parity Lien
Representative are bound by the provisions of this Agreement, including the
provisions relating to the ranking of Parity Liens and the order of application
of proceeds from the enforcement of Parity Liens; and

 

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(c) the Collateral Trustee shall perform its obligations under the Collateral
Trust Agreement, the other Parity Lien Security Documents and the Intercreditor
Agreement.

3. Governing Law and Miscellaneous Provisions. The provisions of Article 7 of
the Collateral Trust Agreement will apply with like effect to this Collateral
Trust Joinder.

IN WITNESS WHEREOF, the parties hereto have caused this Collateral Trust Joinder
to be executed by their respective officers or representatives as of
            , 20    .

 

[name of the new representative or the Administrative Agent]

 

Name:   Title:  

The Collateral Trustee hereby acknowledges receipt of this Collateral Trust
Joinder and agrees to act as Collateral Trustee for the [New
Representative][Administrative Agent] and the holders of the Obligations
represented thereby:

 

WILMINGTON TRUST, NATIONAL ASSOCIATION, as Collateral Trustee By:  

 

Name:   Title:  

 

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EXHIBIT C

[FORM OF]

COLLATERAL TRUST JOINDER – ADDITIONAL GRANTOR

Reference is made to the Collateral Trust Agreement, dated as of October 26,
2015 (as amended, supplemented, amended and restated or otherwise modified and
in effect from time to time, the “Collateral Trust Agreement”), among EXCO
Resources, Inc. (the “Company”), the Grantors and Guarantors from time to time
party thereto, Hamblin Watsa Investment Counsel Ltd., as Administrative Agent
under the Second Lien Credit Agreement (as defined therein), and Wilmington
Trust, National Association, as Collateral Trustee. Capitalized terms used but
not otherwise defined herein have the meanings assigned to them in the
Collateral Trust Agreement. This Collateral Trust Joinder is being executed and
delivered pursuant to Section 7.18 of the Collateral Trust Agreement.

1. Joinder. The undersigned,                     , a                     ,
hereby agrees to become party as a Grantor under the Collateral Trust Agreement
for all purposes thereof on the terms set forth therein, and to be bound by the
terms of the Collateral Trust Agreement as fully as if the undersigned had
executed and delivered the Collateral Trust Agreement as of the date thereof.

2. Governing Law and Miscellaneous Provisions. The provisions of Article 7 of
the Collateral Trust Agreement will apply with like effect to this Collateral
Trust Joinder.

IN WITNESS WHEREOF, the parties hereto have caused this Collateral Trust Joinder
to be executed by their respective officers or representatives as of
            , 20    .

 

[                                                                             
        ] By:  

 

Name:   Title:  

The Collateral Trustee hereby acknowledges receipt of this Collateral Trust
Joinder and agrees to act as Collateral Trustee with respect to the Collateral
pledged by the new Grantor:

 

WILMINGTON TRUST, NATIONAL ASSOCIATION, as Collateral Trustee By:  

 

Name:   Title:  

 

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