Exhibit 10.1

SERVICES AND INVESTMENT AGREEMENT

By And Among

EXCO RESOURCES, INC.,

As EXCO,

And

ENERGY STRATEGIC ADVISORY SERVICES LLC,

As ESAS,

Dated as of March 31, 2015

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TABLE OF CONTENTS

 

ARTICLE 1 DEFINITIONS

  1   

Section 1.1

Certain Definitions   1   

Section 1.2

Interpretation   11   

ARTICLE 2 WARRANTS; INITIAL SHARES

  12   

Section 2.1

Warrants   12   

Section 2.2

Initial Shares   12   

ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF ESAS

  13   

Section 3.1

Formation   13   

Section 3.2

Power and Authority   13   

Section 3.3

Execution and Delivery   13   

Section 3.4

Restricted Securities   14   

Section 3.5

Investment Intent   14   

Section 3.6

Sophistication   14   

Section 3.7

No Conflicts   14   

Section 3.8

Consents, Approvals or Waivers   15   

Section 3.9

No Broker’s Fee   15   

Section 3.10

Bankruptcy   15   

ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF EXCO

  15   

Section 4.1

Organization and Qualification   15   

Section 4.2

Corporate Power and Authority   16   

Section 4.3

Execution and Delivery; Enforceability   16   

Section 4.4

Capitalization   16   

Section 4.5

Issuance   17   

Section 4.6

No Conflict   17   

Section 4.7

Consents and Approvals   18   

Section 4.8

Arm’s Length   18   

Section 4.9

EXCO SEC Filings   18   

Section 4.10

Financial Statements   19   

Section 4.11

No Registration Rights Agreements   20   

Section 4.12

No EXCO Material Adverse Effect   20   

Section 4.13

No Broker’s Fees   21   

Section 4.14

Anti-takeover Provisions   21   

Section 4.15

Investment Company Status   21   

Section 4.16

Bankruptcy   21   

ARTICLE 5 COVENANTS OF THE PARTIES

  21   

Section 5.1

No Stabilization   21   

Section 5.2

Closing Efforts   21   

Section 5.3

Expenses   22   

Section 5.4

Confidentiality   22   

Section 5.5

Press Releases   23   

Section 5.6

Regulatory Filings   24   

 

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TABLE OF CONTENTS

(continued)

 

Section 5.7

Non-Solicitation   25   

Section 5.8

Listing   25   

Section 5.9

Proxy Statement   25   

Section 5.10

Shareholder Approval; Meeting of Shareholders   26   

Section 5.11

Registration Rights Agreement   27   

Section 5.12

Blue Sky   27   

Section 5.13

Designation of Director   27   

Section 5.14

Reservation of Shares   27   

Section 5.15

Warrant Exercise Procedures   27   

Section 5.16

Beneficial Ownership Limitation   27   

Section 5.17

Indemnity for Certain Liabilities   28   

Section 5.18

Strategic Advisory Services   28   

Section 5.19

Director Nomination Rights and Wilder’s Service to the Board of Directors   31
  

Section 5.20

Agreement to Invest   32   

Section 5.21

Limitation on Losses   32   

Section 5.22

Standstill   32   

Section 5.23

EXCO Credit Agreement   33   

Section 5.24

Purchase Restrictions Prior to Anniversary Dates   33   

Section 5.25

Further Assurances   33   

ARTICLE 6 INITIAL SHARES CLOSING

  34   

Section 6.1

Conditions of ESAS to Initial Shares Closing   34   

Section 6.2

Conditions of EXCO to Initial Shares Closing   35   

Section 6.3

Time and Place of Initial Shares Closing   36   

Section 6.4

Obligations of ESAS at Initial Shares Closing   36   

Section 6.5

Obligations of EXCO at Initial Shares Closing   37   

ARTICLE 7 CONDITIONS TO CLOSING

  38   

Section 7.1

Conditions of ESAS to Closing   38   

Section 7.2

Conditions of EXCO to Closing   39   

ARTICLE 8 CLOSING

  41   

Section 8.1

Time and Place of Closing   41   

Section 8.2

Obligations of ESAS at Closing   41   

Section 8.3

Obligations of EXCO at Closing   42   

ARTICLE 9 TERMINATION

  42   

Section 9.1

Term   42   

Section 9.2

Early Termination   42   

Section 9.3

Effect of Termination   43   

ARTICLE 10 INDEMNIFICATION

  44   

Section 10.1

ESAS’s Indemnification Rights   44   

Section 10.2

EXCO’s Indemnification Rights   45   

 

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TABLE OF CONTENTS

(continued)

 

Section 10.3

Survival; Limitation on Actions   45   

Section 10.4

Exclusive Remedy and Certain Limitations   46   

Section 10.5

Indemnification Actions   47   

ARTICLE 11 MISCELLANEOUS

  50   

Section 11.1

Notices   50   

Section 11.2

Governing Law   51   

Section 11.3

Forum Selection; Waiver of Jury Trial   51   

Section 11.4

Dispute Resolution   52   

Section 11.5

Headings and Construction   53   

Section 11.6

Waivers   53   

Section 11.7

Severability   54   

Section 11.8

Assignment   54   

Section 11.9

Entire Agreement   54   

Section 11.10

Amendment   54   

Section 11.11

No Third-Person Beneficiaries   54   

Section 11.12

Limitation on Damages   55   

Section 11.13

Time of the Essence; Calculation of Time   55   

Section 11.14

Counterparts   55   

 

Exhibit A Form of Fourth Amended and Restated Articles of Incorporation of EXCO
Exhibit B Form of Warrants Exhibit C Form of Registration Rights Agreement
Exhibit D Form of Nomination Letter Agreement Exhibit E Executive Chairman
Description

SCHEDULES

 

Schedule 1.1 Knowledge Persons Schedule 4.11 Registration Rights Agreements

 

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SERVICES AND INVESTMENT AGREEMENT

This SERVICES AND INVESTMENT AGREEMENT (this “Agreement”), is dated as of
March 31, 2015 (the “Execution Date”), by and among EXCO Resources, Inc., a
Texas corporation (“EXCO”), and Energy Strategic Advisory Services LLC, a
Delaware limited liability company (“ESAS”). Each of EXCO and ESAS are sometimes
referred to collectively as the “Parties” and individually as a “Party.”

RECITALS:

WHEREAS, ESAS desires to provide, and EXCO desires to engage ESAS for, the
Services upon the terms and conditions hereinafter set forth;

WHEREAS, EXCO desires to sell and issue, and ESAS desires to receive from EXCO,
the Initial Shares (defined below) and the Warrants (defined below), upon the
terms and conditions hereinafter set forth; and

WHEREAS, ESAS desires to purchase at least fifty million dollars ($50,000,000)
of EXCO Common Stock prior to the first anniversary of the Closing Date,
including the Initial Shares.

NOW, THEREFORE, in consideration of the premises and of the mutual promises,
representations, warranties, covenants, conditions and agreements contained
herein, and for other valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Parties agree as follows:

ARTICLE 1

DEFINITIONS

Section 1.1 Certain Definitions. As used herein:

“2005 Registration Rights Agreement” means that certain First Amended and
Restated Registration Rights Agreement of EXCO, originally dated as of
October 3, 2005, as amended and restated as of December 30, 2005.

“2007 Registration Rights Agreement” means that certain Registration Rights
Agreement of EXCO, dated March 28, 2007, in respect of 7.0% Cumulative
Convertible Perpetual Preferred Stock and Hybrid Preferred Stock.

“AAA” is defined in Section 11.4(a).

“Accounting Principles” means the United States generally accepted accounting
principles, consistently applied.

“Affiliate” means, with respect to any Person, any Person that (a) directly or
indirectly (through one or more Subsidiaries) controls such Person, (b) is
controlled directly or indirectly (through one or more Subsidiaries) by such
Person, (c) is under the common control, whether

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directly or indirectly (through one or more Subsidiaries), with such Person by
the same ownership or control of the parent or general partner of such Person,
or (d) is the successor or surviving Person by a merger or consolidation of any
such Person pursuant to applicable Law. For purposes of this definition
“control” means (i) the ownership, directly or indirectly or beneficially, of
fifty percent (50%) of the outstanding voting securities or the beneficial
interest of another Person or (ii) the direct or indirect ability to direct the
management, policies or business decisions of another Person, whether as the
general partner, sole member, sole shareholder, through voting securities,
contracts or otherwise.

“Arbitration Panel” is defined in Section 11.4(a).

“beneficially own,” “beneficially owned,” “beneficial ownership” and similar
phrases have the same meanings as such terms have under Rule 13d-3 (or any
successor rule then in effect) under the Exchange Act, except that, in
calculating the beneficial ownership of any Person, such Person shall be deemed
(i) to have beneficial ownership of all securities that such Person has the
right to acquire, whether such right is currently exercisable or is exercisable
upon the occurrence of a subsequent event or after the passage of time, and
(ii) to beneficially own all of the shares of Capital Stock held by any of its
Affiliates.

“Board of Directors” means the Board of Directors of EXCO.

“BRC” is defined in Section 3.1.

“Business Day” means any day other than a Saturday, a Sunday, or a day on which
banks are closed for business in Dallas, Texas or New York, New York.

“Business Opportunities Waiver” means the renouncement of any interest or
expectancy of EXCO in, or in being offered an opportunity to participate in, any
business opportunities by each of the members of the Board of Directors of EXCO
(and their respective Affiliates and related funds and other related Persons,
including any ESAS nominees or representatives serving on the Board of Directors
of EXCO or any of its Subsidiaries, including the position of Executive
Chairman) in the form set forth in Exhibit A.

“Business Plan” is defined in Section 5.18(a).

“Capital Stock” of any Person means any and all shares of capital stock,
partnership interests, membership interests in a limited liability company,
beneficial interests in a trust or other equity ownership interests in a Person,
and any warrants, options or other rights entitling the holder thereof to
purchase or acquire any such equity interest.

“Certificate of Amendment” means the certificate of amendment published by the
secretary of state of the State of Texas on Form 424 completed to give effect to
the amendment and restatement of EXCO’s Articles of Incorporation pursuant to
the Organizational Document Amendment Proposal.

“Claim Notice” is defined in Section 10.5(b).

“Closing” is defined in Section 8.1.

 

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“Closing Date” is defined in Section 8.1.

“Closing Warrants” means (i) a warrant exercisable for 20,000,000 shares of
Common Stock with a strike price of $7.00 per share of Common Stock, and (ii) a
warrant exercisable for 25,000,000 shares of Common Stock with a strike price of
$10.00 per share of Common Stock, each as evidenced by the certificates in the
Form of Warrants attached hereto as Exhibit B.

“Code” means the United States Internal Revenue Code of 1986.

“Common Stock” shall mean the common stock of EXCO, par value $0.001 per share.

“Confidential Information” is defined in Section 5.4.

“Confidentiality Agreement” means that certain Confidentiality Agreement dated
as of August 20, 2014 by and among EXCO and ESAS, as amended from time to time.

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

“Damages” is defined in Section 10.4(b).

“Direct Claim” is defined in Section 10.5(g).

“Dispute” is defined in Section 11.4(a).

“ESAS” is defined in the introductory paragraph hereof.

“ESAS Forfeiture Event” shall mean:

(a) any material willful or intentional breach by ESAS of any of its covenants
set forth in this Agreement or any other Transaction Document that are to be
performed by ESAS after the Closing Date but on or prior to the Termination
Date;

(b) ESAS’s failure to purchase, hold or satisfy all or any portion the
Investment or to comply with the terms of Section 5.20 as and when required
under the terms of this Agreement; or

(c) any time after the Closing Date and on or prior to the date a Party delivers
a notice of termination of this Agreement, the occurrence or existence of any of
the following:

(i) Wilder’s failure to agree to be nominated for election to serve on the Board
of Directors as the Executive Chairman at any annual meeting of the shareholders
or special meeting held to elect members of the Board of Directors or the
Executive Chairman;

(ii) Wilder’s resignation from the Board of Directors;

 

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(iii) Wilder’s failure to agree to serve on the Board of Directors as Executive
Chairman when properly elected;

(iv) the prohibition or disqualification of Wilder from serving as a director of
EXCO under any final non-appealable Order or decree of any court with competent
jurisdiction, the SEC or any other regulatory body, rule or regulation of the
SEC, the NYSE or any other exchange on which the Common Stock is listed, or by
applicable Law;

(v) Wilder’s engagement in acts or omissions constituting a breach of his
fiduciary duties to EXCO and its shareholders (other than such duties that are
waived in the Articles of Incorporation of EXCO), as determined under a final
non-appealable Order or decree of any court with competent jurisdiction;

(vi) Wilder being subject to a disqualification event described in Rule 506(d)
of Regulation D of the Securities Act of 1933; or

(vii) any final non-appealable conviction by a court with competent jurisdiction
or any plea of nolo contendere of Wilder of any felony (other than any driving
violation) or crime involving dishonesty or moral turpitude; or

(viii) Wilder’s death or failure to possess sufficient mental and physical
capacities, as determined by a medical doctor appointed by EXCO’s CEO from the
medical staff at Texas Health Presbyterian Hospital Dallas, to perform his
obligations as Executive Chairman of EXCO (other than periods of temporary
disability or incapacity not to exceed sixty (60) consecutive days);

provided, however, (i) ESAS Forfeiture Event shall not exist and shall not be
valid (and any invalid termination of this Agreement for ESAS Forfeiture Event
shall be deemed a termination not for ESAS Forfeiture Event) unless (A) EXCO
notifies ESAS in writing in reasonable detail of the circumstances forming the
basis for an ESAS Forfeiture Event termination, (B) such notice is given within
sixty (60) days after EXCO obtains knowledge of such circumstances and (C) such
notice indicates that EXCO elects to terminate this Agreement for ESAS
Forfeiture Event based on such circumstances, and (ii) with respect to subpart
(a) of this definition, “ESAS Forfeiture Event” shall not be deemed to exist
unless ESAS has failed to cure any such breaches described in such subpart
within sixty (60) days’ notice from EXCO of such breach.

“ESAS Group” means ESAS and each Affiliate of ESAS.

“ESAS Initial Warrantholders” shall mean, at the Execution Date and such other
date or dates that the Warrants are issued, as applicable, ESAS and any of its
Affiliates to whom, pursuant to Section 11.8, ESAS has assigned (with the
consent of EXCO, which consent shall not be unreasonably withheld) the right to
be issued by EXCO all or a portion of the Warrants.

“ESAS Material Adverse Effect” means any event, change or circumstance (whether
foreseeable or not) that, individually or in the aggregate, results or would be
reasonably likely to result in a material adverse effect on the ability of ESAS
to perform its obligations hereunder or under the other Transaction Documents;
provided, however, that “ESAS Material Adverse

 

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Effect” shall not include material adverse effects resulting from (A) general
changes in hydrocarbon prices; (B) changes in condition or developments
generally applicable to the oil and gas industry in the United States so long as
such conditions do not have a materially disproportionate effect on ESAS,
(C) economic, financial, credit or political conditions and general changes in
markets so long as such conditions do not have a materially disproportionate
effect on ESAS; (D) acts of God, including hurricanes and storms; (E) acts or
failures to act of Governmental Authorities (where not caused by the willful or
negligent acts of ESAS); (F) civil unrest or similar disorder; terrorist acts;
or any outbreak of hostilities or war; (G) any reclassification or recalculation
of reserves in the ordinary course of business; (H) changes in Laws; (I) effects
or changes that are cured at no cost to EXCO or no longer exist by the earlier
of the Closing and the termination of this Agreement pursuant to Article 8;
(J) any effect resulting from any action taken by EXCO or any Affiliate of EXCO,
other than those actions expressly permitted or required in accordance with the
terms of this Agreement; (K) natural declines in well performance; or (L) any
matters, facts or disclosures set forth in the schedules herein as of the
Execution Date.

“EXCO” is defined in the introductory paragraph hereof.

“EXCO Credit Agreement” means that certain Amended and Restated Credit
Agreement, dated as of July 31, 2013, among EXCO, as borrower, certain
Subsidiaries of EXCO, as guarantors, the lender parties thereto, and JPMorgan
Chase Bank, N.A., as Administrative Agent, as amended.

“EXCO Forfeiture Event” shall mean:

(a) any material willful or intentional breach by EXCO of any of its covenants
set forth in this Agreement or any other Transaction Document that are to be
performed by EXCO after the Closing Date but on or prior to the Termination
Date; or

(b) if any time after the Closing Date and on or prior to the date a Party
delivers a notice of termination of this Agreement, Wilder is not elected as the
Executive Chairman of the Board of Directors or is removed as Executive Chairman
of the Board of Directors except as a result of any of the following:

(i) Wilder’s failure to agree to be nominated for election to serve on the Board
of Directors as the Executive Chairman at any annual meeting of the shareholders
or special meeting held to elect members of the Board of Directors or the
Executive Chairman;

(ii) Wilder’s resignation from the Board of Directors;

(iii) Wilder’s failure to agree to serve on the Board of Directors as Executive
Chairman when properly elected;

(iv) the prohibition or disqualification of Wilder from serving as a director of
EXCO under any final non-appealable Order or decree of any court with competent
jurisdiction, the SEC or any other regulatory body, rule or regulation of the
SEC, the NYSE or any other exchange on which the Common Stock is listed, or by
applicable Law;

 

 

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(v) Wilder’s engagement in acts or omissions constituting a breach of his
fiduciary duties to EXCO and its shareholders (other than such duties that are
waived in the Articles of Incorporation of EXCO), as determined under a final
non-appealable Order or decree of any court with competent jurisdiction;

(vi) Wilder being subject to a disqualification event described in Rule 506(d)
of Regulation D of the Securities Act of 1933;

(vii) any final non-appealable conviction by a court with competent jurisdiction
or any plea of nolo contendere of Wilder of any felony (other than any driving
violation) or crime involving dishonesty or moral turpitude; or

(viii) Wilder’s death or failure to possess sufficient mental and physical
capacities, as determined by a medical doctor appointed by EXCO’s CEO from the
medical staff at Texas Health Presbyterian Hospital Dallas, to perform his
obligations as Executive Chairman of the EXCO (other than periods of temporary
disability or incapacity not to exceed sixty (60) consecutive days);

provided, however, (i) EXCO Forfeiture Event shall not exist and shall not be
valid (and any invalid termination of this Agreement for EXCO Forfeiture Event
shall be deemed a termination not for EXCO Forfeiture Event) unless (A) ESAS
notifies EXCO in writing in reasonable detail of the circumstances forming the
basis for an EXCO Forfeiture Event termination, (B) such notice is given within
sixty (60) days after ESAS obtains knowledge of such circumstances and (C) such
notice indicates that ESAS elects to terminate this Agreement for EXCO
Forfeiture Event based on such circumstances, and (ii) with respect to subpart
(a) of this definition, “EXCO Forfeiture Event” shall not be deemed to exist
unless EXCO has failed to cure any such breaches described in such subpart
within sixty (60) days’ notice from ESAS of such breach.

“EXCO Group” means EXCO and each Affiliate of EXCO except for members of ESAS
Group.

“EXCO Material Adverse Effect” means any event, change or circumstance (whether
foreseeable or not) that, individually or in the aggregate, results or would be
reasonably likely to result in a material adverse effect on (i) EXCO’s ability
to perform its obligations hereunder or under the other Transaction Documents or
(ii) the ownership, financial condition, capitalization, liabilities or
operation of EXCO as currently conducted as of the Execution Date; provided,
however, that “EXCO Material Adverse Effect” shall not include material adverse
effects resulting from (A) general changes in hydrocarbon prices; (B) changes in
condition or developments generally applicable to the oil and gas industry in
the United States so long as such conditions do not have a materially
disproportionate effect on EXCO, (C) economic, financial, credit or political
conditions and general changes in markets; (D) acts of God, including hurricanes
and storms; (E) acts or failures to act of Governmental Authorities (where not
caused by the willful or negligent acts of EXCO); (F) civil unrest or similar
disorder; terrorist acts; or any outbreak of hostilities or war; (G) any
reclassification or recalculation of reserves in the ordinary course of
business; (H) changes in Laws; (I) effects or changes that are cured at no cost

 

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to ESAS or no longer exist by the earlier of the Closing and the termination of
this Agreement pursuant to Article 8; (J) any effect resulting from any action
taken by ESAS or any of ESAS’s respective Affiliates with the intent of causing
such effect, other than those actions expressly permitted or required in
accordance with the terms of this Agreement; (K) any effect resulting from any
action taken by EXCO or any Affiliate of EXCO with ESAS’s written consent;
(L) natural declines in well performance; or (M) any matters, facts or
disclosures set forth in the schedules herein as of the Execution Date.

“EXCO Organizational Documents” shall mean the Third Amended and Restated
Articles of Incorporation of EXCO, as amended, and the Second Amended and
Restated Bylaws of EXCO.

“EXCO Stock Plans” is defined in Section 4.4.

“Escrow Account” means the escrow account maintained by the Escrow Agent in
accordance with the terms of the Escrow Agreement.

“Escrow Agent” means a United States national banking association, as appointed
by mutual agreement of the Parties to serve as escrow agent hereunder, and any
successor to such banking association.

“Escrow Agreement” means an escrow agreement between the Parties and the Escrow
Agent, as such may be amended, modified, supplemented or replaced from time to
time.

“Exceptions” is defined in Section 3.3.

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

“Execution Date” is defined in the introductory paragraph hereof.

“Fundamental Representations” means (a) with respect to EXCO, the
representations and warranties of EXCO set forth in Section 4.3 through
Section 4.6, inclusive, and Section 4.13, and the corresponding representations
and warranties with respect thereto given in the certificates delivered by EXCO
at Closing pursuant to Section 8.3(e) and (b) with respect to ESAS, the
representations and warranties of ESAS set forth in Section 3.3, Section 3.7,
and Section 3.9, and the corresponding representations and warranties with
respect thereto given in the certificates delivered by ESAS at Closing pursuant
to Section 8.2(c).

“Governmental Authority” means any court, tribunal, arbitrator, authority,
agency, commission, official or other instrumentality of the United States, any
foreign country or any domestic or foreign state, county, city, tribal,
quasi-governmental entity or other political subdivision or authority exercising
or entitled to exercise any administrative, executive, judicial, legislative,
regulatory or taxing authority or power.

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.

 

 

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“Incentive Payment” means a payment in an amount equal to zero to $2.4 million
as determined in accordance with Section 5.18(d)(ii). For purposes of
Section 5.18(d)(ii), the maximum Incentive Payment shall be $2.4 million.

“Indemnified Person” is defined in Section 10.5(a).

“Indemnifying Party” is defined in Section 10.5(a).

“Initial Investment” is defined in Section 2.2.

“Initial Shares” is defined in Section 2.2.

“Initial Shares Closing” is defined in Section 2.2.

“Initial Shares Closing Date” is defined in Section 2.2.

“Initial Warrants” means (i) a warrant exercisable for 15,000,000 shares of
Common Stock with a strike price of $2.75 per share of Common Stock and (ii) a
warrant exercisable for 20,000,000 shares of Common Stock with a strike price of
$4.00 per share of Common Stock, each as delivered in connection with the
execution of this Agreement.

“Investment” means the Initial Investment and the Remaining Investment.

“Investment Obligation Termination Event” means the occurrence of any of the
following events: (a) an event of default (other than defaults to which
contractual cure periods or lender forbearance agreements apply) by EXCO or any
of its Affiliates under (i) the EXCO Credit Agreement or any other credit
agreement or similar agreement for borrowed money or (ii) any EXCO indenture,
(b) EXCO is removed from, and the Common Stock is no longer listed on, the NYSE,
(c) EXCO becomes insolvent, (d) any bankruptcy proceeding is commenced by, in
favor of or against EXCO pursuant to Chapter 11, United States Code, or any
similar federal, state or foreign bankruptcy Law; provided, however, no
Investment Obligation Termination Event shall occur until ESAS notifies EXCO in
writing in reasonable detail of the circumstances giving rise to such Investment
Obligation Termination Event, (e) the failure of EXCO to make all SEC Filings as
and when required by applicable Law or (f) the issuance of any “going concern”
opinion in any audit report from any outside auditors of EXCO.

“Investment Obligation Test Date” is defined in Section 5.20.

“Knowledge” means, (i) with respect to ESAS, the actual conscious knowledge,
without any duty or obligation of investigation or inquiry, of only those
officers of ESAS named on Schedule 1.1 and (ii) with respect to EXCO the actual
conscious knowledge, without any duty or obligation of investigation or inquiry,
of only those officers and employees of EXCO named on Schedule 1.1.

“Laws” means all laws, statutes, rules, regulations, ordinances, Orders,
decrees, requirements, judgments and codes of Governmental Authorities.

 

 

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“Lien” means any (a) lien, mortgage, pledge, collateral assignment or security
interest, of any kind, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of Capital Stock or
securities, any purchase option, call or similar right of a Third Party with
respect to such securities (including, in each case of subpart (a) through (c),
any agreement to give any of the foregoing, any conditional sale or other title
retention agreement) and any option, trust or other preferential arrangement
having the practical effect of any of the foregoing.

“Monthly Fee” means a monthly payment of $300,000 that EXCO shall pay to ESAS
for the Services.

“Nomination Letter Agreement” is defined in Section 5.19.

“Notice” is defined in Section 11.1.

“NYSE” shall mean the New York Stock Exchange LLC.

“NYSE Approval Proposal” shall mean the proposal to approve the issuance of a
portion of the Warrants and the Warrant Shares in accordance with the rules of
the NYSE or any other U.S. national securities exchange on which the Common
Stock is then listed.

“Open Market Shares” means Common Stock constituting the Investment that ESAS
shall purchase in the open market as described in Section 5.20.

“Order” means any order, injunction, judgment, doctrine, decree, ruling, writ,
assessment, arbitration award or similar action of a Governmental Authority.

“Organizational Document Amendment Proposal” means the proposal to approve the
amendment and restatement of the Third Amended and Restated Articles of
Incorporation of EXCO in the form attached hereto as Exhibit A, which shall
include the Business Opportunities Waiver.

“Ownership Change” is defined in Section 5.21.

“Percentile Rank” means, with respect to any anniversary of the Execution Date,
the Percentile Rank as such term is defined in the Form of Warrants attached
hereto as Exhibit B except that the Performance Measurement Date shall be the
date of such anniversary and the Initial Value Date shall be the date 364 days
prior to such anniversary date.

“Permits” means any approvals, authorizations, consents, licenses,
registrations, variances, franchise, permission, clearance, qualification,
permits or certificates issued, granted, given, obtained, or otherwise made
available by or under the authority of a Governmental Authority or pursuant to
any Law, and applications therefor and renewals thereof.

“Person” means any individual, corporation, partnership, limited liability
company, trust, estate, Governmental Authority or any other entity.

“Preferred Stock” is defined in Section 4.4.

 

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“Proxy Statement” is defined in Section 5.9.

“Registration Rights” is defined in Section 4.11.

“Registration Rights Agreement” means the Registration Rights Agreement between
ESAS, each ESAS Initial Warrantholder and EXCO in substantially the form
attached hereto as Exhibit C with such changes as the Parties reasonably agree
to in good faith negotiations covering the registration of the Initial Shares,
the Warrants, the Warrant Shares and any other shares of Common Stock owned or
hereafter purchased by the ESAS Group.

“Remaining Investment” is defined in Section 5.20.

“Representatives” means, with respect to a Party, such Party, its Affiliates and
each of their respective officers, employees, accountants, attorneys,
environmental consultants and other authorized representatives.

“Required Shareholder Approval” shall mean the requisite approval by (a) the
holders of EXCO’s Capital Stock of the NYSE Approval Proposal, as required by
the NYSE or any other U.S. national securities exchange on which the Common
Stock is then listed, and (b) the approval of the holders of two-thirds of the
outstanding Common Stock and disinterested holders of Common Stock representing
a majority of the votes cast (excluding abstentions) by all disinterested
holders of Common Stock of the Organizational Document Amendment Proposal, as
required by applicable Law and the EXCO Organizational Documents.

“Rule 10b5-1 Plan” means a written plan of ESAS to acquire the Remaining
Investment in accordance with Rule 10b5-1(c) promulgated under the Exchange Act.

“SEC” means the U.S. Securities and Exchange Commission.

“SEC Filings” is defined in Section 4.9.

“Securities” means the Initial Shares, the Warrants and the Warrant Shares.

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

“Services” means the strategic advisory services that ESAS shall provide to EXCO
pursuant to Section 5.18 of this Agreement, which shall have the goal of
repositioning EXCO in accordance with the Business Plan.

“Shareholder Meeting” means the annual or special meeting of the holders of
Common Stock to be called by EXCO for the purpose of obtaining the Required
Shareholder Approval.

“Shareholder Proposals” means the Organizational Document Amendment Proposal and
the NYSE Approval Proposal.

“SOX” is defined in Section 4.10(e).

 

 

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“Subsidiary” shall mean, with respect to any Person, (i) any corporation,
association, partnership or other business entity of which more than fifty
percent (50%) of the total voting power of shares ordinarily entitled to vote in
the election of directors or other members of the governing body of such Person
(other than solely by reason of a contingency) is at the time owned or
controlled, directly or indirectly, by (a) such Person, (b) such Person and one
or more subsidiaries of such Person or (c) one or more subsidiaries of such
Person, (ii) a partnership or limited liability company of which such Person or
one of its subsidiaries is the general partner or managing member, as
applicable, or (iii) any other Person in which such Person has the power to
elect or direct the election of a majority of the directors or other governing
body of such Person.

“Termination Date” is defined in Section 9.2(c).

“Third Party” means any Person other than ESAS and EXCO or any of their
respective Affiliates.

“Third Party Claim” is defined in Section 10.5(c)

“Trading Day” is defined in the Form of Warrants attached hereto as Exhibit B.

“Transaction Documents” means this Agreement, the Confidentiality Agreement, the
Registration Rights Agreement, the Warrants, the Nomination Letter Agreement,
the Escrow Agreement and the certificates delivered by the applicable Parties
under Sections 8.2(c) and 8.3(e).

“Warrant Shares” means the shares of Common Stock issued by EXCO upon exercise
of the Warrants in accordance with the terms of the Warrants.

“Warrants” means the Initial Warrants and the Closing Warrants.

“Wilder” means C. John Wilder, a resident of Dallas County, Texas.

Section 1.2 Interpretation. In this Agreement, unless a clear contrary intention
appears: (a) the singular number includes the plural number and vice versa;
(b) reference to any Person includes such Person’s successors and assigns but
only if such successors and assigns are not prohibited by this Agreement, and
reference to a Person in a particular capacity excludes such Person in any other
capacity or individually; (c) reference to any gender includes each other
gender; (d) reference to any agreement (including this Agreement), document or
instrument means, unless specifically provided otherwise, such agreement,
document or instrument as amended or modified and in effect from time to time in
accordance with the terms thereof; (e) reference to any law means, unless
specifically provided otherwise, such law as amended, modified, codified,
replaced or reenacted, in whole or in part, and in effect from time to time,
including rules and regulations promulgated thereunder and reference to any
section or other provision of any law means, unless specifically provided
otherwise, that provision of such law from time to time in effect and
constituting the substantive amendment, modification, codification, replacement
or reenactment of such section or other provision; (f) reference in this
Agreement to any Article, Section, Appendix, Schedule or Exhibit means such
Article or Section hereof or Appendix, Schedule or Exhibit thereto;
(g) “hereunder”, “hereof”, “hereto” and words of similar import shall be deemed
references to this Agreement as a whole and not to any particular Article,
Section or other provision thereof; (h) “including” (and with correlative
meaning “include”)

 

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means including without limiting the generality of any description preceding
such term; (i) “or” shall be disjunctive, but not exclusive; (j) relative to the
determination of any period of time, “from” means “from and including” and “to”
means “to but excluding”; (k) the Schedules and Exhibits attached to this
Agreement shall be construed with and as an integral part of this Agreement to
the same extent as if the same had been set forth verbatim herein; provided that
in the event a word or phrase defined in this Agreement is expressly given a
different meaning in any Schedule or Exhibit, such different definition shall
apply only to such Schedule or Exhibit defining such word or phrase
independently, and the meaning given such word or phrase in this Agreement shall
control for purposes of this Agreement, and such alternative meaning shall have
no bearing or effect, on the interpretation of this Agreement; and (l) except as
otherwise provided herein, all actions which any Person may take and all
determinations which any Person may make pursuant to this Agreement may be taken
and made at the sole and absolute discretion of such Person.

ARTICLE 2

WARRANTS; INITIAL SHARES

Section 2.1 Warrants.

(a) On the terms and conditions contained in this Agreement, on the Execution
Date, EXCO shall issue to ESAS the Initial Warrants, as partial consideration
for the performance of the Services in accordance with this Agreement.

(b) On the terms and conditions contained in this Agreement, at Closing, or such
earlier date, to be mutually agreed upon by EXCO and ESAS, as soon as
practicable after the necessary approvals have been obtained for the issuance of
the Closing Warrants, EXCO shall issue to ESAS the Closing Warrants, which shall
be exercisable pursuant to the terms of the Form of Warrants attached hereto as
Exhibit B, as partial consideration for the continued performance of the
Services in accordance with this Agreement.

Section 2.2 Initial Shares.

(a) On the terms and conditions contained in this Agreement, EXCO shall issue to
ESAS, and ESAS shall purchase and acquire from EXCO, 5,882,353 shares of Common
Stock (the “Initial Shares”) on or promptly after the date when a registration
statement has been declared effective by the SEC covering the resale of the
Initial Shares (the “Initial Shares Closing”, and such date, the “Initial Shares
Closing Date”) as consideration for the payment in cash by ESAS of an amount
equal to ten million dollars ($10,000,000) (the “Initial Investment”).

(b) Promptly after the date hereof the Parties shall mutually agree upon the
Escrow Agent and execute a mutually agreeable Escrow Agreement.

 

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(c) No later than three (3) Business Days after the execution of the Escrow
Agreement by the Parties and the Escrow Agent, ESAS shall deposit an amount
equal to the Initial Investment with the Escrow Agent via wire transfer of
immediately available funds to the Escrow Account, such amount to be held in
escrow by the Escrow Agent in accordance with the terms of the Escrow Agreement.

(d) Upon the Initial Shares Closing in accordance with Article 6, on the Initial
Shares Closing Date the Initial Investment shall be disbursed to EXCO and the
remainder, if any, of the amounts held in the Escrow Account attributable to any
interest accrued upon the Initial Investment shall be disbursed to or on behalf
of ESAS.

(e) If for any reason this Agreement is terminated prior to Closing in
accordance with Section 9.2 below, then all amounts held in the Escrow Account
shall be disbursed or retained as provided in Section 5.18(e) and Section 9.3.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF ESAS

ESAS represents and warrants to, and agrees with, EXCO as set forth below.
Except for representations, warranties and agreements that are expressly limited
as to a particular date, each representation, warranty and agreement is made as
of the Execution Date and as of the Closing Date after giving effect to the
transactions contemplated hereby:

Section 3.1 Formation. ESAS has been duly organized and is validly existing as a
limited liability company in good standing under the Laws of the State of
Delaware. ESAS is a wholly-owned, direct subsidiary of Bluescape Resources
Company LLC (“BRC”).

Section 3.2 Power and Authority. ESAS has the requisite limited liability
company power and authority to enter into, execute and deliver this Agreement
and the other Transaction Documents and each other agreement, document, and
instrument to which it is or will be a party or which it has executed and
delivered, or will execute and deliver, in connection with the transactions
contemplated by this Agreement and to perform its obligations and consummate the
transactions contemplated hereunder and thereunder and has taken all necessary
limited liability company action required for the due authorization of the
Transaction Documents, the performance of its obligations thereunder and the
consummation of the transaction contemplated thereby.

Section 3.3 Execution and Delivery. Each Transaction Document to which ESAS is,
or will be, a party has been, or at the time of its execution and delivery by
ESAS, will be, duly and validly authorized, executed and delivered by ESAS, and
constitutes, or at the time of its execution and delivery by ESAS, will
constitute, a valid and binding obligation of ESAS, enforceable against ESAS in
accordance with its terms, except as may be limited by the effect of bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or similar Laws
affective the enforcement of creditors’ rights generally, subject to principles
of equity and public policy and except to the extent that the indemnification
and contribution provisions in this Agreement may be limited by federal or state
securities Laws (the “Exceptions”).

 

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Section 3.4 Restricted Securities. ESAS understands that the Securities have not
been registered under the Securities Act and may not be resold without
registration under the Securities Act except pursuant to a specific exemption
from the registration provisions of the Securities Act. As a result, ESAS
acknowledges and understands that, upon the original issuance thereof and until
such time as the same is no longer required under any applicable requirements of
the Securities Act or applicable state securities Laws, EXCO and its transfer
agent shall make such notation in the stock book and transfer records of EXCO as
may be necessary to record that the Securities have not been registered under
the Securities Act and may not be resold without registration under the
Securities Act except pursuant to a specific exemption from the registration
provisions of the Securities Act. ESAS acknowledges that Rule 144 promulgated
under the Securities Act may not be available to exempt all sales of the
Securities. ESAS recognizes that EXCO is under no obligation to register the
Securities except pursuant to this Agreement and the Registration Rights
Agreement. ESAS understands that the certificates representing the Securities
may carry one or more legends incorporating such restrictions.

Section 3.5 Investment Intent. ESAS is acquiring the Securities for investment
for its own account, and not with the view to, or for resale in connection with,
any distribution thereof not in compliance with the Securities Act and any
applicable state securities or “blue sky” Laws, and ESAS has no present
intention of selling, granting any participation in, or otherwise distributing
the same, except in compliance with the Securities Act and any applicable state
securities or “blue sky” Laws.

Section 3.6 Sophistication. Each of ESAS and BRC is an “accredited investor”
within the meaning of Rule 501(a) promulgated under the Securities Act, and ESAS
has such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of its investment in the Securities
being acquired hereunder. ESAS understands and is able to bear any economic
risks associated with such investment. Without derogating from or limiting the
representations and warranties of EXCO, ESAS acknowledges that it has been
afforded the opportunity to ask questions and receive answers concerning EXCO
and to obtain additional information that it has requested to verify the
information contained in this Section 3.6. With the assistance of ESAS’s own
professional advisors, to the extent that ESAS has deemed appropriate, ESAS has
made its own legal, tax, accounting and financial evaluation of the merits and
risks of an investment in Securities and the consequences of this Agreement.
ESAS has considered the suitability of the Securities as an investment in light
of its own circumstances and financial condition, and ESAS is able to bear any
economic risks associated with such investment. Notwithstanding the foregoing,
nothing contained herein will operate to modify or limit in any respect the
other representations, warranties or covenants of EXCO or to relieve it from any
obligations to ESAS for breach thereof or for the making of misleading
statements or the omission of material facts in connection with the transactions
contemplated herein.

Section 3.7 No Conflicts. The acquisition of the Securities, the execution and
delivery by ESAS of each of the Transaction Documents to which it is, or will
be, a party and the performance of and compliance with all of the provisions
thereof by ESAS, and the consummation of the transactions contemplated therein
(i) will not conflict with, or result in a breach or violation of, any of the
terms or provisions of, or constitute a default under (in each case, with or
without notice or lapse of time, or both), or result, in the acceleration of, or
the creation of any Lien under, any indenture, mortgage, deed of trust, loan
agreement or other

 

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agreement, instrument, contract or other arrangement to which ESAS is a party or
by which ESAS is bound or to which any of the property or assets of ESAS is
subject, (ii) will not result in any violation of the provisions of the
certificate of formation, operating agreement or similar governance documents of
ESAS, and (iii) will not result in any material violation of, or any termination
or material impairment of any rights under, any applicable Law, including any
license, authorization, injunction, judgment, Order, decree, rule or regulation
of any Governmental Authority, except in the case of each of clauses (i) through
(iii), for any conflict, breach, violation, default, acceleration, Lien,
termination or impairment which would not reasonably be expected to result in an
ESAS Material Adverse Effect.

Section 3.8 Consents, Approvals or Waivers. No consent, approval, authorization,
Order, Permit, registration or qualification of any Third Party or with any
Governmental Authority is required to be obtained or made by ESAS in connection
with the execution and delivery of the Transaction Documents, the compliance by
ESAS with any of the provisions hereof and thereof, or the consummation of the
transactions contemplated hereby, except for (i) such consents, approvals,
authorizations, registrations or qualifications as may be required under state
securities or “blue sky” Laws in connection with the acquisition of the
Securities by ESAS, (ii) any consent, approval, authorization, registration or
qualification which, if not made or obtained, would not reasonably be expected
to prohibit or materially and adversely affect ESAS’s performance of its
obligations under this Agreement, (iii) if applicable, filings required under,
and compliance with other applicable requirements of, the HSR Act, (iv) filings
required with the NYSE in connection with listing of the Securities and (v) the
registration of the resale of the Securities, including such “blue sky”
consents, approval authorizations, registrations or qualifications as may be
necessary or appropriate.

Section 3.9 No Broker’s Fee. Neither ESAS nor any of its Affiliates is a party
to any contract, agreement or understanding with any Person that would give rise
to a claim against EXCO for a financial advisory fee, brokerage commission,
finder’s fee or like payment in connection with any transaction contemplated in
any of the Transaction Agreements.

Section 3.10 Bankruptcy. There are no bankruptcy, reorganization or receivership
proceedings pending, being contemplated by, or, to the Knowledge of ESAS,
threatened in writing against, ESAS.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF EXCO

EXCO represents and warrants to, and agrees with, ESAS as set forth below.
Except for representations, warranties and agreements that are expressly limited
as to a particular date, each representation, warranty and agreement is made as
of the Execution Date and as of the Closing Date after giving effect to the
transactions contemplated hereby:

Section 4.1 Organization and Qualification. EXCO has been duly incorporated and
is validly existing as a corporation in good standing under the Laws of the
State of Texas, with the corporate power and authority to own its properties and
conduct its business as currently conducted, and, except as has not had and
would not reasonably be expected to have,

 

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individually or in the aggregate, an EXCO Material Adverse Effect, has been duly
qualified as a foreign corporation for the transaction of business and is in
good standing under the Laws of each other jurisdiction in which it owns or
leases properties, or conducts any business so as to require such qualification.
Each Subsidiary of EXCO that is a “significant subsidiary” within the meaning of
Rule 1-02(w) of Regulation S-X under the Securities Act has been duly organized
and is validly existing in good standing under the Laws of its jurisdiction of
organization, with the corporate or analogous power and authority to own its
properties and conduct its business as currently conducted, and, except as has
not had and would not reasonably be expected to have, individually or in the
aggregate, an EXCO Material Adverse Effect, has been duly qualified as a foreign
corporation, limited liability company or partnership, as applicable, for the
transaction of business and is in good standing under the Laws of each other
jurisdiction in which it owns or leases properties, or conducts any business so
as to require such qualification.

Section 4.2 Corporate Power and Authority. EXCO has the requisite corporate
power and authority to enter into, execute and deliver this Agreement, the other
Transaction Documents and each other agreement, document, and instrument to
which it is or will be a party or which it has executed and delivered, or will
execute and deliver, in connection with the transactions contemplated by this
Agreement and, assuming receipt of the Required Shareholder Approval, to perform
its obligations and consummate the transactions contemplated hereunder and
thereunder, including the issuance of the Securities. EXCO has taken all
necessary corporate action required for the due authorization of the Transaction
Documents, the performance of its obligations thereunder and the consummation of
the transaction contemplated thereby, including the issuance of the Securities,
except for receiving the Required Shareholder Approval and, once such Required
Shareholder Approval is received, filing the Certificate of Amendment with the
secretary of state of the State of Texas.

Section 4.3 Execution and Delivery; Enforceability. Each Transaction Document to
which EXCO is, or will be, a party has been, or at the time of its execution and
delivery by EXCO, will be, duly and validly authorized, executed and delivered
by EXCO, and constitutes, or at the time of its execution and delivery by EXCO,
will constitute, a valid and binding obligation of EXCO, enforceable against
EXCO in accordance with its terms, except as may be limited by the Exceptions.

Section 4.4 Capitalization. The authorized Capital Stock of EXCO consists of
350,000,000 shares of Common Stock of which, as of the Execution Date,
273,702,116 shares were issued and outstanding, of which 2,157,885 are shares of
restricted stock issued pursuant to and subject to the vesting requirements of
compensatory equity plans of EXCO in effect as of the Execution Date (the “EXCO
Stock Plans”) (excluding, for the avoidance of doubt, shares held in treasury
and an additional 1,371,536 shares of unvested, performance-based restricted
share units reserved for issuance under the EXCO Stock Plans), and 10,000,000
shares of Preferred Stock, par value $0.001 per share (the “Preferred Stock”),
of which, as of the Execution Date, no shares are either designated or issued
and outstanding. As of the Execution Date, EXCO held 578,042 shares of Common
Stock in its treasury. As of the Execution Date, no shares of Common Stock or
Preferred Stock were reserved for issuance, except for 10,020,193 shares of
Common Stock reserved for issuance under the EXCO Stock Plans upon the exercise
of stock options outstanding as of such date and granted under the EXCO Stock
Plans, with a weighted average exercise price of $12.63 per share and 1,371,536
restricted share units reserved for issuance

 

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under the EXCO Stock Plan subject to the achievement of certain criteria. The
outstanding shares of Common Stock have been duly authorized and are validly
issued and outstanding, fully paid and nonassessable, and subject to no
preemptive rights (and were not issued in violation of any preemptive rights,
EXCO Organizational Documents, or any applicable Laws). As of the Execution
Date, except as set forth above or pursuant to this Agreement, there are no
(A) shares of Capital Stock or other equity interests or voting securities of
EXCO authorized, reserved for issuance, issued or outstanding, (B) options,
warrants, calls, preemptive rights, subscription or other rights, instruments,
agreements, arrangements or commitments of any character, obligating EXCO or any
of its Subsidiaries to issue, transfer or sell or cause to be issued,
transferred or sold any shares of Capital Stock or other equity interest or
voting security in EXCO or any securities or instruments convertible into or
exchangeable for such shares of Capital Stock or other equity interests or
voting securities, or obligating EXCO or any of its Subsidiaries to grant,
extend or enter into any such option, warrant, call, preemptive right,
subscription or other right, instrument, agreement, arrangement or commitment,
(C) except in connection with the vesting, settlement or forfeiture of, or tax
payment or withholding with respect to, any equity-based awards under the EXCO
Stock Plans, outstanding contractual obligations of EXCO or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any Capital Stock or
other equity interest or voting securities of EXCO, or (D) issued or outstanding
restricted stock awards, units, rights to receive any Capital Stock or other
equity interest or voting securities of EXCO on a deferred basis, or rights to
purchase or receive any Capital Stock or equity interest or voting securities
issued or granted by EXCO to any current or former director, officer, employee
or consultant of EXCO. No Subsidiary of EXCO owns any shares of Capital Stock or
other equity interest or voting securities of EXCO. There are no voting trusts
or other agreements or understandings to which EXCO or any of its Subsidiaries
is a party with respect to the voting of the Capital Stock or other equity
interest or voting securities of EXCO.

Section 4.5 Issuance. Subject to the Required Shareholder Approval and the
acceptance of the Certificate of Amendment by the secretary of state of the
State of Texas, the issuance of the Securities has been duly and validly
authorized and, when such Securities are issued and delivered against payment
therefor, will be duly authorized, validly issued and delivered and fully paid
and nonassessable, free and clear of any and all Liens, other than Liens arising
as a matter of applicable securities Law.

Section 4.6 No Conflict. Subject to the Required Shareholder Approval and the
acceptance of the Certificate of Amendment by the secretary of state of the
State of Texas, the sale, issuance and delivery of the Securities and the
execution and delivery by EXCO of the Transaction Documents and the performance
of and compliance with all of the provisions thereof by EXCO and the
consummation of the transactions contemplated therein (i) will not conflict
with, or result in a breach or violation of, any of the terms or provisions of,
or constitute a default under (in each case, with or without notice or lapse of
time, or both), or result in the acceleration of, or the creation of any Lien
under, any indenture, mortgage, deed of trust, loan agreement or other
agreement, instrument, contract or other arrangement to which EXCO or any of its
Subsidiaries is a party or by which EXCO or any of its Subsidiaries is bound or
to which any of the property or assets of EXCO or any of its Subsidiaries is
subject, other than the EXCO Credit Agreement, (ii) will not result in any
violation of the provisions of the EXCO Organizational Documents or any of the
organizational or governance documents of any of EXCO’s Subsidiaries, and
(iii) will not result in any material violation of, or any termination or
material

 

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impairment of any rights under, any applicable Law, including any license,
authorization, injunction, judgment, Order, decree, rule or regulation of any
Governmental Authority, except, in any such case in clauses (i) and (iii), for
any conflict, breach, violation, default, acceleration, Lien, termination or
impairment which would not reasonably be expected to have, individually or in
the aggregate, an EXCO Material Adverse Effect.

Section 4.7 Consents and Approvals. No consent, approval, authorization, Order,
registration or qualification of or with any Third Party or any Governmental
Authority is required for the sale, issuance and delivery of the Securities, and
the execution and delivery by EXCO of this Agreement and the other Transaction
Documents and performance of and compliance by EXCO with all of the provisions
hereof and thereof and the consummation of the transactions contemplated herein
and therein, except (i) the Required Shareholder Approval, (ii) the acceptance
of the Certificate of Amendment by the secretary of state of the State of Texas,
(iii) such consents, approvals, authorizations, registrations or qualifications
as may be required under state securities or “blue sky” Laws in connection with
the issuance of the Securities, (iv) if applicable, filings required under, and
compliance with other applicable requirements of, the HSR Act, (v) filings
required with the NYSE in connection with listing of the Securities, (vi) the
registration of the resale of the Securities, including such “blue sky”
consents, approval authorizations, registrations or qualifications as may be
necessary or appropriate and (vii) as required under the EXCO Credit Agreement.

Section 4.8 Arm’s Length. In connection with all aspects of each transaction
contemplated by this Agreement, EXCO acknowledges and agrees that: (i) the
transactions contemplated by this Agreement are arm’s-length commercial
transactions between EXCO and ESAS, (ii) EXCO is capable of evaluating, and
understands and accepts, the terms, risks and conditions of the transactions
contemplated by this Agreement, (iii) in connection with the transactions
contemplated by this Agreement and the process leading to the foregoing, ESAS
has been, are, and will be acting solely as a principal and has not been, is
not, and will not be acting as an advisor, agent or fiduciary for EXCO or any of
EXCO’s Affiliates, shareholders, creditors or employees or any other Person, and
(iv) ESAS has no obligation to EXCO or EXCO’s Affiliates, shareholders,
creditors or employees or any other Person with respect to the transactions
contemplated hereby except those obligations expressly set forth in this
Agreement. To the fullest extent permitted by Law, EXCO hereby waives and
releases any claims that EXCO or EXCO’s Affiliates, shareholders, creditors or
employees or any other Person may have against ESAS or any of their Affiliates
with respect to any breach or alleged breach of agency or fiduciary duty in
connection with any aspect of any transaction contemplated by this Agreement.

Section 4.9 EXCO SEC Filings. Since January 1, 2012, EXCO has filed or furnished
all required reports, schedules, forms, statements and other documents
(including exhibits and all other information incorporated therein) (the “SEC
Filings”) with the SEC. As of their respective dates, each of the SEC Filings
complied in all material respects with the requirements of the Securities Act or
the Exchange Act, as applicable, and the rules and regulations of the SEC
promulgated thereunder applicable to such SEC Filings. No SEC Filing filed after
December 31, 2011, when filed, and, in the case of any SEC Filing amended or
superseded prior to the Execution Date, on the date of such amending or
superseding filing, contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were

 

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made, not misleading. Any SEC Filing filed with the SEC after the Execution Date
but prior to the Closing Date, when filed, will not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading.

Section 4.10 Financial Statements.

(a) Each of (i) the financial statements and the related notes of EXCO and its
Consolidated Subsidiaries included or incorporated by reference in the SEC
Filings, and (ii) the financial statements and the related notes of EXCO and its
Consolidated Subsidiaries to be included or incorporated by reference in the
Proxy Statement, if any, comply or will comply, as the case may be, in all
material respects with the applicable requirements of the Securities Act, the
Exchange Act, and the rules and regulations of the SEC thereunder, and fairly
present, or will fairly present, as the case may be, in all material respects
the financial position, results of operations and cash flows of EXCO and its
Subsidiaries as of the dates indicated and for the periods specified, subject,
in the case of the unaudited financial statements, to the absence of disclosures
normally made in footnotes and to customary year-end adjustments that are not
and shall not be material; such financial statements have been prepared, or will
be prepared, as the case may be, in conformity with the Accounting Principles
applied on a consistent basis throughout the periods covered thereby (except as
disclosed in the SEC Filings filed before the Execution Date), and each of
(A) the supporting schedules included or incorporated by reference in the SEC
Filings, and (B) the supporting schedules to be included or incorporated by
reference in the Proxy Statement, if any, fairly present, or will fairly
present, as the case may be, in all material respects, the information required
to be stated therein; and each of (x) the other financial information included
or incorporated by reference in the SEC Filings, and (y) the other financial
information to be included or incorporated by reference in the Proxy Statement,
if any, has been, or will be, as the case may be, derived from the accounting
records of EXCO and its Subsidiaries and presents fairly, or will present
fairly, as the case may be, the information shown thereby.

(b) Neither EXCO nor any of EXCO’s Subsidiaries is a party to, or has any
commitment to become a party to, any joint venture, off-balance sheet
partnership or any similar agreement or arrangement, where the result, purpose
or effect of such agreement or arrangement is to avoid disclosure of any
material transaction involving, or material liabilities of, EXCO or any of its
Subsidiaries in the SEC Filings (including the financial statements contained
therein). Except to the extent specifically reflected or reserved against on the
December 31, 2014 consolidated balance sheet of EXCO (including the notes
thereto) included in EXCO’s Form 10-K as filed with the Commission on
February 25, 2015, neither EXCO nor any of its Subsidiaries has any
(i) liabilities (whether or not accrued, fixed, contingent, asserted or known)
or (ii) any impairments (including impairments that would reasonably be expected
to occur or be taken) to assets or reserves, except for liabilities or
impairments, respectively, that (A) are otherwise disclosed in the SEC Filings
or (B) would not reasonably be expected to have, individually or in the
aggregate, an EXCO Material Adverse Effect.

 

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(c) EXCO has designed and maintains a system of internal control over financial
reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act)
sufficient to provide reasonable assurances regarding the reliability of
financial reporting. EXCO (1) has designed and maintains disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) to
provide reasonable assurance that information required to be disclosed by EXCO
in the reports that it files or submits with the SEC is recorded, processed,
summarized and reported within the time periods specified in the SEC’s rules,
regulations and forms, and is accumulated and communicated to EXCO’s management
as appropriate to allow timely decisions regarding required disclosure, and
(2) has disclosed, based on its most recent evaluation of internal control over
financial reporting, to EXCO’s outside auditors and the Audit Committee of the
Board of Directors (A) all significant deficiencies and material weaknesses in
the design or operation of internal control over financial reporting that would
reasonably be expected to adversely affect EXCO’s ability to record, process,
summarize and report financial information and (B) any fraud, whether or not
material, that involves management or other employees who have a significant
role in EXCO’s internal control over financial reporting, all of which
information described in clauses (A) and (B) above has been disclosed by EXCO to
ESAS prior to the Execution Date.

(d) Any material change in internal control over financial reporting required to
be disclosed in any SEC Filings has been so disclosed. Since December 31, 2011,
to the Knowledge of EXCO, neither EXCO nor any of its Subsidiaries has received
any complaint, allegation, assertion or claim regarding the accounting or
auditing practices, procedures, methodologies or methods of EXCO or any of its
Subsidiaries or their respective internal accounting controls relating to
periods after December 31, 2011, except for any complaints, allegations,
assertions or claims that have not had, and would not reasonably be expected to
have, individually or in the aggregate, an EXCO Material Adverse Effect.

(e) Each of the principal executive officer of EXCO and the principal financial
officer of EXCO (or each former principal executive officer of EXCO and each
former principal financial officer EXCO, as applicable) has made all
certifications required by Rules 13a-14 and 15d-14 under the Exchange Act and
Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, as amended (“SOX”), with
respect to the SEC Filings, and the statements contained in such certifications
are true and complete. For purposes of this Agreement, “principal executive
officer” and “principal financial officer” shall have the meanings given to such
terms in SOX.

Section 4.11 No Registration Rights Agreements. Other than the 2005 Registration
Rights Agreement and the 2007 Registration Rights Agreement, EXCO is not bound
by any agreement, contract or other arrangement with respect to its equity
securities granting any demand, shelf, incidental/piggyback or other
registration rights (“Registration Rights”) to any Person. Except as set forth
on Schedule 4.11, there have not been any amendments, modification or
supplements to, or any waivers under, either the 2005 Registration Rights
Agreement or the 2007 Registration Rights Agreement.

Section 4.12 No EXCO Material Adverse Effect. Between January 1, 2015 and the
Execution Date, other than as disclosed in the SEC Filings filed prior to the
Execution Date and except for actions to be taken in connection with the
transactions contemplated under this Agreement, there has not occurred any EXCO
Material Adverse Effect.

 

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Section 4.13 No Broker’s Fees. Neither EXCO nor any of its Subsidiaries is a
party to any contract, agreement or understanding with any Person that would
give rise to a claim against ESAS for a financial advisory fee, brokerage
commission, finder’s fee or like payment in connection with the issuance of the
Securities or the other transactions contemplated in any of the Transaction
Documents.

Section 4.14 Anti-takeover Provisions. The actions taken by the Board of
Directors to approve this Agreement, the other Transaction Documents and the
transactions contemplated hereby and thereby constitute all the action necessary
to render inapplicable to this Agreement, the other Transaction Documents, the
acquisition of shares by the ESAS Group to comply with its obligation under
Section 5.20 and the acquisition of the Warrants by ESAS hereunder and the
purchase of the Warrant Shares to be purchased upon exercise of the Warrants,
the provisions of any potentially applicable anti-takeover, control share, fair
price, moratorium, interested shareholder or similar law and any potentially
applicable provision of the EXCO Organizational Documents.

Section 4.15 Investment Company Status. EXCO is not an “investment company” or
an entity “controlled” by an “investment company” within the meaning of the
Investment Company Act of 1940, as amended.

Section 4.16 Bankruptcy. There are no bankruptcy, reorganization or receivership
proceedings pending, being contemplated by, or, to the Knowledge of EXCO,
threatened in writing against, EXCO.

ARTICLE 5

COVENANTS OF THE PARTIES

Section 5.1 No Stabilization. EXCO will not take, directly or indirectly, any
action designed to or that would reasonably be expected to cause or result in
any stabilization or manipulation of the price of the shares of Common Stock.

Section 5.2 Closing Efforts. Each of the Parties shall use its commercially
reasonable efforts to take all actions and to do all things necessary, proper or
advisable to consummate the transactions contemplated by this Agreement,
including using its commercially reasonable efforts (a) to ensure that such
Party’s representations and warranties are true and correct in all material
respects on the Closing Date and all covenants of such Party to be performed
prior to Closing are performed in all material respects, (b) to ensure that the
Required Shareholder Approval is received and, once such Required Shareholder
Approval is received, file the Certificate of Amendment with the secretary of
state of the State of Texas and (c) to obtain, at such Party’s expense, all
waivers, Permits, consents, clearances, approvals or other authorizations from
Governmental Authorities and to effect all registrations, filings and notices
with or to Governmental Authorities, as may be required by applicable Laws for
such Party to consummate the transactions contemplated by this Agreement and to
otherwise comply with all applicable Laws in connection with the consummation of
the transactions contemplated by this Agreement.

 

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Section 5.3 Expenses. Except as expressly set forth herein, all expenses
incurred by or on behalf of ESAS in connection with or related to the
authorization, preparation or execution of this Agreement, and the Exhibits and
Schedules hereto and thereto, and all other matters related to the Closing,
including all fees and expenses of counsel, accountants and financial advisers
employed by or on behalf of ESAS, shall be borne solely and entirely by ESAS,
and all such expenses incurred by EXCO shall be borne solely and entirely by
EXCO.

Section 5.4 Confidentiality. Each Party hereby agrees to keep and to cause such
Party’s Representatives to keep all Confidential Information confidential and
not to use such Confidential Information for any purpose except exercising its
rights, or fulfilling its obligations, under this Agreement, or as may be
authorized in writing by the disclosing Party. The confidentiality obligation
set forth in this Section 5.4 shall not apply to (a) Confidential Information
(i) that becomes, through no violation of the provisions of this Section 5.4 by
the applicable Party or such Party’s Representatives, part of the public domain
or publically available by publication or otherwise, (ii) which is obtained by
the applicable Party or such Party’s Representatives from a source that is not
known to it to be prohibited from disclosing such Confidential Information to
such Party or such Party’s Representatives, by any legal, fiduciary or
contractual obligation of confidentiality to another Party, as evidenced by the
receiving Party’s written records, or (iii) which is developed independently by
the applicable Party or such Party’s Representatives without use of the
Confidential Information or violation of such Party’s and its Representatives’
obligations under this Section 5.4, in each case, as evidenced by the receiving
Party’s written records, or (b) disclosures of Confidential Information (i) in
the course of any trial or other legal proceeding involving the applicable Party
or such Party’s Representatives (including any such trial or legal proceeding
relating to, or arising out of, this Agreement), or (ii) as required by any
applicable securities Law or other Law (including any subpoena, interrogatory,
or other similar requirement for such information to be disclosed or the request
or requirement of any regulatory, governmental or self-regulatory authority with
jurisdiction over the receiving Party or its Representatives) or the rules of
any applicable national stock exchange. In any such circumstance outlined in
clause (b) above, the disclosing Party shall as promptly as practicable give the
other Parties written notice of such required disclosure and thereafter disclose
only that portion of the Confidential Information as such disclosing Party is
advised by legal counsel that it is reasonably required to disclose and shall
exercise its commercially reasonable efforts to obtain reliable assurance that
confidential treatment shall be accorded such Confidential Information. The
confidentiality restrictions on each Party set forth in this Section 5.4 shall
terminate upon the first anniversary of the earlier of (a) Closing Date and
(b) the Termination Date. Each Party, on behalf of itself and its applicable
Representatives, acknowledges the competitive and confidential nature of the
Confidential Information and that irreparable damage may result to the other
Party if any Confidential Information is disclosed to any Third Party, except as
herein permitted or under the Confidentiality Agreement and except to (A) its
lenders, auditors or tax advisors and (B) Representatives who reasonably need to
know such information to assist the receiving Party in exercising its rights, or
fulfilling its obligations, under this Agreement, provided that each Party shall
be responsible for any of its lenders’, auditors’, tax advisors’ or
Representatives’ breaches of this Section 5.4, as if such Representatives were a
signatory to this Agreement for the purposes of this Section 5.4. It is

 

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further understood and agreed that monetary damages would not be a sufficient
remedy for any breach of this Section 5.4. Accordingly, it is agreed by each
Party that the other Parties shall be entitled to an injunction or injunctions
(without the posting of any bond and without proof of actual damages) to prevent
breaches or threatened breaches of this Section 5.4 and/or to specific
performance of this Section 5.4, and that neither a Party nor any of its
Representatives may oppose the granting of such relief, provided, however, that
such Party and its Representatives are entitled to dispute whether or not any
Confidential Information has been disclosed in violation of this Section 5.4.
Each Party agrees that equitable relief is not exclusive of other remedies to
which the other Parties may be entitled at Law or in equity for a breach of this
Section 5.4. “Confidential Information” means any and all information,
documents, instruments, data with respect to EXCO, ESAS or of any other nature
provided by or on behalf of a Party to any Representative or another Party,
confidential, proprietary and other information of a Party or the its assets
whether disclosed orally, visually, in writing or in other tangible form, and
any and all nonpublic or proprietary information of any nature (including
prices, trade secrets, technological know-how, data and all other nonpublic or
proprietary concepts, methods of doing business, ideas, materials or
information), and all information derived from any nonpublic or proprietary
information.

Section 5.5 Press Releases.

(a) EXCO and ESAS shall, on or before 8:30 a.m., New York, New York time, on the
first Trading Day (as defined in the Warrant) following the Execution Date,
issue a press release disclosing the transactions contemplated hereby. Within
four (4) Business Days after the Execution Date, EXCO shall file a Current
Report on Form 8-K with the SEC describing the terms of the transactions
contemplated by the Transaction Documents and including the Transaction
Documents as exhibits to such Current Report on Form 8-K, to the extent required
by the Exchange Act. Thereafter, EXCO shall timely file any filings and notices
required by the SEC or applicable Law with respect to the transactions
contemplated hereby. Except as may be required by applicable Law or the rules
and regulations of the SEC or the NYSE (in which case prior written notice of
such inclusion shall, to the extent practicable, be provided to ESAS), EXCO
shall not include the name of any member of the ESAS Group (that was not
previously disclosed in any public disclosure) in any press release with respect
to the transactions set forth herein or in the other Transaction Documents
without the prior written consent and approval of ESAS.

(b) From and after the Execution Date, except as contemplated by this
Section 5.5, neither EXCO, on the one hand, nor ESAS, on the other hand, shall
make, and each of EXCO and ESAS shall cause each of its Affiliates not to make,
any public press release or public disclosure regarding the existence of this
Agreement, the contents hereof or the transactions contemplated hereby, or the
identities of any Parties hereto without the prior written consent of EXCO, on
the one hand, and ESAS, on the other hand; provided, however, the foregoing
shall not restrict disclosures by EXCO and ESAS (i) to the extent that such
disclosures are required by applicable securities or other Laws or the
applicable rules of any stock exchange having jurisdiction over EXCO and ESAS or
(ii) to Governmental Authorities or any Third Party holding rights of consent or
other rights that may be applicable to the transactions contemplated by this
Agreement, as reasonably necessary to provide notices, seek waivers, amendments
or terminations of such rights, or seek such consents. EXCO and ESAS shall each
be liable for the compliance of their respective Affiliates with the terms of
this Section 5.5.

 

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Section 5.6 Regulatory Filings. EXCO and ESAS shall, and shall cause their
respective Affiliates to (a) make or cause to be made the filings required of
such Party or any of its Affiliates under any Laws with respect to the
transactions contemplated by this Agreement and to pay any fees due by such
Party in connection with such filings, as promptly as is reasonably practicable,
and in any event within ten (10) Business Days after the Execution Date (other
than (1) the Proxy Statement, which EXCO shall use its commercially reasonable
efforts to file as promptly as practicable after execution of this Agreement and
in any event not more than thirty (30) days after the Execution Date in
accordance with Section 5.9 or (2) under the HSR Act, which the Parties shall
use commercially reasonable efforts to file as and when required under the HSR
Act), (b) cooperate with the other Parties and furnish all information in such
Party’s possession that is necessary in connection with such other Party’s
filings, (c) use commercially reasonable efforts to cause the expiration or
termination of the notice or waiting periods under the HSR Act and, if
applicable, any other Laws with respect to the transactions contemplated by this
Agreement as promptly as is reasonably practicable, (d) promptly inform the
other Party of (and, at the other Party’s reasonable request, supply to such
other Party) any communication (or other correspondence or memoranda) from or
to, and any proposed understanding or agreement with, any Governmental Authority
in respect of such filings, (e) consult and cooperate with the other Party in
connection with any analyses, appearances, presentations, memoranda, briefs,
arguments and opinions made or submitted by or on behalf of any Party in
connection with all meetings, actions, discussions and proceedings with
Governmental Authorities relating to such filings, including, subject to
applicable Law, permitting the other Party to review in advance any proposed
written communication between it and any Governmental Authority, (f) comply, as
promptly as is reasonably practicable, with any requests of any Governmental
Authority received by such Party or any of its Affiliates under the HSR Act and
any other Laws for additional information, documents or other materials, (g) use
commercially reasonable efforts to resolve any objections as may be asserted by
any Governmental Authority with respect to the transactions contemplated by this
Agreement, and (h) use commercially reasonable efforts to contest and resist any
action or proceeding instituted (or threatened in writing to be instituted) by
any Governmental Authority challenging the transactions contemplated by this
Agreement as in violation of any Law. If a Party or any of its Affiliates
intends to participate in any meeting or discussion with any Governmental
Authority with respect to such filings or the transactions contemplated by this
Agreement (other than any meetings or discussions with the SEC), it will give
the other Party reasonable prior notice of, and an opportunity to participate
in, such meeting or discussion. Notwithstanding anything to the contrary set
forth herein, in no event shall any Party be required to make any payment, other
than filing fees, to such Governmental Authority or concede anything of value,
other than such payments or concessions that are de minimis in nature and do not
exceed $100,000 in value, in the aggregate, to obtain any such consent, approval
or waiver; provided, however, that if any Party is required to make a payment or
concession in excess of the forgoing, the other Party may, to the extent
possible, elect to make a substitute payment or concession on the first Party’s
behalf. No Party shall voluntarily extend any waiting period under the HSR Act
or any competition/investment Law or enter into any agreement with any
Governmental Authority to delay or not to consummate the transactions
contemplated by this Agreement, except with the prior written consent of the
other Parties (such consent not to be unreasonably withheld, conditioned or
delayed).

 

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Section 5.7 Non-Solicitation. For a period beginning on the Execution Date and
ending on the one (1) year anniversary of the earlier to occur of (a) the
Termination Date or (b) the expiration of the obligations of ESAS under
Section 5.18, each of EXCO, on the one hand, and ESAS, on the other hand, shall
not, without the other Party’s prior written consent, directly or indirectly
solicit, encourage or otherwise induce any of the other Party’s or its
Affiliates’ employees to leave their respective employment or become the
employee or contractor of the soliciting Party or its Affiliates.
Notwithstanding the foregoing, nothing contained in this Section 5.7 shall
prohibit the hiring or contracting for the services of any employee who has
terminated his or her employment relationship without any direct or indirect
solicitation or inducement by the soliciting Party or its Affiliates. A general
advertisement for employment that is not targeted at any such employee shall not
constitute a breach of any Party’s obligations under this Section 5.7. It is
further understood and agreed that monetary damages would not be a sufficient
remedy for any breach of this Section 5.7. Accordingly, it is agreed by each of
EXCO, on the one hand, and ESAS, on the other hand, that the other Party shall
be entitled to an injunction or injunctions (without the posting of any bond and
without proof of actual damages) to prevent breaches or threatened breaches of
this Section 5.7 and/or to specific performance of this Section 5.7, and that
neither a Party nor any of its Affiliates may oppose the granting of such
relief, provided, however, that such Party and its Affiliates are entitled to
dispute whether or not any violation of this Section 5.7 has occurred. Each
Party agrees that equitable relief is not exclusive of other remedies to which
the other Party may be entitled at Law or in equity for a breach of this
Section 5.7.

Section 5.8 Listing. EXCO shall use its commercially reasonable efforts to
include all of the Initial Shares and, when issued, the Warrant Shares for
listing on the NYSE if the Common Stock is then listed on the NYSE or, if the
Common Stock is not then listed on the NYSE, on the primary national securities
exchange or automated quotation system on which the Common Stock is then listed
or authorized for quotation.

Section 5.9 Proxy Statement.

(a) As promptly as practicable after execution of this Agreement and in any
event not more than thirty (30) days after the Execution Date, EXCO shall, in
consultation with ESAS, prepare, and EXCO shall file with the SEC, preliminary
proxy materials in compliance with Section 14 of the Exchange Act (the “Proxy
Statement”). As promptly as practicable after comments, if any, are received
from the SEC thereon and after the furnishing by EXCO and ESAS of all
information required to be contained therein, EXCO shall, in consultation with
ESAS, prepare and EXCO shall file any required amendments, if any, with the SEC.
EXCO shall notify ESAS promptly of the receipt of any comments from the SEC or
its staff and of any request by the SEC or its staff for amendments or
supplements to the Proxy Statement or for additional information and shall
consult with ESAS regarding, and supply ESAS with copies of, all correspondence
between EXCO or any of its Representatives, on the one hand, and the SEC or its
staff, on the other hand, with respect to the Proxy Statement. Prior to filing
or mailing any proposed amendment of or supplement to the Proxy Statement, EXCO
shall

 

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provide ESAS a reasonable opportunity to review and comment on such document.
EXCO shall use its commercially reasonable efforts to have the Proxy Statement
cleared by the SEC and shall thereafter mail to the shareholders of Common Stock
as promptly as possible the Proxy Statement and all other proxy materials for
the Shareholder Meeting.

(b) ESAS shall use its commercially reasonable efforts to furnish EXCO any
information required to be included in the Proxy Statement and reasonably
requested from ESAS by EXCO; provided that no information that ESAS or its
Affiliates has furnished, or will furnish, to EXCO shall be included in the
Proxy Statement unless ESAS shall have expressly consented in writing to such
information being included in the Proxy Statement. Any information relating to
ESAS furnished to EXCO in writing by ESAS expressly for use in the Proxy
Statement will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.

(c) EXCO hereby covenants and agrees that (i) the Proxy Statement will, when
filed, comply as to form in all material respects with the applicable
requirements of the Exchange Act and (ii) none of the information included or
incorporated by reference in the Proxy Statement will, at the date it is first
mailed to the shareholders of Common Stock or at the time of the Shareholder
Meeting or at the time of any amendment or supplement thereof, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading.

Section 5.10 Shareholder Approval; Meeting of Shareholders. EXCO shall take, in
accordance with applicable Law and the EXCO Organizational Documents, all action
necessary to convene the Shareholder Meeting as promptly as practicable, but no
later than sixty (60) days after clearance of the proxy statement by the SEC, to
submit for approval by the requisite vote of the shareholders of EXCO the
Shareholder Proposals. In connection with each meeting of shareholders at which
either of the Shareholder Proposals is submitted for a vote of the shareholders
of EXCO, to the fullest extent permitted by applicable Law, (i) the Board of
Directors shall recommend that its shareholders vote in favor of the Shareholder
Proposals, and (ii) neither the Board of Directors nor any committee thereof
shall withdraw or modify, or propose or resolve to withdraw or modify in a
manner materially adverse to ESAS, the recommendation of the Board of Directors
that the shareholders of EXCO vote in favor of the Shareholder Proposals;
provided that, at any time prior to obtaining such shareholder approval, the
Board of Directors may withdraw such recommendation if such Board of Directors
determines in good faith (after consultation with outside counsel) that failure
to take such action violates its fiduciary duties under applicable Law. EXCO
shall take all lawful action to solicit from the shareholders proxies in favor
of the Shareholder Proposals and take all other action necessary or advisable to
secure the vote or consent of the EXCO shareholders that are required by the
rules of the NYSE and applicable Law, including, if necessary or appropriate,
adjourning the Shareholder Meeting to solicit additional proxies.

 

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Section 5.11 Registration Rights Agreement. Prior to the Initial Shares Closing
Date, EXCO shall take all action to obtain any and all consents required under
the 2005 Registration Rights Agreement and the 2007 Registration Rights
Agreement such that no Person shall have any Registration Rights that conflict
with or violate the rights granted to ESAS under the Registration Rights
Agreement. Concurrently with the Initial Shares Closing, ESAS and each ESAS
Initial Warrantholder and EXCO shall execute and deliver the Registration Rights
Agreement.

Section 5.12 Blue Sky. EXCO shall, prior to the Closing Date, take all action to
obtain an exemption for or to qualify the Securities to be issued to ESAS
pursuant to this Agreement under applicable securities or “blue sky” Laws of the
states of the United States (or to obtain an exemption from such qualification).
EXCO shall make all filings and reports relating to the offer and sale of the
Securities required under applicable securities or “blue sky” Laws of the states
of the United States following the Closing Date.

Section 5.13 Designation of Director. Concurrently with the Closing, the Board
of Directors of EXCO shall, if there is not a vacancy on the Board of Directors
at that time, take action to increase the size of the Board of Directors by one,
and shall elect Wilder as a member of the Board of Directors; provided that
Wilder is living and physically and mentally capable of performing the duties
that accompany the office of Director.

Section 5.14 Reservation of Shares. After the Closing, so long as any of the
Warrants remain outstanding, EXCO shall use its commercially reasonable efforts
to take all action necessary to at all times have authorized, and reserved for
the purpose of issuance, no less than one hundred percent (100%) of the maximum
number of shares of Common Stock issuable upon exercise of all the Warrants
(without regard to any limitations on the exercise of the Warrants set forth
therein).

Section 5.15 Warrant Exercise Procedures. The form of Notice of Exercise
included in the form of certificate attached hereto as Exhibit B sets forth the
totality of the procedures required of the holder of the Warrants in order to
exercise the Warrants. No additional legal opinion, other information or
instructions shall be required of the holder of the Warrants to exercise their
Warrants. EXCO shall honor exercises of the Warrants and shall deliver the
Warrant Shares in accordance with the terms, conditions and time periods set
forth in the Warrants.

Section 5.16 Beneficial Ownership Limitation. From the Closing Date until the
second anniversary of the Closing Date, ESAS, for itself and on behalf of the
other members of the ESAS Group, acknowledges and agrees that, unless otherwise
approved in advance in writing by the Board of Directors, ESAS shall not, and
shall cause Wilder and the members of the ESAS Group not to, in any manner,
directly or indirectly, whether acting alone or in concert with others, acquire
(or propose or agree to acquire), by purchase or otherwise, record ownership or
beneficial ownership of any Capital Stock of EXCO or rights, options or other
convertible securities to acquire interests in any of EXCO’s Capital Stock
except that the members of the ESAS Group, in the aggregate, may beneficially
own up to fifty percent (50%) of EXCO’s outstanding Capital Stock and may
beneficially own an amount in excess of such percentage solely to the extent
resulting exclusively from actions or omissions taken by EXCO or under the terms
of any agreements, contracts or instruments that no member of the ESAS Group is
party.

 

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Section 5.17 Indemnity for Certain Liabilities. EXCO and their respective
successors and assigns shall be responsible for, perform, pay and shall
indemnify, defend and hold harmless the ESAS Group from and against all
obligations, liabilities, claims, causes of action, and Damages caused by,
arising out of, attributable to or resulting from any claims by Third Parties
relating to this Agreement, the Transaction Documents (other than the
Registration Rights Agreement) or the Proxy Statement, the use of proceeds from
the purchase and sale of EXCO securities hereunder or any claim, litigation,
investigation or proceeding relating to the foregoing, to the extent any member
of the ESAS Group is or is threatened to be made a party thereto, in each case
except to the extent resulting from (a) the breach of any of ESAS’s
representations, warranties or covenants set forth in this Agreement or
(b) information provided by ESAS in the Proxy Statement.

Section 5.18 Strategic Advisory Services. From and after the Execution Date
until the earlier of the Termination Date or the four (4) year anniversary of
the Execution Date:

(a) ESAS shall develop an EXCO performance oversight and improvement program
(the “Business Plan”), which shall be based upon:

(i) maximizing value for all EXCO shareholders;

(ii) developing an execution team and disciplined operating system for EXCO and
its Subsidiaries;

(iii) instituting a capital and risk allocation process based on risk/return
analysis and designing EXCO’s risk management and hedging strategy and
execution;

(iv) restructuring commercial contracts and joint-venture arrangements; and

(v) instituting fixed costs reduction programs towards the goal of long term
costs competiveness.

(b) Wilder shall direct all of ESAS’s activities with respect to the development
and implementation of the Business Plan as he deems appropriate in the exercise
of his reasonable discretion.

(c) ESAS shall use commercially reasonable efforts, and shall cause Wilder to
use commercially reasonable efforts, to assist EXCO in the implementation of the
Business Plan as ESAS and Wilder deem appropriate in each of their reasonable
discretion.

(d) In return for the Services, EXCO shall pay ESAS:

(i) subject to Section 5.18(e), for each month the Services are provided under
this Agreement, the Monthly Fee by the 15th of the next month; and

 

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(ii) subject to Section 5.18(e), for each full year after the Closing Date
occurring prior to the termination of this Agreement, the Incentive Payment by
the 45th day following the end of such year, which payment shall be adjusted as
follows:

(A) If EXCO’s Percentile Rank based on the one-year period preceding such
anniversary is less than 50, the Incentive Payment shall be equal to zero.

(B) If EXCO’s Percentile Rank based on the one-year period preceding such
anniversary is greater than or equal to 50 and less than 75, the Incentive
Payment amount shall be the amount established by the following formula:

 

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(C) If EXCO’s Percentile Rank based on the one-year period preceding such
anniversary is greater than or equal to 75, ESAS shall receive the maximum
Incentive Payment.

(D) For the avoidance of doubt, (x) no Incentive Payment paid in exchange for
one year of the Services shall ever exceed $2.4 million and (y) if this
Agreement is terminated prior to any anniversary of the Closing Date, no
Incentive Payment shall be due or payable for such partial year of Services.

(e) Monthly Fee and Incentive Payment Holdback.

(i) Notwithstanding the foregoing, from the Execution Date until the earlier to
occur of the date fifteen (15) Business Days after the Investment Obligation
Test Date and the Termination Date, all Monthly Fees and Incentive Payments
attributable to any periods prior to such earlier date that are payable by EXCO
under this Section 5.18 shall, in lieu of payment to ESAS, be deposited into the
Escrow Account as and when due and payable under the terms of this Section 5.18.

(ii) In the event that after the Closing Date and on or prior to the date
fifteen (15) Business Days after the Investment Obligation Test Date (A) EXCO
has elected to terminate this Agreement as a result of any ESAS Forfeiture Event
occurring at or prior to the Investment Obligation Test Date or (B) ESAS has
elected to terminate this Agreement as a result of any reason other than an EXCO
Forfeiture Event, then (1) EXCO shall be entitled to receive for its own account
the entirety of the Monthly Fees and Incentive Payments (including all interest
and earnings accruing thereon) held in the Escrow Account

 

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and the Warrants shall be forfeited to the extent set forth in the Warrants and
(2) EXCO’s right to terminate this Agreement, the retention of such amounts in
the Escrow Account and the forfeiture of the Warrants shall constitute
liquidated damages hereunder, which remedy shall be the sole and exclusive
remedy available to EXCO for any such ESAS Forfeiture Event, termination or
failure. Each Party acknowledges and agrees that (A) EXCO’s actual damages upon
the event of such ESAS Forfeiture Event, termination or failure are difficult to
ascertain with any certainty, (B) the amounts in the Escrow Account is a fair
and reasonable estimate by the Parties of such aggregate actual damages of EXCO
and (C) such liquidated damages do not constitute a penalty.

(iii) In the event that the Closing has occurred, on the date sixteen
(16) Business Days after the Investment Obligation Test Date, if EXCO is not
entitled under Section 5.18(e)(ii) to receive Monthly Fees and Incentive
Payments (including all interest and earnings accruing thereon) held in the
Escrow Account, then ESAS shall be entitled to receive for its own account the
entirety of the Monthly Fees and Incentive Payments (including all interest and
earnings accruing thereon) held in the Escrow Account.

(iv) All amounts due and payable from and after the Investment Obligation Test
Date that are payable by EXCO under this Section 5.18 shall be paid to ESAS as
and when due and payable under the terms of this Section 5.18.

(f) Subject to the terms of Section 5.4 and Section 5.7, EXCO, at EXCO’s sole
cost, risk, and expense, shall provide reasonable access during normal business
hours to any records, data, material, properties, officers, managers, employees,
personnel, consultants, advisors, counsel and lenders of EXCO and its Affiliates
to the extent reasonably requested by ESAS in order for ESAS to perform and
provide the Services and comply with the obligations of ESAS under this
Section 5.18.

(g) In the performance of any Services by ESAS for EXCO, ESAS, its Affiliates,
their employees or officers and Wilder (other than solely in his capacity as a
director or as Executive Chairman of EXCO, as applicable) shall be each deemed
an independent contractor, free and clear of any dominion or control by EXCO in
the manner in which said services are to be performed or the establishment of
hours of labor, and as such ESAS, its Affiliates, their employees or officers
and Wilder (other than solely in his capacity as a director or as Executive
Chairman of EXCO, as applicable) shall not be, and shall not represent
themselves as, an agent or employee of EXCO or its Affiliates, including for tax
purposes. Notwithstanding anything herein to the contrary, ESAS retains the
authority and right to direct and control all the details of ESAS’s performance
of the Services. EXCO shall have no right or authority to supervise or give
directions or instructions to the employees, agents, or representatives of ESAS,
its Affiliates or Wilder (other than solely in his capacity as a director or as
Executive Chairman of EXCO, as applicable), and ESAS, its Affiliates and their
employees, agents or representatives shall at all times be under the direct and
sole supervision and control of ESAS. It is the understanding and intention of
the Parties that no relationship of master and servant or principal and agent
shall exist between EXCO and ESAS, its Affiliates, the employees, agents or
representatives of ESAS and its Affiliates or Wilder (other than solely in his
capacity as a director or as Executive Chairman of EXCO, as applicable). No
member of

 

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the ESAS Group owes any duty, fiduciary or otherwise, to any member of the EXCO
Group except for fiduciary duties (other than such duties that are waived in the
Articles of Incorporation of EXCO) of Wilder in connection with and to the
extent of his duties as Executive Chairman of EXCO during his period of service
in such position.

(h) ESAS warrants for a period of one (1) year after the date of the performance
of any specific Services provided under this Section 5.18, such Services shall
have been performed (i) in good faith in a diligent manner and (ii) in
accordance with all applicable Laws. Except as expressly provided in this
Section 5.18(h), (A) NO MEMBER OF THE ESAS GROUP MAKES ANY, AND EACH OF THE ESAS
GROUP EXPRESSLY DISCLAIMS, AND EXCO WAIVES AND REPRESENTS AND WARRANTS THAT EXCO
HAS NOT RELIED UPON, ANY REPRESENTATION OR WARRANTY OR GUARANTY, EXPRESS OR
IMPLIED, IN THIS OR ANY OTHER TRANSACTION DOCUMENT OR CONTRACT DELIVERED
HEREUNDER OR IN CONNECTION WITH THE SERVICES, INCLUDING ANY REPRESENTATION OR
WARRANTY OR GUARANTY, EXPRESS OR IMPLIED AS TO (I) THE SERVICES PERFORMED BY ANY
MEMBER OF THE ESAS GROUP OR ANY OTHER PERSON (II) ANY RESULTS, EFFECTS OR
PERFORMANCE OF ANY OF THE SERVICES, OR (III) ANY OTHER, PROPOSALS,
RECOMMENDATIONS, COURSES OF ACTION, RECORDS, FILES OR MATERIALS OR INFORMATION
(INCLUDING AS TO THE ACCURACY, COMPLETENESS OR CONTENTS OF THE RECORDS) THAT MAY
BE MADE AVAILABLE OR COMMUNICATED AFTER THE EXECUTION DATE TO EXCO OR ITS
AFFILIATES, OR ITS OR THEIR EMPLOYEES, AGENTS, CONSULTANTS, REPRESENTATIVES OR
ADVISORS IN CONNECTION WITH THE PREPARATIONS OR PERFORMANCE OF THE SERVICES
(B) EACH MEMBER OF THE ESAS GROUP FURTHER DISCLAIMS, AND EXCO WAIVES, ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, OF MERCHANTABILITY, FITNESS FOR
A PARTICULAR PURPOSE OR CONFORMITY TO MODELS OR SAMPLES OF MATERIALS OF ANY
SERVICES.

Section 5.19 Director Nomination Rights and Wilder’s Service to the Board of
Directors. Pursuant to a nomination letter agreement, the form of which is
attached hereto as Exhibit D (the “Nomination Letter Agreement”), ESAS shall
have the right to nominate for election to the Board of Directors of EXCO one
director subject to the provisions contained in such Nomination Letter
Agreement. The failure of Wilder to receive the votes necessary to be elected to
serve on the Board or to serve as Executive Chairman, despite ESAS’s compliance
with the obligations set forth in the second sentence of this Section 5.19,
shall not be deemed to be a breach of this Section 5.19. Wilder shall receive
customary compensation, benefits and protections, as the other members of the
Board of Directors. Wilder shall have no additional legal duties or obligations
associated with the role of Executive Chairman.

 

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Section 5.20 Agreement to Invest. Subject to applicable Law, from the period
after the Closing Date through the first anniversary of the Closing Date, the
ESAS Group shall purchase shares of Common Stock of EXCO through open market
purchases from unaffiliated Third Parties such that (when including all or any
portion of the Initial Investment held by the ESAS Group on the Investment
Obligation Test Date) shall own, directly or indirectly, beneficially or of
record, as of the first anniversary of the Closing Date, shares of Common Stock
of EXCO with an aggregate cost basis (net of the aggregate cost basis of all
shares of Common Stock sold by the ESAS Group during the same period) of at
least fifty million dollars ($50,000,000) (such purchases, excluding the Initial
Investment, the “Remaining Investment”); provided, however, (a) ESAS, at its
sole option to be exercised by the delivery of written notice to EXCO on or
before the first anniversary of the Closing Date, may extend such deadline by up
to three (3) months from the first anniversary of the Closing Date (such
deadline, as validly extended in accordance with this Section 5.20, the
“Investment Obligation Test Date”) in the event that the ESAS Group is unable to
purchase and own such shares of Common Stock due to blackout dates (other than
normal quarterly blackouts that do not exceed seventy-five (75) days with
respect to the last fiscal quarter and forty-five (45) days with respect to the
first, second and third fiscal quarters) or other restrictions under applicable
Laws or this Agreement, (b) ESAS shall not be required to comply with its
obligations under this Section 5.20 to the extent that such compliance would be
reasonably likely to result in any breach of ESAS’s obligations under
Section 5.16 and (c) the obligations under this Section 5.20 shall be null and
void ab initio upon the earlier to occur of the Termination Date or an
Investment Obligation Termination Event prior to the deadline set forth in this
Section 5.20). The Remaining Investment shall be conducted in accordance with a
Rule 10b5-1 Plan and, in making the Remaining Investment, ESAS shall use
commercially reasonable efforts to comply with the limitations and restrictions
set forth in Rule 10b-18(b) promulgated under the Exchange Act. Within three
(3) Business Days after the Investment Obligation Test Date, ESAS shall submit a
certificate stating compliance together with reasonable documentation supporting
such compliance. ESAS may make open market purchases or sales of any other EXCO
securities at its own discretion.

Section 5.21 Limitation on Losses. EXCO and ESAS shall, and shall cause their
respective Affiliates to, cooperate in good faith to determine whether any
transactions contemplated by this Agreement, including a Remaining Investment
pursuant to Section 5.20 or the vesting, forfeiture or exercise of any Warrants
pursuant to the terms of the applicable Form of Warrant, would, or reasonably
would be expected to, cause an ownership change of EXCO under Section 382 of the
Code or any comparable provision of any state or local Law, limiting or
restricting the utilization of net operating losses of EXCO (collectively, an
“Ownership Change”). If EXCO and ESAS agree that any such transactions would, or
reasonably would be expected to cause an Ownership Change, the Parties shall use
commercially reasonable efforts to negotiate a modification mutually acceptable
to EXCO and ESAS to avoid such Ownership Change.

Section 5.22 Standstill. From the Execution Date until the earlier to occur of
(a) the Termination Date and (b) the Closing Date, unless approved in advance in
writing by the Board of Directors and except in connection with the Shareholder
Proposals or as otherwise contemplated by this Agreement, ESAS shall not, and
shall cause Wilder and each other member of the ESAS Group acting on behalf of,
or in concert with, ESAS not to, and ESAS shall cause any other Person in which
Wilder owns, directly or indirectly, beneficially or of record, more than fifty
(50%) of the voting or equity interests not to, in any manner, directly or
indirectly, whether alone or in concert with others, (i) make any statement or
proposal to the Board of Directors or the board of directors of any of EXCO’s
Affiliates or Subsidiaries or to any of

 

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EXCO’s stockholders regarding, or make any public announcement, proposal or
offer (including any “solicitation” of “proxies” as such terms are defined or
used in the Exchange Act and the rules promulgated thereunder) with respect to,
or otherwise solicit, seek or offer to effect (including, for the avoidance of
doubt, indirectly by means of communication with the press or media) (A) any
business combination, merger, tender offer, exchange offer, restructuring,
recapitalization, liquidation, dissolution, divestiture, break-up, spin-off or
other extraordinary transaction involving EXCO or any of its Affiliates or
Subsidiaries or any of their respective assets or

securities, (B) any proposal to seek representation on the Board of Directors or
otherwise to seek to control or influence the management, Board of Directors or
policies of EXCO or its Affiliates or Subsidiaries or to request, call or seek
to call a meeting of the stockholders of EXCO, (C) any acquisition of any of
EXCO’s or any of its Affiliates’ or Subsidiaries’ respective loans, debt
securities, equity securities or assets, or rights or options to acquire
interests in any of EXCO’s or any of its Affiliates’ or Subsidiaries’ loans,
debt securities, equity securities or assets, (D) any request or proposal to
waive, terminate or amend the provisions of this Section 5.22 or (E) any
proposal, arrangement or other statement that is inconsistent with the terms of
this Agreement, including this Section 5.22; (ii) instigate, join, encourage, or
assist any Third Party (including forming a “group” (as such term is defined or
used in the Exchange Act and the rules promulgated thereunder) with any such
Third Party) to do, or enter into any discussions or agreements with any Third
Party with respect to, any of the actions set forth in clause (i) above;
(iii) take any action that reasonably would be expected to require any member of
the EXCO Group to make a public announcement regarding any of the actions set
forth in clause (i) above; or (iv) acquire (or propose or agree to acquire), in
any manner, directly or indirectly, of record or beneficially, whether alone or
in concert with others, any loans, debt securities, equity securities or assets
of EXCO or any of its Affiliates or Subsidiaries, or rights or options or other
convertible securities to acquire interests in any of EXCO’s or its Affiliates’
or Subsidiaries’ loans, debt securities, equity securities or assets.

Section 5.23 EXCO Credit Agreement. EXCO shall, prior to the Closing Date, take
commercially reasonable action to obtain any and all consents required in
connection with the actions contemplated by this Agreement under the EXCO Credit
Agreement.

Section 5.24 Purchase Restrictions Prior to Anniversary Dates. Prior to
termination of the Agreement in accordance with Article 9, during the twenty
(20) Trading Days prior to the first, second, third and fourth anniversaries of
the Execution Date, ESAS shall not, and shall cause Wilder and each other member
of the ESAS Group acting on behalf of, or in concert with, ESAS not to, and ESAS
shall cause any other Person in which Wilder owns, directly or indirectly,
beneficially or of record, more than fifty percent (50%) of the voting or equity
interests not to, in any manner, directly or indirectly, whether alone or in
concert with others, acquire (or propose or agree to acquire), in any manner,
directly or indirectly, of record or beneficially, whether alone or in concert
with others, any equity securities of EXCO or rights or options or other
convertible securities to acquire interests in any of EXCO’s equity securities,
in each case other than the Warrant Shares.

Section 5.25 Further Assurances. After Closing, ESAS and EXCO each agree to take
such further actions and to execute, acknowledge and deliver, and to cause each
of its Subsidiaries to take such further actions and to execute, acknowledge and
deliver, all such further documents as are reasonably requested by the other for
carrying out the purposes of this Agreement or of any document delivered
pursuant to the Transaction Documents.

 

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ARTICLE 6

INITIAL SHARES CLOSING

Section 6.1 Conditions of ESAS to Initial Shares Closing. The obligations of
ESAS to consummate the Initial Shares Closing (except for the obligations of
ESAS to be performed prior to the Initial Shares Closing and obligations that
survive termination of this Agreement), are subject, at the option of ESAS, to
the satisfaction on or prior to the Initial Shares Closing of each of the
conditions set forth in this Section 6.1, unless waived in writing by ESAS:

(a) Representations. The representations and warranties of EXCO set forth in
Article 4 (in each case, disregarding all qualifications and exceptions
contained therein relating to materiality, EXCO Material Adverse Effect or other
similar qualifications) shall be true and correct in all respects, in each case,
as of the Execution Date and as of the Initial Shares Closing Date after giving
effect to the transactions contemplated in Section 2.2(a) with the same effect
as if made on and as of the Initial Shares Closing Date (except for
representations and warranties made as of a specified date, which shall be true
and correct only as of such specified date), except to the extent the failure of
any such representation or warranty to be true and correct as of the Execution
Date or as of the Initial Shares Closing Date does not result in an EXCO
Material Adverse Effect.

(b) Performance. EXCO shall have performed and observed in all material respects
all covenants and agreements contained in this Agreement required to be
performed or complied with on or prior to the Initial Shares Closing Date.

(c) NYSE. The Initial Shares shall have been approved for listing on the NYSE,
subject to official notice of issuance.

(d) No Action. On the Initial Shares Closing Date, no Order restraining,
enjoining or otherwise prohibiting the consummation of the Initial Shares
Closing, or granting substantial damages in connection therewith, shall have
been issued and remain in force, and no suit, action, or other proceeding
(excluding any such matter initiated by ESAS or any Affiliate of ESAS) shall be
pending before any Governmental Authority or body of competent jurisdiction that
is reasonably expected to (i) prohibit the consummation of the transactions
contemplated by this Agreement or (ii) result in the recovery of substantial
damages from ESAS or EXCO.

(e) Governmental Consents. All material consents, clearances and approvals of
and notices to any Governmental Authority (including any under the HSR Act)
required to be obtained by EXCO for the issuance by EXCO of the Initial Shares
as contemplated under this Agreement shall have been granted (or delivered in
the case of notices) and the applicable waiting period (including any under the
HSR Act) shall have expired, or early termination of the waiting period shall
have been granted.

(f) EXCO Material Adverse Effect. Since the Execution Date, no EXCO Material
Adverse Effect shall have occurred.

 

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(g) Closing Deliverables. EXCO shall (i) have delivered or caused to be
delivered to ESAS the officer’s certificate described in Section 6.5(e), and
(ii) be ready, willing and able to deliver or cause to be delivered to ESAS or
the other applicable Parties at the Initial Shares Closing the other documents
and items required to be delivered by EXCO under Section 6.5.

(h) Registration Rights Consent. EXCO shall have obtained any and all consents
required under the 2005 Registration Rights Agreement and the 2007 Registration
Rights Agreement such that no Person shall have any Registration Rights that
conflict with or violate the rights granted to ESAS under the Registration
Rights Agreement.

(i) Registration. A registration statement registering the Initial Shares for
resale shall have been filed with the SEC and the Registration Rights Agreement
shall have been executed and delivered.

Section 6.2 Conditions of EXCO to Initial Shares Closing. The obligations of
EXCO to consummate the Initial Shares Closing (except for the obligations of
EXCO to be performed prior to the Initial Shares Closing and obligations that
survive termination of this Agreement), are subject, at the option of EXCO, to
the satisfaction on or prior to the Initial Shares Closing of each of the
conditions set forth in this Section 6.2, unless waived in writing by EXCO:

(a) Representations. The representations and warranties of ESAS set forth in
Article 3 (disregarding all qualifications and exceptions contained therein
relating to materiality, ESAS Material Adverse Effect or other similar
qualifications) shall be true and correct in all respects, in each case, as of
the Execution Date and as of the Initial Shares Closing Date after giving effect
to the transactions contemplated Section 2.2(a) with the same effect as if made
on and as of the Initial Shares Closing Date (except for representations and
warranties made as of a specified date, which shall be true and correct only as
of such specified date), except to the extent the failure of any such
representation or warranty to be true and correct as of the Execution Date or as
of the Initial Shares Closing Date does not result in an ESAS Material Adverse
Effect.

(b) Performance. ESAS shall have materially performed and observed, in all
material respects, each covenant and agreement to be performed or observed by
ESAS under this Agreement prior to or on the Initial Shares Closing Date.

(c) NYSE. The Initial Shares shall have been approved for listing on the NYSE,
subject to official notice of issuance.

(d) No Action. On the Initial Shares Closing Date, no Order restraining,
enjoining or otherwise prohibiting the Initial Shares Closing, or granting
substantial damages in connection therewith, shall have been issued and remain
in force, and no suit, action, or other proceeding (excluding any such matter
initiated by EXCO or any Affiliate of EXCO) shall be pending before any
Governmental Authority or body of competent jurisdiction that is reasonably
expected to (i) prohibit the consummation of the transactions contemplated by
this Agreement or (ii) result in the recovery of substantial damages from ESAS
or EXCO.

 

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(e) Governmental Consents. All material consents, clearances and approvals of
and notices to any Governmental Authority (including any under the HSR Act)
required to be obtained by ESAS for the issuance by EXCO of the Initial Shares
as contemplated under this Agreement shall have been granted (or delivered in
the case of notices), and the applicable waiting period (including any under the
HSR Act) shall have expired, or early termination of the waiting period shall
have been granted.

(f) ESAS Material Adverse Effect. Since the Execution Date, no ESAS Material
Adverse Effect shall have occurred.

(g) Closing Deliverables. (i) ESAS shall have delivered or caused to be
delivered to EXCO the officer’s certificate described in Section 6.4(c), and
(ii) ESAS shall be ready, willing and able to deliver or cause to be delivered
to EXCO at the Initial Shares Closing the other documents and items required to
be delivered by ESAS under Section 6.4.

(h) Registration Rights Consent. EXCO shall have obtained any and all consents
required under the 2005 Registration Rights Agreement and the 2007 Registration
Rights Agreement such that no Person shall have any Registration Rights that
conflict with or violate the rights granted to ESAS under the Registration
Rights Agreement.

(i) Registration. A registration statement registering the Initial Shares for
resale shall have been filed with the SEC and the Registration Rights Agreement
shall have been executed and delivered.

Section 6.3 Time and Place of Initial Shares Closing. Subject to the provisions
of this Article 6, the consummation of the Initial Shares Closing shall, unless
otherwise agreed to in writing by EXCO and ESAS, take place at the offices of
Akin Gump Strauss Hauer & Feld LLP located at 1700 Pacific Avenue, Suite 4100,
Dallas, Texas at 9:00 a.m., Dallas time, on a date to be specified by the
Parties, which shall be no later than the fifth Business Day after the
satisfaction or waiver (to the extent permitted by applicable Law) of the
conditions set forth in this Article 6 (other than conditions that by their
nature are to be satisfied at the Initial Shares Closing, but subject to the
satisfaction or waiver of those conditions), or at such other place, date and
time as the Parties may agree. All actions to be taken and all documents and
instruments to be executed and delivered at the Initial Shares Closing shall be
deemed to have been taken, executed and delivered simultaneously and, except as
permitted hereunder, no actions shall be deemed taken nor any document and
instruments executed or delivered until all actions have been taken and all
documents and instruments have been executed and delivered.

Section 6.4 Obligations of ESAS at Initial Shares Closing. At the Initial Shares
Closing, upon the terms and subject to the conditions of this Agreement, and
subject to the simultaneous performance by EXCO of its obligations pursuant to
Section 6.5, ESAS shall deliver or cause to be delivered to EXCO, among other
things, the following:

 

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(a) Written instructions to the Escrow Agent, duly executed by ESAS, instructing
the Escrow Agent to disburse (i) the Initial Investment to EXCO and (ii) all
amounts held in the Escrow Account attributable to any interest accrued upon the
Initial Investment to ESAS;

(b) Registration Rights Agreement, duly executed by ESAS;

(c) A certificate duly executed by an authorized officer of ESAS, dated as of
the Initial Shares Closing, certifying on behalf of ESAS that the conditions set
forth in Section 6.1 have been fulfilled; and

(d) All other documents and instruments requested by EXCO from ESAS that are
reasonably necessary to consummate the transfer of the Initial Shares.

Section 6.5 Obligations of EXCO at Initial Shares Closing. At the Initial Shares
Closing, upon the terms and subject to the conditions of this Agreement, and
subject to the simultaneous performance by ESAS of its obligations pursuant to
Section 6.4, EXCO shall deliver, or cause to be delivered, to ESAS or the other
applicable Persons, among other things, the following:

(a) A certificate representing the Initial Shares or certificated through
book-entry form;

(b) Written instructions to the Escrow Agent, duly executed by EXCO, instructing
the Escrow Agent to disburse (i) the Initial Investment to EXCO and (ii) all
amounts held in the Escrow Account attributable to any interest accrued upon the
Initial Investment to ESAS;

(c) Registration Rights Agreement, duly executed by EXCO;

(d) A certificate evidencing the formation and good standing of EXCO in its
jurisdiction of formation issued by the Secretary of State (or comparable
office) of such jurisdiction of formation as of a date within ten (10) days of
the Closing Date;

(e) A certificate, duly executed by an authorized officer of EXCO, dated as of
the Initial Shares Closing, certifying on behalf of EXCO that the conditions set
forth in Section 6.2 have been fulfilled; and

(f) All other documents and instruments requested by ESAS from EXCO that are
reasonably necessary to consummate the transfer of the Initial Shares.

 

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ARTICLE 7

CONDITIONS TO CLOSING

Section 7.1 Conditions of ESAS to Closing. The obligations of ESAS to consummate
the transactions contemplated by this Agreement (except for the obligations of
ESAS to be performed prior to the Closing and obligations that survive
termination of this Agreement), including the obligations of ESAS to consummate
the Closing, are subject, at the option of ESAS, to the satisfaction on or prior
to Closing of each of the conditions set forth in this Section 7.1, unless
waived in writing by ESAS:

(a) Representations. The representations and warranties of EXCO set forth in
Article 4 (in each case, disregarding all qualifications and exceptions
contained therein relating to materiality, EXCO Material Adverse Effect or other
similar qualifications) shall be true and correct in all respects, in each case,
as of the Execution Date and as of the Closing Date after giving effect to the
transactions contemplated hereby with the same effect as if made on and as of
the Closing Date (except for representations and warranties made as of a
specified date, which shall be true and correct only as of such specified date),
except to the extent the failure of any such representation or warranty to be
true and correct as of the Execution Date or as of the Closing Date does not
result in an EXCO Material Adverse Effect.

(b) Performance. EXCO shall have performed and observed in all material respects
all covenants and agreements contained in this Agreement required to be
performed or complied with on or prior to the Closing Date.

(c) NYSE. The Warrant Shares shall have been approved for listing on the NYSE,
subject to official notice of issuance.

(d) No Action. On the Closing Date, no Order restraining, enjoining or otherwise
prohibiting the consummation of the transactions contemplated by this Agreement,
or granting substantial damages in connection therewith, shall have been issued
and remain in force, and no suit, action, or other proceeding (excluding any
such matter initiated by ESAS or any Affiliate of ESAS) shall be pending before
any Governmental Authority or body of competent jurisdiction that is reasonably
expected to (i) prohibit the consummation of the transactions contemplated by
this Agreement or (ii) result in the recovery of substantial damages from ESAS
or EXCO.

(e) Governmental Consents. All material consents, clearances and approvals of
and notices to any Governmental Authority (including any under the HSR Act)
required to be obtained by EXCO for the issuance by EXCO of the Initial Shares
and Warrants as contemplated under this Agreement shall have been granted (or
delivered in the case of notices) and the applicable waiting period (including
any under the HSR Act) shall have expired, or early termination of the waiting
period shall have been granted.

(f) EXCO Material Adverse Effect. Since the Execution Date, no EXCO Material
Adverse Effect shall have occurred.

(g) Receipt of Required Shareholder Approval. The Required Shareholder Approval
shall have been received from the shareholders of EXCO.

(h) Filing of Certificate of Amendment. The secretary of state of the State of
Texas shall have accepted the Certificate of Amendment filed with it by EXCO.

 

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(i) Closing Deliverables. EXCO shall (i) have delivered or caused to be
delivered to ESAS the officer’s certificate described in Section 8.3(e), and
(ii) be ready, willing and able to deliver or cause to be delivered to ESAS or
the other applicable Parties at the Closing the other documents and items
required to be delivered by EXCO under Section 8.3.

(j) Wilder. Wilder shall be alive and possess sufficient mental and physical
capacities to perform his obligations at Closing as Executive Chairman of EXCO
and to enable ESAS to perform its obligations contained in Section 5.13 and
Section 5.18 of this Agreement.

(k) Net Operating Loss. On the Closing Date, no state or federal net operating
loss of EXCO as of the Closing Date would be subject to material limitation,
restriction or impairment on its use pursuant to Section 382 of the Code or any
comparable provision of any state or local Law, assuming that the Investment is
made entirely on the Closing Date at $2 per share.

(l) EXCO Credit Agreement Consent. EXCO shall have obtained any and all consents
required in connection with the actions contemplated by this Agreement under the
EXCO Credit Agreement.

(m) Bylaws. The Board of Directors of EXCO shall have amended EXCO’s Second
Amended and Restated Bylaws to establish the position of Executive Chairman of
the Board of Directors of EXCO as a non-officer position and to include a
description of the position of Executive Chairman in accordance with the
language as set forth on Exhibit E.

(n) Initial Shares Closing. The Initial Shares Closing has occurred prior to, or
will close simultaneously with, the Closing.

Section 7.2 Conditions of EXCO to Closing. The obligations of EXCO to consummate
the transactions contemplated by this Agreement (except for the obligations of
EXCO to be performed prior to the Closing and obligations that survive
termination of this Agreement), including the obligations of EXCO to consummate
the Closing, are subject, at the option of EXCO, to the satisfaction on or prior
to Closing of each of the conditions set forth in this Section 7.2, unless
waived in writing by EXCO:

(a) Representations. The representations and warranties of ESAS set forth in
Article 3 (disregarding all qualifications and exceptions contained therein
relating to materiality, ESAS Material Adverse Effect or other similar
qualifications) shall be true and correct in all respects, in each case, as of
the Execution Date and as of the Closing Date after giving effect to the
transactions contemplated hereby with the same effect as if made on and as of
the Closing Date (except for representations and warranties made as of a
specified date, which shall be true and correct only as of such specified date),
except to the extent the failure of any such representation or warranty to be
true and correct as of the Execution Date or as of the Closing Date does not
result in an ESAS Material Adverse Effect.

 

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(b) Performance. ESAS shall have materially performed and observed, in all
material respects, each covenant and agreement to be performed or observed by
ESAS under this Agreement prior to or on the Closing Date.

(c) NYSE. The Warrant Shares shall have been approved for listing on the NYSE,
subject to official notice of issuance.

(d) No Action. On the Closing Date, no Order restraining, enjoining or otherwise
prohibiting the consummation of the transactions contemplated by this Agreement,
or granting substantial damages in connection therewith, shall have been issued
and remain in force, and no suit, action, or other proceeding (excluding any
such matter initiated by EXCO or any Affiliate of EXCO) shall be pending before
any Governmental Authority or body of competent jurisdiction that is reasonably
expected to (i) prohibit the consummation of the transactions contemplated by
this Agreement or (ii) result in the recovery of substantial damages from ESAS
or EXCO.

(e) Governmental Consents. All material consents, clearances and approvals of
and notices to any Governmental Authority (including any under the HSR Act)
required to be obtained by ESAS for the issuance by EXCO of the Initial Shares
and the Warrants as contemplated under this Agreement shall have been granted
(or delivered in the case of notices), and the applicable waiting period
(including any under the HSR Act) shall have expired, or early termination of
the waiting period shall have been granted.

(f) ESAS Material Adverse Effect. Since the Execution Date, no ESAS Material
Adverse Effect shall have occurred.

(g) Receipt of Required Shareholder Approval. The Required Shareholder Approval
shall have been received from the shareholders of EXCO.

(h) Filing of Certificate of Amendment. The secretary of state of the State of
Texas shall have accepted the Certificate of Amendment filed with it by EXCO.

(i) Closing Deliverables. (i) ESAS shall have delivered or caused to be
delivered to EXCO the officer’s certificate described in Section 8.2(c), and
(ii) ESAS shall be ready, willing and able to deliver or cause to be delivered
to EXCO at the Closing the other documents and items required to be delivered by
ESAS under Section 8.2.

(j) Wilder. Wilder shall be alive and possess sufficient mental and physical
capacities to perform his obligations at Closing as Executive Chairman of EXCO
and to enable ESAS to perform its obligations contained in Section 5.13 and
Section 5.18 of this Agreement.

(k) Net Operating Loss. On the Closing Date, no state or federal net operating
loss of EXCO as of the Closing Date would be subject to material limitation,
restriction or impairment on its use pursuant to Section 382 of the Code or any
comparable provision of any state or local Law, assuming that the Investment is
made entirely on the Closing Date at $2 per share.

 

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(l) EXCO Credit Agreement Consent. EXCO shall have obtained any and all consents
required in connection with the actions contemplated by this Agreement under the
EXCO Credit Agreement.

(m) Initial Shares Closing. The Initial Shares Closing has occurred prior to, or
will close simultaneously with, the Closing.

ARTICLE 8

CLOSING

Section 8.1 Time and Place of Closing. Subject to the provisions of Article 7,
the consummation of the transactions contemplated by this Agreement (the
“Closing”) shall, unless otherwise agreed to in writing by EXCO and ESAS, take
place at the offices of Akin Gump Strauss Hauer & Feld LLP located at 1700
Pacific Avenue, Suite 4100, Dallas, Texas at 9:00 a.m., Dallas time, on a date
to be specified by the Parties, which shall be no later than the fifth Business
Day after the satisfaction or waiver (to the extent permitted by applicable Law)
of the conditions set forth in Article 7 (other than conditions that by their
nature are to be satisfied at the Closing, but subject to the satisfaction or
waiver of those conditions), or at such other place, date and time as the
Parties may agree. The date on which the Closing occurs is referred to herein as
the “Closing Date”. All actions to be taken and all documents and instruments to
be executed and delivered at Closing shall be deemed to have been taken,
executed and delivered simultaneously and, except as permitted hereunder, no
actions shall be deemed taken nor any document and instruments executed or
delivered until all actions have been taken and all documents and instruments
have been executed and delivered.

Section 8.2 Obligations of ESAS at Closing. At the Closing, upon the terms and
subject to the conditions of this Agreement, and subject to the simultaneous
performance by EXCO of its obligations pursuant to Section 8.3, ESAS shall
deliver or cause to be delivered to EXCO, among other things, the following:

(a) Nomination Letter Agreement, duly executed by ESAS;

(b) A certificate evidencing the formation and good standing of ESAS in each
such entity’s jurisdiction of formation issued by the Secretary of State (or
comparable office) of such jurisdiction of formation as of a date within ten
(10) days of the Closing Date;

(c) A certificate duly executed by an authorized officer of ESAS, dated as of
the Closing, certifying on behalf of ESAS that the conditions set forth in
Section 7.2(a) and Section 7.2(b) have been fulfilled; and

(d) All other documents and instruments requested by EXCO from ESAS that are
reasonably necessary to transfer the consummate the transactions contemplated
hereunder.

 

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Section 8.3 Obligations of EXCO at Closing. At the Closing, upon the terms and
subject to the conditions of this Agreement, and subject to the simultaneous
performance by ESAS of its obligations pursuant to Section 8.2, EXCO shall
deliver, or cause to be delivered, to ESAS or the other applicable Persons,
among other things, the following:

(a) Closing Warrants, duly executed by EXCO (if not issued on an earlier date
pursuant to Section 2.1(b));

(b) Nomination Letter Agreement, duly executed by EXCO;

(c) Approval of the Board of Directors, if there is not a vacancy on the Board
of Directors at that time, to increase the size of the Board of Directors by one
seat and appoint Wilder to the vacancy created thereby, effective immediately
after the Closing; provided that Wilder is living and physically and mentally
capable of performing the duties that accompany the office of Director;

(d) A certificate evidencing the formation and good standing of EXCO in its
jurisdiction of formation issued by the Secretary of State (or comparable
office) of such jurisdiction of formation as of a date within ten (10) days of
the Closing Date;

(e) A certificate, duly executed by an authorized officer of EXCO, dated as of
the Closing, certifying on behalf of EXCO that the conditions set forth in
Section 7.1(a) and Section 7.1(b) have been fulfilled; and

(f) All other documents and instruments requested by ESAS from EXCO that are
reasonably necessary to transfer the consummate the transactions contemplated
hereunder.

ARTICLE 9

TERMINATION

Section 9.1 Term. Subject to Section 9.2, this Agreement shall commence on the
Execution Date and shall continue until the fourth anniversary of the Closing
Date unless (a) terminated prior to Closing pursuant to Section 9.2(a),
(b) terminated after the Closing pursuant to Section 9.2(b), or (c) extended by
the prior mutual written consent of EXCO and ESAS.

Section 9.2 Early Termination.

(a) This Agreement may be terminated and the transactions contemplated hereby
abandoned, including any obligation to issue the Closing Warrants and the
Warrant Shares pursuant to Article 2, at any time prior to Closing:

(i) by the mutual prior written consent of ESAS and EXCO; or

(ii) by ESAS or EXCO:

(A) upon delivering written notice if the Closing shall not have been
consummated on or before November 30, 2015, provided that the Party delivering
such notice is not in material breach of such Party’s representations,
warranties, covenants or agreements set forth herein; or

 

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(B) if the Shareholder Meeting shall have concluded and the Required Shareholder
Approval shall not have been obtained; or

(iii) by ESAS in the event of any breach by EXCO of Section 5.9.

(b) This Agreement may be terminated at any time after Closing:

(i) by the mutual prior written consent of ESAS and EXCO;

(ii) by ESAS or EXCO, at any time after the Closing for any or no reason upon
thirty (30) days prior written notice;

(iii) by ESAS, at any time after the Closing in the event that any event of EXCO
Forfeiture Event has occurred;

(iv) by EXCO, at any time after the Closing in the event that any event of ESAS
Forfeiture Event has occurred; or

(v) in the event of Wilder’s resignation from the Board of Directors.

(c) The date of any permitted termination of this Agreement under this Article
9, the “Termination Date”).

Section 9.3 Effect of Termination.

(a) Generally. If this Agreement is terminated pursuant to Section 9.2, this
Agreement shall become void and of no further force or effect (except for the
provisions of Article 1, Section 5.4, Section 5.5, this Article 9, Article 10
and Section 11.1 through Section 11.14, all of which shall survive and continue
in full force and effect indefinitely unless expressly provided otherwise). The
Confidentiality Agreement shall survive any termination of this Agreement in
accordance with their terms.

(b) Termination Prior to Closing.

(i) In the event that (A) this Agreement is terminated by ESAS under
Section 9.2(a)(ii), (B) all conditions precedent to the obligations of ESAS set
forth in Section 7.1 have been satisfied or waived by ESAS and (C) the Closing
has not occurred as a result of the willful or intentional material breach or
failure of any of EXCO’s representations, warranties or covenants hereunder,
including, if and when required, any of EXCO’s obligations to consummate the
transactions contemplated hereunder at Closing, then ESAS shall be entitled to
recover all Damages incurred by the ESAS Group that are available under all
remedies available at Law or in equity (expressly including specific
performance).

 

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(ii) In the event that (A) this Agreement is terminated by EXCO under
Section 9.2(a)(ii), (B) all conditions precedent to the obligations of EXCO set
forth in Section 7.2 have been satisfied or waived by EXCO and (C) the Closing
has not occurred as a result of the willful or intentional material breach or
failure of any of ESAS’s representations, warranties or covenants hereunder,
including, if and when required, any of ESAS’s obligations to consummate the
transactions contemplated hereunder at Closing, then EXCO shall be entitled to
recover all Damages incurred by EXCO Group that are available under all remedies
available at Law or in equity (expressly including specific performance and the
right to recover any such Damages from amounts held in the Escrow Account).

(iii) Except to the extent EXCO is entitled under Section 5.18(e) and
Section 9.3(b)(ii) to receive any amounts held in Escrow Account, ESAS shall be
entitled to receive for its own account the entirety of all amounts held in the
Escrow Account.

(c) Termination After the Closing Date. In the event that after Closing this
Agreement is terminated by either Party in accordance with Section 9.2(b), then
the terminating Party shall have no liability hereunder for such early
termination of this Agreement; provided, however, (i) each Party shall be
entitled to recover all Damages to the extent expressly available under, and
subject to, the terms of Article 10 with respect to (A) any breaches of
representations or warranties (B) any breaches of any covenants that were
required to be performed prior to the Termination Date and (C) any covenants
that expressly survive termination under Section 9.3(c) that are required to be
performed after the Termination Date, (ii) in such event each of the Warrants
shall be subject to such vesting, exercisability testing, and forfeiture thereof
(if any) in accordance with the terms of such Warrants and (iii) except to the
extent EXCO is entitled under Section 5.18(e) to receive any amounts held in
Escrow Account, ESAS shall be entitled to receive for its own account the
entirety of all amounts held in the Escrow Account.

(d) Promptly, but in no event later than three (3) Business Days after the
Termination Date, the Parties shall execute and deliver to the Escrow Agent
written instructions instructing the Escrow Agent to disburse via wire transfer
of immediately available funds the entirety of the amounts then held in the
Escrow Account to the applicable Parties entitled to receive all or any portion
of such amounts as provided in Section 5.18(e) or this Section 9.3.

ARTICLE 10

INDEMNIFICATION

Section 10.1 ESAS’s Indemnification Rights. Subject to the terms hereof, from
and after Closing EXCO agrees to be responsible for, perform, pay and shall
indemnify, defend and hold harmless each member of the ESAS Group from and
against all obligations, liabilities, claims, causes of action, and Damages
caused by, arising out of, attributable to or resulting from:

(a) the failure or breach of EXCO’s covenants or agreements contained in this
Agreement; or

 

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(b) any breach of any representation or warranty made by EXCO contained in
Article 4 of this Agreement or in the certificate delivered by EXCO at Closing
pursuant to Section 8.3(e).

Section 10.2 EXCO’s Indemnification Rights. Subject to the terms hereof, from
and after Closing ESAS agrees to be responsible for, perform, pay and shall
indemnify, defend and hold harmless each member of the EXCO Group and against
all obligations, liabilities, claims, causes of action, and Damages caused by,
arising out of, attributable to or resulting from:

(a) the failure or breach of ESAS’s covenants or agreements contained in this
Agreement; or

(b) any failure or breach of any representation or warranty made by ESAS
contained in Article 3 of this Agreement, in the certificate delivered by ESAS
at Closing pursuant to Section 8.2(c).

Section 10.3 Survival; Limitation on Actions.

(a) Subject to Section 10.3(b) and Section 10.3(c), the indemnity rights and
obligations of each Party under Section 10.1 and Section 10.2 with respect to:

(i) the Fundamental Representations of ESAS and EXCO shall survive the Closing
indefinitely;

(ii) all representations and warranties of ESAS and EXCO that do not constitute
Fundamental Representations shall each survive the Closing and terminate on the
date eighteen (18) months after the Closing Date;

(iii) the covenants and agreements of ESAS and EXCO set forth herein that are
required to be performed on or prior to Closing shall each survive the Closing
and terminate on the date eighteen (18) months after the Closing Date;

(iv) the covenants and agreements of ESAS and EXCO set forth herein that are
required to be performed after Closing but prior to the applicable Termination
Date shall survive the Closing and terminate on the date eighteen (18) months
after the date such covenants and agreements are required to be performed;

(v) the covenants and agreements of ESAS and EXCO set forth herein that are to
be performed after Closing that expressly survive the Termination Date shall
survive the Termination Date and terminate on the date sixty (60) days after the
expiration of such express performance period of such covenants and agreements;

(vi) representations, warranties, covenants and agreements set forth in this
Agreement and any other Transaction Document or other document delivered
hereunder shall be of no further force and effect, and no Party shall have any
rights or obligations hereunder with respect thereto, after the applicable date
of their expiration, provided that there shall be no termination of any bona
fide claim validly asserted pursuant to a valid Claim Notice pursuant to this
Agreement with respect to such a representation, warranty, covenant or agreement
prior to the expiration or termination date thereof.

 

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(b) Notwithstanding anything set forth in Section 10.3(a), all rights of each
member of the ESAS Group under Section 10.1 and the EXCO Group under
Section 10.2 shall terminate as of the termination date of each respective
representation, warranty, covenant or agreement that is subject to
indemnification, except in each case as to matters for which a specific written
Claim Notice has been validly delivered to the applicable Indemnifying Party on
or before the earlier of such termination date or the date otherwise required to
be delivered hereunder.

(c) Notwithstanding anything herein or in any other Transaction Document to the
contrary, EXCO’s express rights to terminate this Agreement under Article 9, the
retention of any amounts in the Escrow Account permitted under
Section 5.18(e)(ii) and the forfeiture of the Warrants pursuant to the terms
thereof shall constitute the sole and exclusive remedy available to EXCO for any
failure of ESAS’s to purchase, hold or satisfy all or any portion the Investment
or to comply with the terms of Section 5.20, ESAS’s termination of this
Agreement in accordance with Article 9 for any reason or any breach or failure
of ESAS to perform its obligations under Section 5.18. Each Party acknowledges
and agrees that (A) EXCO’s actual damages upon the event of such ESAS Forfeiture
Event, termination or failure are difficult to ascertain with any certainty,
(B) the amounts in the Escrow Account is a fair and reasonable estimate by the
Parties of such aggregate actual damages of EXCO and (C) such liquidated damages
do not constitute a penalty.

(d) Subject to Section 11.12, Section 10.3(c) and Section 5.18(e)(ii), the
liability of EXCO pursuant to Section 10.1 and ESAS pursuant to Section 10.2
shall be without limit.

Section 10.4 Exclusive Remedy and Certain Limitations.

(a) Notwithstanding anything to the contrary contained in this Agreement and the
other Transaction Documents, from and after Closing, each Party’s sole exclusive
remedy against the other Party with respect to any breach of the
representations, warranties, covenants and agreements of the other Party
contained herein are the rights set forth in this Article 10 and the rights to
enforce specific performance of the terms of this Agreement and the other
Transaction Documents, as limited by the terms of this Article 10 and the terms
of each applicable Transaction Document.

(b) “Damages” shall mean the amount of any loss, cost, costs of settlement (but
only to the extent the Indemnified Person complied with the terms of
Section 10.5), damage, diminution in value, expense, claim, award or judgment
incurred or suffered by any Indemnified Person arising out of or resulting from
the indemnified matter, whether attributable to personal injury or death,
property damage, contract claims, torts or otherwise, including reasonable fees
and expenses of attorneys, consultants, accountants

 

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or other agents and experts reasonably incident to matters indemnified against,
and the costs of prosecution, defense, preparations for defense, investigation
and/or monitoring of such matters, and the costs of enforcement of the
indemnity; provided, however, that “Damages” shall not include (i) any
adjustment for Taxes that may be assessed on payments under this Article 10 or
for Tax benefits received by the Indemnified Person as a consequence of any
Damages, (ii) to the extent provided in Section 11.12, any loss of profits,
whether actual or consequential, or other consequential damages suffered by the
Party (whether on its own behalf or on behalf of any member of the ESAS Group or
EXCO Group, as applicable) claiming indemnification, or any punitive damages, or
(iii) any diminution in value or increase in liability, loss, cost, expense,
claim, award or judgment to the extent such diminution or increase is caused by
the actions or omissions of the Indemnified Person after the Closing Date.

(c) Any claim for indemnity under this Article 10 by (i) any member of the ESAS
Group must be brought and administered by ESAS and (ii) any member of the EXCO
Group must be brought and administered by EXCO. No Indemnified Person other than
ESAS and EXCO shall have any rights against either ESAS or EXCO under the terms
of this Article 10 except as may be exercised on its behalf by EXCO or ESAS, as
applicable, pursuant to this Article 10. ESAS may elect to exercise or not
exercise indemnification rights under this Section 10.4 on behalf of the ESAS
Group in ESAS’s sole discretion and shall have no liability to any such other
member of the ESAS Group for any action or inaction under this Section 10.4.
EXCO may elect to exercise or not exercise indemnification rights under this
Section 10.4 on behalf of the EXCO Group in EXCO’s sole discretion and shall
have no liability to any such other member of the EXCO Group for any action or
inaction under this Section 10.4.

Section 10.5 Indemnification Actions. All claims for indemnification under
Article 10 shall be asserted and resolved as follows:

(a) For purposes of this Article 10, the term “Indemnifying Party” when used in
connection with particular Damages shall mean the Person(s) having an obligation
to indemnify another Person(s) with respect to such Damages pursuant to this
Article 10, and the term “Indemnified Person” when used in connection with
particular Damages shall mean a Person(s) having the right to be indemnified
with respect to such Damages pursuant to this Article 10.

(b) To make claim for indemnification, defense or reimbursement under this
Article 10, EXCO or ESAS, as applicable, shall notify the Indemnifying Party of
its claim, including the specific details (including supporting documentation of
the alleged Damages and such Indemnified Party’s good faith estimate of the
applicable claim) of and specific basis under this Agreement for its claim (the
“Claim Notice”).

(c) In the event that any claim for indemnification set forth in any Claim
Notice is based upon a claim by a Third Party against the Indemnified Person (a
“Third Party Claim”), EXCO or ESAS, as applicable, shall provide its Claim
Notice promptly after EXCO or ESAS, as applicable, has actual knowledge of the
Third Party Claim and shall enclose a copy of all papers (if any) served with
respect to the Third Party Claim;

 

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provided that the failure of any Indemnified Person to give notice of an Third
Party Claim as provided in this Section 10.5 shall not relieve the Indemnifying
Party of its obligations under this Article 10 except to the extent such failure
results in insufficient time being available to permit the Indemnifying Party to
effectively defend against the Third Party Claim or otherwise prejudices the
Indemnifying Party’s ability to defend against the Third Party Claim. In the
event that the claim for indemnification is based upon an alleged inaccuracy or
breach of a representation, warranty, covenant or agreement, the Claim Notice
shall specify the representation, warranty, covenant or agreement that was
allegedly inaccurate or breached.

(d) In the case of a claim for indemnification based upon an Third Party Claim,
the Indemnifying Party shall have thirty (30) days from its receipt of the Claim
Notice to notify the Indemnified Person whether it admits or denies its
obligation to defend the Indemnified Person against such Third Party Claim under
this Article 10. The Indemnified Person is authorized, prior to and during such
thirty (30) day period, to file any motion, answer or other pleading that it
shall deem necessary or appropriate to protect its interests or those of the
Indemnifying Party and that is not prejudicial to the Indemnifying Party. If the
Indemnifying Party fails to notify the Indemnified Person within such thirty
(30) day period regarding whether the Indemnifying Party admits or denies its
obligation to defend the Indemnified Person, then until such date as the
Indemnifying Party admits or it is finally determined by an non-appealable
judgment that such obligation exists, the Indemnified Person may file any
motion, answer or other pleading, settle any Third Party Claim or take any other
action that the Indemnified Person deems necessary or appropriate to protect its
interest, regardless of whether the Indemnifying Party is prejudiced or
adversely impacted by any such actions.

(e) If the Indemnifying Party admits its indemnity obligations under this
Article 10 with respect to any Third Party Claim, then such Indemnifying Party
shall have (i) the right and obligation to diligently prosecute and control the
defense, at its sole cost and expense, the Third Party Claim and (ii) have full
control of such defense and proceedings, including any compromise or settlement
thereof unless the compromise or settlement includes the payment of any amount
(not indemnified by the Indemnifying Party) by, the performance of any
obligation by, or the limitation of any right or benefit of, the Indemnified
Person, in which event such settlement or compromise shall not be effective
without the consent of the Indemnified Person, which shall not be unreasonably
withheld or delayed. If requested by the Indemnifying Party, the Indemnified
Person agrees at the cost and expense of the Indemnifying Party to cooperate in
contesting any Third Party Claim which the Indemnifying Party elects to contest;
provided, however, that the Indemnified Person shall not be required to bring
any counterclaim or cross-complaint against any Person. The Indemnified Person
may participate in, but not control, any defense or settlement of any Third
Party Claim controlled by the Indemnifying Party pursuant to this
Section 10.5(e); provided that the Indemnified Person may file initial pleadings
as described in the last sentence of paragraph (c) above if required by court or
procedural rules to do so within the thirty (30) day period in paragraph
(c) above. An Indemnifying Party shall not, without the written consent of the
Indemnified Person, settle any Third Party Claim or consent to the entry of any
judgment with respect thereto that (A) does not result in a final resolution of
the Indemnified

 

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Person’s liability with respect to the Third Party Claim (including, in the case
of a settlement, an unconditional written release of the Indemnified Person from
all further liability in respect of such Third Party Claim) or (B) may
materially and adversely affect the Indemnified Person (other than as a result
of money damages covered by the indemnity).

(f) If the Indemnifying Party does not admit its obligation or admits its
obligation but fails to diligently defend or settle the Third Party Claim, then
the Indemnified Person shall have the right, but not the obligation, to defend
and control the defense against the Third Party Claim (at the sole cost and
expense of the Indemnifying Party, if the Indemnified Person is entitled to
indemnification hereunder), with counsel of the Indemnified Person’s choosing,
subject to the right of the Indemnifying Party to admit its obligation to
indemnify the Indemnified Person and assume the defense of the Third Party Claim
at any time prior to settlement or final determination thereof. If the
Indemnifying Party has not yet admitted its obligation to indemnify the
Indemnified Person, the Indemnified Person shall send written notice to the
Indemnifying Party of any proposed settlement and the Indemnifying Party shall
have the option for ten (10) days following receipt of such notice to (i) admit
in writing its obligation for indemnification with respect to such Third Party
Claim and (ii) if its obligation is so admitted, assume the defense of the Third
Party Claim, including the power to reject the proposed settlement. If the
Indemnified Person settles any Third Party Claim over the objection of the
Indemnifying Party after the Indemnifying Party has timely admitted its
obligation for indemnification in writing and assumed the defense of the Third
Party Claim, the Indemnified Person shall be deemed to have waived any right to
indemnity with respect to the Third Party Claim. If the Indemnifying Party does
not timely object to the proposed settlement, then the Indemnified Person may
accept such settlement and continue to pursue indemnity for all Damages,
including such settlement, from the Indemnifying Party.

(g) In the case of a claim for indemnification not based upon a Third Party
Claim, (a “Direct Claim”) shall be asserted by giving the Indemnifying Party
reasonably prompt Claim Notice thereof, but in any event not later than thirty
(30) days after the Indemnified Person becomes aware of the events that gave
rise to such Direct Claim. Such Claim Notice by the Indemnified Party shall
describe the Direct Claim in reasonable detail, shall include copies of all
available material written evidence thereof and shall indicate the estimated
amount, if reasonably practicable, of Damages that have been or may be sustained
by the Indemnified Person. The Indemnifying Party shall have sixty (60) days
from its receipt of the Claim Notice to (i) cure the Damages complained of,
(ii) admit its obligation to provide indemnification with respect to such
Damages or (iii) dispute the claim for such Damages. If the Indemnifying Party
does not notify the Indemnified Person within such sixty (60) day period that it
has cured the Damages or that it disputes the claim for such Damages, the
Indemnifying Party shall be conclusively deemed obligated to provide
indemnification hereunder with respect to such Direct Claim.

 

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ARTICLE 11

MISCELLANEOUS

Section 11.1 Notices. Any notice, request, instruction, correspondence or other
document to be given hereunder by any Party to another (herein collectively
called “Notice”) shall be in writing and delivered in person or by courier
service requiring acknowledgement of receipt or mailed by certified mail,
postage prepaid and return receipt requested, or by e-mail, as follows:

 

To ESAS:

Energy Strategic Advisory Services LLC

200 Crescent Court, Suite 200

Dallas, Texas 75201

Attention: Jonathan Siegler, Executive Vice President, CFO

Telephone: (469) 398-2205

Facsimile: (682) 626-1335

E-mail: jasiegler@bluescapegroup.com

with a copy (that shall not constitute Notice) to:

Bracewell & Giuliani LLP

711 Louisiana Street, Suite 2300

Houston, Texas 77002

Attn: Bryan E. Loocke

Telephone: (713) 221-1522

Facsimile: (713) 437-5355

E-mail: bryan.loocke@bgllp.com

To EXCO:

EXCO Resources, Inc.

12377 Merit Drive

Suite 1700

Dallas, Texas 75251

Attention: William L. Boeing

Telephone: (214) 368-2084

Facsimile: (214) 706-3409

E-mail: lboeing@excoresources.com

with a copy (that shall not constitute Notice) to:

Akin Gump Strauss Hauer & Feld LLP

One Bryant Park

Bank of America Tower

New York, NY 10036-6745

Attention: Steven M. Pesner, Esq.

Telephone: (212) 872-1070

Facsimile: (212) 872-1002

E-mail: spesner@akingump.com

Notice given by personal delivery or courier shall be effective upon actual
receipt. Notice given by mail shall be effective upon actual receipt or, if not
actually received, the fifth Business Day following deposit with the U.S. Post
Office. Notice given by email shall be effective upon actual receipt if received
during the recipient’s normal business hours, or at the beginning of the

 

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recipient’s next Business Day after receipt if not received during the
recipient’s normal business hours. In the event a Party provides notice by
email, then, no later than two (2) Business Days following such email notice,
the notifying Party shall deliver a hard copy of such notice to each other Party
by personal delivery or courier or by mail. If a date specified herein for
giving any notice or taking any action is not a Business Day (or if the period
during which any notice is required to be given or any action taken expires on a
date which is not a Business Day), then the date for giving such notice or
taking such action (and the expiration date of such period during which notice
is required to be given or action taken) shall be the next day which is a
Business Day. Any Party may change any address to which Notice is to be given to
it by giving Notice as provided above of such change of address.

Section 11.2 Governing Law. This Agreement and the documents delivered pursuant
hereto and the legal relations between the Parties shall be governed by,
construed and enforced in accordance with the Laws of the State of Texas,
without regard to principles of conflicts of Laws that would direct the
application of the Laws of another jurisdiction.

Section 11.3 Forum Selection; Waiver of Jury Trial.

(a) Each Party to this Agreement agrees that, except as provided in and subject
to Section 11.4 or as necessary to (i) obtain provisional injunctive, ancillary
or other equitable relief if such action is necessary to avoid irreparable harm
or to preserve the status quo pending the resolution of the Dispute in
accordance with the provisions of Section 11.4 or (ii) enter and enforce any
judgment on the award rendered by the Arbitration Panel in accordance with
applicable Laws, (A), each Party hereby irrevocably consents to the exclusive
jurisdiction of the courts of the State of Texas in and for Dallas County or the
United States District Court for the Northern District of Texas in connection
with any Dispute, litigation or proceeding arising out of this Agreement or any
of the transactions contemplated thereby, (B) all Disputes among any the Parties
to this Agreement and the transactions contemplated hereby shall have exclusive
jurisdiction and venue only in the courts of the State of Texas in and for
Dallas County or the United States District Court for the Northern District of
Texas, and (C) each Party waives any objection which it may have pertaining to
improper venue or forum non-conveniens to the conduct of any litigation or
proceeding in the foregoing courts. Each Party agrees that any and all process
directed to it in any such proceeding or litigation may be served upon it
outside of the State of Texas in and for Dallas County or the United States
District Court for the Northern District of Texas with the same force and effect
as if such service had been made within State of Texas in and for Dallas County
or the United States District Court for the Northern District of Texas.

(b) EACH OF THE PARTIES HEREBY VOLUNTARILY AND IRREVOCABLY WAIVES TRIAL BY JURY
IN ANY LITIGATION, ACTION OR OTHER PROCEEDING BROUGHT IN CONNECTION WITH THIS
AGREEMENT.

 

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Section 11.4 Dispute Resolution.

(a) Each Party to this Agreement agrees that any dispute, controversy, matter or
claim between the Parties (each, subject to such exceptions, a “Dispute”), that
cannot be resolved among the Parties shall be resolved in accordance with
procedures specified herein, which shall constitute the sole and exclusive
procedures for the resolution of Disputes. Excepting the right of a Party to
seek the relief described under Section 11.4(d) below, all Disputes, whether
sounding in tort, contract or otherwise, shall be resolved by binding,
self-administered arbitration pursuant to the Commercial Arbitration Rules of
the American Arbitration Association (the “AAA”), and all such proceedings shall
be subject to the Federal Arbitration Act; provided, however, arbitrators shall
be appointed in accordance with the provisions of this Section 11.4(a). There
shall be three (3) arbitrators (“Arbitration Panel”). EXCO shall designate one
arbitrator and ESAS shall designate one arbitrator, neither of whom need be
neutral but both of whom must have expertise or experience in the U.S. oil and
gas industry, within thirty (30) days of the notification of a Party’s intent to
proceed with arbitration hereunder. The two (2) arbitrators so designated shall
elect a third arbitrator, which shall be neutral and have experience or
expertise in the U.S. oil and gas industry. If either Party fails to designate
an arbitrator within the time specified or the two Parties’ arbitrators fail to
designate the neutral third arbitrator within thirty (30) days of their
appointment, the remaining arbitrator(s) shall be appointed by the AAA using the
listing ranking and striking method.

(b) Each Party shall cooperate in reasonable, prompt discovery prior to
presenting the case to the arbitrators. Within thirty (30) calendar days of the
appointment of the arbitrators, they shall establish (i) the scope of discovery
and (ii) a limited discovery schedule. All discovery activities shall be
conducted under the rules of the AAA. The award of the Arbitration Panel shall
(A) be based on the decision of a majority of the members of the Arbitration
Panel, (B) be final and binding upon the Parties, (C) be issued within ninety
(90) days after the submittal of the Dispute to the AAA or as otherwise
determined by the Arbitration Panel or the Parties, (D) be in writing, and
(E) set forth the factual and legal bases for such award. EXCO shall pay for the
expenses incurred by its designated arbitrator, and ESAS shall pay for the
expenses incurred by their designated arbitrator. The costs of the third,
neutral arbitrator shall be borne as to one half by EXCO and as to the other
half by ESAS. Each Party shall bear its own attorneys’ fees, subject to the
right of the Arbitration Panel to award attorneys’ fees and costs of the
arbitration to any Party. As between the Parties, only damages allowed pursuant
to this Agreement may be awarded and, without limiting the foregoing,
arbitrators shall have no authority to award any damages that are excluded under
any express provision of the Agreement. Each Party hereby undertakes without
delay to implement, perform, or comply with the provisions of any arbitral award
or decision.

(c) The site of any arbitration brought pursuant to this Section 11.4 shall be
Dallas, Texas, U.S.A.

(d) The Parties hereby agree to continue to perform their respective obligations
under the Agreement while any Dispute is pending. Notwithstanding anything to
the contrary herein, any Party may proceed to any court of competent
jurisdiction to (i) obtain provisional injunctive, ancillary or other equitable
relief if such action is necessary to avoid irreparable harm or to preserve the
status quo pending the resolution of the Dispute in accordance with the
provisions of this Section 11.4 or (ii) enter and enforce any judgment on the
award rendered by the Arbitration Panel in accordance with applicable Laws.
Notwithstanding the foregoing, the arbitration of the underlying Dispute shall
proceed in accordance with the terms hereof during the pendency of the
proceeding to obtain such provisional injunctive, ancillary or other equitable
relief.

 

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(e) EACH OF THE PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY CONSENTS TO THE
SUBMISSION OF ANY DISPUTE FOR SETTLEMENT BY FINAL AND BINDING ARBITRATION IN
ACCORDANCE WITH THE PROVISIONS OF THIS SECTION 11.4, AND HEREBY WAIVES THE RIGHT
TO PROCEED TO COURT OR ANY OTHER FORUM THAT MAY APPLY TO IT BY REASON OF ITS
PRESENT OR FUTURE DOMICILE, OR FOR ANY OTHER REASON EXCEPT RECOURSE TO COURTS
FOR ENFORCEMENT OF ARBITRAL AWARDS OR OTHER ORDER OF THE ARBITRATORS ISSUED IN
AN ARBITRATION PURSUANT TO THIS SECTION 11.4 OR SEEKING ANY INTERIM OR
CONSERVATORY MEASURES OF THE RULES OF ARBITRATION OF THE AAA OR DESCRIBED IN
THIS SECTION 11.4. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY PARTY TO BRING
ANY SUIT, ACTION OR PROCEEDING SEEKING TO ENFORCE ANY ARBITRAL AWARD OR OTHER
ORDER OF THE ARBITRATORS ISSUED IN AN ARBITRATION PURSUANT TO THIS SECTION 11.4
OR SEEKING ANY INTERIM OR CONSERVATORY MEASURES PURSUANT TO THE RULES OF
ARBITRATION OF THE AAA AGAINST ANY PARTY IN ANY OTHER JURISDICTION PERMITTED BY
LAW.

Section 11.5 Headings and Construction. The headings and captions herein are
inserted for convenience of reference only and are not intended to govern, limit
or aid in the construction of any term or provision hereof. The rights and
obligations of each Party shall be determined pursuant to this Agreement. ESAS
and EXCO have had the opportunity to exercise business discretion in relation to
the negotiation of the details and terms of the transaction contemplated hereby.
This Agreement is the result of arm’s length negotiations from equal bargaining
positions. It is the intention of the Parties that every covenant, term and
provision of this Agreement shall be construed simply according to its fair
meaning and not strictly for or against any Party (notwithstanding any rule of
law requiring an agreement to be strictly construed against the drafting Party)
and no consideration shall be given or presumption made, on the basis of who
drafted this Agreement or any particular provision thereof, it being understood
that the Parties to this Agreement are sophisticated and have had adequate
opportunity and means to exercise business discretion in relation to the
negotiation of the details of the transaction contemplated hereby and retain
counsel to represent their interests and to otherwise negotiate the provisions
of this Agreement.

Section 11.6 Waivers. Any failure by any Party to comply with any of its
obligations, agreements or conditions herein contained may be waived by the
Party to whom such compliance is owed by the application of the express terms
hereof of by an instrument signed by the Party to whom compliance is owed and
expressly identified as a waiver, but not in any other manner. Except as
otherwise expressly provided herein, no waiver of, or consent to a change in or
modification of, any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of, or consent to a change in or modification, other
provisions hereof (whether or not similar), nor shall such waiver constitute a
continuing waiver unless otherwise expressly provided herein.

 

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Section 11.7 Severability. It is the intent of the Parties that the provisions
contained in this Agreement shall be severable. Should any provisions, in whole
or in part, be held invalid as a matter of Law, such holding shall not affect
the other portions of this Agreement, and such portions that are not invalid
shall be given effect without the invalid portion.

Section 11.8 Assignment. No Party shall assign or otherwise transfer all or any
part of this Agreement, nor shall any Party delegate any of its rights or duties
hereunder, without the prior written consent of the other Party and any
assignment, transfer or delegation made without such consent shall be null and
void; provided that ESAS may assign its rights and duties under this Agreement
to any of its Affiliates upon written request by ESAS, and written consent of
EXCO, such consent not to be unreasonably withheld; provided further, that ESAS
shall not assign or transfer its rights under the Warrants except for as
provided in the terms of the Warrants. To the extent there are ESAS Initial
Warrantholders other than ESAS, each such ESAS Initial Warrantholder shall be
deemed to make each of the representation, warranties and agreements in Article
3, mutatis mutandis, as of the Execution Date or Closing Date, as applicable,
substituting the respective ESAS Initial Warrantholder’s legal name for ESAS.
Unless expressly agreed to in writing by the Parties, no permitted assignment of
any Party’s rights or duties hereunder shall relieve or release any Party from
the performance of such Party’s rights or obligations hereunder and the
assigning Party shall be fully liable to the other Parties for the performance
of all such rights and duties. Subject to the foregoing, this Agreement shall be
binding upon and inure to the benefit of the Parties hereto and their respective
permitted successors and assigns.

Section 11.9 Entire Agreement. This Agreement, the Confidentiality Agreement,
Transaction Documents and the other documents to be executed and delivered
hereunder hereto constitute the entire agreement among the Parties pertaining to
the subject matter hereof, and supersede all prior agreements, understandings,
negotiations and discussions, whether oral or written, of the Parties pertaining
to the subject matter hereof.

Section 11.10 Amendment. The provisions of this Agreement may not be amended,
modified or supplemented, except by the prior written consent of (a) ESAS and
(b) EXCO. Any ESAS Initial Warrantholder that is a holder of record of Warrants
at the time of any such amendment, modification, supplement, waiver or consent
or thereafter shall be bound by any such amendment, modification, supplement,
waiver or consent effected pursuant to this Section 11.10 as it relates to
ownership and transfer of the Securities, whether or not any notice, writing or
marking indicating such amendment, modification, supplement, waiver or consent
appears on the Securities or is delivered to such holder. Any amendment,
supplement or modification of or to any provision of this Agreement, any waiver
or any provision of this Agreement, and any consent to any departure from the
terms of any provision of this Agreement shall be effective only in the specific
instance and for the specific purpose for which made or given.

Section 11.11 No Third-Person Beneficiaries. Nothing in this Agreement shall
entitle any Person other than EXCO or ESAS to any claim, cause of action, remedy
or right of any kind. Notwithstanding the foregoing: (a) the Parties reserve the
right to amend, modify, terminate,

 

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supplement, or waive any provision of this Agreement or this entire Agreement
without the consent or approval of any other Person (including the other members
of the ESAS Group or the other members of the EXCO Group or the ESAS Initial
Warrantholders (other than ESAS)); and (b) no Party hereunder shall have any
direct liability to any permitted Third Party beneficiary, nor shall any
permitted Third Party beneficiary have any right to exercise any rights
hereunder for such third-party beneficiary’s benefit.

Section 11.12 Limitation on Damages. Notwithstanding anything to the contrary
contained herein, NO PERSON SHALL BE ENTITLED TO LOST PROFITS, INDIRECT,
CONSEQUENTIAL, SPECIAL OR PUNITIVE DAMAGES IN CONNECTION WITH THIS AGREEMENT AND
THE TRANSACTIONS CONTEMPLATED HEREBY AND EACH OF EXCO AND ESAS, FOR ITSELF AND
ON BEHALF OF THEIR RESPECTIVE MEMBERS OF THE EXCO GROUP AND ESAS GROUP,
RESPECTIVELY, HEREBY EXPRESSLY WAIVES ANY RIGHT TO LOST PROFITS, INDIRECT,
CONSEQUENTIAL, SPECIAL OR PUNITIVE DAMAGES IN CONNECTION WITH THIS AGREEMENT AND
THE TRANSACTIONS CONTEMPLATED HEREBY; provided, however, (a) that if an
Indemnified Person is held liable to a Third Party based on any final judgment
of a court of competent jurisdiction for any lost profits, indirect,
consequential, special or punitive damages and the applicable Indemnifying Party
is obligated to indemnify such Indemnified Person for the matter that gave rise
to such Damages, then such Indemnifying Party shall be liable for, and obligated
to reimburse such Indemnified Person for such Damages, (b) the waiver and
limitations set forth in this Section 11.12 shall not limit or apply to any
Damages that a Party is entitled to recover at law or equity under Article 9 and
(c) the waiver and limitations set forth in this Section 11.12 shall not limit
or apply to any Damages that ESAS or any of its permitted successors or assigns
are entitled to recover at law or equity in connection with any breach by EXCO
of any of its covenants or obligations under the Warrants or the Registration
Rights Agreement.

Section 11.13 Time of the Essence; Calculation of Time. Time is of the essence
in this Agreement. If the date specified in this Agreement for giving any notice
or taking any action is not a Business Day (or if the period during which any
notice is required to be given or any action taken expires on a date that is not
a Business Day), then the date for giving such notice or taking such action (and
the expiration date of such period during which notice is required to be given
or action taken) shall be the next day that is a Business Day.

Section 11.14 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Facsimile, .pdf or other
electronic transmission of copies of signatures shall constitute original
signatures for all purposes of this Agreement and any enforcement hereof.

[Remainder of Page Intentionally Left Blank. Signature Pages to Follow]

 

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IN WITNESS WHEREOF, this Agreement has been entered into by each of the Parties
as of the Execution Date.

 

ENERGY STRATEGIC ADVISORY SERVICES LLC Name:

/s/ C. John Wilder

By: C. John Wilder Title: Executive Chairman

Signature Page to Services and Investment Agreement

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EXCO RESOURCES, INC. Name:

/s/ Harold L. Hickey

By: Harold L. Hickey Title: President and Chief Executive Officer

Signature Page to Services and Investment Agreement