Document:

Exhibit 10.4

 

EXCO Resources, Inc.

12377 Merit Drive, Suite 1700

Dallas, TX 75251

 

March 28, 2007

 

Ares
Corporate Opportunities Fund, L.P.

ACOF EXCO,
L.P.

ACOF EXCO
892 Investors, L.P.

Ares
Corporate Opportunities Fund II, L.P.

Ares EXCO,
L.P.

Ares EXCO 892
Investors, L.P.

c/o Ares
Management LLC

1999 Avenue
of the Stars, Suite 1900

Los Angeles,
California 90067

 

Re:                               Nomination of Designee to the
Board of Directors

 

Ladies and
Gentlemen:

 

Reference is
hereby made to that certain Preferred Stock Purchase Agreement (the “Purchase
Agreement”), dated as of the date hereof, by and among EXCO Resources, Inc.
(“EXCO”) and the Purchasers named therein. All capitalized terms used
but not otherwise defined herein shall have the respective meanings set forth
in the Purchase Agreement. For purposes of this letter, “Ares” means,
collectively, Ares Corporate Opportunities Fund, L.P. (“ACOF”), ACOF
EXCO, L.P. (“ACOF EXCO”), ACOF EXCO 892 Investors, L.P. (“ACOF 892”),
Ares Corporate Opportunities Fund II, L.P. (“ACOF II”),  Ares EXCO, L.P. (“Ares EXCO”), Ares
EXCO 892 Investors, L.P. (“Ares 892”) and any other investment fund or
account, whether now in existence or hereafter formed, which is managed or
controlled by Ares Management LLC (“Ares Management”) or any of its
affiliates (as such term is defined in Rule 12b-2 of the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated thereunder),
or of which Ares Management or any of its affiliates is an advisor.

 

This is the
letter referred to in Section 2.04(d) of the Purchase Agreement. EXCO hereby
agrees, subject to the fiduciary duties of its board of directors, for the
benefit of ACOF, ACOF EXCO, ACOF 892, ACOF II, Ares EXCO and Ares 892 that
following such time when: (i) Ares ceases to have the right to elect a director
to serve on the Board of Directors pursuant to Section 5(c) of the Series
C 7.0% Preferred Statement of Designation and (ii) there ceases to be
twenty-five percent (25%) or more of the Initial Preferred Shares (as defined
in the Statements of Designation) outstanding, EXCO shall cause an individual
designated by ACOF II (or its designee) to be nominated for election to serve
on the Board of Directors at any annual meeting of the shareholders or special
meeting held to elect directors, for so long as Ares beneficially 

 

 

 

owns an
aggregate of at least 10,000,000 shares of Common Stock (including, without
limitation, Common Stock issuable upon conversion or exchange of Convertible
Securities), subject to adjustment to reflect stock dividends, stock splits,
stock combinations and other similar events occurring after the date hereof; provided, however,
that ACOF II may assign the right to nominate an individual to serve on the
Board of Directors to (i) Ares or (ii) any other investment fund or account,
whether now in existence or hereafter formed, which is managed or controlled by
Ares Management or any of its affiliates. In no respect shall this letter
obligate EXCO or its directors to recommend that its shareholders elect such
individual or impair their power and ability to recommend that its shareholders
not elect such individual.

 

This letter
is being executed in connection with the Purchase Agreement, and Sections 7.01,
7.02, 7.06, 7.08 and 7.10 of the Purchase Agreement are incorporated by
reference herein. This letter shall be governed by, and construed in accordance
with, the laws of the State of Texas without regard to principles of conflicts
of law. The terms of this letter may not be amended, modified or supplemented,
and waivers or consents to departures from the terms hereof may not be given,
except by the written consent of all of the parties hereto. This letter may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts together
shall constitute one and the same instrument.

 

[Signature Page Follows]

 

2

 

 

If the foregoing accurately sets forth our understanding,
please acknowledge by signing in the space provided below.

 

	
   

  	
  Sincerely,

  
	
   

  	
   

  	
   

  
	
   

  	
  EXCO RESOURCES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ J.
  Douglas Ramsey, PH.D.

  	
   

  
	
   

  	
   

  	
  Name: J.
  Douglas Ramsey, Ph.D.

  
	
   

  	
   

  	
  Title:
  Vice President and Chief Financial Officer

  

 

SIGNATURE PAGE

SIDE LETTER

 

 

 

AGREED TO AND
ACCEPTED

as of the
date set forth above

 

ARES CORPORATE OPPORTUNITIES FUND, L.P.

 

	
  By:

  	
  ACOF
  Operating Manager, L.P.

  
	
  Its:

  	
  Manager

  
	
   

  	
   

  
	
   

  	
  By: 

  	
      /s/
  Jeff Serota

  	
   

  
	
   

  	
  Name:   Jeff
  Serota

  
	
   

  	
  Title:  Vice
  President

  

 

 

ACOF EXCO, L.P.

 

	
  By:

  	
  ACOF
  Operating Manager, L.P.

  
	
  Its:

  	
  Manager

  
	
   

  	
   

  
	
   

  	
  By: 

  	
      /s/
  Jeff Serota

  	
   

  
	
   

  	
  Name:   Jeff
  Serota

  
	
   

  	
  Title:  Vice
  President

  

 

 

ACOF EXCO 892 INVESTORS, L.P.

 

	
  By:

  	
  ACOF
  Operating Manager, L.P.

  
	
  Its:

  	
  Manager

  
	
   

  	
   

  
	
   

  	
  By: 

  	
      /s/
  Jeff Serota

  	
   

  
	
   

  	
  Name:   Jeff
  Serota

  
	
   

  	
  Title:  Vice
  President

  

 

 

ARES CORPORATE OPPORTUNITIES FUND II, L.P.

 

	
  By:

  	
  ACOF
  Operating Manager II, L.P.

  
	
  Its:

  	
  Manager

  
	
   

  	
   

  
	
   

  	
  By: 

  	
      /s/
  Jeff Serota

  	
   

  
	
   

  	
  Name:   Jeff
  Serota

  
	
   

  	
  Title:  Vice
  President

  

 

SIGNATURE PAGE

SIDE LETTER

 

 

ARES EXCO, L.P.

 

	
  By:

  	
  ACOF
  Operating Manager II, L.P.

  
	
  Its:

  	
  Manager

  
	
   

  	
   

  
	
   

  	
  By: 

  	
      /s/
  Jeff Serota

  	
   

  
	
   

  	
  Name:   Jeff
  Serota

  
	
   

  	
  Title:  Vice
  President

  

 

 

 

ARES EXCO 892 INVESTORS, L.P.

 

	
  By:

  	
  ACOF
  Operating Manager II, L.P.

  
	
  Its:

  	
  Manager

  
	
   

  	
   

  
	
   

  	
  By: 

  	
      /s/
  Jeff Serota

  	
   

  
	
   

  	
  Name:   Jeff
  Serota

  
	
   

  	
  Title:  Vice
  President

  

 

SIGNATURE PAGE

SIDE LETTERExhibit 10.5

 

Execution Version

 

 

 

 

AMENDED AND RESTATED CREDIT AGREEMENT

 

dated as of

March 30, 2007

 

among

 

EXCO PARTNERS OPERATING PARTNERSHIP, LP,

as Borrower

 

CERTAIN SUBSIDIARIES OF BORROWER,

as Guarantors

 

The Lenders Party Hereto

 

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent

 

J.P. MORGAN SECURITIES INC.,

as Sole Bookrunner and Lead Arranger

 

$1,300,000,000 Senior Secured Credit Facility

 

 

 

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I

  	
  DEFINITIONS

  	
  1

  
	
   

  	
   

  	
   

  
	
  Section 1.01.

  	
  Defined
  Terms

  	
  1

  
	
  Section 1.02.

  	
  Classification
  of Loans and Borrowings

  	
  25

  
	
  Section 1.03.

  	
  Terms
  Generally

  	
  25

  
	
  Section 1.04.

  	
  Accounting
  Terms; GAAP

  	
  25

  
	
  Section 1.05.

  	
  Oil and Gas
  Definitions

  	
  25

  
	
  Section 1.06.

  	
  Time of Day

  	
  26

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
  THE CREDITS

  	
  26

  
	
   

  	
   

  	
   

  
	
  Section 2.01.

  	
  Commitments

  	
  26

  
	
  Section 2.02.

  	
  Termination
  and Reduction of the Aggregate Commitment

  	
  26

  
	
  Section 2.03.

  	
  Reserved

  	
  27

  
	
  Section 2.04.

  	
  Loans and
  Borrowings

  	
  27

  
	
  Section 2.05.

  	
  Requests for
  Revolving Borrowings

  	
  27

  
	
  Section 2.06.

  	
  Swingline
  Loans

  	
  28

  
	
  Section 2.07.

  	
  Letters of Credit

  	
  29

  
	
  Section 2.08.

  	
  Funding of
  Borrowings

  	
  34

  
	
  Section 2.09.

  	
  Interest
  Elections

  	
  34

  
	
  Section 2.10.

  	
  Repayment of
  Loans; Evidence of Debt

  	
  36

  
	
  Section 2.11.

  	
  Optional
  Prepayment of Loans

  	
  37

  
	
  Section 2.12.

  	
  Mandatory
  Prepayment of Loans

  	
  37

  
	
  Section 2.13.

  	
  Fees

  	
  39

  
	
  Section 2.14.

  	
  Interest

  	
  40

  
	
  Section 2.15.

  	
  Alternate
  Rate of Interest

  	
  40

  
	
  Section 2.16.

  	
  Increased
  Costs

  	
  41

  
	
  Section 2.17.

  	
  Break
  Funding Payments

  	
  42

  
	
  Section 2.18.

  	
  Taxes

  	
  43

  
	
  Section 2.19.

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

  	
  44

  
	
  Section 2.20.

  	
  Mitigation
  Obligations; Replacement of Lenders

  	
  46

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
  BORROWING BASE

  	
  47

  
	
   

  	
   

  	
   

  
	
  Section 3.01.

  	
  Reserve
  Report; Proposed Borrowing Base

  	
  47

  
	
  Section 3.02.

  	
  Scheduled
  Redeterminations of the Borrowing Base; Procedures and Standards

  	
  48

  
	
  Section 3.03.

  	
  Special
  Redeterminations

  	
  49

  
	
  Section 3.04.

  	
  Notice of
  Redetermination

  	
  49

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
  REPRESENTATIONS AND WARRANTIES

  	
  49

  
	
   

  	
   

  	
   

  
	
  Section 4.01.

  	
  Organization;
  Powers

  	
  49

  
	
  Section 4.02.

  	
  Authorization;
  Enforceability

  	
  50

  
	
  Section 4.03.

  	
  Governmental
  Approvals; No Conflicts

  	
  50

  
					

 

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 4.04.

  	
  Financial
  Condition; No Material Adverse Change

  	
  50

  
	
  Section 4.05.

  	
  Properties

  	
  50

  
	
  Section 4.06.

  	
  Litigation
  and Environmental Matters

  	
  51

  
	
  Section 4.07.

  	
  Compliance
  with Laws and Agreements

  	
  51

  
	
  Section 4.08.

  	
  Investment
  Company Status

  	
  51

  
	
  Section 4.09.

  	
  Taxes

  	
  51

  
	
  Section 4.10.

  	
  ERISA

  	
  52

  
	
  Section 4.11.

  	
  Disclosure

  	
  52

  
	
  Section 4.12.

  	
  Labor
  Matters

  	
  52

  
	
  Section 4.13.

  	
  Capitalization
  and Credit Party Information

  	
  52

  
	
  Section 4.14.

  	
  Margin Stock

  	
  52

  
	
  Section 4.15.

  	
  Oil and Gas
  Interests

  	
  53

  
	
  Section 4.16.

  	
  Insurance

  	
  53

  
	
  Section 4.17.

  	
  Solvency

  	
  53

  
	
  Section 4.18.

  	
  Deposit
  Accounts

  	
  54

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
  CONDITIONS

  	
  54

  
	
   

  	
   

  	
   

  
	
  Section 5.01.

  	
  Effective
  Date

  	
  54

  
	
  Section 5.02.

  	
  Each Credit
  Event

  	
  58

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
  AFFIRMATIVE COVENANTS

  	
  58

  
	
   

  	
   

  	
   

  
	
  Section 6.01.

  	
  Financial
  Statements; Other Information

  	
  59

  
	
  Section 6.02.

  	
  Notices of
  Material Events

  	
  61

  
	
  Section 6.03.

  	
  Existence;
  Conduct of Business

  	
  62

  
	
  Section 6.04.

  	
  Payment of
  Obligations

  	
  62

  
	
  Section 6.05.

  	
  Maintenance
  of Properties; Insurance

  	
  62

  
	
  Section 6.06.

  	
  Books and
  Records; Inspection Rights

  	
  62

  
	
  Section 6.07.

  	
  Compliance
  with Laws

  	
  63

  
	
  Section 6.08.

  	
  Use of
  Proceeds and Letters of Credit

  	
  63

  
	
  Section 6.09.

  	
  Mortgages

  	
  63

  
	
  Section 6.10.

  	
  Title Data

  	
  63

  
	
  Section 6.11.

  	
  Swap
  Agreements

  	
  63

  
	
  Section 6.12.

  	
  Operation of
  Oil and Gas Interests

  	
  64

  
	
  Section 6.13.

  	
  Restricted
  Subsidiaries

  	
  64

  
	
  Section 6.14.

  	
  Pledged
  Equity Interests

  	
  65

  
	
  Section 6.15.

  	
  Production
  Proceeds and Bank Accounts

  	
  65

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
  NEGATIVE COVENANTS

  	
  65

  
	
   

  	
   

  	
   

  
	
  Section 7.01.

  	
  Indebtedness

  	
  65

  
	
  Section 7.02.

  	
  Liens

  	
  66

  
	
  Section 7.03.

  	
  Fundamental
  Changes

  	
  67

  
	
  Section 7.04.

  	
  Investments,
  Loans, Advances, Guarantees and Acquisitions

  	
  68

  
	
  Section 7.05.

  	
  Swap
  Agreements

  	
  69

  
	
  Section 7.06.

  	
  Restricted
  Payments

  	
  70

  
	
  Section 7.07.

  	
  Transactions
  with Affiliates

  	
  70

  
				

 

ii

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 7.08.

  	
  Restrictive
  Agreements

  	
  70

  
	
  Section 7.09.

  	
  Disqualified
  Stock and Fiscal Year

  	
  71

  
	
  Section 7.10.

  	
  Amendments
  to Organizational Documents

  	
  71

  
	
  Section 7.11.

  	
  Financial
  Covenants

  	
  71

  
	
  Section 7.12.

  	
  Sale and
  Leaseback Transactions and other Off-Balance Sheet Liabilities

  	
  72

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
  GUARANTEE OF OBLIGATIONS

  	
  72

  
	
   

  	
   

  	
   

  
	
  Section 8.01.

  	
  Guarantee of
  Payment

  	
  72

  
	
  Section 8.02.

  	
  Guarantee
  Absolute

  	
  72

  
	
  Section 8.03.

  	
  Guarantee
  Irrevocable

  	
  73

  
	
  Section 8.04.

  	
  Reinstatement

  	
  73

  
	
  Section 8.05.

  	
  Subrogation

  	
  73

  
	
  Section 8.06.

  	
  Subordination

  	
  74

  
	
  Section 8.07.

  	
  Payments
  Generally

  	
  74

  
	
  Section 8.08.

  	
  Setoff

  	
  74

  
	
  Section 8.09.

  	
  Formalities

  	
  75

  
	
  Section 8.10.

  	
  Limitations
  on Guarantee

  	
  75

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX

  	
  EVENTS OF DEFAULT

  	
  75

  
	
   

  	
   

  	
   

  
	
  ARTICLE X

  	
  THE ADMINISTRATIVE AGENT

  	
  77

  
	
   

  	
   

  	
   

  
	
  ARTICLE XI

  	
  MISCELLANEOUS

  	
  79

  
	
   

  	
   

  	
   

  
	
  Section 11.01.

  	
  Notices

  	
  79

  
	
  Section 11.02.

  	
  Waivers;
  Amendments

  	
  80

  
	
  Section 11.03.

  	
  Expenses;
  Indemnity; Damage Waiver

  	
  81

  
	
  Section 11.04.

  	
  Successors
  and Assigns

  	
  83

  
	
  Section 11.05.

  	
  Survival

  	
  86

  
	
  Section 11.06.

  	
  Counterparts;
  Integration; Effectiveness

  	
  87

  
	
  Section 11.07.

  	
  Severability

  	
  87

  
	
  Section 11.08.

  	
  Right of
  Setoff

  	
  87

  
	
  Section 11.09.

  	
  GOVERNING
  LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS

  	
  88

  
	
  Section 11.10.

  	
  WAIVER OF
  JURY TRIAL

  	
  88

  
	
  Section 11.11.

  	
  Headings

  	
  89

  
	
  Section 11.12.

  	
  Confidentiality

  	
  89

  
	
  Section 11.13.

  	
  Interest
  Rate Limitation

  	
  89

  
	
  Section 11.14.

  	
  USA PATRIOT
  Act

  	
  90

  
	
  Section 11.15.

  	
  Original
  Credit Agreement

  	
  90

  
	
  Section 11.16.

  	
  Reaffirmation
  and Grant of Security Interest

  	
  90

  
	
  Section 11.17.

  	
  Reallocation
  of Aggregate Commitment

  	
  91

  
				

 

iii

 

	
  SCHEDULES:

  	
   

  	
   

  
	
   

  	
   

  
	
  Schedule
  2.01

  	
  –

  	
  Applicable
  Percentages and Initial Commitments

  	
   

  
	
  Schedule
  4.06

  	
  –

  	
  Disclosed
  Matters

  	
   

  
	
  Schedule
  4.13

  	
  –

  	
  Capitalization
  and Credit Party Information

  	
   

  
	
  Schedule
  4.18

  	
  –

  	
  Deposit and
  Investment Accounts

  	
   

  
	
  Schedule
  7.01

  	
  –

  	
  Existing
  Indebtedness

  	
   

  
	
  Schedule
  7.02

  	
  –

  	
  Existing
  Liens

  	
   

  
	
  Schedule
  7.07

  	
  –

  	
  Transactions
  with Affiliates

  	
   

  
	
  Schedule
  7.08

  	
  –

  	
  Existing
  Restrictions

  	
   

  
	
   

  	
   

  
	
  EXHIBITS:

  	
   

  
	
   

  	
   

  
	
  Exhibit A

  	
  –

  	
  Form of
  Assignment and Assumption

  	
   

  
	
  Exhibit B

  	
  –

  	
  Form of
  Opinion of Borrower’s Counsel

  	
   

  
	
  Exhibit C

  	
  –

  	
  Form of
  Counterpart Agreement

  	
   

  
	
  Exhibit D

  	
  –

  	
  Form of
  Solvency Certificate

  	
   

  
	
  Exhibit E

  	
  –

  	
  Form of Note

  	
   

  
							

 

iv

 

AMENDED AND
RESTATED CREDIT AGREEMENT dated as of March 30, 2007, among EXCO PARTNERS
OPERATING PARTNERSHIP, LP, as Borrower, CERTAIN SUBSIDIARIES OF BORROWER, as
Guarantors, the LENDERS party hereto, and JPMORGAN CHASE BANK, N.A., as
Administrative Agent.

 

The parties hereto agree as follows:

 

Article I

 

Definitions

 

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

 

“ABR”,
when used in reference to any Loan or Borrowing, refers to whether such Loan,
or the Loans comprising such Borrowing, are bearing interest at a rate
determined by reference to the Alternate Base Rate.

 

“Acquisition”
means, the acquisition by the Borrower or any Restricted Subsidiary, whether by
purchase, merger (and, in the case of a merger with any such Person, with such
Person being the surviving corporation) or otherwise, of all or substantially
all of the Equity Interest of, or the business, property or fixed assets of or
business line or unit or a division of, any other Person primarily engaged in
the business of producing oil or natural gas or the acquisition by the Borrower
or any Restricted Subsidiary of property or assets consisting of Oil and Gas
Interests.

 

“Adjusted
LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest
Period, an interest rate per annum (rounded upwards, if necessary, to the next
1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period multiplied
by (b) the Statutory Reserve Rate.

 

“Administrative
Agent” means JPMorgan Chase Bank, N.A. in its capacity as contractual
representative of the Lenders hereunder pursuant to Article X and not in its
individual capacity as a Lender, and any successor agent appointed pursuant to Article
X.

 

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

 

“Advance Payment Contract”
means any contract whereby any Credit Party either (a) receives or becomes
entitled to receive (either directly or indirectly) any payment (an “Advance
Payment”) to be applied
toward payment of the purchase price of Hydrocarbons produced or to be produced
from Oil and Gas Interests owned by any Credit Party and which Advance Payment
is, or is to be, paid in advance of actual delivery of such production to or
for the account of the purchaser regardless of such production, or
(b) grants an option or right of refusal to the purchaser to take delivery
of such production in lieu of payment, and, in either of 

 

1

 

the
foregoing instances, the Advance Payment is, or is to be, applied as payment in
full for such production when sold and delivered or is, or is to be, applied as
payment for a portion only of the purchase price thereof or of a percentage or
share of such production; provided that  inclusion
of the standard “take or pay” provision in any gas sales or purchase contract
or any other similar contract shall not, in and of itself, constitute such
contract as an Advance Payment Contract for the purposes hereof.

 

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

 

“AGC”
means Anadarko Gathering Company, a Delaware corporation and its successors and
assigns.

 

“Aggregate
Applicable Percentage” means, with respect to each Lender at any time, the
sum of such Lender’s Credit Exposure, and Unused Commitment at such time
divided by the sum of the Aggregate Credit Exposure, and all Unused Commitments
at such time, unless the Aggregate Commitment has been terminated in which case
it shall be the aggregate amount of such Lender’s outstanding Loans, LC Exposure
and Swingline Exposure at such time divided by the aggregate outstanding amount
of all Loans, LC Exposure and Swingline Loans at such time.

 

“Aggregate
Commitment” means the amount equal to the lesser of (i) the Maximum
Facility Amount and (ii) the Borrowing Base, as such Aggregate Commitment may
be reduced or increased pursuant to Section 2.02 and Article III.

 

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

 

“Agreement”
means this Amended and Restated Credit Agreement, dated as of March 30, 2007 as
it may be amended, supplemented or otherwise modified from time to time.

 

“Alternate
Base Rate” means, for any day, a rate per annum equal to the greatest of
(a) the Prime Rate in effect on such day, and (b) the Federal Funds
Effective Rate in effect on such day plus one-half of one percent (1⁄2 of 1%). Any
change in the Alternate Base Rate due to a change in the Prime Rate or the
Federal Funds Effective Rate shall be effective from and including the
effective date of such change in the Prime Rate or the Federal Funds Effective
Rate, respectively.

 

“Anadarko
Asset Acquisition” means the acquisition of certain assets of APC and AGC
by the Borrower and Vernon Gathering pursuant to the Anadarko Asset Purchase
Agreement including the assignment of the Vernon Hedges to one or more Credit
Parties on terms and conditions reasonably acceptable to the Administrative
Agent.

 

“Anadarko
Asset Purchase Agreement” means that certain Purchase and Sale Agreement by
and among APC, AGC and Vernon Holdings executed on December 22, 2006 as amended
by that certain First Amendment to Purchase and Sale Agreement, dated March 30,
2007.

 

2

 

“Anadarko
Asset Purchase Documents” means the Anadarko Asset Purchase Agreement and
all other certificates and other documents and instruments now or hereafter
executed and delivered by, between or among the Borrower, APC and AGC pursuant
to the Anadarko Asset Purchase Agreement or in connection with the Anadarko Asset
Acquisition.

 

“APC”
means Anadarko Petroleum Corporation, a Delaware corporation, and its
successors and assigns.

 

“Applicable
Percentage” means, with respect to any Lender at any time, the percentage
of the Aggregate Commitment represented by such Lender’s Commitment at such
time. The initial amount of each Lender’s Applicable Percentage is as set forth
on Schedule 2.01. If the Aggregate Commitment has terminated or expired,
the Applicable Percentages shall be determined based upon the Aggregate Commitment
most recently in effect, giving effect to any subsequent assignments.

 

“Applicable
Rate” means, for any day, with respect to any Eurodollar Loan or ABR Loan,
or with respect to the Unused Commitment Fees payable hereunder, as the case
may be, the applicable rate per annum set forth below under the caption “Eurodollar
Spread”, “ABR Spread” or “Unused Commitment Fee Rate”, as the case may be,
based upon the Borrowing Base Usage applicable on such date:

 

	
  Borrowing Base

  Usage

  	
   

  	
  Eurodollar

  Spread

  	
   

  	
  ABR Spread

  	
   

  	
  Unused

  Commitment

  Fee Rate

  	
   

  
	
  > 90%

  	
   

  	
  175 b.p.

  	
   

  	
  75 b.p.

  	
   

  	
  37.5 b.p.

  	
   

  
	
  > 75% and <
  90%

  	
   

  	
  150 b.p.

  	
   

  	
  50 b.p.

  	
   

  	
  37.5 b.p.

  	
   

  
	
  > 50% and <
  75%

  	
   

  	
  125 b.p.

  	
   

  	
  25 b.p.

  	
   

  	
  30 b.p.

  	
   

  
	
  < 50%

  	
   

  	
  100 b.p.

  	
   

  	
  0 b.p.

  	
   

  	
  25 b.p.

  	
   

  

 

Each change in
the Applicable Rate shall apply during the period commencing on the effective
date of such change and ending on the date immediately preceding the effective
date of the next change.

 

“Approved
Counterparty” means, at any time and from time to time, (i) any Person
engaged in the business of writing Swap Agreements for commodity, interest rate
or currency risk that is acceptable to the Administrative Agent and has (or the
credit support provider of such Person has), at the time Borrower or any
Restricted Subsidiary enters into a Swap Agreement with such Person, a long
term senior unsecured debt credit rating of BBB+ or better from S&P or Baa1
or better from Moody’s and (ii) any Lender Counterparty.

 

“Approved
Fund” has the meaning assigned to such term in Section 11.04.

 

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

 

3

 

“Arranger”
means J.P. Morgan Securities Inc. in its capacity as sole bookrunner and lead
arranger.

 

“Assignment
and Assumption” means an assignment and assumption entered into by a Lender
and an Eligible Assignee, and accepted by the Administrative Agent, in the form
of Exhibit A or any other form approved by the Administrative Agent.

 

“Availability
Period” means the period from and including the Effective Date to but
excluding the earlier of the Maturity Date and the date of termination of the
Aggregate Commitment.

 

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

 

“Board of
Directors” means (1) with respect to a corporation, the Board of Directors
of the corporation or any committee thereof duly authorized to act on behalf of
such board; (2) with respect to a partnership, the Board of Directors of the
general partner of the partnership; (3) with respect to a limited liability
company, the managing member or members or any controlling committee of
managing members thereof; and (4) with respect to any other Person, the board
or committee of such Person serving a similar function.

 

“Borrower”
means EXCO Partners Operating Partnership, LP, a Delaware limited partnership,
and its successors and permitted assigns.

 

“Borrower
Materials” has the meaning assigned to such term in Section 6.01.

 

“Borrowing”
means (a) Revolving Loans of the same Type, made, converted or continued on the
same date and, in the case of Eurodollar Loans, as to which a single Interest
Period is in effect, or (b) a Swingline Loan.

 

“Borrowing Base” means, at any time an amount equal
to the amount determined in accordance with Section 3.01, as the same may be
redetermined, adjusted or reduced from time to time pursuant to Section 3.02
and Section 3.03.

 

“Borrowing Base Deficiency” means, as of any date, the amount,
if any, by which Aggregate Credit Exposure on such date exceeds the Borrowing
Base in effect on such date; provided, that, for purposes of determining
the existence and amount of any Borrowing Base Deficiency, obligations under
any Letter of Credit will not be deemed to be outstanding to the extent such
obligations are secured by cash in the manner contemplated by Section 2.07(j).

 

“Borrowing Base Properties” means all Oil and Gas
Interests of the Borrower and the Restricted Subsidiaries evaluated by the
Lenders for purposes of establishing the Borrowing Base.

 

“Borrowing
Base Usage” means, as of any date and for all purposes, the quotient, expressed
as a percentage, of (i) Aggregate Credit Exposure as of such date divided by (ii) the Borrowing Base as
of such date.

 

4

 

“Borrowing
Request” means a request by the Borrower for a Borrowing in accordance with
Section 2.05.

 

“Business
Day” means any day that is not a Saturday, Sunday or other day on which
commercial banks in New York, New York or Dallas, Texas are authorized or
required by law to remain closed; provided that,
when used in connection with a Eurodollar Loan, the term “Business Day”
shall also exclude any day on which banks are not open for dealings in dollar
deposits in the London interbank market.

 

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

 

“Cash
Management Obligations” means, with respect to any Credit Party, any
obligations of such Credit Party owed to JPMorgan Chase Bank, N.A. (or any of
its affiliates) in respect of treasury management arrangements, depositary or
other cash management services.

 

“Change in
Law” means (a) the adoption of any law, rule or regulation after the date
of this Agreement, (b) any change in any law, rule or regulation or in the
interpretation or application thereof by any Governmental Authority after the
date of this Agreement or (c) compliance by any Lender or the Issuing Bank
(or, for purposes of Section 2.16(b), by any lending office of such Lender or
by such Lender’s or the Issuing Bank’s holding company, if any) with any
request, guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.

 

“Change of
Control” means (a) the acquisition of greater than fifty percent (50%) of
the voting or economic interest in the General Partner by any Person other than
the MLP; (b) the General Partner shall cease to own and control, of
record, beneficially and directly, one hundred percent (100%) of the general
partnership interest of the Borrower or cease to be the sole managing partner
of the Borrower; (c) any “person” or “group” (as such terms are used in
Sections 13(d) and 14(d) under the Exchange Act), other than EXCO, shall
become, or obtain rights (whether by means or warrants, options or otherwise)
to become, the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5
under the Exchange Act) directly or indirectly, of Equity Interests of the MLP
that would entitle such person or group entitled to vote such Equity Interests
representing, in the aggregate, more than thirty-five percent (35%) of the
total amount of outstanding Equity Interests of the MLP at any annual meeting
of the partners of the MLP or otherwise in the election of the Board of
Directors of the General Partner or the MLP General Partner; (d) the failure,
for any reason, of EXCO to own and control, directly or indirectly more than fifty
percent (50%) of the voting and economic interests of the MLP General Partner;
(e) the MLP General Partner shall cease to own and control, of record,
beneficially and directly, one hundred percent (100%) of the general
partnership interest in the MLP or to be the sole managing partner of the MLP;
or (f) the occurrence of a “Change of Control” as such term is defined in the
EXCO Credit Agreement.

 

5

 

“Charges”
has the meaning assigned to such term in Section 11.13.

 

“Class”
where used in reference to any Loan or Borrowing, refers to whether such Loan,
or the Loans comprising such Borrowing, are Revolving Loans or Swingline Loans.

 

“Code”
means the Internal Revenue Code of 1986, as amended from time to time.

 

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

 

“Commitment”
means, with respect to each Lender, the commitment of such Lender to make Loans
and to acquire participations in Letters of Credit and Swingline Loans
hereunder, expressed as an amount representing the maximum aggregate amount of
such Lender’s Credit Exposure hereunder, as such commitment may be (a) reduced
from time to time pursuant to Section 2.02, (b) reduced or increased from time
to time as a result of changes in the Borrowing Base pursuant to Article III
and (c) reduced or increased from time to time pursuant to assignments by or to
such Lender pursuant to Section 11.04. The initial amount of each Lender’s
Commitment (which amount is such Lender’s Applicable Percentage of the initial
Aggregate Commitment) is set forth in Schedule 2.01, or in the Assignment and
Assumption pursuant to which such Lender shall have assumed its Commitment, as
applicable.

 

“Consolidated
Current Assets” means, as of any date of determination, the total of (i)
the consolidated current assets of the Borrower and the Restricted Subsidiaries
determined in accordance with GAAP as of such date and calculated on a combined
basis, plus, all Unused
Commitments as of such date, (ii) less
any non-cash assets required to be included in consolidated current assets of
the Borrower and the Restricted Subsidiaries as a result of the application of
FASB Statement 133 as of such date.

 

“Consolidated
Current Liabilities” means, as of any date of determination, the total of
(i) consolidated current liabilities of the Borrower and the Restricted
Subsidiaries, as determined in accordance with GAAP as of such date, (ii) less current maturities of the Loans,
(iii) less any non-cash
obligations required to be included in consolidated current liabilities of the
Borrower and the Restricted Subsidiaries as a result of the application of FASB
Statement 133 as of such date.

 

“Consolidated
Current Ratio” means, as of any date of determination, the ratio of
Consolidated Current Assets to Consolidated Current Liabilities as of such
date.

 

“Consolidated EBITDAX” means, with
respect to the Borrower and its Restricted Subsidiaries for any period,
Consolidated Net Income for such period; plus,
without duplication and to the extent deducted in the calculation of
Consolidated Net Income for such period, the sum of (a) income or
franchise Taxes paid or accrued; (b) Consolidated Interest Expense;
(c) amortization, depletion and depreciation expense; (d) any
non-cash losses or charges on any Swap Agreement resulting from the
requirements of FASB Statement 133 for that period; (e) oil and gas
exploration expenses (including all drilling, completion, geological and geophysical
costs) for such period; (f) losses from sales or other dispositions of
assets (other than Hydrocarbons produced in the ordinary course of business)
and other extraordinary or 

 

6

 

non-recurring losses; (g) workover expenses for such period; (h)
cash payments made during such period as a result of the early termination of
any Swap Agreement (giving effect to any netting agreements); and (i) other
non-cash charges (excluding accruals for cash expenses made in the ordinary
course of business); minus, to
the extent included in the calculation of Consolidated Net Income for such
period; (j) the sum of (1) any non-cash gains on any Swap Agreements
resulting from the requirements of FASB Statement 133 for that period;
(2) extraordinary or non-recurring gains; and (3) gains from sales or
other dispositions of assets (other than Hydrocarbons produced in the ordinary
course of business); provided  that, with respect to the determination of
Borrower’s compliance with the leverage ratio set forth in Section 7.11(b) for
any period, Consolidated EBITDAX shall be adjusted to give effect, on a pro
forma basis, to any Acquisitions made during such period as if such
Acquisitions were made at the beginning of such period.

 

“Consolidated
Funded Indebtedness” means, as of any date and without duplication,
Indebtedness of the Borrower and the Restricted Subsidiaries of the type
described in clauses (a), (b), (c), (d), (e), (f), (g) or (h) of the definition
of Indebtedness, minus Surplus
Cash.

 

“Consolidated
Interest Expense” means for any period, without duplication, the aggregate
of all interest paid or accrued by the Borrower and its Restricted
Subsidiaries, on a consolidated basis, in respect of Indebtedness of any such
Person, on a consolidated basis, including all interest, fees and costs payable
with respect to the obligations related to such Indebtedness (other than fees
and costs which may be capitalized as transaction costs in accordance with
GAAP) and the interest component of Capitalized Lease Obligations, all as
determined in accordance with GAAP.

 

“Consolidated Net Income” means for
any period, the consolidated net income (or loss) of the Borrower and its
Consolidated Subsidiaries, as applicable, determined on a consolidated basis in
accordance with GAAP; provided that there shall be excluded (a) the income (or
deficit) of any Person accrued prior to the date it becomes a Consolidated
Subsidiary of the Borrower, or is merged into or consolidated with the Borrower
or any of its Consolidated Subsidiaries, as applicable, (b) the income (or
deficit) of any Person in which any other Person (other than the Borrower or
any of its Restricted Subsidiaries) has an Equity Interest, except to the
extent of the amount of dividends or other distributions actually paid to the
Borrower or any of its Restricted Subsidiaries during such period and (c) the
undistributed earnings of any Consolidated Subsidiary of the Borrower, to the
extent that the declaration or payment of dividends or similar distributions by
such Consolidated Subsidiary is not at the time permitted by the terms of any
contractual obligation (other than under any Loan Document) or by any law
applicable to such Consolidated Subsidiary.

 

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

 

“Contribution
Agreement” means that certain Contribution Agreement dated as of March 30,
2007, by and among EXCO and certain of its Subsidiaries and the Borrower,
together 

 

7

 

with the additional conveyance documents and instruments contemplated
or referenced thereunder.

 

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

 

“Counterpart
Agreement” means a Counterpart Agreement substantially in the form of
Exhibit C delivered by a Guarantor pursuant to Section 6.13.

 

“Credit
Exposure” means, with respect to any Lender at any time, the sum of the outstanding
principal amount of such Lender’s Loans and its LC Exposure and its Swingline
Exposure at such time.

 

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

 

“Crude Oil”
means all crude oil and condensate.

 

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

 

“Defaulting
Lender” means any Lender that (a) has failed to fund any portion of the
Loans, participations in LC Disbursements or participations in Swingline Loans
required to be funded by it hereunder within one Business Day of the date
required to be funded by it hereunder, (b) has otherwise failed to pay over to the
Administrative Agent or any other Lender any other amount required to be paid
by it hereunder within one Business Day of the date when due, unless the
subject of a good faith dispute, or (c) has been deemed insolvent or become the
subject of a bankruptcy or insolvency proceeding.

 

“Disclosed
Matters” means the actions, suits and proceedings and the environmental
matters disclosed in Schedule 4.06.

 

“Disqualified
Stock” means any Equity Interest, which, by its terms (or by the terms of
any security into which it is convertible or for which it is exchangeable), or
upon the happening of any event, matures or is mandatorily redeemable, pursuant
to a sinking fund obligation or otherwise, or is redeemable at the sole option
of the holder thereof (other than solely as a result of a change of control or
asset sale), in whole or in part, on or prior to the Maturity Date.

 

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

 

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

 

8

 

“Effective
Date” means the date on which the conditions specified in Section 5.01 are
satisfied (or waived in accordance with Section 11.02).

 

“Eligible
Account” has the meaning assigned to such term in Section 6.15.

 

“Eligible
Assignee” means any Person that qualifies as an assignee pursuant to Section
11.04(b)(i); provided that notwithstanding the foregoing, “Eligible Assignee”
shall not include the Borrower or any of the Borrower’s Affiliates or
Subsidiaries.

 

“Engineered
Value” means, the value attributed to the Borrowing Base Properties for
purposes of the most recent Redetermination of the Borrowing Base pursuant to Article
III (or for purposes of determining the Initial Borrowing Base in the event no
such Redetermination has occurred), based upon the discounted present value of
the estimated net cash flow to be realized from the production of Hydrocarbons
from the Borrowing Base Properties as set forth in the Reserve Report.

 

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

 

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

 

“Equity
Interests” means 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.

 

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

 

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

 

“ERISA
Event” means (a) any “reportable event”, as defined in
Section 4043 of ERISA or the regulations issued thereunder with respect to
a Plan (other than an event for which the thirty (30)-day notice period is
waived); (b) the existence with respect to any Plan of an “accumulated
funding deficiency” (as defined in Section 412 of the Code or Section 302
of 

 

9

 

ERISA), whether or not waived; (c) the filing pursuant to
Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by any Credit Party or any of its ERISA
Affiliates of any liability under Title IV of ERISA with respect to the
termination of any Plan; (e) the receipt by any Credit Party or any ERISA
Affiliate from the PBGC or a plan administrator of any notice relating to an
intention to terminate any Plan or Plans or to appoint a trustee to administer
any Plan; (f) the incurrence by any Credit Party or any of its ERISA Affiliates
of any liability with respect to the withdrawal or partial withdrawal from any
Plan or Multiemployer Plan; or (g) the receipt by any Credit Party or any
ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from
any Credit Party or any ERISA Affiliate of any notice, concerning the imposition
of Withdrawal Liability or a determination that a Multiemployer Plan is, or is
expected to be, insolvent or in reorganization, within the meaning of
Title IV of ERISA.

 

“Eurodollar”,
when used in reference to any Loan or Borrowing, refers to whether such Loan,
or the Loans comprising such Borrowing, are bearing interest at a rate
determined by reference to the Adjusted LIBO Rate.

 

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

 

“Excluded
Taxes” means, with respect to the Administrative Agent, any Lender, the
Issuing Bank or any other recipient of any payment to be made by or on account
of any obligation of the Borrower hereunder, (a) income or franchise taxes
imposed on (or measured by) its net income by the United States of America, or
by the jurisdiction under the laws of which such recipient is organized or in
which its principal office is located or, in the case of any Lender, in which
its applicable lending office is located, (b) any branch profits taxes imposed
by the United States of America or any similar tax imposed by any other
jurisdiction in which the Borrower is located and (c) in the case of a Foreign
Lender (other than an assignee pursuant to a request by the Borrower under Section
2.20(b)), any withholding tax that is imposed on amounts payable to such
Foreign Lender at the time such Foreign Lender becomes a party to this
Agreement (or designates a new lending office) or is attributable to such
Foreign Lender’s failure to comply with Section 2.18(e), except to the extent
that such Foreign Lender (or its assignor, if any) was entitled, at the time of
designation of a new lending office (or assignment), to receive additional
amounts from the Borrower with respect to such withholding tax pursuant to Section
2.18(a).

 

“EXCO”
means EXCO Resources, Inc., a Texas corporation, and its successors and
assigns.

 

“EXCO
Agreements” means, collectively, (i) that certain Administrative Services
Agreement, dated as of October 2, 2006, by and among the Borrower, the MLP
General Partner and certain of the MLP Subsidiaries, (ii) that certain Omnibus
Agreement, dated as of October 2, 2006, by and among the Borrower and
certain of the MLP Subsidiaries, and (iii) the other agreements, certificates
and instruments executed and delivered in connection with the agreements
described in the foregoing clauses (i) and (ii), all as amended, supplemented
or modified from time to time.

 

10

 

“EXCO
Credit Agreement” means that certain Amended and Restated Credit Agreement,
dated March 17, 2006, among EXCO, as borrower, certain subsidiaries of EXCO as
guarantors, the financial institutions from time to time a party thereto as
lenders and JPMorgan Chase Bank, N.A., as administrative agent, as amended,
modified, supplemented or restated from time to time.

 

“Existing
Swap Agreements” means, collectively, (i) any Swap Agreement entered into
between any Credit Party and any Lender Counterparty (including any Lender
Counterparty under and as defined in the Original Credit Agreement) prior to
the Effective Date and in effect on the Effective Date and (ii) any of the
Vernon Hedges assigned to any Credit Party on the Effective Date and to which
any Lender Counterparty is a party.

 

“FASB”
means Financial Accounting Standards Board.

 

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

 

“Foreign
Lender” means any Lender that is organized under the laws of a jurisdiction
other than that in which any Credit Party is located. For purposes of this
definition, the United States of America, each State thereof and the District
of Columbia shall be deemed to constitute a single jurisdiction.

 

“GAAP”
means generally accepted accounting principles in the United States of America.

 

“Gas Balancing Agreement” means any agreement or arrangement
whereby the Borrower or any Restricted Subsidiary, or any other party having an
interest in any Hydrocarbons to be produced from Oil and Gas Interests in which
the Borrower or any Restricted Subsidiary owns an interest, has a right to take
more than its proportionate share of production therefrom.

 

“General
Partner” means EXCO Partners OLP GP, LLC, a Delaware limited liability
company, and its successors and permitted assigns.

 

“Governmental
Authority” means the government of the United States of America, any other
nation or any political subdivision thereof, whether state or local, and any
agency, authority, instrumentality, regulatory body, court, central bank or other
entity properly exercising executive, legislative, judicial, taxing, regulatory
or administrative powers or functions of or pertaining to government.

 

“Guarantee”
of or by any Person (in this definition, the “guarantor”) means any
obligation, contingent or otherwise, of the guarantor guaranteeing or having
the economic effect 

 

11

 

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

 

“Guaranteed
Liabilities” has the meaning assigned to such term in Section 8.01.

 

“Guarantor”
means each Restricted Subsidiary that is a party hereto or hereafter executes
and delivers to the Administrative Agent and the Lenders, a Counterpart
Agreement pursuant to Section 6.13 or otherwise.

 

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

 

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

 

“Indebtedness”
of any Person means, without duplication, (a) all obligations of such
Person for borrowed money or with respect to deposits or advances of any kind,
(b) all obligations of such Person evidenced by bonds, debentures, notes
or similar instruments, (c) all obligations of such Person upon which
interest charges are paid, (d) all obligations of such Person under
conditional sale or other title retention agreements relating to property
acquired by such Person, (e) all obligations of such Person in respect of
the deferred purchase price of property or services (excluding current accounts
payable incurred in the ordinary course of business), (f) all Indebtedness
of others secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien on property
owned or acquired by such Person, whether or not the Indebtedness secured
thereby has been assumed, (g) all Guarantees by such Person of
Indebtedness of others, (h) all Capital Lease Obligations of such Person,
(i) all obligations, contingent or otherwise, of such Person as an account
party in respect of letters of credit and letters of guaranty and (j) all
obligations, contingent or otherwise, of such Person in respect of bankers’
acceptances. The Indebtedness of any Person shall include the Indebtedness of
any other entity (including any partnership in which such Person is a general
partner) to the extent such Person is liable therefor as a result of such
Person’s ownership interest in or other relationship with such entity, except
to the extent the terms of such Indebtedness provide that such Person is not
liable therefor.

 

12

 

“Indemnified
Taxes” means Taxes other than Excluded Taxes.

 

“Indemnitee”
has the meaning assigned to such term in Section 11.03.

 

“Information”
has the meaning assigned to such term in Section 11.12.

 

“Initial
Borrowing Base” has the meaning assigned to such term in Section 3.01.

 

“Interest
Election Request” means a request by the Borrower to convert or continue a
Borrowing in accordance with Section 2.09.

 

“Interest
Payment Date” means (a) with respect to any ABR Loan (other than a
Swingline Loan), the last day of each calendar quarter, (b) with respect to any
Eurodollar Loan, the last day of the Interest Period applicable to the
Borrowing of which such Loan is a part and, in the case of a Eurodollar
Borrowing with an Interest Period of more than three months’ duration, each day
prior to the last day of such Interest Period that occurs at intervals of three
(3) months’ duration after the first day of such Interest Period and (c) with
respect to any Swingline Loan, the day that such Loan is required to be repaid.

 

“Interest
Period” means with respect to any Eurodollar Borrowing, the period
commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter, as the Borrower may elect; provided,
that (i) if any Interest Period would end on a day other than a Business Day,
such Interest Period shall be extended to the next succeeding Business Day
unless such next succeeding Business Day would fall in the next calendar month,
in which case such Interest Period shall end on the next preceding Business Day
and (ii) any Interest Period that commences on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the last calendar month of such Interest Period) shall end on the last
Business Day of the last calendar month of such Interest Period. For purposes
hereof, the date of a Borrowing initially shall be the date on which such
Borrowing is made and, in the case of a Revolving Borrowing, thereafter shall
be the effective date of the most recent conversion or continuation of such
Borrowing.

 

“Issuing
Bank” means JPMorgan Chase Bank, N.A., in its capacity as the issuer of
Letters of Credit hereunder, and its successors in such capacity as provided in
Section 2.07(i). The Issuing Bank may, in its discretion, arrange for one or
more Letters of Credit to be issued by Affiliates of the Issuing Bank, in which
case the term “Issuing Bank” shall include any such Affiliate with respect to
Letters of Credit issued by such Affiliate.

 

“LC
Disbursement” means a payment made by the Issuing Bank pursuant to a Letter
of Credit.

 

“LC
Exposure” means, at any time, the sum of (a) the aggregate undrawn amount
of all outstanding Letters of Credit at such time plus (b) the aggregate amount
of all LC Disbursements that have not yet been reimbursed by or on behalf of
the Borrower at such time. The LC Exposure of any Lender at any time shall be
its Applicable Percentage of the total LC Exposure at such time.

 

13

 

“Lender
Counterparty” means any Lender or any Affiliate of a Lender counterparty to
a Swap Agreement with any Credit Party.

 

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

 

“Letter of
Credit” means any letter of credit issued pursuant to this Agreement and,
to the extent outstanding on the Effective Date, any letter of credit issued
under the Original Credit Agreement and any renewals thereof after the
Effective Date.

 

“LIBO Rate”
means, with respect to any Eurodollar Borrowing for any Interest Period, the
rate appearing on Page 3750 of the Moneyline
Telerate Service (or on any successor or substitute page of such
Service, or any successor to or substitute for such Service, providing rate
quotations comparable to those currently provided on such page of such Service,
as determined by the Administrative Agent from time to time for purposes of
providing quotations of interest rates applicable to dollar deposits in the
London interbank market) at approximately 11:00 a.m., London time, two (2) Business
Days prior to the commencement of such Interest Period, as the rate for dollar
deposits with a maturity comparable to such Interest Period. In the event that
such rate is not available at such time for any reason, then the “LIBO Rate”
with respect to such Eurodollar Borrowing for such Interest Period shall be the
rate at which dollar deposits of $5,000,000 and for a maturity comparable to
such Interest Period are offered by the principal London office of the
Administrative Agent in immediately available funds in the London interbank
market at approximately 11:00 a.m., London time, two (2) Business Days
prior to the commencement of such Interest Period.

 

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

 

“Loan
Documents” means this Agreement, any promissory notes executed in
connection herewith, Security Instruments, the Letters of Credit (and any
applications therefore and reimbursement agreements related thereto), the Fee
Letter and any other agreements executed in connection with this Agreement.

 

“Loans”
means the loans made by the Lenders to the Borrower pursuant to this Agreement.

 

“Majority
Lenders” means, at any time, Lenders having Credit Exposures and Unused
Commitments representing more than fifty percent (50%) of the sum of the
Aggregate Credit Exposure and all Unused Commitments at such time or, if the
Aggregate Commitment has been terminated, Lenders having Credit Exposures
representing more than fifty percent (50%) of the Aggregate Credit Exposure at
such time; provided that the Unused Commitment, and the 

 

14

 

Credit Exposures held or deemed held by any Defaulting Lender shall be
excluded for purposes of making a determination of the Majority Lenders.

 

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

 

“Material
Domestic Subsidiary” means any Domestic Subsidiary that owns or holds
assets, properties or interests (including Oil and Gas Interests) with an
aggregate fair market value, on a consolidated basis, greater than five percent
(5%) of the aggregate fair market value of all of the assets, properties and
interests (including Oil and Gas Interests) of the Borrower and the Restricted
Subsidiaries, on a consolidated basis.

 

“Material Gas Imbalance”
means, with respect to all Gas Balancing Agreements to which Borrower or any
Restricted Subsidiary is a party or by which any Oil and Gas Interests owned by
Borrower or a Restricted Subsidiary is bound, a net overproduced gas imbalance
to Borrower and the Restricted Subsidiaries, taken as a whole, in excess of $10,000,000.

 

“Material
Indebtedness” means any Indebtedness (other than the Loans and Letters of
Credit), or obligations in respect of one or more Swap Agreements, of the
Borrower or any one or more of the Restricted Subsidiaries in an aggregate
principal amount exceeding $10,000,000. For purposes of determining Material Indebtedness,
the “principal amount” of the obligations of the Borrower or any Guarantor in
respect of any Swap Agreement at any time shall be the maximum aggregate amount
(giving effect to any netting agreements) that the Borrower or such Guarantor
would be required to pay if such Swap Agreement were terminated at such time.

 

“Material
Sales Contract” means, as of any date of determination,  any agreement for the sale of Hydrocarbons
from the Borrowing Base Properties to which the Borrower or any Restricted
Subsidiary is a party if the aggregate volume of Hydrocarbons sold pursuant to
such agreement during the twelve (12) months immediately preceding such date
equals or exceeds ten percent (10%) of the aggregate volume of Hydrocarbons
sold by the Borrower and the Restricted Subsidiaries, on a consolidated basis,
from the Borrowing Base Properties during the twelve (12) months immediately
preceding such date.

 

“Maturity
Date” means March 30, 2012.

 

“Maximum
Facility Amount” means $1,300,000,000.

 

“Maximum
Liability” has the meaning assigned to such term in Section 8.10.

 

“Maximum Rate”
has the meaning assigned to such term in Section 11.13.

 

15

 

“Merger
Agreement” means that certain Agreement and Plan of Merger by and among the
Borrower and Vernon Holdings dated as of March 30, 2007.

 

“MLP”
means EXCO Partners, LP, a Delaware limited partnership.

 

“MLP
General Partner” means EXCO GP Partners, LP, a Delaware limited
partnership, and its successors and permitted assigns that are admitted to the
MLP as general partner of the MLP.

 

“MLP Subsidiaries”
means, collectively, the MLP and its Subsidiaries.

 

“Moody’s”
means Moody’s Investors Service, Inc.

 

“Mortgaged
Properties” means the Oil and Gas Interests described in one or more duly
executed, delivered and filed Mortgages evidencing a Lien prior and superior in
right to any other Person in favor of the Administrative Agent for the benefit
of the Secured Parties and subject only to the Liens permitted pursuant to Section
7.02.

 

“Mortgages”  means all mortgages, deeds of trust,
amendments to mortgages, security agreements, assignments of production, pledge
agreements, collateral mortgages, collateral chattel mortgages, collateral
assignments, financing statements and other documents, instruments and
agreements evidencing, creating, perfecting or otherwise establishing the Liens
required by Section 6.09. All Mortgages shall be in form and substance
satisfactory to Administrative Agent in its sole discretion.

 

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

 

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

 

“Net Cash
Proceeds” means, with respect to any sale, transfer, assignment or
disposition of any Borrowing Base Properties by the Borrower or any Restricted
Subsidiary, the excess, if any, of (a) the sum of cash and cash equivalents
received in connection with such sale, but only as and when so received, over
(b) the sum of (i) the principal amount of any Indebtedness that is secured by
such asset and that is required to be repaid in connection with the sale
thereof (other than the Loans), (ii) the out-of-pocket expenses incurred by the
Borrower or such Restricted Subsidiary in connection with such sale, (iii) all
legal, title and recording tax expense and all federal, state, provincial,
foreign and local taxes required to be accrued as a liability under GAAP as a
consequence of such sale, (iv) all distributions and other payments required to
be made to minority interest holders in Restricted Subsidiaries as a result of
such sale, (v) the deduction of appropriate amounts provided by the seller as a
reserve, in accordance with GAAP, against any liabilities associated with the
property or other assets disposed of in such sale and retained by the Borrower
or any Restricted Subsidiary after such sale, (vi) cash payments made to
satisfy obligations resulting from early terminations of Swap Agreements in
connection with or as a result of any such sale or other disposition of
Borrowing Base Properties, 

 

16

 

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

 

“Net
Working Capital” means, on any date of determination, the sum of (a) Consolidated
Current Assets as of such date (calculated without including Unused Commitments
as of such date) minus (b) Consolidated Current Liabilities as of such date.

 

“Non-Consenting
Lender” has the meaning assigned to such term in Section 2.20(c).

 

“Obligations”
means any and all obligations of every nature, contingent or otherwise, whether
now existing or hereafter arising, of any Credit Party from time to time owed
to the Administrative Agent, the Issuing Bank, the Lenders or any of them or
any Lender Counterparty arising under or in connection with any Loan Document
or Swap Agreement (including, any and all Cash Management Obligations and any
and all obligations, contingent or otherwise, whether now existing or hereafter
arising, of any Credit Party under any Existing Swap Agreement and any and all
obligations, contingent or otherwise, whether now existing or hereafter
arising, of any Credit Party with respect to any transactions under any Swap
Agreement with any Person that was a Lender Counterparty at the time such
Credit Party entered into such transactions regardless of whether such Person
is no longer a Lender Counterparty), whether for principal, interest,
reimbursement of amounts drawn under any Letter of Credit, payments for early
termination of Swap Agreements, funding indemnification amounts, fees,
expenses, indemnification or otherwise.

 

“Off-Balance Sheet
Liability” of a Person means (i) any repurchase obligation or liability of
such Person with respect to accounts or notes receivable sold by such Person,
(ii) any liability under any Sale and Leaseback Transaction which is not a Capital
Lease Obligation, (iii) any liability under any so-called “synthetic lease”
transaction entered into by such Person, (iv) any Material Gas Imbalance, (v)
any Advance Payment Contract, or (vi) any obligation arising with respect to
any other transaction which is the functional equivalent of or takes the place
of borrowing but which does not constitute a liability on the balance sheets of
such Person, but excluding from the foregoing clauses (iii) through (vi)
operating leases and usual and customary oil, gas and mineral leases.

 

“Oil and
Gas Interest(s)” means: (a) direct and indirect interests in and rights
with respect to oil, gas, mineral and related properties and assets of any kind
and nature, direct or indirect, including, without limitation, working, royalty
and overriding royalty interests, mineral interests, leasehold interests,
production payments, operating rights, net profits interests, other non-working
interests, contractual interests, non-operating interests and rights in any
pooled, unitized or communitized acreage by virtue of such interest being a
part thereof; (b) interests in and rights with respect to Hydrocarbons other
minerals or revenues therefrom and contracts and agreements in connection
therewith and claims and rights thereto (including oil and gas leases,
operating agreements, unitization, communitization and pooling agreements and
orders, division orders, transfer orders, mineral deeds, royalty deeds, oil and
gas sales, exchange and processing 

 

17

 

contracts and agreements and, in each case, interests thereunder), and
surface interests, fee interests, reversionary interests, reservations and
concessions related to any of the foregoing; (c) easements, rights-of-way,
licenses, permits, leases, and other interests associated with, appurtenant to,
or necessary for the operation of any of the foregoing; (d) interests in oil,
gas, water, disposal and injection wells, equipment and machinery (including
well equipment and machinery), oil and gas production, gathering, transmission,
compression, treating, processing and storage facilities (including tanks, tank
batteries, pipelines and gathering systems), pumps, water plants, electric
plants, gasoline and gas processing plants, refineries and other tangible or
intangible, movable or immovable, real or personal property and fixtures
located on, associated with, appurtenant to, or necessary for the operation of
any of the foregoing; and (e) all seismic, geological, geophysical and
engineering records, data, information, maps, licenses and interpretations.

 

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

 

“Original
Loans” means the loans and other extensions of credit outstanding under the
Original Credit Agreement as of the Effective Date.

 

“Original
Credit Agreement” means that certain Senior Revolving Credit Agreement,
dated as of October 2, 2006, among Borrower, certain Subsidiaries of Borrower,
the lenders party thereto, JPMorgan Chase Bank, N.A. as Administrative Agent
and J.P. Morgan Securities Inc. as Sole Bookrunner and Lead Arranger as
amended, supplemented and otherwise modified from time to time prior to the
Effective Date.

 

“Other
Taxes” means any and all present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies arising from any
payment made hereunder or from the execution, delivery or enforcement of, or
otherwise with respect to, this Agreement.

 

“Participant”
has the meaning assigned to such term in Section 11.04.

 

“Payment
Currency” has the meaning assigned to such term in Section 8.07.

 

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

 

“Permitted
Encumbrances” means:

 

(a)           Liens imposed by law for Taxes that
are not yet due or are being contested in compliance with Section 6.04;

 

18

 

(b)           carriers’, warehousemen’s, mechanics’,
materialmen’s, repairmen’s and other like Liens imposed by law, and contractual
Liens granted to operators and non-operators under oil and gas operating agreements,
in each case, arising in the ordinary course of business or incident to the
exploration, development, operation and maintenance of Oil and Gas Interests
and securing obligations that are not overdue by more than thirty (30) days or
are being contested in compliance with Section 6.04;

 

(c)           pledges and deposits made in the
ordinary course of business in compliance with workers’ compensation,
unemployment insurance and other social security laws or regulations;

 

(d)           deposits to secure the performance of
bids, trade contracts, leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature, in each case in the
ordinary course of business;

 

(e)           judgment liens in respect of
judgments that do not constitute an Event of Default under clause (k) of Article
IX;

 

(f)            easements, zoning restrictions,
rights-of-way, servitudes, permits, surface leases, and similar encumbrances on
real property imposed by law or arising in the ordinary course of business that
do not secure any monetary obligations and do not materially detract from the
value of the affected property or interfere with the ordinary conduct of
business of any Credit Party;

 

(g)           royalties, overriding royalties,
reversionary interests and similar burdens with respect to the Oil and Gas
Interests owned by the Borrower or such Restricted Subsidiary, as the case may
be, if the net cumulative effect of such burdens does not operate to deprive
the Borrower or any Restricted Subsidiary of any material right in respect of
its assets or properties (except for rights customarily granted with respect to
such interests);

 

(h)           Liens arising from Uniform Commercial
Code financing statement filings regarding operating leases entered into by the
Borrower or any Restricted Subsidiary in the ordinary course of business
covering the property under the lease; and

 

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

 

provided
that the term “Permitted Encumbrances” shall not include any Lien securing
Indebtedness (other than contractual Liens described in the foregoing clause
(b) granted to operators and non-operators under oil and gas operating
agreements to the extent the obligations secured by such Liens constitute
Indebtedness).

 

“Permitted
Investments” means:

 

(a)           U.S. Government Securities;

 

19

 

(b)           investments in demand and time
deposit accounts, certificates of deposit and money market deposits maturing
within one hundred eighty (180) days of the date of acquisition thereof issued
by a bank or trust company which is organized under the laws of the United
States of America, any State thereof or any foreign country recognized by the
United States of America, and which bank or trust company has capital, surplus
and undivided profits aggregating in excess of $50,000,000 (or the foreign
currency equivalent thereof) and has outstanding debt which is rated “A” (or
such similar equivalent rating) or higher by at least one nationally recognized
statistical rating organization (as defined in Rule 436 under the Securities
Act of 1933, as amended) or any money-market fund sponsored by a registered
broker dealer or mutual fund distributor;

 

(c)           investments in deposits available for
withdrawal on demand with any commercial bank that is organized under the laws
of any country in which the Borrower or any Restricted Subsidiary maintains an
office or is engaged in the oil and gas business; provided, however,
that (i) all such deposits have been made in such accounts in the ordinary
course of business and (ii) such deposits do not at any one time exceed
$10,000,000 in the aggregate;

 

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

 

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

 

(f)            investments in securities with
maturities of six (6) months or less from the date of acquisition issued or
fully guaranteed by any state, commonwealth or territory of the United States
of America, or by any political subdivision or taxing authority thereof, and
rated at least “A” by S&P or “A” by Moody’s; and

 

(g)           investments in money market funds
that invest substantially all their assets in securities of the types described
in clauses (a) through (f) above

 

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

 

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

 

“Platform”
has the meaning assigned to such term in Section 6.01.

 

20

 

“Pledge
Agreement” means a Pledge and Security Agreement in favor of the
Administrative Agent for the benefit of the Secured Parties covering, among
other things, the rights and interests of Borrower or any Restricted Subsidiary
in the Equity Interest of each Restricted Subsidiary and otherwise in form and
substance satisfactory to the Administrative Agent.

 

“Prime Rate”
means the rate of interest per annum publicly announced from time to time by
JPMorgan Chase Bank, N.A. as its prime rate in effect at its principal office
in New York City, each change in the Prime Rate shall be effective from and
including the date such change is publicly announced as being effective. THE
PRIME RATE IS A REFERENCE RATE AND MAY NOT BE JPMORGAN CHASE BANK N.A.’S LOWEST
RATE.

 

“Prior Term
Loan Credit Agreement” means that certain Senior Term Credit Agreement,
dated as of October 2, 2006, among Borrower, certain Subsidiaries of Borrower,
the lenders party thereto and JPMorgan Chase Bank, N.A. as Administrative
Agent.

 

“Projections”
means the Borrower’s forecasted (a) balance sheets, (b) profit and loss
statements, and (c) cash flow statements, all prepared on a basis consistent
with the historical financial statements described in Section 4.04, the historical
financial information provided pursuant to or in connection with the Anadarko Asset
Acquisition and historical financial information regarding the Credit Parties’
Oil and Gas Interests and after giving effect to the Transactions, together with
appropriate supporting details and a statement of underlying assumptions, in
each case in form and substance satisfactory to the Lenders and for the period
from the Effective Date through December 31, 2011.

 

“Public
Lender” has the meaning assigned to such term in Section 6.01.

 

“Redetermination”
means any Scheduled Redetermination or Special Redetermination.

 

“Redetermination
Date” means (a) with respect to any Scheduled Redetermination, each April 1
and October 1 of each year, commencing October 1, 2007, and
(b) with respect to any Special Redetermination, the first day of the
first month which is not less than twenty (20) Business Days following the date
of a request for a Special Redetermination.

 

“Register”
has the meaning assigned to such term in Section 11.04.

 

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

 

“Required
Lenders” means, at any time, Lenders having Credit Exposures and Unused
Commitments representing at least sixty-six and two-thirds percent (662/3%) (or if there are less
than four (4) Lenders, at least seventy-five percent (75%)) of the sum of the
Aggregate Credit Exposure and all Unused Commitments of all Lenders at such
time or, if the Aggregate Commitment has been terminated, Lenders having Credit
Exposures representing at least sixty-six and two-thirds percent (662/3%) (or if there are less
than four Lenders, at least seventy-five percent (75%)) of the Aggregate Credit
Exposure of all Lenders at such time; provided that the 

 

21

 

Unused Commitment of and the Credit Exposures held or deemed held by
any Defaulting Lender shall be excluded for purposes of making a determination
of the Required Lenders.

 

“Reserve
Report” means an unsuperseded engineering analysis of the Borrowing Base
Properties, in form and substance reasonably acceptable to the Administrative
Agent, prepared in accordance with customary and prudent practices in the
petroleum engineering industry.

 

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

 

“Restricted
Payment” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any Equity Interests in any
Credit Party, or any payment (whether in cash, securities or other property),
including any sinking fund or similar deposit, on account of the purchase,
redemption, retirement, acquisition, cancellation or termination of any such
Equity Interests in any Credit Party or any option, warrant or other right to
acquire any such Equity Interests in any Credit Party.

 

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

 

“Revolving
Loan” means a Loan made pursuant to Section 2.05.

 

“S&P”
means Standard & Poor’s Ratings Group, a division of The McGraw Hill
Corporation.

 

“Sale and
Leaseback Transaction” means any sale or other transfer of any property by
any Person with the intent to lease such property as lessee.

 

“Scheduled
Redetermination” means any redetermination of the Borrowing Base pursuant
to Section 3.02.

 

“Secured
Party” means the Administrative Agent, any Lender and any Lender
Counterparty and shall include any Lender Counterparty to the extent that any
Obligations owing to such Lender Counterparty arise under hedging transactions
entered into at the time such Person was a Lender or Lender Counterparty.

 

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

 

22

 

“Special
Redetermination” means any redetermination of the Borrowing Base made
pursuant to Section 3.03.

 

“Statutory
Reserve Rate” means a fraction (expressed as a decimal), the numerator of
which is the number one and the denominator of which is the number one minus
the aggregate of the maximum reserve percentages (including any marginal,
special, emergency or supplemental reserves) expressed as a decimal established
by the Board to which the Administrative Agent is subject for eurocurrency
funding (currently referred to as “Eurocurrency Liabilities” in
Regulation D of the Board). Such reserve percentages shall include those
imposed pursuant to such Regulation D. Eurodollar Loans shall be deemed to
constitute eurocurrency funding and to be subject to such reserve requirements
without benefit of or credit for proration, exemptions or offsets that may be
available from time to time to any Lender under such Regulation D or any
comparable regulation. The Statutory Reserve Rate shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.

 

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

 

“Surplus
Cash” means the lesser of (i) cash and cash equivalents of the Borrower and
its Restricted Subsidiaries, on a consolidated basis, that constitute Permitted
Investments and (ii) the amount by which Net Working Capital exceeds zero
($0.00).

 

“Swap
Agreement” means any agreement with
respect to any swap, forward, future or derivative transaction or option or
similar agreement involving, or settled by reference to, one or more rates,
currencies, commodities, equity or debt instruments or securities, or economic,
financial or pricing indices or measures of economic, financial or pricing risk
or value or any similar transaction or any combination of these transactions; provided that no phantom stock or
similar plan providing for payments only on account of services provided by
current or former directors, officers, employees or consultants of the Credit
Parties shall be a Swap Agreement.

 

“Swingline
Exposure” means, at any time, the aggregate principal amount of all
Swingline Loans outstanding at such time. The Swingline Exposure of any Lender
at any time shall be its Applicable Percentage of the total Swingline Exposure
at such time.

 

“Swingline
Lender” means JPMorgan Chase Bank, N.A., in its capacity as lender of
Swingline Loans hereunder.

 

23

 

“Swingline
Loan” means a Loan made pursuant to Section 2.06.

 

“Taxes”
means any and all present or future taxes, levies, imposts, duties, deductions,
charges or withholdings imposed by any Governmental Authority.

 

“Transactions”
means (i) the execution, delivery and performance by the Credit Parties of this
Agreement and the Loan Documents, (ii) the borrowing of Loans, (iii) the use of
the proceeds thereof, (iv) the issuance of Letters of Credit hereunder, (v) the
contribution of all of the Equity Interests of Vernon Holdings to the Borrower
pursuant to the Contribution Agreement, (vi) the merger of Vernon Holdings with
and into the Borrower pursuant to the Merger Agreement, (vii) the consummation
of the Anadarko Asset Acquisition, and (viii) the assignment of the Vernon
Hedges to one or more Credit Parties on terms and conditions reasonably
satisfactory to the Administrative Agent.

 

“Type”,
when used in reference to any Loan or Borrowing, refers to whether the rate of
interest on such Loan, or on the Loans comprising such Borrowing, is determined
by reference to the Adjusted LIBO Rate or the Alternate Base Rate.

 

“Unrestricted
Subsidiary” means (a) any Subsidiary that at the time of determination
shall be designated an Unrestricted Subsidiary by the Board of Directors of the
Borrower in the manner provided below and (b) any Subsidiary of an Unrestricted
Subsidiary. The Board of Directors of the Borrower may designate any Subsidiary
(including any newly acquired or newly formed Subsidiary) to be an Unrestricted
Subsidiary unless such Subsidiary or any of its Subsidiaries is a Material
Domestic Subsidiary or a Subsidiary owning Oil and Gas Interests included in
the Borrowing Base Properties.

 

“Unused
Commitment” means, with respect to each Lender at any time, such Lender’s
Commitment at such time minus such Lender’s Credit Exposure (other than such
Lender’s Swingline Exposure) at such time.

 

“Unused
Commitment Fee” has the meaning assigned to such term in Section 2.13(a).

 

“U.S.
Government Securities” means direct obligations of, or obligations the
principal of and interest on which are unconditionally guaranteed by, the United
States of America (or by any agency thereof to the extent such obligations are
backed by the full faith and credit of the United States of America), in each
case maturing within one year from the date of acquisition thereof.

 

“Vernon
Gathering” means Vernon Gathering, LLC, a Delaware limited liability
company, and its successors.

 

“Vernon
Hedges” means the hedging transactions set forth on Schedule 7.15 of the
Anadarko Asset Purchase Agreement and otherwise on terms and conditions
reasonably acceptable to the Administrative Agent and in notional amounts
covering at least ninety percent (90%) of the forecasted production from proved
producing reserves included in the Oil and Gas Interests acquired in the
Anadarko Asset Acquisition through December 31, 2009.

 

24

 

“Vernon
Holdings” means Vernon Holdings, LLC, a Delaware limited liability company,
and its successors.

 

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

 

Section 1.02.          Classification of Loans and
Borrowings. For purposes of this Agreement, Loans may be classified and
referred to by Class (e.g., a “Revolving
Loan”) or by Type (e.g., a “Eurodollar
Loan” or an “ABR Loan”) or by Class and Type (e.g,
a “Eurodollar Revolving Loan”). Borrowings also may be classified and referred
to by Class (e.g., a “Revolving
Borrowing”) or by Type (e.g., a “Eurodollar
Borrowing” or an “ABR Borrowing”) or by Class and Type (e.g., a “Eurodollar Revolving Borrowing”).

 

Section 1.03.          Terms Generally. The
definitions of terms herein shall apply equally to the singular and plural
forms of the terms defined. Whenever the context may require, any pronoun shall
include the corresponding masculine, feminine and neuter forms. The words “include”,
“includes” and “including” shall be deemed to be followed by the phrase “without
limitation”. The word “will” shall be construed to have the same meaning and
effect as the word “shall”. Unless the context requires otherwise (a) any
definition of or reference to any agreement, instrument or other document
herein shall be construed as referring to such agreement, instrument or other
document as from time to time amended, supplemented or otherwise modified
(subject to any restrictions on such amendments, supplements or modifications
set forth herein), (b) any reference herein to any Person shall be construed to
include such Person’s successors and assigns, (c) the words “herein”, “hereof”
and “hereunder”, and words of similar import, shall be construed to refer to
this Agreement in its entirety and not to any particular provision hereof, (d)
all references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement and (e) the words “asset” and “property” shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights.

 

Section 1.04.          Accounting Terms; GAAP. Except
as otherwise expressly provided herein, all terms of an accounting or financial
nature shall be construed in accordance with GAAP, as in effect from time to
time; provided  that, if the Borrower notifies the
Administrative Agent that the Borrower request an amendment to any provision
hereof to eliminate the effect of any change occurring after the date hereof in
GAAP or in the application thereof on the operation of such provision (or if
the Administrative Agent notifies the Borrower that the Majority Lenders
request an amendment to any provision hereof for such purpose), regardless of
whether any such notice is given before or after such change in GAAP or in the
application thereof, then such provision shall be interpreted on the basis of
GAAP as in effect and applied immediately before such change shall have become
effective until such notice shall have been withdrawn or such provision amended
in accordance herewith.

 

Section 1.05.          Oil and Gas Definitions. For
purposes of this Agreement, the terms “proved [or] proven reserves,” “proved
developed reserves,” “proved [or] proven undeveloped reserves,” “proved [or]
proven developed nonproducing reserves” and “proved [or] proven

 

25

 

developed
producing reserves,” have the meaning given such terms from time to time and at
the time in question by the Society of Petroleum Engineers of the American
Institute of Mining Engineers.

 

Section 1.06.                             Time
of Day. Unless otherwise specified, all references to times of day shall be
references to Central time (daylight or standard, as applicable).

 

Article II

 

The Credits

 

Section 2.01.                             Commitments.
Subject to the terms and conditions set forth herein, each Lender that was a
Lender under and as defined in the Original Credit Agreement agrees to continue
the Original Loans and each Lender agrees to make Loans to the Borrower from
time to time during the Availability Period in an aggregate principal amount
that will not result in (a) such Lender’s Credit Exposure exceeding such
Lender’s Commitment or (b) the Aggregate Credit Exposure exceeding the
Aggregate Commitment. Within the foregoing limits and subject to the terms and
conditions set forth herein, the Borrower may borrow, prepay and reborrow Loans.

 

Section 2.02.                             Termination
and Reduction of the Aggregate Commitment.

 

(a)                                  Unless
previously terminated, the Aggregate Commitment shall terminate on the Maturity
Date.

 

(b)                                 The
Borrower may at any time terminate, or from time to time reduce, the Aggregate
Commitment; provided that (i)
each reduction of the Aggregate Commitment shall be in an amount that is an
integral multiple of $5,000,000 and not less than $10,000,000, and (ii) the
Borrower shall not terminate or reduce the Aggregate Commitment if, after
giving effect to any concurrent prepayment of the Loans in accordance with Section
2.11 and Section 2.12, the Aggregate Credit Exposure would exceed the Aggregate
Commitment.

 

(c)                                  The
Borrower shall notify the Administrative Agent of any election to terminate or
reduce the Aggregate Commitment under paragraph (b) of this Section at
least three Business Days prior to the effective date of such termination or
reduction, specifying such election and the effective date thereof. Promptly
following receipt of any notice, the Administrative Agent shall advise the
Lenders of the contents thereof. Each notice delivered by the Borrower pursuant
to this Section shall be irrevocable; provided
that a notice of termination of the Aggregate Commitment delivered by the Borrower
may state that such notice is conditioned upon the effectiveness of other
credit facilities, in which case such notice may be revoked by the Borrower (by
notice to the Administrative Agent on or prior to the specified effective date)
if such condition is not satisfied. Any termination of the Aggregate Commitment
shall be permanent. Each reduction of the Aggregate Commitment shall be made
ratably among the Lenders in accordance with their respective Commitment.

 

26

 

(d)                                 With
respect to any sale, transfer or disposition of Borrowing Base Properties
(other than sales, transfers or dispositions permitted under Section
7.03(a)(vi)), the Borrowing Base shall be automatically reduced by an amount
equal to the value assigned to such Borrowing Base Properties by the
Administrative Agent in connection with the most recent Redetermination of the
Borrowing Base preceding the date of such sale (or in connection with the
determination of the Initial Borrowing Base with respect to any sale occurring
prior to the first Redetermination of the Borrowing Base).

 

Section 2.03.                             Reserved.

 

Section 2.04.                             Loans
and Borrowings.

 

(a)                                  Each
Loan shall be made as part of a Borrowing consisting of Loans made by the
Lenders ratably in accordance with their respective Commitments. The failure of
any Lender to make any Loan required to be made by it shall not relieve any
other Lender of its obligations hereunder; provided
that the Commitments of the Lenders are several and no Lender shall be
responsible for any other Lender’s failure to make Loans as required.

 

(b)                                 Subject
to Section 2.15, each Revolving Borrowing shall be comprised entirely of ABR
Loans or Eurodollar Loans as the Borrower may request in accordance herewith. Each
Swingline Loan shall be an ABR Loan. Each Lender at its option may make any
Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such
Lender to make such Loan; provided
that any exercise of such option shall not affect the obligation of the
Borrower to repay such Loan in accordance with the terms of this Agreement.

 

(c)                                  At
the commencement of each Interest Period for any Eurodollar Revolving
Borrowing, such Borrowing shall be in an aggregate amount that is an integral
multiple of $1,000,000 and not less than $1,000,000. At the time that each ABR Revolving
Borrowing is made, such Borrowing shall be in an aggregate amount that is an
integral multiple of $1,000,000 and not less than $1,000,000; provided that an ABR Revolving Borrowing
may be in an aggregate amount that is equal to the entire unused balance of the
Aggregate Commitment or that is required to finance the reimbursement of an LC
Disbursement as contemplated by Section 2.07(e). Each Swingline Loan shall be
in an amount that is not less than $500,000. Borrowings of more than one Type may
be outstanding at the same time; provided
that there shall not at any time be more than a total of four (4) Eurodollar
Revolving Borrowings outstanding.

 

(d)                                 Notwithstanding
any other provision of this Agreement, the Borrower shall not be entitled to
request, or to elect to convert or continue, any Eurodollar Borrowing if the
Interest Period requested with respect thereto would end after the Maturity
Date.

 

Section 2.05.                             Requests
for Revolving Borrowings. To request a Revolving Borrowing, the Borrower
shall notify the Administrative Agent of such request by telephone (a) in the
case of a Eurodollar Borrowing, not later than 11:00 a.m., three Business
Days before the date of the proposed Eurodollar Borrowing or (b) in the
case of an ABR Revolving Borrowing, not later than 11:00 a.m., one
Business Day before the date of the 

 

27

 

proposed
Borrowing; provided that any such
notice of an ABR Revolving Borrowing to finance the reimbursement of an LC
Disbursement as contemplated by Section 2.07(e) may be given not later than
10:00 a.m., on the date of the proposed Borrowing. Each such telephonic
Borrowing Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Administrative Agent of a written Borrowing Request
in a form approved by the Administrative Agent and signed by the Borrower. Each
such telephonic and written Borrowing Request shall specify the following
information in compliance with Section 2.04:

 

(i)                  the aggregate
amount of the requested Borrowing;

 

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

 

(iii)            whether such Borrowing
is to be an ABR Borrowing or a Eurodollar Borrowing;

 

(iv)           in the case of a Eurodollar
Revolving Borrowing, the initial Interest Period to be applicable thereto,
which shall be a period contemplated by the definition of the term “Interest
Period”; and

 

(v)              the location and
number of the Borrower’s account to which funds are to be disbursed, which
shall comply with the requirements of Section 2.08.

 

If no election
as to the Type of Revolving Borrowing is specified, then the requested
Revolving Borrowing shall be an ABR Borrowing. If no Interest Period is
specified with respect to any requested Eurodollar Revolving Borrowing, then
the Borrower shall be deemed to have selected an Interest Period of one month’s
duration. Promptly following receipt of a Borrowing Request in accordance with
this Section, the Administrative Agent shall advise each Lender of the details
thereof and of the amount of such Lender’s Loan to be made as part of the
requested Borrowing.

 

Section 2.06.                             Swingline
Loans.

 

(a)                                  Subject
to the terms and conditions set forth herein, the Swingline Lender agrees to
make Swingline Loans to the Borrower from time to time during the Availability
Period, in an aggregate principal amount at any time outstanding that will not
result in (i) the aggregate principal amount of outstanding Swingline Loans
exceeding $10,000,000 or (ii) the Aggregate Credit Exposure exceeding the
Aggregate Commitment, provided that the Swingline Lender shall not be required
to make a Swingline Loan to refinance an outstanding Swingline Loan. Within the
foregoing limits and subject to the terms and conditions set forth herein, the
Borrower may borrow, prepay and reborrow Swingline Loans.

 

(b)                                 To
request a Swingline Loan, the Borrower shall notify the Administrative Agent of
such request by telephone (confirmed by telecopy), not later than 11:00 a.m.,
on the day of a proposed Swingline Loan. Each such notice shall be irrevocable
and shall specify the requested date (which shall be a Business Day) and amount
of the requested 

 

28

 

Swingline Loan. The Administrative Agent will
promptly advise the Swingline Lender of any such notice received from the
Borrower. The Swingline Lender shall make each Swingline Loan available to the
Borrower by means of a credit to the general deposit account of the Borrower
with the Swingline Lender (or, in the case of a Swingline Loan made to finance
the reimbursement of an LC Disbursement as provided in Section 2.07(e), by
remittance to the Issuing Bank) by 3:00 p.m., on the requested date of
such Swingline Loan.

 

(c)                                  The
Swingline Lender may by written notice given to the Administrative Agent not
later than 10:00 a.m., on any Business Day require the Lenders to acquire
participations on such Business Day in all or a portion of the Swingline Loans
outstanding. Such notice shall specify the aggregate amount of Swingline Loans
in which Lenders will participate. Promptly upon receipt of such notice, the
Administrative Agent will give notice thereof to each Lender, specifying in
such notice such Lender’s Applicable Percentage of such Swingline Loan or Loans.
Each Lender hereby absolutely and unconditionally agrees, upon receipt of
notice as provided above, to pay to the Administrative Agent, for the account
of the Swingline Lender, such Lender’s Applicable Percentage of such Swingline
Loan or Loans. Each Lender acknowledges and agrees that its obligation to
acquire participations in Swingline Loans pursuant to this paragraph is
absolute and unconditional and shall not be affected by any circumstance
whatsoever, including the occurrence and continuance of a Default or reduction
or termination of the Commitments, and that each such payment shall be made
without any offset, abatement, withholding or reduction whatsoever. Each Lender
shall comply with its obligation under this paragraph by wire transfer of
immediately available funds, in the same manner as provided in Section 2.08 with
respect to Loans made by such Lender (and Section 2.08 shall apply, mutatis mutandis, to the payment
obligations of the Lenders), and the Administrative Agent shall promptly pay to
the Swingline Lender the amounts so received by it from the Lenders. The
Administrative Agent shall notify the Borrower of any participations in any
Swingline Loan acquired pursuant to this paragraph, and thereafter payments in
respect of such Swingline Loan shall be made to the Administrative Agent and
not to the Swingline Lender. Any amounts received by the Swingline Lender from
the Borrower (or other party on behalf of the Borrower) in respect of a
Swingline Loan after receipt by the Swingline Lender of the proceeds of a sale
of participations therein shall be promptly remitted to the Administrative
Agent; any such amounts received by the Administrative Agent shall be promptly
remitted by the Administrative Agent to the Lenders that shall have made their
payments pursuant to this paragraph and to the Swingline Lender, as their
interests may appear; provided that any such payment so remitted shall be
repaid to the Swingline Lender or to the Administrative Agent, as applicable,
if and to the extent such payment is required to be refunded to the Borrower
for any reason. The purchase of participations in a Swingline Loan pursuant to
this paragraph shall not relieve the Borrower of any default in the payment
thereof.

 

Section 2.07.                             Letters
of Credit.

 

(a)                                  General.
Subject to the terms and conditions set forth herein, the Borrower may request
the issuance of Letters of Credit for its own or the account of the 

 

29

 

General Partner or any Restricted Subsidiary
in a form reasonably acceptable to the Administrative Agent and the Issuing
Bank, at any time and from time to time during the Availability Period. In the
event of any inconsistency between the terms and conditions of this Agreement
and the terms and conditions of any form of letter of credit application or
other agreement submitted by the Borrower to, or entered into by the Borrower
with, the Issuing Bank relating to any Letter of Credit, the terms and
conditions of this Agreement shall control.

 

(b)                                 Notice
of Issuance, Amendment, Renewal, Extension; Certain Conditions. To request
the issuance of a Letter of Credit (or the amendment, renewal or extension of
an outstanding Letter of Credit), the Borrower shall hand deliver or telecopy
(or transmit by electronic communication, if arrangements for doing so have
been approved by the Issuing Bank) to the Issuing Bank and the Administrative
Agent (reasonably in advance of the requested date of issuance, amendment,
renewal or extension) a notice requesting the issuance of a Letter of Credit,
or identifying the Letter of Credit to be amended, renewed or extended, and
specifying the date of issuance, amendment, renewal or extension (which shall
be a Business Day), the date on which such Letter of Credit is to expire (which
shall comply with paragraph (c) of this section), the amount of such
Letter of Credit, the name and address of the beneficiary thereof and such
other information as shall be necessary to prepare, amend, renew or extend such
Letter of Credit. If requested by the Issuing Bank, the Borrower also shall
submit a letter of credit application on the Issuing Bank’s standard form in
connection with any request for a Letter of Credit. A Letter of Credit shall be
issued, amended, renewed or extended only if (and upon issuance, amendment,
renewal or extension of each Letter of Credit the Borrower shall be deemed to
represent and warrant that), after giving effect to such issuance, amendment,
renewal or extension (i) the LC Exposure shall not exceed $100,000,000 and
(ii) the Aggregate Credit Exposure shall not exceed the Aggregate Commitment.

 

(c)                                  Expiration
Date. Each Letter of Credit shall expire at or prior to the close of
business on the earlier of (i) the date one year after the date of the
issuance of such Letter of Credit (or, in the case of any renewal or extension
thereof, one year after such renewal or extension) and (ii) the date that
is five (5) Business Days prior to the Maturity Date.

 

(d)                                 Participations.
By the issuance of a Letter of Credit (or an amendment to a Letter of
Credit increasing the amount thereof) and without any further action on the
part of the Issuing Bank or the Lenders, the Issuing Bank hereby grants to each
Lender, and each Lender hereby acquires from the Issuing Bank, a participation
in such Letter of Credit equal to such Lender’s Applicable Percentage of the
aggregate amount available to be drawn under such Letter of Credit. In
consideration and in furtherance of the foregoing, each Lender hereby
absolutely and unconditionally agrees to pay to the Administrative Agent, for
the account of the Issuing Bank, such Lender’s Applicable Percentage of each LC
Disbursement made by the Issuing Bank and not reimbursed by the Borrower on the
date due as provided in paragraph (e) of this Section, or of any reimbursement
payment required to be refunded to the Borrower for any reason. Each Lender
acknowledges and agrees that its obligation to acquire participations pursuant
to this paragraph in respect of Letters of Credit is absolute and unconditional
and shall not 

 

30

 

be affected by any circumstance whatsoever,
including any amendment, renewal or extension of any Letter of Credit or the
occurrence and continuance of a Default or reduction or termination of the
Aggregate Commitment, and that each such payment shall be made without any
offset, abatement, withholding or reduction whatsoever.

 

(e)                                  Reimbursement.
If the Issuing Bank shall make any LC Disbursement in respect of a Letter
of Credit, the Borrower shall reimburse such LC Disbursement by paying to the
Administrative Agent an amount equal to such LC Disbursement not later than
12:00 noon on the date that such LC Disbursement is made, if the Borrower shall
have received notice of such LC Disbursement prior to 10:00 a.m. on such date,
or, if such notice has not been received by the Borrower prior to such time on
such date, then not later than 12:00 noon on (i) the Business Day that the
Borrower receives such notice, if such notice is received prior to 10:00 a.m.
on the day of receipt, or (ii) the Business Day immediately following the day
that the Borrower receives such notice, if such notice is not received prior to
such time on the day of receipt; provided
that the Borrower may, subject to the conditions to borrowing set forth herein,
request in accordance with Section 2.05 that such payment be financed with an
ABR Revolving Borrowing or Swingline Loan in an equivalent amount and, to the
extent so financed, the Borrower’s obligation to make such payment shall be
discharged and replaced by the resulting ABR Revolving Borrowing or Swingline
Loan. If the Borrower fails to make such payment when due, the Administrative
Agent shall notify each Lender of the applicable LC Disbursement, the payment
then due from the Borrower in respect thereof and such Lender’s Applicable
Percentage thereof. Promptly following receipt of such notice, each Lender
shall pay to the Administrative Agent its Applicable Percentage of the payment
then due from the Borrower, in the same manner as provided in Section 2.08 with
respect to Loans made by such Lender (and Section 2.08 shall apply, mutatis mutandis, to the payment
obligations of the Lenders), and the Administrative Agent shall promptly pay to
the Issuing Bank the amounts so received by it from the Lenders. Promptly
following receipt by the Administrative Agent of any payment from the Borrower
pursuant to this paragraph, the Administrative Agent shall distribute such
payment to the Issuing Bank or, to the extent that Lenders have made payments
pursuant to this paragraph to reimburse the Issuing Bank, then to such Lenders
and the Issuing Bank as their interests may appear. Any payment made by a
Lender pursuant to this paragraph to reimburse the Issuing Bank for any LC Disbursement
(other than the funding of ABR Loans or Swingline Loans as contemplated above)
shall not constitute a Loan and shall not relieve the Borrower of its
obligation to reimburse such LC Disbursement.

 

(f)                                    Obligations
Absolute. The Borrower’s obligation to reimburse LC Disbursements as
provided in paragraph (e) of this Section shall be absolute, unconditional
and irrevocable, and shall be performed strictly in accordance with the terms
of this Agreement under any and all circumstances whatsoever and irrespective
of (i) any lack of validity or enforceability of any Letter of Credit or this
Agreement, or any term or provision therein, (ii) any draft or other document
presented under a Letter of Credit proving to be forged, fraudulent or invalid
in any respect or any statement therein being untrue or inaccurate in any
respect, (iii) payment by the Issuing Bank under a Letter of Credit against
presentation of a draft or other document that does not comply with the terms
of such Letter of Credit, or (iv) any other event or circumstance 

 

31

 

whatsoever, whether or not similar to any of
the foregoing, that might, but for the provisions of this Section, constitute a
legal or equitable discharge of, or provide a right of setoff against, the
Borrower’s obligations hereunder. Neither the Administrative Agent, the Lenders
nor the Issuing Bank, nor any of their Related Parties, shall have any
liability or responsibility by reason of or in connection with the issuance or
transfer of any Letter of Credit or any payment or failure to make any payment
thereunder (irrespective of any of the circumstances referred to in the
preceding sentence), or any error, omission, interruption, loss or delay in
transmission or delivery of any draft, notice or other communication under or
relating to any Letter of Credit (including any document required to make a
drawing thereunder), any error in interpretation of technical terms or any
consequence arising from causes beyond the control of the Issuing Bank; provided that the foregoing shall not be
construed to excuse the Issuing Bank from liability to the Borrower to the
extent of any direct damages (as opposed to consequential damages, claims in
respect of which are hereby waived by the Borrower to the extent permitted by
applicable law) suffered by the Borrower that are caused by the Issuing Bank’s
failure to exercise care when determining whether drafts and other documents
presented under a Letter of Credit comply with the terms thereof. The parties
hereto expressly agree that, in the absence of gross negligence or willful
misconduct on the part of the Issuing Bank (as finally determined by a court of
competent jurisdiction), the Issuing Bank shall be deemed to have exercised
care in each such determination. In furtherance of the foregoing and without
limiting the generality thereof, the parties agree that, with respect to
documents presented which appear on their face to be in substantial compliance
with the terms of a Letter of Credit, the Issuing Bank may, in its sole
discretion, either accept and make payment upon such documents without
responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of such
Letter of Credit.

 

(g)                                 Disbursement
Procedures. The Issuing Bank shall, promptly following its receipt thereof,
examine all documents purporting to represent a demand for payment under a Letter
of Credit. The Issuing Bank shall promptly notify the Administrative Agent and
the Borrower by telephone (confirmed by telecopy) of such demand for payment
and whether the Issuing Bank has made or will make an LC Disbursement
thereunder; provided that any
failure to give or delay in giving such notice shall not relieve the Borrower
of its obligation to reimburse the Issuing Bank and the Lenders with respect to
any such LC Disbursement.

 

(h)                                 Interim
Interest. If the Issuing Bank shall make any LC Disbursement, then, unless
the Borrower shall reimburse such LC Disbursement in full on the date such LC
Disbursement is made, the unpaid amount thereof shall bear interest, for each
day from and including the date such LC Disbursement is made to but excluding
the date that the Borrower reimburses such LC Disbursement, at the rate per
annum then applicable to ABR Loans; provided
that, if the Borrower fails to reimburse such LC Disbursement when due pursuant
to paragraph (e) of this Section, then Section 2.14(c) shall apply. Interest
accrued pursuant to this paragraph shall be for the account of the Issuing
Bank, except that interest accrued on and after the date of payment by any
Lender pursuant to 

 

32

 

paragraph (e) of this Section to reimburse
the Issuing Bank shall be for the account of such Lender to the extent of such
payment.

 

(i)                                     Replacement
of the Issuing Bank. The Issuing Bank may be replaced at any time by
written agreement among the Borrower, the Administrative Agent, the replaced
Issuing Bank and the successor Issuing Bank. The Administrative Agent shall
notify the Lenders of any such replacement of the Issuing Bank. At the time any
such replacement shall become effective, the Borrower shall pay all unpaid fees
accrued for the account of the replaced Issuing Bank pursuant to Section
2.13(b). From and after the effective date of any such replacement, (i) the
successor Issuing Bank shall have all the rights and obligations of the Issuing
Bank under this Agreement with respect to Letters of Credit to be issued
thereafter and (ii) references herein to the term “Issuing Bank” shall be
deemed to refer to such successor or to any previous Issuing Bank, or to such
successor and all previous Issuing Banks, as the context shall require. After
the replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall
remain a party hereto and shall continue to have all the rights and obligations
of an Issuing Bank under this Agreement with respect to Letters of Credit
issued by it prior to such replacement, but shall not be required to issue
additional Letters of Credit.

 

(j)                                     Cash
Collateralization. If any Event of Default shall occur and be continuing,
on the Business Day that the Borrower receives notice from the Administrative
Agent or the Required Lenders (or, if the maturity of the Loans has been
accelerated, Lenders with LC Exposure representing greater than sixty-six and
two-thirds percent (662/3%) of the total LC Exposure)
demanding the deposit of cash collateral pursuant to this paragraph, the
Borrower shall deposit in an account with the Administrative Agent, in the name
of the Administrative Agent and for the benefit of the Lenders, an amount in
cash equal to the LC Exposure as of such date plus any accrued and unpaid
interest thereon; provided that
the obligation to deposit such cash collateral shall become effective
immediately, and such deposit shall become immediately due and payable, without
demand or other notice of any kind, upon the occurrence of any Event of Default
with respect to the Borrower described in clause (h) or (i) of Article IX.
Such deposit shall be held by the Administrative Agent as collateral for the
payment and performance of the obligations of the Borrower under this Agreement
and Borrower hereby grants a security interest in such cash and each deposit
account into which such cash is deposited to secure the Obligations. The
Administrative Agent shall have exclusive dominion and control, including the
exclusive right of withdrawal, over such account. Other than any interest
earned on the investment of such deposits and interest at the rate per annum in
effect for accounts of the same type maintained with the Administrative Agent
at such time, which investments shall be made at the option and sole discretion
of the Administrative Agent and at the Borrower’s risk and expense, such
deposits shall not bear interest. Interest or profits, if any, on such
investments shall accumulate in such account. Moneys in such account shall be
applied by the Administrative Agent to reimburse the Issuing Bank for LC
Disbursements for which it has not been reimbursed and, to the extent not so
applied, shall be held for the satisfaction of the reimbursement obligations of
the Borrower for the LC Exposure at such time or, if the maturity of the Loans
has been accelerated (but subject to the consent of Lenders with LC Exposure representing
sixty-six and two-thirds percent (662/3%)
or more of the total 

 

33

 

LC Exposure), be applied to satisfy other
obligations of the Borrower under this Agreement. If the Borrower is required
to provide an amount of cash collateral hereunder as a result of the occurrence
of an Event of Default, such amount (to the extent not applied as aforesaid)
shall be returned to the Borrower within three (3) Business Days after all
Events of Default have been cured or waived.

 

Section 2.08.                             Funding
of Borrowings.

 

(a)                                  Each
Lender shall make each Loan to be made by it hereunder on the proposed date
thereof by wire transfer of immediately available funds by 12:00 noon to the
account of the Administrative Agent most recently designated by it for such
purpose by notice to the Lenders; provided that Swingline Loans shall be made
as provided in Section 2.06. The Administrative Agent will make such Loans
available to the Borrower by promptly crediting the amounts so received, in
like funds, to an Eligible Account of the Borrower designated by the Borrower
in the applicable Borrowing Request; provided
that ABR Revolving Loans made to finance the reimbursement of an LC
Disbursement as provided in Section 2.07(e) shall be remitted by the
Administrative Agent to the Issuing Bank.

 

(b)                                 Unless
the Administrative Agent shall have received notice from a Lender prior to the
proposed date of any Borrowing that such Lender will not make available to the
Administrative Agent such Lender’s share of such Borrowing, the Administrative
Agent may assume that such Lender has made such share available on such date in
accordance with paragraph (a) of this Section and may, in reliance upon such
assumption, make available to the Borrower a corresponding amount. In such
event, if a Lender has not in fact made its share of the applicable Borrowing
available to the Administrative Agent, then the applicable Lender and the
Borrower severally agree to pay to the Administrative Agent forthwith on demand
such corresponding amount with interest thereon, for each day from and
including the date such amount is made available to the Borrower to but
excluding the date of payment to the Administrative Agent, at (i) in the case
of such Lender, the greater of the Federal Funds Effective Rate and a rate
determined by the Administrative Agent in accordance with banking industry
rules on interbank compensation or (ii) in the case of the Borrower, the
interest rate applicable to ABR Loans. If such Lender pays such amount to the
Administrative Agent, then such amount shall constitute such Lender’s Loan
included in such Borrowing.

 

Section 2.09.                             Interest
Elections.

 

(a)                                  Each
Revolving Borrowing initially shall be of the Type specified in the applicable Borrowing
Request and, in the case of a Eurodollar Revolving Borrowing, shall have an
initial Interest Period as specified in such Borrowing Request; provided that all
Revolving Borrowings on the Effective Date shall be ABR Borrowings. Thereafter,
the Borrower may elect to convert such Borrowing to a different Type or to
continue such Revolving Borrowing and, in the case of a Eurodollar Revolving
Borrowing, may elect Interest Periods therefor, all as provided in this Section.
The Borrower may elect different options with respect to different portions of
the affected Borrowing, in which case each such portion shall be allocated
ratably among the Lenders holding the Loans 

 

34

 

comprising such Borrowing, and the Loans
comprising each such portion shall be considered a separate Revolving Borrowing.
This section shall not apply to Swingline Borrowings, which may not be
converted or continued.

 

(b)                                 To
make an election pursuant to this Section, the Borrower shall notify the
Administrative Agent of such election by telephone by the time that a Borrowing
Request would be required under Section 2.05 if the Borrower were requesting a
Borrowing of the Type resulting from such election to be made on the effective
date of such election. Each such telephonic Interest Election Request shall be
irrevocable and shall be confirmed promptly by hand delivery or telecopy to the
Administrative Agent of a written Interest Election Request in a form approved
by the Administrative Agent and signed by the Borrower.

 

(c)                                  Each
telephonic and written Interest Election Request shall specify the following
information in compliance with Section 2.04:

 

(i)                  the Borrowing to
which such Interest Election Request applies and, if different options are
being elected with respect to different portions thereof, the portions thereof
to be allocated to each resulting Borrowing (in which case the information to
be specified pursuant to clauses (iii) and (iv) below shall be specified for
each resulting Borrowing);

 

(ii)               the effective date
of the election made pursuant to such Interest Election Request, which shall be
a Business Day;

 

(iii)            whether the resulting
Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and

 

(iv)           if the resulting
Borrowing is a Eurodollar Borrowing, the Interest Period to be applicable
thereto after giving effect to such election, which shall be a period
contemplated by the definition of the term “Interest Period”.

 

If any such
Interest Election Request requests a Eurodollar Borrowing but does not specify
an Interest Period, then the Borrower shall be deemed to have selected an
Interest Period of one month’s duration.

 

(d)                                 Promptly
following receipt of an Interest Election Request, the Administrative Agent
shall advise each Lender of the details thereof and of such Lender’s portion of
each resulting Borrowing.

 

(e)                                  If
the Borrower fails to deliver a timely Interest Election Request with respect
to a Eurodollar Revolving Borrowing prior to the end of the Interest Period
applicable thereto, then, unless such Borrowing is repaid as provided herein,
at the end of such Interest Period such Borrowing shall be converted to an ABR
Borrowing. Notwithstanding any contrary provision hereof, if an Event of
Default has occurred and is continuing and the Administrative Agent, at the
request of the Majority Lenders, so notifies the Borrower, then, so long as an
Event of Default is continuing (i) no outstanding Borrowing may be converted to
or continued as a Eurodollar Revolving 

 

35

 

Borrowing and (ii) unless repaid, each
Eurodollar Revolving Borrowing shall be converted to an ABR Borrowing at the end
of the Interest Period applicable thereto.

 

Section 2.10.                             Repayment of
Loans; Evidence of Debt.

 

(a)                                  The
Borrower hereby unconditionally promises to pay (i) to the Administrative Agent
for the account of each Lender the then unpaid principal amount of each
Revolving Loan on the Maturity Date and (ii) to the Swingline Lender the then
unpaid principal amount of each Swingline Loan on the earlier of the Maturity
Date and the first date after such Swingline Loan is made that is the fifteenth
(15th) or last day of any calendar month and is at least two (2) Business
Days after such Swingline Loan is made; provided that each date that a
Revolving Borrowing is made, the Borrower shall repay all Swingline Loans then
outstanding.

 

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

 

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

 

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

 

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

 

(f)                                    Any
Lender or Participant may request that Loans made by it be evidenced by a
promissory note. In such event, the Borrower shall prepare, execute and deliver
to such Lender or Participant a promissory note payable to the order of such
Lender or 

 

36

 

Participant (or, if requested by such Lender
or Participant, to such Lender or Participant and its registered assigns) and
in the form attached hereto as Exhibit E. Thereafter, the Loans evidenced
by such promissory note and interest thereon shall at all times (including
after assignment pursuant to Section 11.04) be represented by one or more
promissory notes in such form payable to the order of the payee named therein
(or, if such promissory note is a registered note, to such payee and its
registered assigns).

 

Section 2.11.                             Optional
Prepayment of Loans.

 

(a)                                  The
Borrower shall have the right at any time and from time to time to prepay any Borrowing
in whole and or in part, subject to prior notice in accordance with paragraph
(b) of this Section; provided that any prepayment made at any time a Borrowing
Base Deficiency exists shall be applied ratably to the prepayment of Revolving
Borrowings to the extent required to eliminate such Borrowing Base Deficiency.

 

(b)                                 The
Borrower shall notify the Administrative Agent (and, in the case of prepayment
of a Swingline Loan, the Swingline Lender) by telephone (confirmed by telecopy)
of any prepayment hereunder (i) in the case of prepayment of a Eurodollar
Borrowing, not later than 11:00 a.m. three (3) Business Days before the date of
prepayment, (ii) in the case of prepayment of an ABR Borrowing, not later than
11:00 a.m. one (1) Business Day before the date of prepayment or (iii) in the
case of prepayment of a Swingline Lender, not later than 12:00 noon on the date
of prepayment. Each such notice shall be irrevocable and shall specify the
prepayment date and the principal amount of each Borrowing or portion thereof
to be prepaid; provided that, if a notice of
prepayment is given in connection with a conditional notice of termination or
reduction of the Aggregate Commitment as contemplated by Section 2.02, then
such notice of prepayment may be revoked if such notice of termination or
reduction is revoked in accordance with Section 2.02. Promptly following
receipt of any such notice relating to a Revolving Borrowing, the
Administrative Agent shall advise the Lenders of the contents thereof. Each
partial prepayment of any Borrowing shall be in an amount that would be
permitted in the case of an advance of a Borrowing of the same Type as provided
in Section 2.04. Each prepayment of a Revolving Borrowing shall be applied
ratably to the Revolving Loans included in the prepaid Revolving Borrowing. Prepayments
shall be accompanied by accrued interest to the extent required by Section 2.14.

 

Section 2.12.                             Mandatory
Prepayment of Loans.

 

(a)                                  Except
as otherwise provided in Section 2.12(b), in the event a Borrowing Base
Deficiency exists, the Borrower shall either (a) within fifteen (15) days after
written notice from the Administrative Agent to the Borrower of such Borrowing
Base Deficiency, by instruments satisfactory in form and substance to the Required
Lenders, provide the Lenders with additional security consisting of Oil and Gas
Interests with value and quality satisfactory to the Required Lenders in their
sole discretion to eliminate such Borrowing Base Deficiency, or prepay, without
premium or penalty, the principal amount of the Loans in an amount sufficient
to eliminate such Borrowing Base 

 

37

 

Deficiency (or by a combination of such
additional security and such prepayment eliminate such Borrowing Base
Deficiency), or (b) within fifteen (15) days after written notice from the
Administrative Agent to the Borrower of such Borrowing Base Deficiency, elect
to prepay, subject to the payment of any funding indemnification amounts
required by Section 2.17 but without premium or penalty, the principal amount
of such Borrowing Base Deficiency in not more than six (6) equal monthly
installments plus accrued interest thereon with the first such monthly payment
being due upon the thirtieth (30th) day after the Borrower’s receipt
of notice of such Borrowing Base Deficiency. In the event Aggregate Credit
Exposure exceeds the Aggregate Commitment at any time, the Borrower shall,
subject to the payment of any funding indemnification amounts required by Section
2.17 but without premium or penalty, immediately prepay the principal amount of
the Loans in an amount sufficient to eliminate such excess.

 

(b)                                 If
the Borrower or any Restricted Subsidiary sells, transfers or otherwise
disposes of any Borrowing Base Properties at any time, the Borrower shall
prepay the Revolving Borrowings to the extent necessary to eliminate any
Borrowing Base Deficiency that may exist or that may have occurred as a result
of such sale, transfer or other disposition on the date it or any Restricted
Subsidiary receives the Net Cash Proceeds from such sale, transfer or other
disposition and any Net Cash Proceeds in excess of the amount necessary to
eliminate any such Borrowing Base Deficiency shall be used within one hundred
eighty (180) days after such disposition (i) to acquire property, plant and
equipment or any business entity used or useful in carrying on the business of
the Borrower and its Restricted Subsidiaries and having a fair market value at
least equal to the fair market value of the properties sold or otherwise
disposed of or to improve or replace any existing property of the Borrower and
its Restricted Subsidiaries used or useful in carrying on the business of the
Borrower and its Restricted Subsidiaries or (ii) prepay the Loans in accordance
with the instructions of the Borrower (unless an Event of Default exists in
which event any amounts prepaid shall be applied to the Loans at the discretion
of the Administrative Agent).

 

(c)                                  Amounts
applied to the prepayment of Borrowings pursuant to this Section shall be first
applied to Swingline Borrowings then outstanding and upon payment in full of
all outstanding Swingline Borrowings, second, ratably to ABR Borrowings then
outstanding and, upon payment in full of all outstanding ABR Borrowings, third,
to Eurodollar Borrowings then outstanding, and if more than one Eurodollar
Borrowing is then outstanding, to each such Eurodollar Borrowing beginning with
the Eurodollar Borrowing with the least number of days remaining in the
Interest Period applicable thereto and ending with the Eurodollar Borrowing
with the most number of days remaining in the Interest Period applicable
thereto, subject to the payment of any funding indemnification amounts required
by Section 2.17 but without penalty or premium. Amounts applied to the payment
of Revolving Borrowings pursuant to this Section may be reborrowed subject to
and in accordance with the terms of this Agreement.

 

38

 

Section 2.13.                             Fees.

 

(a)                                  The
Borrower agrees to pay to the Administrative Agent, for the account of each
Lender, an unused commitment fee (the “Unused Commitment Fee”)
equivalent to the Applicable Rate times the daily average of the total Unused
Commitments. Such Unused Commitment Fee shall be calculated on the basis of a
year consisting of 360 days. The Unused Commitment Fee shall be payable in
arrears on the last day of March, June, September and December of each year,
commencing with the first such date to occur after the Effective Date, and on
the Maturity Date for any period then ending for which the Unused Commitment
Fee shall not have been theretofore paid. In the event the Aggregate Commitment
terminates on any date other than the last day of March, June, September or
December of any year, the Borrower agrees to pay to the Administrative Agent,
for the account of each Lender, on the date of such termination, the total
Unused Commitment Fee due for the period from the last day of the immediately
preceding March, June, September or December, as the case may be, to the date
such termination occurs.

 

(b)                                 The
Borrower agrees to pay (i) to the Administrative Agent for the account of each
Lender a participation fee with respect to its participations in Letters of
Credit, which shall accrue at the same Applicable Rate used to determine the
interest rate applicable to Eurodollar Loans on the average daily amount of
such Lender’s LC Exposure (excluding any portion thereof attributable to
unreimbursed LC Disbursements) during the period from and including the
Effective Date to but excluding the later of the date on which such Lender’s
Commitment terminates and the date on which such Lender ceases to have any LC
Exposure, and (ii) to the Issuing Bank a fronting fee, which shall accrue at
the rate or rates per annum separately agreed upon between the Borrower and the
Issuing Bank on the average daily amount of the LC Exposure (excluding any
portion thereof attributable to unreimbursed LC Disbursements) during the
period from and including the Effective Date to but excluding the later of the
date of termination of the Aggregate Commitment and the date on which there
ceases to be any LC Exposure, as well as the Issuing Bank’s standard fees with
respect to the issuance, amendment, renewal or extension of any Letter of
Credit or processing of drawings thereunder. Participation fees and fronting
fees accrued through and including the last day of March, June, September and December
of each year shall be payable on the third Business Day following such last
day, commencing on the first such date to occur after the Effective Date; provided that all such fees shall be payable on the date on
which the Aggregate Commitment terminates and any such fees accruing after the
date on which the Aggregate Commitment terminates shall be payable on demand. Any
other fees payable to the Issuing Bank pursuant to this paragraph shall be
payable within ten (10) days after demand. All participation fees and fronting
fees shall be computed on the basis of a year of 360 days and shall be payable
for the actual number of days elapsed (including the first day but excluding
the last day).

 

(c)                                  Borrower
agrees to pay to the Administrative Agent, for its own account, fees payable in
the amounts and at the times separately agreed upon between the Borrower and
the Administrative Agent.

 

39

 

(d)                                 All
fees payable hereunder shall be paid on the dates due, in immediately available
funds, to the Administrative Agent (or to the Issuing Bank, in the case of fees
payable to it) for distribution, in the case of Unused Commitment Fees and
participation fees, to the Lenders. Subject to Section 11.13, fees paid shall
not be refundable under any circumstances.

 

Section 2.14.                             Interest.

 

(a)                                  The
Loans comprising each ABR Borrowing (including each Swingline Loan) shall
bear interest at the Alternate Base Rate plus the Applicable Rate.

 

(b)                                 The
Loans comprising each Eurodollar Borrowing shall bear interest at the Adjusted
LIBO Rate for the Interest Period in effect for such Borrowing plus the
Applicable Rate.

 

(c)                                  Notwithstanding
the foregoing, if any principal of or interest on any Loan or any fee or other
amount payable by the Borrower hereunder is not paid when due, whether at
stated maturity, upon acceleration or otherwise, such overdue amount shall bear
interest, after as well as before judgment, at a rate per annum equal to (i) in
the case of overdue principal of any Loan, two percent (2%) plus the rate
otherwise applicable to such Loan as provided in the preceding paragraphs of
this Section or (ii) in the case of any other amount, two percent (2%) plus the
rate applicable to ABR Loans as provided in paragraph (a) of this Section.

 

(d)                                 Accrued
interest on each Loan shall be payable in arrears on each Interest Payment Date
for such Loan and upon termination of the Aggregate Commitment and on the
Maturity Date; provided that (i) interest
accrued pursuant to paragraph (c) of this Section shall be payable on demand,
(ii) in the event of any repayment or prepayment of any Loan (other than a
prepayment of an ABR Loan prior to the end of the Availability Period at a time
when no Borrowing Base Deficiency exists), accrued interest on the principal
amount repaid or prepaid shall be payable on the date of such repayment or
prepayment and (iii) in the event of any conversion of any Eurodollar Loan
prior to the end of the current Interest Period therefor, accrued interest on
such Loan shall be payable on the effective date of such conversion.

 

(e)                                  All
interest hereunder shall be computed on the basis of a year of 360 days, except
that interest computed by reference to the Alternate Base Rate at times when
the Alternate Base Rate is based on the Prime Rate shall be computed on the
basis of a year of 365 days (or 366 days in a leap year), and in each case
shall be payable for the actual number of days elapsed (including the first day
but excluding the last day). The applicable Alternate Base Rate, Adjusted LIBO
Rate or LIBO Rate shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error.

 

Section 2.15.                             Alternate
Rate of Interest. If prior to the commencement of any Interest Period for a
Eurodollar Borrowing:

 

40

 

(a)                                  the
Administrative Agent determines (which determination shall be conclusive absent
manifest error) that adequate and reasonable means do not exist for
ascertaining the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such
Interest Period; or

 

(b)                                 the
Administrative Agent is advised by the Majority Lenders that the Adjusted LIBO
Rate or the LIBO Rate, as applicable, for such Interest Period will not
adequately and fairly reflect the cost to such Lenders (or Lender) of making or
maintaining their Loans (or its Loan) included in such Borrowing for such
Interest Period;

 

then the
Administrative Agent shall give notice thereof to the Borrower and the Lenders
by telephone or telecopy as promptly as practicable thereafter and, until the
Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective,
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing.

 

Section 2.16.                             Increased
Costs.

 

(a)                                  If
any Change in Law shall:

 

(i)                  impose, modify
or deem applicable any reserve, special deposit or similar requirement against
assets of, deposits with or for the account of, or credit extended by, any
Lender (except any such reserve requirement reflected in the Adjusted LIBO
Rate) or the Issuing Bank; or

 

(ii)               impose on any
Lender or the Issuing Bank or the London interbank market any other condition
affecting this Agreement or Eurodollar Loans made by such Lender or any Letter
of Credit or participation therein;

 

and the result
of any of the foregoing shall be to increase the cost to such Lender of making
or maintaining any Eurodollar Loan (or of maintaining its obligation to make
any such Loan) or to increase the cost to such Lender or the Issuing Bank of
participating in, issuing or maintaining any Letter of Credit or to reduce the
amount of any sum received or receivable by such Lender or the Issuing Bank
hereunder (whether of principal, interest or otherwise), then the Borrower will
pay to such Lender or the Issuing Bank, as the case may be, such additional
amount or amounts as will compensate such Lender or the Issuing Bank, as the
case may be, for such additional costs incurred or reduction suffered.

 

(b)                                 If
any Lender or the Issuing Bank determines that any Change in Law regarding
capital requirements has or would have the effect of reducing the rate of
return on such Lender’s or the Issuing Bank’s capital or on the capital of such
Lender’s or the Issuing Bank’s holding company, if any, as a consequence of
this Agreement or the Loans made by, or participations in Letters of Credit
held by, such Lender, or the Letters of Credit issued by the Issuing Bank, to a
level below that which such Lender or the 

 

41

 

Issuing Bank or such Lender’s or the Issuing
Bank’s holding company could have achieved but for such Change in Law (taking
into consideration such Lender’s or the Issuing Bank’s policies and the
policies of such Lender’s or the Issuing Bank’s holding company with respect to
capital adequacy), then from time to time the Borrower will pay to such Lender
or the Issuing Bank, as the case may be, such additional amount or amounts as
will compensate such Lender or the Issuing Bank or such Lender’s or the Issuing
Bank’s holding company for any such reduction suffered.

 

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

 

(d)                                 Failure
or delay on the part of any Lender or the Issuing Bank to demand compensation
pursuant to this Section shall not constitute a waiver of such Lender’s or the
Issuing Bank’s right to demand such compensation; provided
that the Borrower shall not be required to compensate a Lender or the Issuing
Bank pursuant to this Section for any increased costs or reductions incurred
more than one hundred eighty (180) days prior to the date that such Lender or
the Issuing Bank, as the case may be, notifies the Borrower of the Change in
Law giving rise to such increased costs or reductions and of such Lender’s or
the Issuing Bank’s intention to claim compensation therefor; provided  further
that, if the Change in Law giving rise to such increased costs or reductions is
retroactive, then the 180-day period referred to above shall be extended to
include the period of retroactive effect thereof.

 

Section 2.17.                             Break
Funding Payments. In the event of (a) the payment of any principal of any
Eurodollar Loan other than on the last day of an Interest Period applicable
thereto (including as a result of an Event of Default), (b) the conversion of
any Eurodollar Loan other than on the last day of the Interest Period
applicable thereto, (c) the failure to borrow, convert, continue or prepay any
Eurodollar Loan on the date specified in any notice delivered pursuant hereto
(regardless of whether such notice may be revoked under Section 2.11(b) and is
revoked in accordance therewith), (d) the assignment of any Eurodollar
Loan other than on the last day of the Interest Period applicable thereto as a
result of a request by the Borrower pursuant to Section 2.20, then, in any such
event, the Borrower shall compensate each Lender for the loss, cost and expense
attributable to such event. In the case of a Eurodollar Loan, such loss, cost
or expense to any Lender shall be deemed to include an amount determined by
such Lender to be the excess, if any, of (i) the amount of interest which would
have accrued on the principal amount of such Loan had such event not occurred,
at the Adjusted LIBO Rate that would have been applicable to such Loan, for the
period from the date of such event to the last day of the then current Interest
Period therefor (or, in the case of a failure to borrow, convert or continue,
for the period that would have been the Interest Period for such Loan), over (ii)
the amount of interest which would accrue on such principal amount for such
period at the interest rate which such Lender would bid were it to bid, at the
commencement of such period, for dollar deposits of a comparable amount 

 

42

 

and period
from other banks in the eurodollar market. A certificate of any Lender setting
forth any amount or amounts that such Lender is entitled to receive pursuant to
this Section shall be delivered to the Borrower and shall be conclusive absent
manifest error. The Borrower shall pay such Lender the amount shown as due on
any such certificate within ten (10) days after receipt thereof.

 

Section 2.18.                             Taxes.

 

(a)                                  Any
and all payments by or on account of any obligation of the Borrower hereunder
shall be made free and clear of and without deduction for any Indemnified Taxes
or Other Taxes; provided that if
the Borrower shall be required to deduct any Indemnified Taxes or Other Taxes
from such payments, then (i) the sum payable shall be increased as
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section) the Administrative
Agent, Lender or Issuing Bank (as the case may be) receives an amount equal to
the sum it would have received had no such deductions been made, (ii) the
Borrower shall make such deductions and (iii) the Borrower shall pay the
full amount deducted to the relevant Governmental Authority in accordance with
applicable law.

 

(b)                                 In
addition, the Borrower shall pay any Other Taxes to the relevant Governmental
Authority in accordance with applicable law.

 

(c)                                  The
Borrower shall indemnify the Administrative Agent, each Lender and the Issuing
Bank, within 10 days after written demand therefor, for the full amount of any
Indemnified Taxes or Other Taxes paid by the Administrative Agent, such Lender
or the Issuing Bank, as the case may be, on or with respect to any payment by
or on account of any obligation of the Borrower hereunder (including Indemnified
Taxes or Other Taxes imposed or asserted on or attributable to amounts payable
under this Section) and any penalties, interest and reasonable expenses arising
therefrom or with respect thereto, whether or not such Indemnified Taxes or
Other Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority. A certificate delivered to the Borrower by a Lender or
the Issuing Bank, or by the Administrative Agent on its own behalf or on behalf
of a Lender or the Issuing Bank, setting forth (i) the amount of such payment
or liability reasonably necessary to compensate the Administrative Agent, such
Lender or the Issuing Bank, as the case may be, (ii) the factual basis for such
compensation and (iii) the manner in which such amount or amounts were
calculated, shall be conclusive absent manifest error.

 

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

 

(e)                                  Any
Foreign Lender that is entitled to an exemption from or reduction of
withholding tax under the law of the jurisdiction in which the Borrower is
located, or any 

 

43

 

treaty to which such jurisdiction is a party,
with respect to payments under this Agreement shall deliver to the Borrower
(with a copy to the Administrative Agent), at the time or times prescribed by
applicable law, such properly completed and executed documentation prescribed
by applicable law or reasonably requested by the Borrower as will permit such
payments to be made without withholding or at a reduced rate.

 

(f)                                    If the Administrative Agent or a Lender
determines, in its sole discretion, that it has received a refund of any Taxes
or Other Taxes as to which it has been indemnified by the Borrower or with
respect to which the Borrower have paid additional amounts pursuant to this Section
2.18, it shall pay over such refund to the Borrower (but only to the extent of
indemnity payments made, or additional amounts paid, by the Borrower under this
Section 2.18 with respect to the Taxes or Other Taxes giving rise to such
refund), net of all out-of-pocket expenses of the Administrative Agent or such
Lender and without interest (other than any interest paid by the relevant
Governmental Authority with respect to such refund); provided, that the
Borrower, upon the request of the Administrative Agent, the Swingline Lender or
such Lender, agrees to repay the amount paid over to the Borrower (plus any
penalties, interest or other charges imposed by the relevant Governmental
Authority) to the Administrative Agent or such Lender in the event the
Administrative Agent or such Lender is required to repay such refund to such
Governmental Authority. This section shall not be construed to require the
Administrative Agent or any Lender to make available its tax returns (or any
other information relating to its taxes which it deems confidential) to the
Borrower or any other Person.

 

Section 2.19.                             Payments
Generally; Pro Rata Treatment; Sharing of Set-offs.

 

(a)                                  The
Borrower shall make each payment required to be made by it hereunder (whether
of principal, interest, fees or reimbursement of LC Disbursements, or of
amounts payable under Section 2.16, Section 2.17 or Section 2.18, or otherwise)
prior to 12:00 noon on the date when due, in immediately available funds,
without set-off or counterclaim. Any amounts received after such time on any
date may, in the discretion of the Administrative Agent, be deemed to have been
received on the next succeeding Business Day for purposes of calculating
interest thereon. All such payments shall be made to the Administrative Agent
at its offices at JPMorgan Loan Services, 21 South Clark St., 19th
Floor, Chicago, Illinois 60603-2003, except payments to be made directly to the
Issuing Bank or Swingline Lender as expressly provided herein and except that
payments pursuant to Section 2.16, Section 2.17, Section 2.18 and Section 11.03
shall be made directly to the Persons entitled thereto. The Administrative
Agent shall distribute any such payments received by it for the account of any
other Person to the appropriate recipient promptly following receipt thereof. If
any payment hereunder shall be due on a day that is not a Business Day, the
date for payment shall be extended to the next succeeding Business Day, and, in
the case of any payment accruing interest, interest thereon shall be payable
for the period of such extension. All payments hereunder shall be made in
Dollars.

 

(b)                                 If
at any time insufficient funds are received by and available to the
Administrative Agent to pay fully all amounts of principal, unreimbursed LC 

 

44

 

Disbursements, interest, fees and other
Obligations then due hereunder, such funds shall be applied (i) first, towards
payment of interest and fees then due hereunder, ratably among the parties
entitled thereto in accordance with the amounts of interest and fees then due
to such parties, and (ii) second, towards payment of principal and unreimbursed
LC Disbursements then due hereunder, ratably among the parties entitled thereto
in accordance with the amounts of principal and unreimbursed LC Disbursements
then due to such parties; provided that in the event such funds are received by
and available to the Administrative Agent as a result of the exercise of any
rights and remedies with respect to any collateral under the Security
Instruments, the parties entitled to a ratable share of such funds pursuant to
the foregoing clause (ii) and the determination of each parties’ ratable share
shall include, on a pari passu
basis, the Lender Counterparties and the actual aggregate amounts then due and
owing to each Lender Counterparty by the Borrower or any Guarantor as a result
of the early termination of any transactions under any Swap Agreements included
in the Obligations (after giving effect to any netting agreements).

 

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

 

(d)                                 Unless
the Administrative Agent shall have received notice from the Borrower prior to
the date on which any payment is due to the Administrative Agent for the
account of the Lenders or the Issuing Bank hereunder that the Borrower will not
make such payment, the Administrative Agent may assume that the Borrower has
made such payment on such date in accordance herewith and may, in reliance upon
such assumption, 

 

45

 

distribute to the Lenders or the Issuing
Bank, as the case may be, the amount due. In such event, if the Borrower have
not in fact made such payment, then each of the Lenders or the Issuing Bank, as
the case may be, severally agrees to repay to the Administrative Agent
forthwith on demand the amount so distributed to such Lender or Issuing Bank
with interest thereon, for each day from and including the date such amount is
distributed to it to but excluding the date of payment to the Administrative
Agent, at the greater of the Federal Funds Effective Rate and a rate determined
by the Administrative Agent in accordance with banking industry rules on
interbank compensation.

 

(e)                                  If
any Lender shall fail to make any payment required to be made by it pursuant to
Section 2.07(d) or Section 2.07(e), Section 2.08(b), Section 2.19(d) or Section
11.03(c), then the Administrative Agent may, in its discretion (notwithstanding
any contrary provision hereof), apply any amounts thereafter received by the
Administrative Agent for the account of such Lender to satisfy such Lender’s
obligations under such Sections until all such unsatisfied obligations are
fully paid.

 

Section 2.20.                             Mitigation
Obligations; Replacement of Lenders.

 

(a)                                  If
any Lender requests compensation under Section 2.16, or if the Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.18, then such
Lender shall use reasonable efforts to designate a different lending office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or Affiliates, if, in the
judgment of such Lender, such designation or assignment (i) would eliminate or
reduce amounts payable pursuant to Section 2.16 or Section 2.18, as the case
may be, in the future and (ii) would not subject such Lender to any
unreimbursed cost or expense and would not otherwise be disadvantageous to such
Lender. The Borrower hereby agrees to pay all reasonable costs and expenses
incurred by any Lender in connection with any such designation or assignment.

 

(b)                                 If
any Lender requests compensation under Section 2.16, or if the Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.18, or if any
Lender defaults in its obligation to fund Loans hereunder, then the Borrower
may, at its sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in Section
11.04), all its interests, rights and obligations under this Agreement to an
assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment); provided
that (i) the Borrower shall have received the prior written consent of the
Administrative Agent (and if a Commitment is being assigned, the Issuing Bank),
which consent shall not unreasonably be withheld, (ii) such Lender shall have
received payment of an amount equal to the outstanding principal of its Loans,
participations in LC Disbursements and Swingline Loans, accrued interest
thereon, accrued fees and all other amounts payable to it hereunder, from the
assignee (to the extent of such outstanding principal and accrued interest and
fees) or the Borrower (in the case of all other amounts) and (iii) in the
case of any such assignment resulting from a claim for compensation under Section
2.16 or 

 

46

 

payments required to be made pursuant to Section
2.18, such assignment will result in a reduction in such compensation or
payments. A Lender shall not be required to make any such assignment and
delegation if, prior thereto, as a result of a waiver by such Lender or
otherwise, the circumstances entitling the Borrower to require such assignment
and delegation cease to apply.

 

(c)                                  If
in connection with any proposed amendment, modification, termination, waiver or
consent with respect to any of the provisions of this Agreement or any other
Loan Document as contemplated by Section 11.02, the consent of Majority Lenders
or Required Lenders, as the case may be, shall have been obtained but the
consent of one or more of such other Lenders (each a “Non-Consenting Lender”)
whose consent is required has not been obtained or if Lender is a Defaulting
Lender; then, the Borrower may elect to replace such Non-Consenting Lender or
Defaulting Lender, as the case may be, as a Lender party to this Agreement in
accordance with and subject to the restrictions contained in, and consents
required by Section 11.04; provided that
(i) the Borrower shall have received the prior written consent of the
Administrative Agent (and if a Commitment is being assigned, the Issuing Bank),
which consent shall not unreasonably be withheld, (ii) such Lender shall have
received payment of an amount equal to the outstanding principal of its Loans
and participations in LC Disbursements, accrued interest thereon, accrued fees
and all other amounts payable to it hereunder, from the assignee (to the extent
of such outstanding principal and accrued interest and fees) or the Borrower
(in the case of all other amounts) and (iii) in the case of any such
assignment resulting from a claim for compensation under Section 2.16 or
payments required to be made pursuant to Section 2.18, such assignment will
result in a reduction in such compensation or payments. A Lender shall not be
required to make any such assignment and delegation if, prior thereto, as a
result of a waiver by such Lender or otherwise, the circumstances entitling the
Borrower to require such assignment and delegation cease to apply or, in the
case of a Defaulting Lender, such Lender is no longer a Defaulting Lender.

 

Article III

 

Borrowing Base

 

Section 3.01.                             Reserve
Report; Proposed Borrowing Base. During the period from the Effective Date
until the first Redetermination after the Effective Date, the Borrowing Base
shall be $1,300,000,000 (the “Initial Borrowing Base”). As soon as
available and in any event by March 1 and September 1 of each year, beginning September
1, 2007, the Borrower shall deliver to the Administrative Agent and each Lender
a Reserve Report, prepared as of the immediately preceding December 31 and
June 30, respectively, in form and substance reasonably satisfactory to
the Administrative Agent and prepared by an Approved Petroleum Engineer (or, in
the case of the Reserve Report due on September 1 of each year, by
petroleum engineers employed by the Borrower), said Reserve Report to utilize
economic and pricing parameters established from time to time by the
Administrative Agent, together with such other information, reports and data
concerning the value of the Borrowing Base Properties as the Administrative
Agent shall deem reasonably necessary to determine the value of such Borrowing
Base Properties. Simultaneously with the delivery to the Administrative Agent
and the Lenders of each Reserve Report, the 

 

47

 

Borrower shall
submit to the Administrative Agent and each Lender the Borrower’s requested
amount of the Borrowing Base as of the next Redetermination Date. Promptly
after the receipt by the Administrative Agent of such Reserve Report and
Borrower’s requested amount for the Borrowing Base, the Administrative Agent
shall submit to the Lenders a recommended amount of the Borrowing Base to
become effective for the period commencing on the next Redetermination Date.

 

Section 3.02.                             Scheduled
Redeterminations of the Borrowing Base; Procedures and Standards. Based in
part on the Reserve Reports made available to the Administrative Agent and the
Lenders pursuant to Section 3.01, the Lenders shall redetermine the Borrowing
Base on or prior to the next Redetermination Date (or such date promptly
thereafter as reasonably possible based on the engineering and other
information available to the Lenders). Any Borrowing Base which becomes
effective as a result of any Redetermination shall be subject to the following
restrictions: (a) such Borrowing Base shall not exceed the Maximum Facility
Amount, (b) to the extent such Borrowing Base represents an increase in the
Borrowing Base in effect prior to such Redetermination, such Borrowing Base
must be approved by all Lenders, and (c) to the extent such Borrowing Base
represents a decrease in the Borrowing Base in effect prior to such
Redetermination or a reaffirmation of such prior Borrowing Base, such Borrowing
Base must be approved by the Administrative Agent and Required Lenders. If a
redetermined Borrowing Base is not approved by the Administrative Agent and Required
Lenders within twenty (20) days after the submission to the Lenders by the
Administrative Agent of its recommended Borrowing Base pursuant to Section 3.01,
or by all Lenders within such twenty (20) day period in the case of any
increase in the Borrowing Base, the Administrative Agent shall notify each
Lender that the recommended Borrowing Base, as the case may be, has not been
approved and request that each Lender submit to the Administrative Agent within
ten (10) days thereafter its proposed Borrowing Base. Promptly following the tenth
(10th) day after
the Administrative Agent’s request for each Lender’s proposed Borrowing Base,
the Administrative Agent shall determine the Borrowing Base for such
Redetermination by calculating the highest Borrowing Base then acceptable to
the Administrative Agent and a number of Lenders sufficient to constitute Required
Lenders (or all Lenders in the case of an increase in the Borrowing Base). Each
Redetermination shall be made by the Lenders in their sole discretion, but
based on the Administrative Agent’s and such Lender’s usual and customary
procedures for evaluating Oil and Gas Interests as such exist at the time of
such Redetermination, and including adjustments to reflect the effect of any
Swap Agreements of the Borrower and the Restricted Subsidiaries as such exist
at the time of such Redetermination. The Borrower acknowledges and agrees that
each Redetermination shall be based upon the loan collateral value which the
Administrative Agent and each Lender in its sole discretion (using such
methodology, assumptions and discount rates as the Administrative Agent and
such Lender customarily uses in assigning collateral value to Oil and Gas
Interests) assigns to the Borrowing Base Properties at the time in question and
based upon such other credit factors consistently applied (including, without
limitation, the assets, liabilities, cash flow, business, properties,
prospects, management and ownership of the Credit Parties) as the
Administrative Agent and such Lender customarily considers in evaluating
similar oil and gas credits. It is expressly understood that the Administrative
Agent and Lenders have no obligation to designate the Borrowing Base at any particular
amounts, except in the exercise of their discretion, whether in relation to the
Aggregate Commitment or otherwise. If the Borrower does not furnish all
information, reports and data required to be delivered by any date specified in
this Article III, unless such failure is not the fault of the Borrower, the 

 

48

 

Administrative
Agent and Lenders may nonetheless designate the Borrowing Base at any amounts
which the Administrative Agent and all Lenders or Required Lenders, as the case
may be, in their reasonable discretion determine and may redesignate the
Borrowing Base from time to time thereafter until the Administrative Agent and the
Lenders receive all such information, reports and data, whereupon the
Administrative Agent and all Lenders or Required Lenders, as the case may be,
shall designate a new Borrowing Base, as described above.

 

Section 3.03.                             Special
Redeterminations. In addition to Scheduled Redeterminations, the Borrower
shall be permitted to request a Special Redetermination of the Borrowing Base
once between each Scheduled Redetermination and the Required Lenders shall be
permitted to request a Special Redetermination at any time. Any request by
Borrower pursuant to this Section 3.03 shall be submitted to the Administrative
Agent and each Lender and at the time of such request (or within twenty (20)
days thereafter in the case of the Reserve Report) Borrower shall
(1) deliver to the Administrative Agent and each Lender a Reserve Report prepared
as of a date prior to the date of such request that is reasonably acceptable to
the Administrative Agent and such other information which the Administrative
Agent shall reasonably request, and (2) notify the Administrative Agent and
each Lender of the Borrowing Base requested by Borrower in connection with such
Special Redetermination. Any request by Required Lenders for a Special
Redetermination pursuant to this Section 3.03 shall be submitted to the
Administrative Agent and the Borrower. Any Special Redetermination shall be
made by the Administrative Agent and Lenders in accordance with the procedures
and standards set forth in Section 3.02; provided that no Reserve Report is
required to be delivered to the Administrative Agent or the Lenders in connection
with any Special Redetermination requested by the Required Lenders pursuant to
this Section 3.03.

 

Section 3.04.                             Notice
of Redetermination. Promptly following any Redetermination of the Borrowing
Base, the Administrative Agent shall notify the Borrower of the amount of the
redetermined Borrowing Base, which Borrowing Base shall be effective as of the
date specified in such notice, and such Borrowing Base shall remain in effect
for all purposes of this Agreement until the next Redetermination.

 

Article IV

 

Representations and Warranties

 

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

 

Section 4.01.                             Organization;
Powers. Each Credit Party is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, has all
requisite power and authority to carry on its business as now conducted and,
except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect, is qualified to
do business in, and is in good standing in, every jurisdiction where such
qualification is required.

 

49

 

Section 4.02.                             Authorization;
Enforceability. The Transactions are within each Credit Party’s corporate,
limited liability company or partnership powers and have been duly authorized
by all necessary corporate, limited liability company or partnership and, if
required, stockholder action. This Agreement has been duly executed and
delivered by each Credit Party and constitutes a legal, valid and binding obligation
of each Credit Party, enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors’ rights generally and subject to general principles of
equity, regardless of whether considered in a proceeding in equity or at law.

 

Section 4.03.                             Governmental
Approvals; No Conflicts. The Transactions (a) do not require any consent or
approval of, registration or filing with, or any other action by, any
Governmental Authority, except such as have been obtained or made and are in
full force and effect and, after the Effective Date, in the case of EXCO, the
filing of this Agreement and related Loan Documents by EXCO with the Securities
and Exchange Commission pursuant to the requirements of the Securities Exchange
Act of 1934, as amended, (b) will not violate any applicable law or regulation
or the charter, by-laws or other Organizational Documents of the Borrower or
any Restricted Subsidiary or any order of any Governmental Authority, (c) will
not violate or result in a default under any indenture, agreement or other
instrument evidencing Material Indebtedness or a Material Sales Contract
binding upon the Borrower or any Restricted Subsidiary or any of their
respective assets, or give rise to a right thereunder to require any payment to
be made by the Borrower or any Restricted Subsidiary, and (d) will not result
in the creation or imposition of any Lien on any asset of the Borrower or any
Restricted Subsidiary not otherwise permitted under Section 7.02.

 

Section 4.04.                             Financial
Condition; No Material Adverse Change.

 

(a)                                  The
Borrower has heretofore furnished to the Lenders the audited consolidated
balance sheet and related statements of income and cash flows of the Borrower
and its Consolidated Subsidiaries as of and for the period beginning September 29,
2006 and ending December 31, 2006 certified by a Responsible Officer. Such
financial statements present fairly, in all material respects, the financial
position and results of operations and cash flows of the Borrower and its
Consolidated Subsidiaries as of such dates and for such periods in accordance
with GAAP, subject to year-end audit adjustments and the absences of footnotes.

 

(b)                                 Since
December 31, 2006, there has been no material adverse change in the business,
assets, operations, prospects or condition, financial or otherwise, of the
Borrower and its Subsidiaries, taken as a whole (it being understood that
neither (i) the Anadarko Asset Acquisition, nor (ii) changes in commodity
prices for Hydrocarbons affecting the oil and gas industry as a whole
constitutes a material adverse change).

 

Section 4.05.                             Properties.

 

(a)                                  Except
as otherwise provided in Section 4.15 with respect to Oil and Gas Interests,
the Borrower and each Restricted Subsidiary has good title to, or valid
leasehold interests in, all such real and personal property material to its
business, except 

 

50

 

for minor defects in title that do not
interfere with its ability to conduct its business as currently conducted or to
utilize such properties for their intended purposes.

 

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

 

Section 4.06.                             Litigation
and Environmental Matters.

 

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

 

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

 

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

 

Section 4.07.                             Compliance
with Laws and Agreements. The Borrower and each Restricted Subsidiary is in
compliance with all laws, regulations and orders of any Governmental Authority
applicable to it or its property and all indentures, agreements and other
instruments binding upon it or its property, except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect. No Default has occurred and is continuing.

 

Section 4.08.                             Investment
Company Status. Neither the Borrower nor any Restricted Subsidiary is an “investment
company” as defined in, or subject to regulation under, the Investment Company
Act of 1940.

 

Section 4.09.                             Taxes.
The Borrower and each Restricted Subsidiary has timely filed or caused to be
filed all Tax returns and reports required to have been filed and has paid or
caused to be paid all Taxes required to have been paid by it, except
(a) Taxes that are being contested in good faith by appropriate proceedings
and for which the Borrower or such Restricted Subsidiary, 

 

51

 

as applicable,
has set aside on its books adequate reserves or (b) to the extent that the
failure to do so could not reasonably be expected to result in a Material
Adverse Effect.

 

Section 4.10.                             ERISA.
No ERISA Event has occurred or is reasonably expected to occur that, when taken
together with all other such ERISA Events for which liability is reasonably
expected to occur, could reasonably be expected to result in a Material Adverse
Effect. The present value of all accumulated benefit obligations under each
Plan (based on the assumptions used for purposes of FASB Statement 87) did
not, as of the date of the most recent financial statements reflecting such
amounts, exceed by more than $5,000,000 the fair market value of the assets of
such Plan, and the present value of all accumulated benefit obligations of all
underfunded Plans (based on the assumptions used for purposes of FASB
Statement 87) did not, as of the date of the most recent financial
statements reflecting such amounts, exceed by more than $5,000,000 the fair
market value of the assets of all such underfunded Plans.

 

Section 4.11.                             Disclosure.
The Borrower has disclosed to the Lenders all agreements, instruments and
corporate or other restrictions to which it or any Restricted Subsidiary is
subject, and all other matters known to it, that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect.
None of the other reports, financial statements, certificates or other
information furnished by or on behalf of the Borrower or any Restricted
Subsidiary to the Administrative Agent or any Lender in connection with the
negotiation of this Agreement or delivered hereunder (as modified or
supplemented by other information so furnished) contains any material
misstatement of fact or omits to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided that,
with respect to the Projections, the Borrower represents only that such
information was prepared in good faith based on assumptions believed to be
reasonable at the time.

 

Section 4.12.                             Labor
Matters. There are no strikes, lockouts or slowdowns against the Borrower
or any of its Restricted Subsidiaries pending or, to the knowledge of the
Borrower, threatened that could reasonably be expected to have a Material
Adverse Effect. The hours worked by and payments made to employees of the
Borrower and its Restricted Subsidiaries have not been in violation of the Fair
Labor Standards Act or any other Law dealing with such matters to the extent
that such violation could reasonably be expected to have a Material Adverse
Effect.

 

Section 4.13.                             Capitalization
and Credit Party Information. Schedule 4.13 lists, as of the Effective Date
(a) each Subsidiary that is an Unrestricted Subsidiary and (b) for the Borrower
and for each Restricted Subsidiary its full legal name, its jurisdiction of
organization, its organizational identification number, its federal tax
identification number, the number of shares of capital stock or other Equity
Interests outstanding and the owner(s) of such Equity Interests.

 

Section 4.14.                             Margin
Stock. Neither the Borrower nor any Restricted Subsidiary is engaged
principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulation U issued by the Board), and no part of the proceeds
of any Loan will be used to purchase or carry any margin stock or to extend
credit to others for the purpose of purchasing or carrying margin stock.

 

52

 

Section 4.15.                             Oil
and Gas Interests. Each Credit Party has good and defensible title to all
proved reserves included in the Oil and Gas Interests (for purposes of this Section
4.15, “proved Oil and Gas Interests”) described in the most recent Reserve
Report provided to the Administrative Agent, free and clear of all Liens except
Liens permitted pursuant to Section 7.02. All such proved Oil and Gas Interests
are valid, subsisting, and in full force and effect, and all rentals,
royalties, and other amounts due and payable in respect thereof have been duly
paid. Without regard to any consent or non-consent provisions of any joint
operating agreement covering any Credit Party’s proved Oil and Gas Interests,
such Credit Party’s share of (a) the costs for each proved Oil and Gas Interest
described in the Reserve Report is not materially greater than the decimal
fraction set forth in the Reserve Report, before and after payout, as the case
may be, and described therein by the respective designations “working
interests,” “WI,” “gross working interest,” “GWI,” or similar terms (except in
such cases where there is a corresponding increase in the net revenue
interest), and (b) production from, allocated to, or attributed to each
such proved Oil and Gas Interest is not materially less than the decimal
fraction set forth in the Reserve Report, before and after payout, as the case
may be, and described therein by the designations “net revenue interest,” “NRI,”
or similar terms. Each well drilled in respect of proved producing Oil and Gas
Interests described in the Reserve Report (1) is capable of, and is presently,
either producing Hydrocarbons in commercially profitable quantities or in the
process of being worked over or enhanced, and the Credit Party that owns such
proved producing Oil and Gas Interests is currently receiving payments for its
share of production, with no funds in respect of any thereof being presently
held in suspense, other than any such funds being held in suspense pending
delivery of appropriate division orders, and (2) has been drilled, bottomed,
completed, and operated in compliance with all applicable laws, in the case of
clauses (1) and (2), except where any failure to satisfy clause (1) or to
comply with clause (2) would not have a Material Adverse Effect, and no such
well which is currently producing Hydrocarbons is subject to any penalty in
production by reason of such well having produced in excess of its allowable
production.

 

Section 4.16.                             Insurance.
The certificate signed by the Responsible Officer that attests to the existence
and adequacy of, and summarizes, the property and casualty insurance program
maintained by the Credit Parties that has been furnished by the Borrower to the
Administrative Agent and the Lenders as of the Effective Date, is complete and
accurate in all material respects as of the Effective Date and demonstrates the
Borrower’s and the Restricted Subsidiaries’ compliance with Section 6.05.

 

Section 4.17.                             Solvency.

 

(a)                                  Immediately
after the consummation of the Transactions and immediately following the making
of the initial Borrowing made on the Effective Date and after giving effect to
the application of the proceeds thereof, (1) the fair value of the assets of
the Credit Parties on a consolidated basis, at a fair valuation, will exceed
the debts and liabilities, subordinated, contingent or otherwise, of the Credit
Parties on a consolidated basis; (2) the present fair saleable value of the
real and personal property of the Credit Parties on a consolidated basis will
be greater than the amount that will be required to pay the probable liability
of the Credit Parties on a consolidated basis on their debts and other
liabilities, subordinated, contingent or otherwise, as such debts and other
liabilities become absolute and matured; (3) the Credit Parties on a
consolidated basis will be able 

 

53

 

to pay their debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become
absolute and matured; and (4) the Credit Parties on a consolidated basis will
not have unreasonably small capital with which to conduct the businesses in
which they are engaged as such businesses are now conducted and are proposed to
be conducted after the date hereof.

 

(b)                                 The
Credit Parties do not intend to, and do not believe that they will, incur debts
beyond their ability to pay such debts as they mature, taking into account the
timing of and amounts of cash to be received by it and the timing of the
amounts of cash to be payable on or in respect of its Indebtedness.

 

Section 4.18.                             Deposit
Accounts. Except as set forth on Schedule 4.18 and other deposit accounts
maintained at financial institutions other than the Administrative Agent (the
aggregate balance of which does not exceed $250,000 at any time for all such
other deposit accounts taken as a whole), no Credit Party has any deposit or
investment accounts and no Affiliate of any Credit Party has any deposit or
investment account into which proceeds of Hydrocarbon production from the Oil
and Gas Interests included in the Borrowing Base Properties are deposited. All
proceeds of Hydrocarbon production from the Oil and Gas Interests included in
the Borrowing Base Properties and all distributions and dividends on any Equity
Interests owned by any Credit Party are deposited and maintained, from the date
of receipt by any Credit Party, in an Eligible Account.

 

Article V

 

Conditions

 

Section 5.01.                             Effective
Date. The obligations of the Lenders and the Lender Counterparties to
continue the Original Loans and the Existing Swap Agreements and the
obligations of the Lenders to make Loans and of the Issuing Bank to issue
Letters of Credit hereunder shall not become effective until the date on which
each of the following conditions is satisfied (or waived in accordance with Section
11.02):

 

(a)                                  The
Administrative Agent (or its counsel) shall have received from each party
hereto either (i) a counterpart of this Agreement signed on behalf of such
party or (ii) written evidence satisfactory to the Administrative Agent (which may
include telecopy transmission of a signed signature page of this Agreement)
that such party has signed a counterpart of this Agreement.

 

(b)                                 The
Administrative Agent shall have received a favorable written opinion (addressed
to the Administrative Agent and the Lenders and dated the Effective Date) of
Haynes and Boone, L.L.P., counsel for the Credit Parties, substantially in the
form of Exhibit B, and covering such other matters relating to the Credit
Parties, and this Agreement as the Majority Lenders shall reasonably request
and (ii) if agreed by opining counsel, opinions delivered in connection with
the Anadarko Asset Purchase Agreement, if any, addressed to the Lenders or
accompanied by reliance letters in favor of the Lenders stating that the
Lenders may rely on such opinions as though they were 

 

54

 

addressed to them. The Credit Parties hereby
request such counsel to deliver such opinion.

 

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

 

(d)                                 The
Administrative Agent shall have received a certificate, dated the Effective
Date and signed by a Responsible Officer of the Borrower, confirming that the
Borrower has (i) complied with the conditions set forth in paragraphs (a)
and (b) of Section 5.02, (ii) complied with the covenants set forth in Section
6.05 (and demonstrating such compliance by the attachment of an insurance
summary and insurance certificates evidencing the coverage described in such
summary), (iii) complied with the requirements of Section 6.09 and Section 6.10,
(iv) received all of the Equity Interests of Vernon Holdings pursuant to the
terms of the Contribution Agreement, (v) received a cash equity
contribution of at least $1,750,000,000 on terms and conditions reasonably
acceptable to the Administrative Agent (which cash equity contribution may
include cash held by, and thereafter retained by, Vernon Holdings at the time
the Equity Interests of Vernon Holdings are contributed to the Borrower), (vi)
consummated the merger of Vernon Holdings with and into the Borrower pursuant
to the Merger Agreement and (v) simultaneously with the initial Borrowing under
this Agreement and in accordance with applicable law, consummated (or caused
one or more of the Restricted Subsidiaries to consummate) the Anadarko Asset
Acquisition without waiver or amendment of any material term or condition of the
Anadarko Asset Purchase Agreement (not otherwise consented to by the
Administrative Agent).

 

(e)                                  The
Administrative Agent, the Lenders and the Arranger shall have received all fees
and other amounts due and payable on or prior to the Effective Date, and, to
the extent invoiced, reimbursement or payment of all out-of-pocket expenses
required to be reimbursed or paid by the Borrower hereunder, including all
fees, expenses and disbursements of counsel for the Administrative Agent to the
extent invoiced on or prior to the Effective Date, together with such
additional amounts as shall constitute such counsel’s reasonable estimate of
expenses and disbursements to be incurred by such counsel in connection with
the recording and filing of Mortgages and financing statements; provided, that,
such estimate shall not thereafter preclude further settling of accounts
between the Borrower and the Administrative Agent.

 

(f)                                    The
Administrative Agent shall have received the Mortgages (and amendments of
Mortgages previously filed in connection with the Original Credit Agreement) to
be executed on the Effective Date pursuant to Section 6.09 of this Agreement,
duly executed and delivered by the appropriate Credit Party, together with such
other assignments, conveyances, amendments, agreements and other writings, including,
without limitation, UCC-1 financing statements, tax affidavits and applicable
department of revenue documentation, creating Liens prior and superior in right
to any

 

55

 

other Person, subject to
Permitted Encumbrances, in Oil and Gas Interests having an Engineered Value
equal to or greater than the Engineered Value required under Section 6.09.

 

(g)           The Administrative Agent shall have received title information reasonably
satisfactory to the Administrative Agent with respect to the Mortgaged
Properties, or the portion thereof, required by Section 6.10 on the
Effective Date;

 

(h)           The Administrative
Agent shall have received the Pledge Agreement (or an amendment of the Pledge
Agreement under and as defined in the Original Credit Agreement) to be executed
on the Effective Date pursuant to Section 6.14 of this Agreement, duly
executed and delivered by the appropriate Credit Party, together with such
other assignments, conveyances, amendments, agreements and other writings,
including, without limitation, UCC-1 financing statements and control
agreements, creating Liens prior and superior in right to any other Person,
subject to the Liens permitted under Section 7.02, in all Equity Interests
of each Restricted Subsidiary now or hereafter owned by Borrower or any
Restricted Subsidiary.

 

(i)            The Administrative
Agent shall have received satisfactory evidence that contemporaneous with the
funding of the initial Borrowings on the Effective Date, the Prior Term Loan Credit
Agreement will be terminated and the following shall occur with respect to such
agreement: (i) all obligations owing to any lender, agent or any other
Person thereunder shall have been paid in full and all commitments of any
lender, agent or any other Person thereunder to make any future loans shall
have been terminated and (ii) all Liens securing obligations thereunder
shall have either been terminated or released.

 

(j)            On or prior to the
Effective Date, the Administrative Agent shall have received a Borrowing
Request acceptable to the Administrative Agent setting forth the Loans
requested by the Borrower on the Effective Date, the Type and amount of each
Loan and the accounts to which such Loans are to be funded; provided that all
Borrowings on the Effective Date shall be ABR Borrowings.

 

(k)           If the initial
Borrowing includes the issuance of a Letter of Credit, the Administrative Agent
shall have received a written request in accordance with Section 2.07 of
this Agreement.

 

(l)            The Administrative
Agent shall have received such financing statements (including, without
limitation, the financing statements referenced in subclause (f) and (h) above)
as Administrative Agent shall specify to fully evidence and perfect all Liens contemplated
by the Loan Documents, all of which shall be filed of record in such
jurisdictions as the Administrative Agent shall require in its sole discretion.

 

(m)          The Administrative Agent
shall have received reasonably satisfactory evidence that after giving effect
to the Transactions, Aggregate Credit Exposure on the Effective Date shall not
exceed $1,100,000,000.

 

56

 

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

 

(o)           The Lenders shall have
received from the Borrower (i) a pro forma consolidated balance sheet of
the Borrower and its Consolidated Subsidiaries as of the Effective Date, and
reflecting the consummation of the Transactions, the related financings and
other transactions contemplated by the Loan Documents to occur on or prior to
the Effective Date, which pro forma balance sheet shall be prepared consistent
in all respects with the information previously provided by the Borrower to the
Administrative Agent and the Lenders and in form and substance satisfactory to
the Administrative Agent, (ii) a pro forma statement of operations of the
Borrower and its Consolidated Subsidiaries for the twelve month period ending
as of the date of the pro forma balance sheet described in the immediately
preceding clause (i), and (iii) the Projections.

 

(p)           Each Credit Party shall
have obtained all approvals required from any Governmental Authority and all
consents of other Persons, in each case that are necessary or advisable in
connection with the Transactions and each of the foregoing shall be in full
force and effect and in form and substance reasonably satisfactory to the
Administrative Agent.  All applicable
waiting periods shall have expired without any action being taken or threatened
by any competent authority which would restrain, prevent or otherwise impose
adverse conditions on the transactions contemplated by the Loan Documents, the Anadarko
Asset Purchase Documents or the financing thereof and no action, request for
stay, petition for review or rehearing, reconsideration, or appeal with respect
to any of the foregoing shall be pending, and the time for any applicable
agency to take action to set aside its consent on its own motion shall have
expired.

 

(q)           There shall not exist
any action, suit, investigation, litigation or proceeding or other legal or
regulatory developments, pending or threatened in any court or before any
arbitrator or Governmental Authority that, in the reasonable opinion of
Administrative Agent, singly or in the aggregate, materially impairs the
Transactions, the financing thereof or any of the other transactions contemplated
by the Loan Documents or the Anadarko Asset Purchase Documents or that could
have a Material Adverse Effect.

 

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

 

(s)           The Administrative
Agent shall have received reasonably satisfactory evidence that the Vernon
Hedges assigned to one or more of the Credit Parties on the Effective Date are
in notional amounts covering at least ninety percent (90%) of the forecasted
production from proved producing reserves included in the Oil and Gas Interests
acquired in the Anadarko Asset Acquisition through December 31, 2009.

 

57

 

(t)            The Administrative
Agent and the Lenders shall have received the audited financial statements
described in Section 4.04(a).

 

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

 

The Administrative Agent shall notify the Borrower and the Lenders of
the Effective Date, and such notice shall be conclusive and binding.  Notwithstanding the foregoing, the
obligations of the Lenders to make Loans and of the Issuing Bank to issue
Letters of Credit hereunder shall not become effective unless each of the
foregoing conditions is satisfied (or waived pursuant to Section 11.02) at
or prior to 3:00 p.m. on April 30, 2007 (and, in the event such
conditions are not so satisfied or waived, the Aggregate Commitment shall
terminate at such time).

 

Section 5.02.          Each Credit Event.  The obligation of each Lender to make a Loan
on the occasion of any Borrowing, and of the Issuing Bank to issue, amend,
renew or extend any Letter of Credit, is subject to the satisfaction of the
following conditions:

 

(a)           The representations and
warranties of each Credit Party set forth in the Loan Documents shall be true
and correct in all material respects on and as of the date of such Borrowing or
the date of issuance, amendment, renewal or extension of such Letter of Credit,
as applicable except to the extent that such representations and warranties
specifically refer to an earlier date, in which case they shall be true and
correct as of such earlier date.

 

(b)           At the time of and
immediately after giving effect to such Borrowing or the issuance, amendment,
renewal or extension of such Letter of Credit, as applicable, no Default shall
have occurred and be continuing.

 

(c)           At the time of and
immediately after giving effect to such Borrowing or the issuance, amendment,
renewal or extension of such Letter of Credit, as applicable, no Borrowing Base
Deficiency exists or would be caused thereby.

 

Each Borrowing and each issuance, amendment, renewal or extension of a
Letter of Credit shall be deemed to constitute a representation and warranty by
the Borrower on the date thereof as to the matters specified in paragraphs (a),
(b) and (c) of this Section.

 

Article VI

Affirmative Covenants

 

Until the Aggregate
Commitment has expired or been terminated and the principal of and interest on
each Loan and all fees payable hereunder shall have been paid in full and all
Letters of Credit shall have expired or terminated and all LC Disbursements
shall have been reimbursed, each Credit Party covenants and agrees with the
Lenders that:

 

58

 

Section 6.01.          Financial Statements; Other Information.  The Borrower will furnish to the
Administrative Agent and each Lender:

 

(a)           within ninety (90) days
after the end of each fiscal year of the Borrower, the audited consolidated
(and unaudited consolidating) balance sheet and related consolidated (and with
respect to statements of operations, consolidating) statements of operations,
partners’ equity and cash flows of the MLP and its Consolidated Subsidiaries as
of the end of and for such year, setting forth in each case in comparative form
the figures for the previous fiscal year, all reported on by a firm of
independent public accountants reasonably acceptable to Administrative Agent
(without a “going concern” or like qualification or exception and without any
qualification or exception as to the scope of such audit) to the effect that
such consolidated financial statements present fairly in all material respects
the financial condition and results of operations of the MLP and its
Consolidated Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied;

 

(b)           within forty-five (45)
days after the end of each fiscal quarter of the Borrower, the consolidated
(and unaudited consolidating) balance sheet and related consolidated (and with
respect to statements of operations, consolidating) statements of operations,
partners’ equity and cash flows of the MLP and its Consolidated Subsidiaries as
of the end of and for such fiscal quarter and the then elapsed portion of the
fiscal year, setting forth in each case in comparative form the figures for the
corresponding period or periods of (or, in the case of the balance sheet, as of
the end of) the previous fiscal year, all certified by a Responsible Officer as
presenting fairly in all material respects the financial condition and results
of operations of the MLP and its Consolidated Subsidiaries on a consolidated
and consolidating basis in accordance with GAAP consistently applied, subject
to normal year-end audit adjustments and the absence of footnotes;

 

(c)           concurrently with any
delivery of financial statements under clause (a) or (b) above,
a certificate in a form reasonably acceptable to Administrative Agent signed by
a Responsible Officer of the Borrower (i) certifying as to whether a
Default has occurred and, if a Default has occurred, specifying the details
thereof and any action taken or proposed to be taken with respect thereto, and (ii) setting
forth reasonably detailed calculations demonstrating compliance with Section 7.11;

 

(d)           promptly after the same
become publicly available, copies of all periodic and other reports, proxy
statements and other materials filed by the Borrower or any Subsidiary with the
Securities and Exchange Commission, or any Governmental Authority succeeding to
any or all of the functions of said Commission, or with any national securities
exchange, or distributed by the Borrower to its shareholders generally, as the
case may be;

 

(e)           as soon as available,
and in any event no later than March 1 and September 1 of each year,
the Reserve Reports required on such dates pursuant to Section 3.01
together with a certificate in a form reasonably acceptable to Administrative
Agent signed by a Responsible Officer of the Borrower certifying as to whether
a Default has

 

59

 

occurred and, if a Default has occurred,
specifying the details thereof and any action taken or proposed to be taken
with respect thereto;

 

(f)            together with the
Reserve Reports required under clause (e) above, (i) a report, in
reasonable detail, setting forth the Swap Agreements then in effect, the
notional volumes of and prices for, on a monthly basis and in the aggregate,
the Crude Oil and Natural Gas for each such Swap Agreement and the term of each
such Swap Agreement; (ii) a true and correct schedule of the
Mortgaged Properties, (iii) the percentage of the Engineered Value of the
Borrowing Base that the Mortgaged Properties represents and (iv) a
description of the additional Oil and Gas Interests, if any, to be mortgaged by
the Credit Parties to comply with Section 6.09 and the Engineered Value
thereof;

 

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

 

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

 

Documents required to be delivered pursuant to Section 6.01(a) or
Section 6.01(b) or Section 6.01(d) may be delivered
electronically and if so delivered, shall be deemed to have been delivered on
the date (i) on which the Borrower posts such documents, or provides a
link thereto on the Borrower’s website on the Internet at the website address
identified in Section 11.01 on which such documents are posted on the
Borrower’s behalf on an Internet or intranet website, if any, to which each
Lender and the Administrative Agent have access (whether a commercial,
third-party website or whether sponsored by the Administrative Agent); provided that: (i) the Borrower shall
deliver paper copies of such documents to the Administrative Agent or any
Lender that requests the Borrower to deliver such paper copies until a written
request to cease delivering paper copies is given by the Administrative Agent
or such Lender and (ii) the Borrower shall notify the Administrative Agent
and each Lender (by telecopier or electronic mail) of the posting of any such
documents and provide to the Administrative Agent by electronic mail electronic
versions (i.e., soft copies) of
such documents.  Notwithstanding anything
contained herein, in every instance the Borrower shall be required to provide
paper copies of the Compliance Certificates required by Section 6.01(c) to
the Administrative Agent.  Except for
such Compliance Certificates, the Administrative Agent shall have no obligation
to request the delivery or to maintain copies of the documents referred to
above, and in any event shall have no responsibility to monitor compliance by
the Borrower with any such request for delivery, and each Lender shall be
solely responsible for requesting delivery to it or maintaining its copies of
such documents.

 

The Borrower hereby
acknowledges that (a) the Administrative Agent and/or the Arrangers will
make available to the Lenders and the Issuing Bank materials and/or information

 

60

 

provided by or on
behalf of the Borrower hereunder (collectively, “Borrower Materials”) by
posting the Borrower Materials on IntraLinks or another similar electronic
system (the “Platform”) and (b) certain of the Lenders may be “public-side”
Lenders (i.e., Lenders that do not wish to
receive material non-public information with respect to the Borrower or its
securities) (each, a “Public Lender”). 
The Borrower hereby agrees that (w) all Borrower Materials that are to
be made available to Public Lenders shall be clearly and conspicuously marked “PUBLIC”
which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently
on the first page thereof; (x) by marking Borrower Materials “PUBLIC,” the
Borrower shall be deemed to have authorized the Administrative Agent, the
Arrangers, the Issuing Bank and the Lenders to treat such Borrower Materials as
either publicly available information or not material information (although it
may be sensitive and proprietary) with respect to the Borrower or its
securities for purposes of United States Federal and state securities laws; (y)
all Borrower Materials marked “PUBLIC” are permitted to be made available
through a portion of the Platform designated “Public Investor;” and (z) the
Administrative Agent and the Arrangers shall be entitled to treat Borrower’s
Materials that are not marked “PUBLIC” as being suitable only for posting on a
portion of the Platform not designated “Public Investor.”

 

Section 6.02.          Notices of Material Events.  The Borrower will furnish to the
Administrative Agent and each Lender prompt written notice of the following:

 

(a)           the occurrence of any
Default;

 

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

 

(c)           the occurrence of any
ERISA Event that, alone or together with any other ERISA Events that have
occurred, could reasonably be expected to result in liability of the Borrower
and the Restricted Subsidiaries in an aggregate amount exceeding $5,000,000;

 

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

 

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

 

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

 

(g)           the occurrence of any
material breach or default under, or repudiation or termination of, any EXCO
Agreement;

 

61

 

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

 

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

 

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

 

Section 6.03.          Existence; Conduct of Business.  The Borrower will, and will cause each
Restricted Subsidiary to, do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its legal existence and the
rights, licenses, permits, privileges and franchises material to the conduct of
its business; provided that the
foregoing shall not prohibit any merger, consolidation, liquidation or
dissolution permitted under Section 7.03.

 

Section 6.04.          Payment of Obligations.  The Borrower will, and will cause each
Restricted Subsidiary to, pay its obligations, including Tax liabilities, that,
if not paid, could result in a Material Adverse Effect before the same shall
become delinquent or in default, except where (a) the validity or amount
thereof is being contested in good faith by appropriate proceedings, (b) the
Borrower or such Restricted Subsidiary has set aside on its books adequate
reserves with respect thereto in accordance with GAAP and (c) the failure
to make payment pending such contest could not reasonably be expected to result
in a Material Adverse Effect.

 

Section 6.05.          Maintenance of Properties; Insurance.  The Borrower will, and will cause each
Restricted Subsidiary and use commercially reasonable efforts to cause each
operator of Borrowing Base Properties to, (a) keep and maintain all
property material to the conduct of its business in good working order and
condition, ordinary wear and tear excepted, and (b) maintain, with
financially sound and reputable insurance companies, insurance in such amounts
and against such risks as are customarily maintained by companies engaged in
the same or similar businesses operating in the same or similar locations.  On or prior to the Effective Date and
thereafter, upon request of the Administrative Agent, the Borrower will furnish
or cause to be furnished to the Administrative Agent from time to time a
summary of the respective insurance coverage of the Borrower and its Restricted
Subsidiaries in form and substance reasonably satisfactory to the
Administrative Agent, and, if requested, will furnish the Administrative Agent
copies of the applicable policies.  Upon
demand by Administrative Agent, the Borrower will cause any insurance policies
covering any such property to be endorsed (a) to provide that such
policies may not be cancelled, reduced or affected in any manner for any reason
without fifteen (15) days prior notice to Administrative Agent, and (b) to
provide for such other matters as the Lenders may reasonably require.

 

Section 6.06.          Books and Records; Inspection Rights.  The Borrower will, and will cause each
Restricted Subsidiary to, keep proper books of record and account in which
full, true and correct entries are made of all dealings and transactions in
relation to its business and activities. 
The Borrower will, and will cause each Restricted Subsidiary to, permit
any representatives

 

62

 

designated by
the Administrative Agent or any Lender, upon reasonable prior notice, to visit
and inspect its properties, to examine and make extracts from its books and
records, and to discuss its affairs, finances and condition with its officers
and, provided an officer of the Borrower has the reasonable opportunity to
participate, its independent accountants, all at such reasonable times and as
often as reasonably requested.

 

Section 6.07.          Compliance with Laws.  The Borrower will, and will cause each
Restricted Subsidiary to, comply with all laws, rules, regulations and orders
of any Governmental Authority applicable to it or its property, except where
the failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.

 

Section 6.08.          Use of Proceeds and Letters of Credit.  The proceeds of the Loans will be used only
to (a) finance the Anadarko Asset Acquisition, (b) repay the amount
outstanding under the Prior Term Loan Credit Agreement, and provided all
amounts outstanding under the Prior Term Loan Credit Agreement are paid in full
on the Effective Date, repay amounts outstanding under the Original Credit
Agreement (c) pay the fees, expenses and transaction costs of the
Transactions, (d) satisfy reimbursement obligations with respect to
Letters of Credit, (e) make Restricted Payments permitted under Section 7.06,
and (f) finance the working capital needs of the Borrower, including
capital expenditures, and for general corporate purposes of the Borrower and
the Guarantors, in the ordinary course of business, including the exploration,
acquisition and development of Oil and Gas Interests.  No part of the proceeds of any Loan will be
used, whether directly or indirectly, to purchase or carry any margin stock (as
defined in Regulation U issued by the Board). 
Letters of Credit will be issued only to support general corporate
purposes of the Borrower and the Restricted Subsidiaries.

 

Section 6.09.          Mortgages.  Each Borrower will, and will cause each
Guarantor to, execute and deliver to the Administrative Agent, for the benefit
of the Secured Parties, Mortgages in form and substance acceptable to the Administrative
Agent together with such other assignments, conveyances, amendments, agreements
and other writings, including, without limitation, UCC-1 financing statements
(each duly authorized and executed, as applicable) as the Administrative Agent
shall deem necessary or appropriate to grant, evidence, perfect and maintain
Liens in not less than eighty percent (80%) of the Engineered Value of the
Borrowing Base Properties.

 

Section 6.10.          Title Data.  The Borrower will, and will cause each
Guarantor to, deliver to the Administrative Agent such opinions of counsel or
other evidence of title as the Administrative Agent shall deem reasonably
necessary or appropriate to verify at all times from and after the Effective
Date, not less than ninety percent (90%) of the Engineered Value of the
Mortgaged Properties of the Borrower and the Guarantors, taken as a whole, and
the validity, perfection and priority of the Liens created by such Mortgages
and such other matters regarding such Mortgages as Administrative Agent shall
reasonably request.

 

Section 6.11.          Swap Agreements.  The Borrower will, and will cause each
Restricted Subsidiary to, maintain the Existing Swap Agreements and none of the
Existing Swap Agreements may be amended, modified or cancelled without the prior
written consent of the Majority Lenders. 
Upon the request of the Majority Lenders, the Borrower and each
Restricted

 

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Subsidiary
shall use their commercially reasonable efforts to cause each Swap Agreement to
which the Borrower or any Restricted Subsidiary is a party to (a) be
collaterally assigned to the Administrative Agent, for the benefit of the
Secured Parties and (b) upon the occurrence of any default or event of
default under such agreement or contract, (i) to permit the Lenders to
cure such default or event of default and assume the obligations of such Credit
Party under such agreement or contract and (ii) to prohibit the
termination of such agreement or contract by the counterparty thereto if the
Lenders assume the obligations of such Credit Party under such agreement or
contract and the Lenders take the actions required under the foregoing clause
(i).  Upon the request of the
Administrative Agent, the Borrower shall, within thirty (30) days of such
request, provide to the Administrative Agent and each Lender copies of all
agreements, documents and instruments evidencing the Swap Agreements not
previously delivered to the Administrative Agent and Lenders, certified as true
and correct by a Responsible Officer of the Borrower, and such other
information regarding such Swap Agreements as the Administrative Agent and
Lenders may reasonably request.

 

Section 6.12.          Operation of Oil and Gas Interests.

 

(a)           Each Borrower will, and
will cause each Restricted Subsidiary to, maintain, develop and operate its Oil
and Gas Interests in a good and workmanlike manner, and observe and comply with
all of the terms and provisions, express or implied, of all oil and gas leases
relating to such Oil and Gas Interests so long as such Oil and Gas Interests
are capable of producing Hydrocarbons and accompanying elements in paying
quantities, except where such failure to comply could not reasonably be
expected to have a Material Adverse Effect.

 

(b)           Borrower will, and will
cause each Restricted Subsidiary to, comply in all respects with all contracts
and agreements applicable to or relating to its Oil and Gas Interests or the
production and sale of Hydrocarbons and accompanying elements therefrom, except
to the extent a failure to so comply could not reasonably be expected to have a
Material Adverse Effect.

 

Section 6.13.          Restricted Subsidiaries.  In the event any Person is or becomes a
Restricted Subsidiary, Borrower will (a) promptly take all action
necessary to comply with Section 6.14, (b) promptly take all such
action and execute and deliver, or cause to be executed and delivered, to the
Administrative Agent all such documents, opinions, instruments, agreements, and
certificates similar to those described in Section 5.01(b) and Section 5.01(c) that
the Administrative Agent may request, and (c) promptly cause such
Restricted Subsidiary to (i) become a party to this Agreement and
Guarantee the Obligations by executing and delivering to the Administrative
Agent a Counterpart Agreement in the form of Exhibit C, and (ii) to
the extent required to comply with Section 6.09 or as requested by the
Administrative Agent, execute and deliver Mortgages and other Security
Instruments creating Liens prior and superior in right to any other Person,
subject to Permitted Encumbrances, in such Restricted Subsidiary’s Oil and Gas
Interests and other assets.  Upon
delivery of any such Counterpart Agreement to the Administrative Agent, notice
of which is hereby waived by each Credit Party, such Restricted Subsidiary
shall be a Guarantor and shall be as fully a party hereto as if such Restricted
Subsidiary were an original signatory hereto. 
Each Credit Party expressly agrees that its obligations arising hereunder
shall not be affected or diminished by the addition or release of any

 

64

 

other Credit
Party hereunder.  This Agreement shall be
fully effective as to any Credit Party that is or becomes a party hereto
regardless of whether any other Person becomes or fails to become or ceases to
be a Credit Party hereunder.  With
respect to each such Restricted Subsidiary, the Borrower shall promptly send to
the Administrative Agent written notice setting forth with respect to such
Person the date on which such Person became a Restricted Subsidiary of the
Borrower, and supplement the data required to be set forth in the Schedules to
this Agreement as a result of the acquisition or creation of such Restricted
Subsidiary; provided that such supplemental data must be reasonably acceptable
to the Administrative Agent and Majority Lenders.

 

Section 6.14.          Pledged Equity Interests.  On the date hereof and at the time hereafter
that any Restricted Subsidiary of the Borrower is created or acquired or any
Unrestricted Subsidiary becomes a Restricted Subsidiary, the Borrower and the
Subsidiaries (as applicable) shall execute and deliver to the Administrative
Agent for the benefit of the Secured Parties, a Pledge Agreement, in form and
substance acceptable to the Administrative Agent, from the Borrower and/or the
Subsidiaries (as applicable) covering all Equity Interests owned by the
Borrower or such Restricted Subsidiaries in such Restricted Subsidiaries,
together with all certificates (or other evidence acceptable to Administrative
Agent) evidencing the issued and outstanding Equity Interests of each such
Restricted Subsidiary of every class owned by such Credit Party (as applicable)
which, if certificated, shall be duly endorsed or accompanied by stock powers
executed in blank (as applicable), as Administrative Agent shall deem necessary
or appropriate to grant, evidence and perfect a security interest in the issued
and outstanding Equity Interests owned by Borrower or any Restricted Subsidiary
in each Restricted Subsidiary prior and superior in right to any other Person.

 

Section 6.15.          Production Proceeds and Bank Accounts.  Subject
to the terms and conditions of the Mortgages, each Credit Party shall cause all production proceeds and
revenues attributable to the Oil and Gas Interests of such Credit Party to be
paid and deposited into deposit accounts of such Credit Party maintained with
the Administrative Agent or with other financial institutions acceptable to the
Administrative Agent and, at the request of the Administrative Agent, cause all
such deposit accounts at such other financial institutions to be subject to a
control agreement in favor of the Administrative Agent for the benefit of the
Secured Parties, in form and substance satisfactory to the Administrative Agent
(an “Eligible Account”).

 

Article VII

Negative Covenants

 

Until the Aggregate
Commitment has expired or terminated and the principal of and interest on each
Loan and all fees payable hereunder have been paid in full and all Letters of
Credit have expired or terminated and all LC Disbursements shall have been
reimbursed, each Credit Party covenants and agrees with the Lenders that:

 

Section 7.01.          Indebtedness.  The Borrower will not, nor will it permit any
of its Restricted Subsidiaries to, create, incur, assume or permit to exist any
Indebtedness, except:

 

(a)           The Obligations;

 

65

 

(b)           Indebtedness existing
on the date hereof and set forth in Schedule 7.01 and extensions, renewals
and replacements of any such Indebtedness that do not increase the outstanding
principal amount thereof;

 

(c)           Indebtedness of the
Borrower to any Guarantor and of any Guarantor to the Borrower or any other
Guarantor; provided, that (i) all
such Indebtedness shall be unsecured and subordinated in right of payment to
the payment in full of all of the Obligations as provided in Section 8.06
and (ii) all such Indebtedness is evidenced by promissory notes in form
and substance reasonably satisfactory to the Administrative Agent, and such
promissory notes are subject to a security interest in favor of the
Administrative Agent for the benefit of the Secured Parties on terms and
conditions reasonably satisfactory to the Administrative Agent prior and
superior in right to any other Person;

 

(d)           Guarantees of the
Obligations;

 

(e)           Indebtedness of the
Borrower and the Restricted Subsidiaries incurred to finance the acquisition,
construction or improvement of any fixed or capital assets, including Capital
Lease Obligations and any Indebtedness assumed in connection with the
acquisition of any such assets or secured by a Lien on any such assets prior to
the acquisition thereof, and extensions, renewals and replacements of any such
Indebtedness that do not increase the outstanding principal amount thereof; provided that (i) such Indebtedness
is incurred prior to or within 90 days after such acquisition or the completion
of such construction or improvement and (ii) the aggregate principal
amount of Indebtedness permitted by this clause (e) shall not exceed $10,000,000
at any time outstanding;

 

(f)            Indebtedness incurred
or deposits made by the Borrower and any Restricted Subsidiary (i) under
worker’s compensation laws, unemployment insurance laws or similar legislation,
or (ii) in connection with bids, tenders, contracts (other than for the
payment of Indebtedness) or leases to which such Credit Party is a party, (iii) to
secure public or statutory obligations of such Credit Party, and (iv) of
cash or U.S. Government Securities made to secure the performance of statutory
obligations, surety, stay, customs and appeal bonds to which such Credit Party
is a party in connection with the operation of the Oil and Gas Interests, in
each case in the ordinary course of business;

 

(g)           Indebtedness of any
Borrower or any Restricted Subsidiary under Swap Agreements to the extent
permitted under Section 7.05;

 

(h)           Other unsecured
Indebtedness of the Credit Parties in an aggregate principal amount not
exceeding $25,000,000 at any time outstanding.

 

Section 7.02.          Liens. 
The Borrower will not, nor will it permit any of its Restricted
Subsidiaries to, create, incur, assume or permit to exist any Lien on any
property or asset now owned or hereafter acquired by it, or assign or sell any
income or revenues (including accounts receivable) or rights in respect of any
thereof, except:

 

(a)           any Lien created
pursuant to this Agreement or the Security Instruments;

 

66

 

(b)           Permitted Encumbrances;

 

(c)           any Lien on any
property or asset of the Borrower or any Restricted Subsidiary existing on the
date hereof and set forth in Schedule 7.02; provided that (i) such Lien shall not apply to any
other property or asset of the Borrower or any other Restricted Subsidiary and (ii) such
Lien shall secure only those obligations which it secures on the date hereof
and extensions, renewals and replacements thereof that do not increase the
outstanding principal amount thereof;

 

(d)           any Lien existing on
any property or asset prior to the acquisition thereof by the Borrower or any
Restricted Subsidiary or existing on any property or asset of any Person that
becomes a Restricted Subsidiary after the date hereof prior to the time such
Person becomes a Restricted Subsidiary; provided
that (i) such Lien secures Indebtedness permitted by Section 7.01(e),
(ii) such Lien is not created in contemplation of or in connection with
such acquisition or such Person becoming a Restricted Subsidiary, as the case
may be, (iii) such Lien shall not apply to any other property or assets of
the Borrower or any other Restricted Subsidiary and (iv) such Lien shall
secure only those obligations which it secures on the date of such acquisition
or the date such Person becomes a Restricted Subsidiary, as the case may be and
extensions, renewals and replacements thereof that do not increase the
outstanding principal amount thereof; and

 

(e)           Liens on fixed or
capital assets acquired, constructed or improved by the Borrower or any
Restricted Subsidiary; provided
that (i) such Liens, secure Indebtedness permitted by Section 7.01, (ii) such
security interests and the Indebtedness secured thereby are incurred prior to
or within ninety (90) days after such acquisition or the completion of such
construction or improvement, (iii) the Indebtedness secured thereby does
not exceed the cost of acquiring, constructing or improving such fixed or
capital assets and (iv) such security interests shall not apply to any
other property or assets of the Borrower or any other Restricted Subsidiaries.

 

Section 7.03.          Fundamental Changes.

 

(a)           The Borrower will not,
nor will it permit any of its Restricted Subsidiaries to, merge into or
consolidate with any other Person, or permit any other Person to merge into or
consolidate with it, or sell, transfer, lease or otherwise dispose of (in one
transaction or in a series of transactions) all or any substantial part of its
assets, or any of its Borrowing Base Properties or any of the Equity Interests
of any Restricted Subsidiary (in each case, whether now owned or hereafter
acquired), or liquidate or dissolve, except that, the Borrower or any
Restricted Subsidiary may sell Hydrocarbons produced from its Oil and Gas
Interests in the ordinary course of business, and if at the time thereof and
immediately after giving effect thereto no Default shall have occurred and be
continuing, (i) any Restricted Subsidiary may merge into the Borrower in a
transaction in which the Borrower is the surviving entity, (ii) any
Restricted Subsidiary may merge into any other Restricted Subsidiary in a
transaction in which the surviving entity is a Restricted Subsidiary, (iii) any
Restricted Subsidiary may sell, transfer, lease or otherwise dispose of its
assets to the Borrower or to another Restricted Subsidiary, (iv) any
Restricted Subsidiary may liquidate or dissolve if the Borrower determines in
good faith that such

 

67

 

liquidation or dissolution is
in the best interests of the Borrower and is not materially disadvantageous to
the Lenders, (v) the Borrower or any Restricted Subsidiary may sell,
transfer, lease or otherwise dispose of equipment and related items in the
ordinary course of business, that are obsolete or no longer necessary in the
business of the Borrower or any of its Restricted Subsidiaries or that is being
replaced by equipment of comparable value and utility, (vi) subject to Section 2.12(b),
the Borrower or any Restricted Subsidiary may sell, transfer, lease, exchange,
abandon or otherwise dispose of Borrowing Base Properties with a value not
exceeding, in the aggregate for the Borrower and its Restricted Subsidiaries
taken as a whole, five percent (5%) of the Borrowing Base between Scheduled
Redeterminations and (vii) with the prior written consent of Required
Lenders and subject to Section 2.02(d) and Section 2.12(b), the
Borrower or any Restricted Subsidiary may sell, transfer, lease, exchange,
abandon or otherwise dispose of Borrowing Base Properties not otherwise
permitted pursuant to the foregoing clause (vi). For purposes of the foregoing
clause (vi), the value of any Oil and Gas Interests included in the Borrowing
Base Properties shall be the Engineered Value of such Oil and Gas Interests and
the value of all other Oil and Gas Interests shall be the value which would be
assigned to such Oil and Gas Interests using the same methodology, assumptions
and discount rates used to determine the Engineered Value of the Borrowing Base
Properties as of the most recent Redetermination.  In addition, for purposes of determining
compliance with clause (vi) of this section with respect to any
exchange of Oil and Gas Interests, the value of such exchange shall be the net
reduction, if any, in Engineered Value realized or resulting from such
exchange.

 

(b)           The Borrower will not,
nor will it permit any of its Restricted Subsidiaries to, engage to any
material extent in any business other than businesses of the type conducted by
the Borrower and its Restricted Subsidiaries on the date of execution of this
Agreement and after giving effect to the Transactions and businesses reasonably
related thereto.

 

Section 7.04.          Investments, Loans, Advances, Guarantees
and Acquisitions.  The Borrower will
not, nor will it permit any of its Restricted Subsidiaries to, purchase, hold
or acquire (including pursuant to any merger with any Person that was not a
wholly owned Restricted Subsidiary prior to such merger) any capital stock,
evidences of Indebtedness or other securities (including any option, warrant or
other right to acquire any of the foregoing) of, make or permit to exist any
loans or advances to, Guarantee any Indebtedness of, or make or permit to exist
any investment or any other interest in, any other Person, or purchase or
otherwise acquire (in one transaction or a series of transactions) any assets of
any other Person constituting a business unit, except:

 

(a)           Permitted Investments;

 

(b)           investments by the
Borrower in the Equity Interests of any Restricted Subsidiary;

 

(c)           investments by the
Borrower or Guarantor consisting of intercompany Indebtedness permitted under Section 7.01(c)

 

68

 

(d)           Guarantees constituting
Indebtedness permitted by Section 7.01;

 

(e)           investments by the
Borrower and its Restricted Subsidiaries that are (1) customary in the oil
and gas business, (2) made in the ordinary course of the Borrower’s or
such Restricted Subsidiary’s business, and (3) made in the form of, or
pursuant to, oil, gas and mineral leases, operating agreements, farm-in
agreements, farm-out agreements, development agreements, unitization
agreements, joint bidding agreements, services contracts and other similar
agreements that a reasonable and prudent oil and gas industry owner or operator
would find acceptable;

 

(f)            investments consisting
of Swap Agreements to the extent permitted under Section 7.05; and

 

(g)           other investments by
the Borrower and the Restricted Subsidiaries; provided
that, on the date any such other
investment is made, the amount of such investment, together with all other
investments made pursuant to this clause (g) of Section 7.04 (in each
case determined based on the cost of such investment) since the Effective Date,
does not exceed in the aggregate, $10,000,000.

 

Section 7.05.          Swap Agreements.  The Borrower will not, nor will it permit any
of its Restricted Subsidiaries to, enter into or maintain any Swap Agreement,
except the Existing Swap Agreements and Swap Agreements entered into in the
ordinary course of business with Approved Counterparties and not for
speculative purposes to (a) hedge or mitigate Crude Oil and Natural Gas
price risks to which the Borrower or any Restricted Subsidiary has actual
exposure, and (b) effectively cap, collar or exchange interest rates (from
fixed to floating rates, from one floating rate to another floating rate or
otherwise) with respect to any interest-bearing liability or investment of any
Credit Party; provided that such Swap
Agreements (at the time each transaction under such Swap Agreement is entered
into) would not cause the aggregate notional amount of Hydrocarbons under all
Swap Agreements then in effect (including the Existing Swap Agreements to
exceed at any time (i) eighty percent (80%)  of
the “forecasted production from total proved reserves” (as defined below) of
the Borrower and the Restricted Subsidiaries for each of the first two years of
the forthcoming five year period and (ii) seventy percent (70%) of the
forecasted production from total proved reserves of the Borrower and the
Restricted Subsidiaries for each of the third, fourth and fifth years of the
forthcoming five year period.  As used in
this Section, “forecasted production from total proved reserves” means the
forecasted production of Crude Oil and Natural Gas as reflected in the most
recent Reserve Report delivered to the Administrative Agent pursuant to Section 6.01,
after giving effect to any pro forma adjustments for the consummation of any
acquisitions or dispositions since the effective date of such Reserve
Report.  Once the Borrower or any
Restricted Subsidiaries enters into a Swap Agreement or any hedge transaction
pursuant to any Swap Agreement, the terms and conditions of such Swap Agreement
and such hedge transaction may not be amended or modified, nor may such Swap
Agreement or hedge transaction be cancelled without the prior written consent
of Majority Lenders.  Each Credit Party
and each Lender agrees and acknowledges that (i) the Existing Swap
Agreements are Swap Agreements permitted under this Section 7.05, (ii) as
of the Effective Date, the counterparty to each Existing Swap Agreement is a
Lender Counterparty, and (iii) the obligations of the Credit Parties under
the Existing Swap

 

69

 

Agreements are
included in the defined term “Obligations” and such obligations are entitled to
the benefits of, and are secured by the Liens granted under, the Security
Instruments.

 

Section 7.06.          Restricted Payments.  The Borrower will not, nor will it permit any
of its Restricted Subsidiaries to, declare or make, or agree to pay or make,
directly or indirectly, any Restricted Payment, except that (a) the
Borrower may declare and make Restricted Payments with respect to its Equity
Interests payable solely in its Equity Interests (other than Disqualified
Stock), (b) the Borrower may make Restricted Payments pursuant to and in
accordance with stock option plans or other benefit plans for management or
employees of the Borrower and its Restricted Subsidiaries in an aggregate
amount not to exceed $2,000,000 in any fiscal year, (c) any Restricted
Subsidiary may make Restricted Payments to the Borrower or any Guarantor;
provided that no Default has occurred and is continuing or would result from
the making of such Restricted Payment, and (d) Restricted Payments by the
Borrower to the holders of its Equity Interests; provided that (i) no
Default has occurred and is continuing or would result from the making of such
Restricted Payment, (ii) EXCO owns, directly or indirectly, all of the
Equity Interests of the Borrower, and (iii) after giving effect to such
Restricted Payment, the Aggregate Commitment exceeds Aggregate Credit Exposure
by an amount equal to or greater than ten percent (10%) of the Borrowing Base.

 

Section 7.07.          Transactions with Affiliates.  The Borrower will not, nor will it permit any
of its Restricted Subsidiaries to, sell, lease or otherwise transfer any
property or assets to, or purchase, lease or otherwise acquire any property or
assets from, or otherwise engage in any other transactions with, any of its
Affiliates, except (a) in the ordinary course of business at prices and on
terms and conditions not less favorable to the Borrower or such Restricted
Subsidiary than could be obtained on an arm’s-length basis from unrelated third
parties, (b) transactions between or among the Borrower and its Restricted
Subsidiaries not involving any other Affiliate, (c) transactions described
on Schedule 7.07, (d) any Restricted Payment permitted by Section 7.06,
and (e) the contribution of the Equity Interests of Vernon Holdings to the
Borrower pursuant to the Contribution Agreement.

 

Section 7.08.          Restrictive Agreements.  The Borrower will not, nor will it permit any
of its Restricted Subsidiaries to, directly or indirectly, enter into, incur or
permit to exist any agreement or other arrangement that prohibits, restricts or
imposes any condition upon (a) the ability of the Borrower or any
Restricted Subsidiary to create, incur or permit to exist any Lien upon any of
its property or assets, or (b) the ability of any Restricted Subsidiary to
pay dividends or other distributions with respect to any of its Equity
Interests or to make or repay loans or advances to the Borrower or any
Restricted Subsidiary or to Guarantee Indebtedness of the Borrower or any
Restricted Subsidiary; provided that (i) the
foregoing shall not apply to restrictions and conditions imposed by law or by
this Agreement, (ii) the foregoing shall not apply to restrictions and
conditions existing on the date hereof identified on Schedule 7.08 (but
shall apply to any extension or renewal of, or any amendment or modification
expanding the scope of, any such restriction or condition), (iii) clause (a) of
the foregoing shall not apply to restrictions or conditions imposed by any
agreement relating to secured Indebtedness permitted by this Agreement if such
restrictions or conditions apply only to the property or assets securing such
Indebtedness and (iv) clause (a) of the foregoing shall not apply to
customary provisions in leases and other contracts restricting the assignment
thereof.

 

70

 

Section 7.09.          Disqualified Stock and Fiscal Year.  The Borrower will not, nor will it permit any
of its Restricted Subsidiaries to, issue any Disqualified Stock nor will it
change its fiscal year.

 

Section 7.10.          Amendments to Organizational Documents.  The Borrower will not, nor will it permit any
of its Restricted Subsidiaries to, enter into or permit any material
modification or amendment of, or waive any material right or obligation of any
Person under its Organizational Documents.

 

Section 7.11.          Financial Covenants.

 

(a)           Consolidated Current
Ratio.  The Borrower will not permit
the Consolidated Current Ratio as of the end of any fiscal quarter ending on or
after June 30, 2007 to be less than 1.00 to 1.00.

 

(b)           Leverage Ratio.

 

(i)            The Borrower will not
permit the ratio, determined as of the end of the fiscal quarter ending June 30,
2007, of (A) Consolidated Funded Indebtedness as of the end of such fiscal
quarter, to (B) Consolidated EBITDAX for such fiscal quarter multiplied by
four (4) to be greater than 3.50 to 1.00.

 

(ii)           The Borrower will not
permit the ratio, determined as of the end of any fiscal quarter ending after June 30,
2007 and on or before December 31, 2007, of (A) Consolidated Funded
Indebtedness as of the end of such fiscal quarter, to (B) Consolidated
EBITDAX for the period from April 1, 2007 to the end of such fiscal
quarter multiplied by a fraction, the numerator of which is four (4) and
the denominator of which is the number of fiscal quarters ended since April 1,
2007, including the then ending fiscal quarter, to be greater than 3.50 to
1.00.

 

(iii)          The Borrower will not
permit the ratio, determined as of the end of the fiscal quarter ending on or
after March 31, 2008, of (A) Consolidated Funded Indebtedness as of
the end of such fiscal quarter to (B) Consolidated EBITDAX for the
trailing four fiscal quarter period ending on such date, to be greater than 3.50
to 1.00.

 

(c)           Interest Coverage
Ratio.

 

(i)            The Borrower will not
permit the ratio, determined as of June 30, 2007, of (A) Consolidated
EBITDAX for such fiscal quarter multiplied by four (4) to (B) Consolidated
Interest Expense for such fiscal quarter multiplied by four (4) to be less
than 2.50 to 1.00.

 

(ii)           The Borrower will not
permit the ratio, determined as of the end of any fiscal quarter ending after June 30,
2007 and on or before December 31, 2007, of (A) Consolidated EBITDAX
for the period from April 1, 2007 to the end of such fiscal quarter
multiplied by a fraction, the numerator of which is four (4)

 

71

 

and the denominator of which is
the number of fiscal quarters ended since April 1, 2007, including the
then ending fiscal quarter, to (B) Consolidated Interest Expense for the
period from April 1, 2007 to the end of such fiscal quarter multiplied by
a fraction, the numerator of which is four (4) and the denominator of
which is the number of fiscal quarters ended since April 1, 2007,
including the then ending fiscal quarter, to be less than 2.50 to 1.00.

 

(iii)          The Borrower will not
permit the ratio, determined as of the end of the fiscal quarter ending on or
after March 31, 2008, of (A) Consolidated EBITDAX for the trailing
four fiscal quarter period ending on such date, to (B) Consolidated Interest
Expense for such four fiscal quarter period to be less than 2.50 to 1.00.

 

Section 7.12.          Sale and Leaseback Transactions and other
Off-Balance Sheet Liabilities.  The
Borrower will not, nor will it permit any Restricted Subsidiary to, enter into
or suffer to exist any (i) Sale and Leaseback Transaction or (ii) any
other transaction pursuant to which it incurs or has incurred Off-Balance Sheet
Liabilities, except for Swap Agreements permitted under the terms of Section 7.05
and Advance Payment Contracts; provided,
that the aggregate amount of all Advance Payments received by any Credit Party
that have not been satisfied by delivery of production at any time does not
exceed, in the aggregate $5,000,000.

 

Article VIII

Guarantee of Obligations

 

Section 8.01.          Guarantee of Payment.  Each Guarantor unconditionally and
irrevocably guarantees to the Administrative Agent for the benefit of the
Secured Parties, the punctual payment of all Obligations now or which may in
the future be owing by the Borrower under the Loan Documents and all
Obligations which may now or which may in the future be owing by the Borrower
or any other Guarantor to any Secured Party under any Swap Agreement (the “Guaranteed
Liabilities”).  This Guarantee is a
guaranty of payment and not of collection only. 
The Administrative Agent shall not be required to exhaust any right or
remedy or take any action against the Borrower or any other Person or any
collateral.  The Guaranteed Liabilities
include interest accruing after the commencement of a proceeding under
bankruptcy, insolvency or similar laws of any jurisdiction at the rate or rates
provided in the Loan Documents, or the Swap Agreements between any Credit Party
and any Secured Party, as the case may be, regardless of whether such interest
is an allowed claim.  Each Guarantor
agrees that, as between the Guarantor and the Administrative Agent, the
Guaranteed Liabilities may be declared to be due and payable for the purposes
of this Guarantee notwithstanding any stay, injunction or other prohibition
which may prevent, delay or vitiate any declaration as regards the Borrower or
any other Guarantor and that in the event of a declaration or attempted
declaration, the Guaranteed Liabilities shall immediately become due and
payable by each Guarantor for the purposes of this Guarantee.

 

Section 8.02.          Guarantee Absolute.  Each Guarantor guarantees that the Guaranteed
Liabilities shall be paid strictly in accordance with the terms of this
Agreement and the Swap Agreements to which any Secured Party is a party.  The liability of each Guarantor hereunder is

 

72

 

absolute and
unconditional irrespective of:  (a) any
change in the time, manner or place of payment of, or in any other term of, all
or any of the Loan Documents or the Guaranteed Liabilities, or any other
amendment or waiver of or any consent to departure from any of the terms of any
Loan Document or Guaranteed Liability, including any increase or decrease in
the rate of interest thereon; (b) any release or amendment or waiver of,
or consent to departure from, any other guaranty or support document, or any
exchange, release or non-perfection of any collateral, for all or any of the
Loan Documents or Guaranteed Liabilities; (c) any present or future law,
regulation or order of any jurisdiction (whether of right or in fact) or of any
agency thereof purporting to reduce, amend, restructure or otherwise affect any
term of any Loan Document or Guaranteed Liability; (d) without being
limited by the foregoing, any lack of validity or enforceability of any Loan
Document or Guaranteed Liability; and (e) any other setoff, defense or
counterclaim whatsoever (in any case, whether based on contract, tort or any
other theory) with respect to the Loan Documents or the transactions
contemplated thereby which might constitute a legal or equitable defense
available to, or discharge of, the Borrower or a Guarantor.

 

Section 8.03.          Guarantee Irrevocable.  This Guarantee is a continuing guaranty of
the payment of all Guaranteed Liabilities now or hereafter existing under this
Agreement and such Swap Agreements to which any Secured Party is a party and
shall remain in full force and effect until payment in full of all Guaranteed
Liabilities and other amounts payable hereunder and until this Agreement and
the Swap Agreements are no longer in effect or, if earlier, when the Guarantor
has given the Administrative Agent written notice that this Guarantee has been
revoked; provided that any notice under this section shall
not release the revoking Guarantor from any Guaranteed Liability, absolute or
contingent, existing prior to the Administrative Agent’s actual receipt of the
notice at its branches or departments responsible for this Agreement and such
Swap Agreements and reasonable opportunity to act upon such notice.

 

Section 8.04.          Reinstatement.  This Guarantee shall continue to be effective
or be reinstated, as the case may be, if at any time any payment of any of the
Guaranteed Liabilities is rescinded or must otherwise be returned by any
Secured Party on the insolvency, bankruptcy or reorganization of the Borrower,
or any other Credit Party, or otherwise, all as though the payment had not been
made.

 

Section 8.05.          Subrogation.  No Guarantor shall exercise any rights which
it may acquire by way of subrogation, by any payment made under this Guarantee
or otherwise, until all the Guaranteed Liabilities have been paid in full and
this Agreement and the Swap Agreements to which any Lender Counterparty is a
party are no longer in effect.  If any
amount is paid to the Guarantor on account of subrogation rights under this
Guarantee at any time when all the Guaranteed Liabilities have not been paid in
full, the amount shall be held in trust for the benefit of the Lenders and the
Lender Counterparties and shall be promptly paid to the Administrative Agent to
be credited and applied to the Guaranteed Liabilities, whether matured or
unmatured or absolute or contingent, in accordance with the terms of this
Agreement and such Swap Agreements.  If
any Guarantor makes payment to the Administrative Agent, Lenders, or any Lender
Counterparties of all or any part of the Guaranteed Liabilities and all the
Guaranteed Liabilities are paid in full and this Agreement and such Swap
Agreements are no longer in effect, the Administrative Agent, Lenders and
Lender Counterparties shall, at such Guarantor’s request, execute and deliver
to such Guarantor appropriate documents, without recourse and without

 

73

 

representation
or warranty, necessary to evidence the transfer by subrogation to such
Guarantor of an interest in the Guaranteed Liabilities resulting from the
payment.

 

Section 8.06.          Subordination.  Without limiting the rights of the
Administrative Agent, the Lenders and the Lender Counterparties under any other
agreement, any liabilities owed by the Borrower to any Guarantor in connection
with any extension of credit or financial accommodation by any Guarantor to or
for the account of the Borrower, including but not limited to interest accruing
at the agreed contract rate after the commencement of a bankruptcy or similar
proceeding, are hereby subordinated to the Guaranteed Liabilities, and such
liabilities of the Borrower to such Guarantor, if the Administrative Agent so
requests, shall be collected, enforced and received by any Guarantor as trustee
for the Administrative Agent and shall be paid over to the Administrative Agent
on account of the Guaranteed Liabilities but without reducing or affecting in
any manner the liability of the Guarantor under the other provisions of this
Guarantee.

 

Section 8.07.          Payments Generally.  All payments by the Guarantors shall be made
in the manner, at the place and in the currency (the “Payment Currency”)
required by the Loan Documents and the Swap Agreement to which any Lender
Counterparty is a party, as the case may be; provided,
however, that (if the Payment
Currency is other than Dollars) any Guarantor may, at its option (or, if for
any reason whatsoever any Guarantor is unable to effect payments in the
foregoing manner, such Guarantor shall be obligated to) pay to the
Administrative Agent at its principal office the equivalent amount in Dollars
computed at the selling rate of the Administrative Agent or a selling rate chosen
by the Administrative Agent, most recently in effect on or prior to the date
the Guaranteed Liability becomes due, for cable transfers of the Payment
Currency to the place where the Guaranteed Liability is payable.  In any case in which any Guarantor makes or
is obligated to make payment in Dollars, the Guarantor shall hold the
Administrative Agent, the Lenders and the Lender Counterparties harmless from
any loss incurred by the Administrative Agent, any Lender or any Lender
Counterparty arising from any change in the value of Dollars in relation to the
Payment Currency between the date the Guaranteed Liability becomes due and the
date the Administrative Agent, such Lender or such Lender Counterparty is
actually able, following the conversion of the Dollars paid by such Guarantor
into the Payment Currency and remittance of such Payment Currency to the place
where such Guaranteed Liability is payable, to apply such Payment Currency to
such Guaranteed Liability.

 

Section 8.08.          Setoff.  Each Guarantor agrees that, in addition to
(and without limitation of) any right of setoff, banker’s lien or counterclaim
the Administrative Agent, any Lender or any Lender Counterparty may otherwise
have, the Administrative Agent, such Lender or such Lender Counterparty shall be
entitled, at its option, to offset balances (general or special, time or
demand, provisional or final) held by it for the account of any Guarantor at
any office of the Administrative Agent, such Lender or such Lender
Counterparty, in Dollars or in any other currency, against any amount payable
by such Guarantor under this Guarantee which is not paid when due (regardless
of whether such balances are then due to such Guarantor), in which case it
shall promptly notify such Guarantor thereof; provided
that the failure of the Administrative Agent, such Lender, or such Lender
Counterparty to give such notice shall not affect the validity thereof.

 

74

 

Section 8.09.          Formalities.  Each Guarantor waives presentment, notice of
dishonor, protest, notice of acceptance of this Guarantee or incurrence of any
Guaranteed Liability and any other formality with respect to any of the
Guaranteed Liabilities or this Guarantee.

 

Section 8.10.          Limitations on Guarantee.  The provisions of the Guarantee under this Article VIII
are severable, and in any action or proceeding involving any state corporate
law, or any state, federal or foreign bankruptcy, insolvency, reorganization or
other law affecting the rights of creditors generally, if the obligations of
any Guarantor under this Guarantee would otherwise be held or determined to be
avoidable, invalid or unenforceable on account of the amount of such Guarantor’s
liability under this Guarantee, then, notwithstanding any other provision of
this Guarantee to the contrary, the amount of such liability shall, without any
further action by the Guarantors, the Administrative Agent, any Lender or any
Lender Counterparty, be automatically limited and reduced to the highest amount
that is valid and enforceable as determined in such action or proceeding (such
highest amount determined hereunder being the relevant Guarantor’s “Maximum
Liability”). This Section 8.10, with respect to the Maximum Liability of
the Guarantors, is intended solely to preserve the rights of the Administrative
Agent, Lenders and Lender Counterparties hereunder to the maximum extent not
subject to avoidance under applicable law, and no Guarantor nor any other
Person shall have any right or claim under this Section 8.10 with respect
to the Maximum Liability, except to the extent necessary so that none of the
obligations of any Guarantor hereunder shall be rendered voidable under
applicable law.

 

Article IX

Events of Default

 

If any of the following
events (“Events of Default”) shall occur:

 

(a)           the Borrower shall fail
to pay any principal of any Loan (including any payments required under Section 2.12)
or any reimbursement obligation in respect of any LC Disbursement when and as
the same shall become due and payable, whether at the due date thereof or at a
date fixed for prepayment thereof or otherwise;

 

(b)           the Borrower shall fail
to pay any interest on any Loan or any fee or any other amount (other than an amount
referred to in clause (a) of this Article) payable under this Agreement,
when and as the same shall become due and payable, and such failure shall
continue unremedied for a period of three days;

 

(c)           any representation or
warranty made or deemed made by or on behalf of the Borrower or any Restricted
Subsidiary in or in connection with this Agreement or any amendment or
modification hereof or waiver hereunder, or in any report, certificate,
financial statement or other document furnished pursuant to or in connection
with this Agreement or any amendment or modification hereof or waiver hereunder
or in any Loan Document furnished pursuant to or in connection with this
Agreement or any amendment or modification thereof or waiver hereunder, shall
prove to have been incorrect in any material respect when made or deemed made;

 

75

 

(d)           the Borrower or any
Restricted Subsidiary shall fail to observe or perform any covenant, condition
or agreement contained in Section 2.12, Section 6.01, Section 6.02, Section 6.03 (with respect to the Borrower
or any Restricted Subsidiary’s existence), Section 6.05 (with respect to
insurance), Section 6.08 or in Article VII;

 

(e)           the Borrower or any
Restricted Subsidiary shall fail to observe or perform any covenant, condition
or agreement contained in this Agreement (other than those specified in clause
(a), (b) or (d) of this Article) or any Loan Document, and such
failure shall continue unremedied for a period of thirty (30) days after notice
thereof from the Administrative Agent to the Borrower (which notice will be
given at the request of any Lender);

 

(f)            the Borrower or any
Restricted Subsidiary shall fail to make any payment (whether of principal
or interest and regardless of amount) in respect of any Material Indebtedness,
when and as the same shall become due and payable;

 

(g)           any event or condition
occurs that results in any Material Indebtedness becoming due prior to its
scheduled maturity or that enables or permits the holder or holders of any
Material Indebtedness or any trustee or agent on its or their behalf to cause
any Material Indebtedness to become due, or to require the prepayment,
repurchase, redemption or defeasance thereof, prior to its scheduled maturity; provided that this clause (g) shall
not apply to secured Indebtedness that becomes due as a result of the voluntary
sale or transfer of the property or assets securing such Indebtedness;

 

(h)           an involuntary
proceeding shall be commenced or an involuntary petition shall be filed seeking
(i) liquidation, reorganization or other relief in respect of the Borrower
or any Restricted Subsidiary or its debts, or of a substantial part of its
assets, under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect or (ii) the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Borrower or any Restricted Subsidiary or for a
substantial part of its assets, and, in any such case, such proceeding or
petition shall continue undismissed for sixty (60) days or an order or decree
approving or ordering any of the foregoing shall be entered;

 

(i)            the Borrower or any
Restricted Subsidiary shall (i) voluntarily commence any proceeding or
file any petition seeking liquidation, reorganization or other relief under any
Federal, state or foreign bankruptcy, insolvency, receivership or similar law
now or hereafter in effect, (ii) consent to the institution of, or fail to
contest in a timely and appropriate manner, any proceeding or petition
described in clause (h) of this Article, (iii) apply for or consent
to the appointment of a receiver, trustee, custodian, sequestrator, conservator
or similar official for the Borrower or any Restricted Subsidiary or for a
substantial part of its assets, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make
a general assignment for the benefit of creditors or (vi) take any action
for the purpose of effecting any of the foregoing;

 

76

 

(j)            the Borrower or any
Restricted Subsidiary shall become unable, admit in writing its inability or
fail generally to pay its debts as they become due;

 

(k)           one or more judgments
for the payment of money in an aggregate amount in excess of $5,000,000 shall
be rendered against the Borrower or any Restricted Subsidiary or any
combination thereof and the same shall remain undischarged for a period of
thirty (30) consecutive days during which execution shall not be effectively
stayed, or any action shall be legally taken by a judgment creditor to attach
or levy upon any assets of the Borrower or any Restricted Subsidiary to enforce
any such judgment;

 

(l)            an ERISA Event shall
have occurred that, in the opinion of the Majority Lenders, when taken together
with all other ERISA Events that have occurred, could reasonably be expected to
result in a Material Adverse Effect;

 

(m)          the delivery by any
Guarantor to the Administrative Agent of written notice that its Guarantee
under Article VIII has been revoked or is otherwise declared invalid or
unenforceable;

 

(n)           a Change of Control
shall occur;

 

then, and in every such event (other than an event with respect to the
Borrower or any Restricted Subsidiary described in clause (h) or (i) of
this Article), and at any time thereafter during the continuance of such event,
the Administrative Agent may, and at the request of the Majority Lenders shall,
by notice to the Borrower, take either or both of the following actions, at the
same or different times:  (i) terminate the Aggregate Commitment,
and thereupon the Aggregate Commitment shall terminate immediately, and (ii) declare
the Loans then outstanding to be due and payable in whole (or in part, in which
case any principal not so declared to be due and payable may thereafter be
declared to be due and payable), and thereupon the principal of the Loans so
declared to be due and payable, together with accrued interest thereon and all
fees and other obligations of the Borrower accrued hereunder, shall become due
and payable immediately, without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by the Borrower; and in case of any
event with respect to the Borrower described in clause (h) or (i) of
this Article, the Aggregate Commitment shall automatically terminate and the
principal of the Loans then outstanding, together with accrued interest thereon
and all fees and other obligations of the Borrower accrued hereunder, shall
automatically become due and payable, without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the Borrower.

 

Article X

The Administrative Agent

 

Each of the Lenders and
the Issuing Bank hereby irrevocably appoints the Administrative Agent as its
agent and authorizes the Administrative Agent to take such actions on its
behalf and to exercise such powers as are delegated to the Administrative Agent
by the terms hereof, together with such actions and powers as are reasonably
incidental thereto.

 

77

 

The bank serving as the
Administrative Agent hereunder shall have the same rights and powers in its
capacity as a Lender as any other Lender and may exercise the same as though it
were not the Administrative Agent, and such bank and its Affiliates may accept
deposits from, lend money to and generally engage in any kind of business with
any Credit Party or other Affiliate thereof as if it were not the
Administrative Agent hereunder.

 

The Administrative Agent
shall not have any duties or obligations except those expressly set forth
herein.  Without limiting the generality
of the foregoing, (a) the Administrative Agent shall not be subject to any
fiduciary or other implied duties, regardless of whether a Default has occurred
and is continuing, (b) the Administrative Agent shall not have any duty to
take any discretionary action or exercise any discretionary powers, except
discretionary rights and powers expressly contemplated hereby that the
Administrative Agent is required to exercise in writing as directed by the Majority
Lenders or the Required Lenders (or such other number or percentage of the
Lenders as shall be necessary under the circumstances as provided in Section 11.02),
and (c) except as expressly set forth herein, the Administrative Agent
shall not have any duty to disclose, and shall not be liable for the failure to
disclose, any information relating to any Credit Party that is communicated to
or obtained by the bank serving as Administrative Agent or any of its
Affiliates in any capacity.  The
Administrative Agent shall not be liable for any action taken or not taken by
it with the consent or at the request of the Majority Lenders or the Required
Lenders (or such other number or percentage of the Lenders as shall be necessary
under the circumstances as provided in Section 11.02) or in the absence of
its own gross negligence or willful misconduct. 
The Administrative Agent shall be deemed not to have knowledge of any
Default unless and until written notice thereof is given to the Administrative
Agent by the Borrower or a Lender, and the Administrative Agent shall not be
responsible for or have any duty to ascertain or inquire into (i) any
statement, warranty or representation made in or in connection with this
Agreement, (ii) the contents of any certificate, report or other document
delivered hereunder or in connection herewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth herein, (iv) the validity, enforceability, effectiveness or
genuineness of this Agreement or any other agreement, instrument or document,
or (v) the satisfaction of any condition set forth in Article V or
elsewhere herein, other than to confirm receipt of items expressly required to
be delivered to the Administrative Agent. 
None of the Syndication Agents, Documentation Agents or Managing Agents
shall have any responsibility or liabilities as an agent hereunder.

 

The Administrative Agent
shall be entitled to rely upon, and shall not incur any liability for relying
upon, any notice, request, certificate, consent, statement, instrument,
document or other writing believed by it to be genuine and to have been signed
or sent by the proper Person.  The
Administrative Agent also may rely upon any statement made to it orally or by
telephone and believed by it to be made by the proper Person, and shall not
incur any liability for relying thereon. 
The Administrative Agent may consult with legal counsel (who may be
counsel for the Borrower), independent accountants and other experts selected
by it, and shall not be liable for any action taken or not taken by it in
accordance with the advice of any such counsel, accountants or experts.

 

The Administrative Agent
may perform any and all its duties and exercise its rights and powers by or
through any one or more sub-agents appointed by the Administrative Agent.  The Administrative Agent and any such
sub-agent may perform any and all its duties and exercise its

 

78

 

rights and powers
through their respective Related Parties. 
The exculpatory provisions of the preceding paragraphs shall apply to
any such sub-agent and to the Related Parties of the Administrative Agent and
any such sub-agent, and shall apply to their respective activities in
connection with the syndication of the credit facilities provided for herein as
well as activities as Administrative Agent.

 

Subject to the
appointment and acceptance of a successor Administrative Agent as provided in
this paragraph, the Administrative Agent may resign at any time by notifying
the Lenders, the Issuing Bank and the Borrower. 
Upon any such resignation, the Majority Lenders shall have the right, in
consultation with the Borrower, to appoint a successor.  If no successor shall have been so appointed
by the Majority Lenders and shall have accepted such appointment within
30 days after the retiring Administrative Agent gives notice of its
resignation, then the retiring Administrative Agent may, on behalf of the
Lenders and the Issuing Bank, appoint a successor Administrative Agent which
shall be a bank with an office in Chicago, Illinois or New York, New York, or
an Affiliate of any such bank.  Upon the
acceptance of its appointment as Administrative Agent hereunder by a successor,
such successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder.  The fees payable by the
Borrower to a successor Administrative Agent shall be the same as those payable
to its predecessor unless otherwise agreed between the Borrower and such
successor.  After the Administrative
Agent’s resignation hereunder, the provisions of this Article and Section 11.03
shall continue in effect for the benefit of such retiring Administrative Agent,
its sub-agents and their respective Related Parties in respect of any actions
taken or omitted to be taken by any of them while it was acting as Administrative
Agent.

 

Each Lender acknowledges
that it has, independently and without reliance upon the Administrative Agent
or any other Lender and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into
this Agreement.  Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to make
its own decisions in taking or not taking action under or based upon this
Agreement, any related agreement or any document furnished hereunder or
thereunder.

 

Article XI

Miscellaneous

 

Section 11.01.        Notices.

 

(a)           Except in the case of
notices and other communications expressly permitted to be given by telephone
(and subject to paragraph (b) below), all notices and other communications
provided for herein shall be in writing and shall be delivered by hand or
overnight courier service, mailed by certified or registered mail or sent by
telecopy, as follows:

 

79

 

(i)            if to the Borrower, to
EXCO Partners Operating Partnership, LP, c/o EXCO Resources, Inc., 12377
Merit Drive, Suite 1700, Dallas, Texas 75251, Attention:  Douglas H. Miller, Chief Executive Officer
and Attention:  J. Douglas Ramsey,
Chief Financial Officer, Telecopy No. (214) 368-2087;

 

(ii)           if to the
Administrative Agent or Issuing Bank, to JPMorgan Chase Bank, N.A., JPMorgan
Loan Services, 21 South Clark St., 19th Floor, Chicago, Illinois 60603-2003,
Telecopy No.: (312) 385-7096, Attention: Claudia Kech, with a copy to JPMorgan
Chase Bank, N.A., 1717 Main Street, TX1-2448, Dallas, Texas 75201, Telecopy No. (214)
290-2332, Attention:  Wm. Mark Cranmer,
Senior Vice President;

 

(iii)          if to the Swingline
Lender, JPMorgan Chase Bank, N.A., JPMorgan Loan Services, 21 South Clark St.,
19th Floor, Chicago, Illinois 60603-2003, Telecopy No.: (312) 385-7096,
Attention: Claudia Kech, with a copy to JPMorgan Chase Bank, N.A., 1717
Main Street, Mail Code TX1-2448, Dallas, Texas 75201, Telecopy No. (214)
290-2332, Attention:  Wm. Mark Cranmer,
Senior Vice President; and

 

(iv)          if to any other Lender,
to it at its address (or telecopy number) set forth in its Administrative
Questionnaire.

 

(b)           Notices and other
communications to the Lenders hereunder may be delivered or furnished by
electronic communications pursuant to procedures approved by the Administrative
Agent; provided that the foregoing shall not apply to notices pursuant to Article II
unless otherwise agreed by the Administrative Agent and the applicable
Lender.  The Administrative Agent or the
Borrower may, in their discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it; provided that approval of such procedures may be
limited to particular notices or communications.

 

(c)           Any party hereto may
change its address or telecopy number for notices and other communications
hereunder by notice to the other parties hereto.  All notices and other communications given to
any party hereto in accordance with the provisions of this Agreement shall be
deemed to have been given on the date of receipt.

 

Section 11.02.        Waivers; Amendments.

 

(a)           No failure or delay by
the Administrative Agent, the Issuing Bank or any Lender in exercising any
right or power hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power.  The rights and remedies of the Administrative
Agent, the Issuing Bank and the Lenders hereunder are cumulative and are not
exclusive of any rights or remedies that they would otherwise have.  No waiver of any provision of this Agreement
or consent to any departure by the Borrower therefrom shall in any event be
effective unless the same shall be permitted by

 

80

 

paragraph (b) of this
Section, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given.  Without limiting the generality of the foregoing,
the making of a Loan or issuance of a Letter of Credit shall not be construed
as a waiver of any Default, regardless of whether the Administrative Agent, any
Lender or the Issuing Bank may have had notice or knowledge of such Default at
the time.

 

(b)           Neither this Agreement
nor any provision hereof may be waived, amended or modified except pursuant to
an agreement or agreements in writing entered into by the Credit Parties and
the Majority Lenders or by the Credit Parties and the Administrative Agent with
the consent of the Majority Lenders; provided
that no such agreement shall (1) increase the Borrowing Base without the
written consent of each Lender, (2) increase the Commitment of any Lender
without the written consent of such Lender, (3) reduce the principal
amount of any Loan or LC Disbursement or reduce the rate of interest thereon,
or reduce any fees payable hereunder, without the written consent of each
Lender affected thereby, (4) postpone the scheduled date of payment of the
principal amount of any Loan or LC Disbursement, or any interest thereon, or
any fees payable hereunder, or reduce the amount of, waive or excuse any such
payment, or postpone the scheduled date of expiration of the Aggregate Commitment,
without the written consent of each Lender affected thereby, (5) change Section 2.19(b) or
Section 2.19(c) in a manner that would alter the pro rata sharing of
payments required thereby, without the written consent of each Lender, (6) except
in connection with any sales, transfers, leases or other dispositions permitted
in Section 7.03, release any Credit Party from its obligations under the
Loan Documents or release any of the Collateral without the written consent of
each Lender, or (7) change any of the provisions of this section or
the definition of “Majority Lenders” or “Required Lenders” or any other
provision hereof specifying the number or percentage of Lenders required to
waive, amend or modify any rights hereunder or make any determination or grant
any consent hereunder, without the written consent of each Lender; provided  further
that no such agreement shall amend, modify or otherwise affect the rights or
duties of the Administrative Agent, the Issuing Bank or the Swingline Lender
hereunder without the prior written consent of the Administrative Agent, the
Issuing Bank or the Swingline Lender, as the case may be.  Notwithstanding anything to the contrary
herein, no Defaulting Lender shall have any right to approve or disapprove any
amendment, waiver or consent hereunder, except that the Commitment of such
Lender may not be increased or extended without the consent of such Lender.

 

Section 11.03.        Expenses; Indemnity; Damage Waiver.

 

(a)           The Borrower shall pay (i) all
reasonable out-of-pocket expenses incurred by the Administrative Agent and its
Affiliates, including the reasonable fees, charges and disbursements of counsel
for the Administrative Agent, in connection with the syndication of the credit
facilities provided for herein, the preparation and administration of this
Agreement and the other Loan Documents or any amendments, modifications or
waivers of the provisions hereof (whether or not the transactions contemplated
hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket
expenses incurred by the Issuing Bank in connection with the issuance,
amendment, renewal or extension of any

 

81

 

Letter of Credit or any demand
for payment thereunder and (iii) all out-of-pocket expenses incurred by
the Administrative Agent, the Issuing Bank or any Lender, including the fees,
charges and disbursements of any counsel for the Administrative Agent, the
Issuing Bank or any Lender, in connection with the enforcement or protection of
its rights in connection with the Loan Documents, including its rights under
this Section, or in connection with the Loans made or Letters of Credit issued
hereunder, including all such out-of-pocket expenses incurred during any
workout, restructuring or negotiations in respect of such Loans or Letters of
Credit.

 

(b)           THE CREDIT PARTIES
SHALL INDEMNIFY THE ADMINISTRATIVE AGENT, THE ISSUING BANK AND EACH LENDER, AND
EACH RELATED PARTY OF ANY OF THE FOREGOING PERSONS (EACH SUCH PERSON BEING
CALLED AN “INDEMNITEE”) AGAINST, AND HOLD EACH INDEMNITEE HARMLESS FROM,
ANY AND ALL LOSSES, CLAIMS, DAMAGES, PENALTIES, LIABILITIES AND RELATED
EXPENSES, INCLUDING THE FEES, CHARGES AND DISBURSEMENTS OF ANY COUNSEL FOR ANY
INDEMNITEE, INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE ARISING OUT OF, IN
CONNECTION WITH, OR AS A RESULT OF (I) THE EXECUTION OR DELIVERY OF THIS
AGREEMENT OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY, THE PERFORMANCE
BY THE PARTIES HERETO OF THEIR RESPECTIVE OBLIGATIONS HEREUNDER OR THE
CONSUMMATION OF THE TRANSACTIONS OR ANY OTHER TRANSACTIONS CONTEMPLATED HEREBY,
(II) ANY LOAN OR LETTER OF CREDIT OR THE USE OF THE PROCEEDS THEREFROM
(INCLUDING ANY REFUSAL BY THE ISSUING BANK TO HONOR A DEMAND FOR PAYMENT UNDER
A LETTER OF CREDIT IF THE DOCUMENTS PRESENTED IN CONNECTION WITH SUCH DEMAND DO
NOT STRICTLY COMPLY WITH THE TERMS OF SUCH LETTER OF CREDIT), (III) ANY
ACTUAL OR ALLEGED PRESENCE OR RELEASE OF HAZARDOUS MATERIALS ON OR FROM ANY
PROPERTY OWNED OR OPERATED BY THE BORROWER OR ANY SUBSIDIARY, OR ANY
ENVIRONMENTAL LIABILITY RELATED IN ANY WAY TO THE BORROWER OR ANY SUBSIDIARY,
OR (IV) ANY ACTUAL OR PROSPECTIVE CLAIM, LITIGATION, INVESTIGATION OR
PROCEEDING RELATING TO ANY OF THE FOREGOING, WHETHER BASED ON CONTRACT, TORT OR
ANY OTHER THEORY AND REGARDLESS OF WHETHER ANY INDEMNITEE IS A PARTY THERETO; PROVIDED THAT SUCH INDEMNITY SHALL NOT, AS
TO ANY INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH LOSSES, CLAIMS,
DAMAGES, LIABILITIES OR RELATED EXPENSES ARE DETERMINED BY A COURT OF COMPETENT
JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED FROM THE
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNITEE.

 

(c)           To the extent that any
Credit Party fails to pay any amount required to be paid by it to the
Administrative Agent, the Issuing Bank or the Swingline Lender under paragraph (a) or
(b) of this Section, each Lender severally agrees to pay to the
Administrative Agent, the Issuing Bank or the Swingline Lender, as the case may
be, such Lender’s Applicable Percentage of such unpaid amount with respect to
the amounts

 

82

 

to be paid to the Issuing Bank
or the Swingline Lender and such Lender’s Aggregate Applicable Percentage of
such unpaid amount with respect to amounts to be paid to the Administrative
Agent (in each case, determined as of the time that the applicable unreimbursed
expense or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed expense or
indemnified loss, claim, damage, liability or related expense, as the case may
be, was incurred by or asserted against the Administrative Agent, the Issuing
Bank or the Swingline Lender in its capacity as such.

 

(d)           TO THE MAXIMUM EXTENT
PERMITTED BY APPLICABLE LAW, THE CREDIT PARTIES SHALL NOT ASSERT, AND HEREBY
WAIVE, ANY CLAIM AGAINST ANY INDEMNITEE, ON ANY THEORY OF LIABILITY, FOR
SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES (AS OPPOSED TO DIRECT OR
ACTUAL DAMAGES) ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF, THIS
AGREEMENT OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY, THE TRANSACTIONS,
ANY LOAN OR LETTER OF CREDIT OR THE USE OF THE PROCEEDS THEREOF.

 

(e)           All amounts due under
this section shall be payable not later than ten (10) days after
written demand therefor.

 

Section 11.04.        Successors and Assigns.

 

(a)           The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby (including any
Affiliate of the Issuing Bank that issues any Letter of Credit), except that (i) no
Credit Party may assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Lender (and any attempted
assignment or transfer by such Credit Party without such consent shall be null
and void) and (ii) no Lender may assign or otherwise transfer its rights
or obligations hereunder except in accordance with this Section.  Nothing in this Agreement, expressed or
implied, shall be construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby (including any
Affiliate of the Issuing Bank that issues any Letter of Credit), Participants
(to the extent provided in paragraph (c) of this Section) and, to the
extent expressly contemplated hereby, the Related Parties of each of the
Administrative Agent, the Issuing Bank and the Lenders) any legal or equitable
right, remedy or claim under or by reason of this Agreement.

 

(b)

 

(i)            Subject to the
conditions set forth in paragraph (b)(ii) below, any Lender may assign to
one or more assignees all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitment and the Loans at the
time owing to it) with the prior written consent (such consent not to be
unreasonably withheld) of:

 

(A)          the Borrower, provided that no consent of the Borrower
shall be required for an assignment to a Lender, an Affiliate of a Lender, a

 

83

 

Federal Reserve Bank, an
Approved Fund or, if an Event of Default has occurred and is continuing, any
other assignee;

 

(B)           the Administrative Agent;

 

(C)           the Issuing Bank; and

 

(D)          the Swingline Lender.

 

(ii)           Assignments shall be
subject to the following additional conditions:

 

(A)          except in the case of an
assignment to a Lender, an Affiliate of a Lender, an Approved Fund or an
assignment of the entire remaining amount of the assigning Lender’s Commitment
or Loans, the amount of the Commitment or Loans of the assigning Lender subject
to each such assignment (determined as of the date the Assignment and
Assumption with respect to such assignment is delivered to the Administrative
Agent) shall not be less than $5,000,000, unless each of the Borrower and the
Administrative Agent otherwise consent, provided
that no such consent of the Borrower shall be required if an Event of Default
has occurred and is continuing;

 

(B)           each partial assignment
shall be made as an assignment of a proportionate part of all the assigning
Lender’s rights and obligations in respect of such Lender’s Commitment and such
Lender’s Loans under this Agreement;

 

(C)           the parties to each
assignment shall execute and deliver to the Administrative Agent an Assignment
and Assumption, together with a processing and recordation fee of $3,500; and

 

(D)          the assignee, if it
shall not be a Lender, shall deliver to the Administrative Agent an
Administrative Questionnaire.

 

For
the purposes of this Section 11.04(b), the term “Approved Fund” has
the following meaning:

 

“Approved Fund” means any Person (other than a natural person)
that is engaged in making, purchasing, holding or investing in bank loans and
similar extensions of credit in the ordinary course of its business and that is
administered or managed by (a) a Lender, (b) an Affiliate of a Lender
or (c) an entity or an Affiliate of an entity that administers or manages
a Lender.

 

(iii)          Subject to acceptance
and recording thereof pursuant to paragraph (b)(iv) of this Section,
from and after the effective date specified in each Assignment and Assumption
the assignee thereunder shall be a party hereto and, to the extent of the
interest assigned by such Assignment and Assumption,

 

84

 

have the rights and obligations
of a Lender under this Agreement, and the assigning Lender thereunder shall, to
the extent of the interest assigned by such Assignment and Assumption, be
released from its obligations under this Agreement (and, in the case of an
Assignment and Assumption covering all of the assigning Lender’s rights and
obligations under this Agreement, such Lender shall cease to be a party hereto
but shall continue to be entitled to the benefits of Section 2.16, Section 2.17,
Section 2.18 and Section 11.03). 
Any assignment or transfer by a Lender of rights or obligations under
this Agreement that does not comply with this Section 11.04 shall be
treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with paragraph (c) of
this section except that any attempted assignment or transfer by any
Lender that does not comply with clause (C) of Section 11.04(b)(ii) shall
be null and void.

 

(iv)          The Administrative
Agent, acting for this purpose as an agent of the Borrower, shall maintain at
one of its offices a copy of each Assignment and Assumption delivered to it and
a register for the recordation of the names and addresses of the Lenders, and
the Commitment and Applicable Percentage of, and principal amount of the Loans
and LC Disbursements owing to, each Lender pursuant to the terms hereof from
time to time (the “Register”). 
The entries in the Register shall be conclusive, and the Credit Parties,
the Administrative Agent, the Issuing Bank and the Lenders may treat each
Person whose name is recorded in the Register pursuant to the terms hereof as a
Lender hereunder for all purposes of this Agreement, notwithstanding notice to
the contrary.  The Register shall be
available for inspection by the Credit Parties, the Issuing Bank and any Lender,
at any reasonable time and from time to time upon reasonable prior notice.

 

(v)           Upon its receipt of a
duly completed Assignment and Assumption executed by an assigning Lender and an
assignee, the assignee’s completed Administrative Questionnaire (unless the
assignee shall already be a Lender hereunder), the processing and recordation
fee referred to in paragraph (b) of this section any written
consent to such assignment required by paragraph (b) of this section, the
Administrative Agent shall accept such Assignment and Assumption and record the
information contained therein in the Register; provided
that if either the assigning Lender or the assignee shall have failed to make
any payment required to be made by it pursuant to Section 2.07(d) or Section 2.07(e),
Section 2.08, Section 2.19(d) or Section 11.03(c), the
Administrative Agent shall have no obligation to accept such Assignment and
Assumption and record the information therein in the Register unless and until
such payment shall have been made in full, together with all accrued interest
thereon.  No assignment shall be
effective for purposes of this Agreement unless it has been recorded in the
Register as provided in this paragraph.

 

(c)

 

(i)            Any Lender may,
without the consent of the Borrower, the Administrative Agent or the Issuing Bank,
sell participations to one or more

 

85

 

banks or other entities (a “Participant”)
in all or a portion of such Lender’s rights and obligations under this
Agreement (including all or a portion of its Commitment and the Loans owing to
it); provided that (A) such Lender’s
obligations under this Agreement shall remain unchanged, (B) such Lender
shall remain solely responsible to the other parties hereto for the performance
of such obligations and (C) the Borrower, the Administrative Agent, the
Issuing Bank and the other Lenders shall continue to deal solely and directly
with such Lender in connection with such Lender’s rights and obligations under
this Agreement.  Any agreement or
instrument pursuant to which a Lender sells such a participation shall provide
that such Lender shall retain the sole right to enforce this Agreement and to
approve any amendment, modification or waiver of any provision of this
Agreement; provided that such agreement or
instrument may provide that such Lender will not, without the consent of the
Participant, agree to any amendment, modification or waiver described in the
first proviso to Section 11.02(b) that affects such Participant.  Subject to paragraph (c)(ii) of this
Section, the Borrower agrees that each Participant shall be entitled to the
benefits of Section 2.16, Section 2.17 and Section 2.18 to the
same extent as if it were a Lender and had acquired its interest by assignment
pursuant to paragraph (b) of this Section.  To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 11.08 as
though it were a Lender, provided such Participant agrees to be subject to Section 2.19(c) as
though it were a Lender.

 

(ii)           A Participant shall not
be entitled to receive any greater payment under Section 2.16 or Section 2.18
than the applicable Lender would have been entitled to receive with respect to
the participation sold to such Participant, unless the sale of the
participation to such Participant is made with the prior written consent of the
Borrower.  A Participant that would be a
Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 2.18
unless the Borrower is notified of the participation sold to such Participant
and such Participant agrees, for the benefit of the Borrower, to comply with Section 2.18(e) as
though it were a Lender.

 

(d)           Any Lender may at any
time pledge or assign a security interest in all or any portion of its rights
under this Agreement to secure obligations of such Lender, including without
limitation any pledge or assignment to secure obligations to a Federal Reserve
Bank, and this section shall not apply to any such pledge or assignment of
a security interest; provided that
no such pledge or assignment of a security interest shall release a Lender from
any of its obligations hereunder or substitute any such pledgee or assignee for
such Lender as a party hereto.

 

Section 11.05.        Survival.  All covenants, agreements, representations
and warranties made by the Credit Parties herein and in the certificates or
other instruments delivered in connection with or pursuant to this Agreement
shall be considered to have been relied upon by the other parties hereto and
shall survive the execution and delivery of this Agreement and the making of
any Loans and issuance of any Letters of Credit, regardless of any
investigation made by any such other party or on its behalf and notwithstanding
that the Administrative Agent, the Issuing Bank or any Lender may have had notice
or knowledge of any Default or incorrect

 

86

 

representation
or warranty at the time any credit is extended hereunder, and shall continue in
full force and effect as long as the principal of or any accrued interest on
any Loan or any fee or any other amount payable under this Agreement is
outstanding and unpaid or any Letter of Credit is outstanding and so long as
the Aggregate Commitment has not expired or terminated.  The provisions of Section 2.16, Section 2.17,
Section 2.18 and Section 11.03 and Article X shall survive and
remain in full force and effect regardless of the consummation of the
transactions contemplated hereby, the repayment of the Loans, the expiration or
termination of the Letters of Credit and the Aggregate Commitment or the
termination of this Agreement or any provision hereof.

 

Section 11.06.        Counterparts; Integration; Effectiveness.  This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract.  This
Agreement and any separate letter agreements with respect to fees payable to
the Administrative Agent constitute the entire contract among the parties
relating to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof.  THIS WRITTEN
CREDIT AND GUARANTY AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES.  Except
as provided in Section 5.01, this Agreement shall become effective when it
shall have been executed by the Administrative Agent and when the
Administrative Agent shall have received counterparts hereof which, when taken
together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. 
Delivery of an executed counterpart of a signature page of this
Agreement by telecopy shall be effective as delivery of a manually executed
counterpart of this Agreement.

 

Section 11.07.        Severability.  Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

 

Section 11.08.        Right of Setoff.  If an Event of Default shall have occurred
and be continuing, each Lender and each of its Affiliates is hereby authorized
at any time and from time to time, to the fullest extent permitted by law, to
set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other obligations at any time owing
by such Lender or Affiliate to or for the credit or the account of the Borrower
against any of and all the obligations of any Credit Party now or hereafter
existing under this Agreement held by such Lender, irrespective of whether or
not such Lender shall have made any demand under this Agreement and although
such obligations may be unmatured.  The
rights of each Lender under this Section and Section 8.08 are in
addition to other rights and remedies (including other rights of setoff) which
such Lender may have.

 

87

 

Section 11.09.        GOVERNING LAW; JURISDICTION; CONSENT TO
SERVICE OF PROCESS.

 

(a)           THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK.

 

(b)           EACH CREDIT PARTY
HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO
THE NONEXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK  STATE COURT SITTING IN NEW YORK, NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR FOR RECOGNITION OR
ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR, TO THE
EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. 
EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH
ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY
LAW.  NOTHING IN THIS AGREEMENT SHALL
AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT, THE ISSUING BANK OR ANY LENDER MAY OTHERWISE
HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AGAINST ANY
CREDIT PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

 

(c)           EACH CREDIT PARTY
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY
AND EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO
THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF
THIS SECTION.  EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE
OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY
SUCH COURT.

 

(d)           EACH PARTY TO THIS
AGREEMENT IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR
NOTICES IN Section 11.01.  NOTHING
IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

 

Section 11.10.        WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT,

 

88

 

TORT OR ANY
OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT
IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT
BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

Section 11.11.        Headings.  Article and Section headings and
the Table of Contents used herein are for convenience of reference only, are
not part of this Agreement and shall not affect the construction of, or be
taken into consideration in interpreting, this Agreement.

 

Section 11.12.        Confidentiality.  Each of the Administrative Agent, the Issuing
Bank and the Lenders agrees to maintain the confidentiality of the Information
(as defined below), except that Information may be disclosed (a) to its
and its Affiliates’ directors, officers, employees and agents, including
accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority or
any self-regulatory authority or agency possessing investigative powers and the
ability to sanction members for non-compliance, (c) to the extent required
by applicable laws or regulations or by any subpoena or similar legal process, (d) to
any other party to this Agreement, (e) in connection with the exercise of
any remedies hereunder or any suit, action or proceeding relating to this
Agreement or the enforcement of rights hereunder, (f) subject to an
agreement containing provisions substantially the same as, or otherwise
consistent with, those of this Section, to (i) any assignee of or
Participant in, or any prospective assignee of or Participant in, any of its
rights or obligations under this Agreement or (ii) any actual or
prospective counterparty (or its advisors) to any swap or derivative
transaction relating to the Credit Parties and their obligations, (g) with
the consent of the Borrower or (h) to the extent such Information (i) becomes
publicly available other than as a result of a breach of this Section or (ii) becomes
available to the Administrative Agent, the Issuing Bank or any Lender on a
nonconfidential basis from a source other than a Credit Party.  For the purposes of this Section, “Information”
means all information received from any Credit Party relating to any Credit
Party or its business, other than any such information that is available to the
Administrative Agent, the Issuing Bank or any Lender on a nonconfidential basis
prior to disclosure by any Credit Party; provided that,
in the case of information received from any Credit Party after the date
hereof, such information is clearly identified at the time of delivery as
confidential.  Any Person required to
maintain the confidentiality of Information as provided in this Section shall
be considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.

 

Section 11.13.        Interest Rate Limitation.  Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Loan, together
with all fees, charges and other amounts which are treated as interest on such
Loan under applicable law (collectively the “Charges”), shall exceed the
maximum lawful rate (the “Maximum Rate”) which may be contracted for,
charged, taken, received or reserved by the Lender holding such Loan in
accordance with applicable law, the rate of interest payable in respect of such
Loan hereunder,

 

89

 

together with
all Charges payable in respect thereof, shall be limited to the Maximum Rate
and, to the extent lawful, the interest and Charges that would have been
payable in respect of such Loan but were not payable as a result of the
operation of this section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.  Chapter 346 of the Texas Finance Code (which
regulates certain revolving credit accounts (formerly TEX. REV. CIV. STAT. ANN.
Art. 5069, Ch. 15)) shall not apply to this Agreement or to any Loan, nor
shall this Agreement or any Loan be governed by or be subject to the provisions
of such Chapter 346 in any manner whatsoever.

 

Section 11.14.        USA PATRIOT Act.  Each Lender that is subject to the
requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into
law October 26, 2001)) (the “Act”) hereby notifies each Credit
Party that pursuant to the requirements of the Act, it is required to obtain,
verify and record information that identifies each Credit Party, which
information includes the name and address of each Credit Party and other
information that will allow such Lender to identify each Credit Party in
accordance with the Act.  The Borrower
shall, upon the request of the Administrative Agent or any Lender, provide all
documentation and other information that the Administrative Agent or such Lender
reasonably requires to comply with its ongoing obligations under applicable “know
your customer” and anti-money laundering rules and regulations, including
the Act.

 

Section 11.15.        Original Credit Agreement.  Upon the Effective Date, this Agreement shall
supersede and replace in its entirety the Original Credit Agreement; provided, however,
that (a) all loans, letters of credit, and other indebtedness, obligations
and liabilities outstanding under the Original Credit Agreement on such date
shall continue to constitute Loans, Letters of Credit and other indebtedness,
obligations and liabilities under this Agreement, (b) the execution and
delivery of this Agreement or any of the Loan Documents hereunder shall not
constitute a novation, refinancing or any other fundamental change in the
relationship among the parties and (c) the Loans, Letters of Credit, and
other indebtedness, obligations and liabilities outstanding hereunder, to the
extent outstanding under the Original Credit Agreement immediately prior to the
date hereof, shall constitute the same loans, letters of credit, and other
indebtedness, obligations and liabilities as were outstanding under the Original
Credit Agreement.

 

Section 11.16.        Reaffirmation and Grant of Security Interest.  Each Credit Party hereby (i) confirms
that each Security Instrument (as defined in the Original Credit Agreement) to
which it is a party or is otherwise bound and all Collateral encumbered
thereby, will continue to guarantee or secure, as the case may be, to the
fullest extent possible in accordance with the Loan Documents, the payment and
performance of all Obligations and Guaranteed Liabilities under this Agreement
and the Secured Obligations (as such term is defined in the Security
Instruments) under the Security Instruments, as the case may be, including
without limitation the payment and performance of all such Obligations and
Guaranteed Liabilities under this Agreement and the Secured Obligations under
the Security Instruments, and (ii) reaffirms its grant to the Administrative
Agent for the benefit of the Secured Parties of a continuing Lien on and
security interest in and to such Credit Party’s right, title and interest in,
to and under all Collateral as collateral security for the prompt payment and
performance in full when due of the Obligations and Guaranteed Liabilities
under this Agreement and the Secured Obligations under

 

90

 

the Security
Instruments (whether at stated maturity, by acceleration or otherwise) in
accordance with the terms thereof.

 

Section 11.17.        Reallocation of Aggregate Commitment.  The Lenders (as defined in the Original
Credit Agreement) have agreed among themselves to reallocate the Aggregate Commitment
(as defined in the Original Credit Agreement) as contemplated by this Agreement
and to adjust their interests in the Aggregate Commitment and the Revolving Loans
(as defined in the Original Credit Agreement) accordingly.  On the Effective Date and after giving effect
to such reallocation and adjustment of such Commitment and such Loans, the Lenders
shall own the Applicable Percentages set forth on Schedule 2.01.  The outstanding Revolving Loans (as defined
in the Original Credit Agreement) and the funds delivered to the Administrative
Agent on the Effective Date by the Lenders shall be allocated such that after
giving effect to such allocation each of the Lenders shall own the Applicable
Percentages of the Aggregate Commitment and the Commitments set forth on Schedule 2.01
and such Lenders shall own the Loans consistent with the Applicable Percentages
set forth on Schedule 2.01.  The
Borrower shall pay any funding indemnification amounts required by Section 2.17
of the Original Credit Agreement in the event the payment of any principal of
any Eurodollar Loan or the conversion of any Eurodollar Loan other than on the
last day of an Interest Period applicable thereto is required in connection
with the reallocation contemplated by this Section 11.17.

 

91

 

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

 

 

	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  EXCO
  PARTNERS OPERATING PARTNERSHIP, LP

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  EXCO Partners OLP GP, LLC

  
	
   

  	
   

  	
  its sole general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ J. Douglas Ramsey, Ph.D.

  	
   

  
	
   

  	
   

  	
  Name:

  	
  J. Douglas
  Ramsey, Ph.D.

  
	
   

  	
   

  	
  Title:

  	
  Vice
  President and Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GUARANTORS:

  
	
   

  	
   

  
	
   

  	
  TXOK
  ENERGY RESOURCES HOLDINGS,

  
	
   

  	
  L.L.C.

  
	
   

  	
  TXOK
  TEXAS ENERGY HOLDINGS, LLC

  
	
   

  	
  GARRISON
  GATHERING, LLC

  
	
   

  	
  VAUGHAN
  DE, LLC

  
	
   

  	
  VAUGHAN
  HOLDING COMPANY, LLC

  
	
   

  	
  VERNON
  GATHERING, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ J.
  Douglas Ramsey, Ph.D.

  	
   

  
	
   

  	
  Name:

  	
  J. Douglas
  Ramsey, Ph.D.

  
	
   

  	
  Title:

  	
  Vice
  President and Chief Financial Officer

  
	
   

  	
   

  	
  for each of the
  Credit Parties listed above

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WINCHESTER
  ENERGY COMPANY , LP

  
	
   

  	
  (as
  successor to Winchester Acquisition, LLC)

  
	
   

  	
   

  
	
   

  	
  By:

  	
  TXOK Texas Energy Holdings, LLC,

  
	
   

  	
   

  	
  as general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ J. Douglas Ramsey, Ph.D.

  	
   

  
	
   

  	
   

  	
  Name:

  	
  J. Douglas
  Ramsey, Ph.D.

  
	
   

  	
   

  	
  Title:

  	
  Vice
  President and Chief Financial

  
	
   

  	
   

  	
   

  	
  Officer

  
								

 

 

EPOP Amended and Restated
Credit Agreement – Signature Page

 

 

	
   

  	
  TXOK
  TEXAS ENERGY RESOURCES, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  TXOK Texas Energy Holdings, LLC,

  
	
   

  	
   

  	
  as general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ J. Douglas Ramsey, Ph.D.

  	
   

  
	
   

  	
   

  	
  Name:

  	
  J. Douglas
  Ramsey, Ph.D.

  
	
   

  	
   

  	
  Title:

  	
  Vice
  President and Chief Financial

  
	
   

  	
   

  	
   

  	
  Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ROJO
  PIPELINE, LP

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  TXOK Texas Energy Holdings, LLC,

  
	
   

  	
   

  	
  its sole general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ J. Douglas Ramsey, Ph.D.

  	
   

  
	
   

  	
   

  	
  Name:

  	
  J. Douglas
  Ramsey, Ph.D.

  
	
   

  	
   

  	
  Title:

  	
  Vice
  President and Chief Financial

  
	
   

  	
   

  	
   

  	
  Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  TALCO
  MIDSTREAM ASSETS, LTD.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  VAUGHAN HOLDING COMPANY, LLC.

  
	
   

  	
   

  	
  its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ J. Douglas Ramsey, Ph.D.

  	
   

  
	
   

  	
   

  	
  Name:

  	
  J. Douglas
  Ramsey, Ph.D.

  
	
   

  	
   

  	
  Title:

  	
  Vice
  President and Chief Financial

  
	
   

  	
   

  	
   

  	
  Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  TGG
  PIPELINE, LTD.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  VAUGHAN HOLDING COMPANY, LLC,

  
	
   

  	
  its General
  Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ J. Douglas Ramsey, Ph.D.

  	
   

  
	
   

  	
  Name:

  	
  J. Douglas
  Ramsey, Ph.D.

  
	
   

  	
  Title:

  	
  Vice
  President and Chief Financial Officer

  
								

 

 

EPOP Amended and Restated
Credit Agreement – Signature Page

 

 

	
   

  	
  WINCHESTER
  PRODUCTION COMPANY,

  
	
   

  	
  LTD.,
  a Texas limited partnership

  
	
   

  	
   

  
	
   

  	
  By:

  	
  VAUGHAN HOLDING COMPANY, LLC,

  
	
   

  	
  Its General
  Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ J. Douglas Ramsey, Ph.D.

  	
   

  
	
   

  	
  Name:

  	
  J. Douglas
  Ramsey, Ph.D.

  
	
   

  	
  Title:

  	
  Vice
  President and Chief Financial Officer

  
						

 

 

EPOP Amended and Restated
Credit Agreement – Signature Page

 

 

	
   

  	
  JPMORGAN
  CHASE BANK, N.A.,

  
	
   

  	
  as a Lender
  and as Administrative Agent,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Wm. Mark Cranmer

  	
   

  
	
   

  	
  Name:

  	
  Wm. Mark
  Cranmer

  
	
   

  	
  Title:

  	
  Senior Vice
  President

  
					

 

 

EPOP Amended and Restated
Credit Agreement – Signature Page

 

 

	
   

  	
  WACHOVIA
  BANK, NATIONAL ASSOCIATION

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Chris Hewitt

  	
   

  
	
   

  	
  Name:

  	
  Chris Hewitt

  
	
   

  	
  Title:

  	
  Vice
  President

  
					

 

 

EPOP Amended and Restated
Credit Agreement – Signature Page

 

 

	
   

  	
  WELLS
  FARGO BANK, N.A.

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jason Hicks

  	
   

  
	
   

  	
  Name:

  	
  Jason Hicks

  
	
   

  	
  Title:

  	
  Portfolio
  Manager

  
					

 

 

EPOP Amended and Restated
Credit Agreement – Signature Page

 

 

	
   

  	
  WESTLB
  AG, NEW YORK BRANCH

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Duncan Robertson

  	
   

  
	
   

  	
  Name:

  	
  Duncan
  Robertson

  
	
   

  	
  Title:

  	
  Executive
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas D. Murray

  	
   

  
	
   

  	
  Name:

  	
  Thomas D.
  Murray

  
	
   

  	
  Title:

  	
  Managing
  Director

  
					

 

 

EPOP Amended and Restated Credit
Agreement – Signature Page

 

 

 

	
   

  	
  BMO
  CAPITAL MARKETS FINANCING, INC.

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James V. Ducate

  	
   

  
	
   

  	
  Name:

  	
  James V.
  Ducate

  
	
   

  	
  Title:

  	
  Director

  
					

 

 

EPOP Amended and Restated
Credit Agreement – Signature Page

 

 

 

	
   

  	
  BANK OF
  SCOTLAND

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Karen Weich

  	
   

  
	
   

  	
  Name:

  	
  Karen Weich

  
	
   

  	
  Title:

  	
  Vice
  President

  
					

 

 

EPOP Amended and Restated
Credit Agreement – Signature Page

 

 

 

	
   

  	
  CITIBANK,
  N.A.

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Angela McCracken

  	
   

  
	
   

  	
  Name:

  	
  Angela
  McCracken

  
	
   

  	
  Title:

  	
  Vice President

  
					

 

 

EPOP Amended and Restated
Credit Agreement – Signature Page

 

 

 

	
   

  	
  ALLIED
  IRISH BANKS, P.L.C.

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David O'Driscoll

  	
   

  
	
   

  	
  Name:

  	
  David
  O'Driscoll

  
	
   

  	
  Title:

  	
  Assistant
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Aidan Lanigan

  	
   

  
	
   

  	
  Name:

  	
  Aidan Lanigan

  
	
   

  	
  Title:

  	
  Vice
  President

  
					

 

 

EPOP Amended and Restated
Credit Agreement – Signature Page

 

 

 

	
   

  	
  DE BANK AG DEUTSCHE

  CENTRAL GENOSSENSCHAFTS BANK

  FRANKFURT AN MAIN, NEW YORK BRANCH

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard L. Hagemann

  	
   

  
	
   

  	
  Name:

  	
  Richard L.
  Hagemann

  
	
   

  	
  Title:

  	
  Vice
  President

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Judson Horn

  	
   

  
	
   

  	
  Name:

  	
  Judson Horn

  
	
   

  	
  Title:

  	
  Assistant
  Treasures

  
					

 

 

EPOP Amended and Restated
Credit Agreement – Signature Page

 

 

 

	
   

  	
  DEUTSCHE
  BANK TRUST COMPANY AMERICAS

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Evelyn Thierry

  	
   

  
	
   

  	
  Name:

  	
  Evelyn
  Thierry

  
	
   

  	
  Title:

  	
  Vice
  President

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Marguerite Sutton

  	
   

  
	
   

  	
  Name:

  	
  Marguerite
  Sutton

  
	
   

  	
  Title:

  	
  Director

  
					

 

 

EPOP Amended and Restated
Credit Agreement – Signature Page

 

 

 

	
   

  	
  CALYON
  NEW YORK BRANCH

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael D. Willis

  	
   

  
	
   

  	
  Name:

  	
  Michael D.
  Willis

  
	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Tom Byargeon

  	
   

  
	
   

  	
  Name:

  	
  Tom Byargeon

  
	
   

  	
  Title:

  	
  Managing
  Director

  
					

 

 

EPOP Amended and Restated
Credit Agreement – Signature Page

 

 

 

	
   

  	
  U.S.
  BANK NATIONAL ASSOCIATION

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Daria Mahoney

  	
   

  
	
   

  	
  Name:

  	
  Daria
  Mahoney

  
	
   

  	
  Title:

  	
  Vice
  President

  
					

 

 

EPOP Amended and Restated
Credit Agreement – Signature Page

 

 

 

	
   

  	
  COMERICA
  BANK

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter L. Sefzik

  	
   

  
	
   

  	
  Name:

  	
  Peter L.
  Sefzik

  
	
   

  	
  Title:

  	
  Vice
  President

  
					

 

 

EPOP Amended and Restated
Credit Agreement – Signature Page

 

 

 

	
   

  	
  FORTIS
  CAPITAL CORP.

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michele Jones

  	
   

  
	
   

  	
  Name:

  	
  Michele
  Jones

  
	
   

  	
  Title:

  	
  Senior Vice
  President

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Darrell Holley

  	
   

  
	
   

  	
  Name:

  	
  Darrell
  Holley

  
	
   

  	
  Title:

  	
  Managing
  Director

  
					

 

 

EPOP Amended and Restated
Credit Agreement – Signature Page

 

 

 

	
   

  	
  BANK OF
  AMERICA

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jeffrey H. Rathkamp

  	
   

  
	
   

  	
  Name:

  	
  Jeffrey H.
  Rathkamp

  
	
   

  	
  Title:

  	
  Managing
  Director

  
					

 

 

EPOP Amended and Restated
Credit Agreement – Signature Page

 

 

 

	
   

  	
  SUMITOMO
  MITSUI BANKING CORPORATION

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William N. Ginn

  	
   

  
	
   

  	
  Name:

  	
  William N.
  Ginn

  
	
   

  	
  Title:

  	
  General
  Manager

  
					

 

 

EPOP Amended and Restated
Credit Agreement – Signature Page

 

 

 

	
   

  	
  URS LOAN
  FINANCE LLC

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mary E. Evans

  	
   

  
	
   

  	
  Name:

  	
  Mary E.
  Evans

  
	
   

  	
  Title:

  	
  Associate
  Director Banking Products Services, US

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David B. Julie

  	
   

  
	
   

  	
  Name:

  	
  David B.
  Julie

  
	
   

  	
  Title:

  	
  Associate
  Director Banking Products Services, US

  
					

 

 

EPOP Amended and Restated
Credit Agreement – Signature Page

 

 

 

	
   

  	
  TORONTO
  DOMINION (TEXAS) LLC

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jackie Barrett

  	
   

  
	
   

  	
  Name:

  	
  Jackie
  Barrett

  
	
   

  	
  Title:

  	
  Authorized
  Signatory

  
					

 

 

EPOP Amended and Restated
Credit Agreement – Signature Page

 

 

 

	
   

  	
  CREDIT
  SUISSE, CAYMAN ISLANDS BRANCH

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Vanessa Gomez

  	
   

  
	
   

  	
  Name:

  	
  Vanessa
  Gomez

  
	
   

  	
  Title:

  	
  Vice
  President

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Shaheen Malik

  	
   

  
	
   

  	
  Name:

  	
  Shaheen
  Malik

  
	
   

  	
  Title:

  	
  Associate

  
					

 

 

EPOP Amended and Restated
Credit Agreement – Signature Page

 

 

 

	
   

  	
  LEHMAN
  BROTHERS COMMERCIAL BANK

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brian McNany

  	
   

  
	
   

  	
  Name:

  	
  Brian McNany

  
	
   

  	
  Title:

  	
  Authorized
  Signatory

  
					

 

 

EPOP Amended and Restated
Credit Agreement – Signature Page

 

 

 

	
   

  	
  BNP
  PARIBAS

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Betsy Jocher

  	
   

  
	
   

  	
  Name:

  	
  Betsy Jocher

  
	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Polly Schott

  	
   

  
	
   

  	
  Name:

  	
  Polly Schott

  
	
   

  	
  Title:

  	
  Vice
  President

  
					

 

 

EPOP Amended and Restated
Credit Agreement – Signature Page

 

 

 

	
   

  	
  KEYBANK
  N.A.

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas Rajan

  	
   

  
	
   

  	
  Name:

  	
  Thomas Rajan

  
	
   

  	
  Title:

  	
  Senior Vice
  President

  
					

 

 

EPOP Amended and Restated
Credit Agreement – Signature Page

 

 

 

	
   

  	
  MORGAN
  STANLEY SENIOR FUNDING, INC.

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Daniel Twenge

  	
   

  
	
   

  	
  Name:

  	
  Daniel Twenge

  
	
   

  	
  Title:

  	
  Authorized
  Signatory

  Morgan Stanley Bank

  
					

 

 

EPOP Amended and Restated
Credit Agreement – Signature Page

 

 

 

	
   

  	
  NATAXIS

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Donovan C. Broussard

  	
   

  
	
   

  	
  Name:

  	
  Donovan C.
  Broussard

  
	
   

  	
  Title:

  	
  Managing
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Renaud d' Herbes

  	
   

  
	
   

  	
  Name:

  	
  Renaud d'
  Herbes

  
	
   

  	
  Title:

  	
  Senior
  Managing Director

  
					

 

 

EPOP Amended and Restated
Credit Agreement – Signature Page

 

 

 

	
   

  	
  ROYAL
  BANK OF CANADA

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Don J. McKinnerney

  	
   

  
	
   

  	
  Name:

  	
  Don J. McKinnerney

  
	
   

  	
  Title:

  	
  Authorized
  Signatory

  
					

 

 

EPOP Amended and Restated
Credit Agreement – Signature Page

 

 

 

	
   

  	
  THE ROYAL
  BANK OF SCOTLAND

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Scott L. Joyce

  	
   

  
	
   

  	
  Name:

  	
  Scott L.
  Joyce

  
	
   

  	
  Title:

  	
  Vice
  President

  
					

 

 

EPOP Amended and Restated
Credit Agreement – Signature Page

 

 

 

	
   

  	
  SOCIETE
  GENERALE

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Christian Nelly

  	
   

  
	
   

  	
  Name:

  	
  Christian
  Nelly

  
	
   

  	
  Title:

  	
  Vice
  President

  
					

 

 

EPOP Amended and Restated
Credit Agreement – Signature Page

 

 

 

	
   

  	
  STERLINE
  BANK

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jeff A. Forbis

  	
   

  
	
   

  	
  Name:

  	
  Jeff A.
  Forbis

  
	
   

  	
  Title:

  	
  Senior Vice
  President

  
					

 

 

EPOP Amended and Restated
Credit Agreement – Signature Page

 

 

 

	
   

  	
  SUNTRUST
  BANK

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Sean Roche

  	
   

  
	
   

  	
  Name:

  	
  Sean Roche

  
	
   

  	
  Title:

  	
  Vice
  President

  
					

 

 

EPOP Amended and Restated
Credit Agreement – Signature Page

 

 

 

	
   

  	
  UNION
  BANK OF CALIFORNIA

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jarrod Bourgeois

  	
   

  
	
   

  	
  Name:

  	
  Jarrod
  Bourgeois

  
	
   

  	
  Title:

  	
  Vice
  President

  
					

 

 

EPOP Amended and Restated
Credit Agreement – Signature Page

 

 

 

	
   

  	
  THE BANK
  OF NOVA SCOTIA

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard Hawthorne

  	
   

  
	
   

  	
  Name:

  	
  Richard
  Hawthorne

  
	
   

  	
  Title:

  	
  Director

  
					

 

 

EPOP Amended and Restated
Credit Agreement – Signature Page

 

 

EXHIBIT A

 

ASSIGNMENT AND
ASSUMPTION

 

This Assignment and
Assumption (the “Assignment and Assumption”) is dated as of the
Effective Date set forth below and is entered into by and between [Insert name
of Assignor] (the “Assignor”) and [Insert name of Assignee] (the “Assignee”).  Capitalized terms used but not defined herein
shall have the meanings given to them in the Amended and Restated Credit
Agreement identified below (as amended, the “Credit Agreement”), receipt
of a copy of which is hereby acknowledged by the Assignee.  The Standard Terms and Conditions set forth
in Annex 1 attached hereto are hereby agreed to and incorporated herein by
reference and made a part of this Assignment and Assumption as if set forth
herein in full.

 

For an agreed
consideration, the Assignor hereby irrevocably sells and assigns to the
Assignee, and the Assignee hereby irrevocably purchases and assumes from the
Assignor, subject to and in accordance with the Standard Terms and Conditions
and the Credit Agreement, as of the Effective Date inserted by the
Administrative Agent as contemplated below (i) all of the Assignor’s
rights and obligations in its capacity as a Lender under the Credit Agreement
and any other documents or instruments delivered pursuant thereto to the extent
related to the amount and percentage interest identified below of all of such
outstanding rights and obligations of the Assignor under the respective
facilities identified below (including any letters of credit, guarantees and
swingline loans included in such facilities) and (ii) to the extent
permitted to be assigned under applicable law, all claims, suits, causes of
action and any other right of the Assignor (in its capacity as a Lender) against
any Person, whether known or unknown, arising under or in connection with the
Credit Agreement, any other documents or instruments delivered pursuant thereto
or the loan transactions governed thereby or in any way based on or related to
any of the foregoing, including contract claims, tort claims, malpractice
claims, statutory claims and all other claims at law or in equity related to
the rights and obligations sold and assigned pursuant to clause (i) above
(the rights and obligations sold and assigned pursuant to clauses (i) and (ii) above
being referred to herein collectively as the “Assigned Interest”).  Such sale and assignment is without recourse
to the Assignor and, except as expressly provided in this Assignment and
Assumption, without representation or warranty by the Assignor.

 

	
  1.

  	
  Assignor:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  2.

  	
  Assignee:

  	
   

  	
   

  
	
   

  	
   

  	
  [and is an Affiliate/Approved
  Fund of [identify Lender]]

  
	
   

  	
   

  	
   

  
	
  3.

  	
  Borrower(s):

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  4.

  	
  Administrative Agent:

  	
  JPMorgan Chase Bank, N.A. (as
  the administrative agent under the Credit Agreement)

  
	
   

  	
   

  	
   

  
	
  5.

  	
  Credit Agreement:

  	
  Amended and Restated Credit
  Agreement dated as of March 30, 2007 among EXCO Partners Operating
  Partnership, LP, as Borrower, Certain Subsidiaries of Borrower, as
  Guarantors, the Lenders parties thereto, and JPMorgan Chase Bank, N.A., as
  Administrative Agent

  

 

A-1

 

	
  6.

  	
  Assigned Interest:

  	
   

  

 

	
  Facility Assigned

  	
   

  	
  Aggregate

  Commitment/Loans

  for all Lenders

  	
   

  	
  Amount of

  Commitment/Loans

  Assigned

  	
   

  	
  Applicable

  Percentage of

  Commitment/Loans

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Commitment

  	
   

  	
  $

  	
   

  	
  $

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
  $

  	
   

  	
  $

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
  $

  	
   

  	
  $

  	
   

  	
   

  	
  %

  

 

Effective Date:                        
      , 20    

 

The terms set forth in
this Assignment and Assumption are hereby agreed to:

 

 

	
   

  	
  ASSIGNOR

  
	
   

  	
   

  
	
   

  	
  [NAME OF
  ASSIGNOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ASSIGNEE

  
	
   

  	
   

  
	
   

  	
  [NAME OF
  ASSIGNEE]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  

 

A-2

 

	
  [Consented to and] Accepted:

  	
   

  
	
   

  	
   

  
	
  JPMORGAN
  CHASE BANK, N.A.,

  	
   

  
	
  as Administrative Agent

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  [Consented to:]

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  EXCO
  PARTNERS OPERATING PARTNERSHIP, LP

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  EXCO
  Partners OLP GP, LLC

  	
   

  	
   

  
	
   

  	
  Its sole
  general partner

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  

 

A-3

 

ANNEX 1

 

Amended and Restated Credit Agreement dated March 30, 2007 among
EXCO Partners Operating Partnership, LP, as Borrower, Certain Subsidiaries of
Borrower, as Guarantors, the Lenders party thereto, and JPMorgan Chase Bank,
N.A., as Administrative Agent.

 

STANDARD TERMS
AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

 

1.             Representations
and Warranties.

 

1.1.          Assignor.  The Assignor (a) represents and warrants
that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the
Assigned Interest is free and clear of any lien, encumbrance or other adverse
claim and (iii) it has full power and authority, and has taken all action
necessary, to execute and deliver this Assignment and Assumption and to
consummate the transactions contemplated hereby; and (b) assumes no
responsibility with respect to (i) any statements, warranties or
representations made in or in connection with the Credit Agreement or any other
Loan Document, (ii) the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Loan Documents or any collateral
thereunder, (iii) the financial condition of the Borrower, any Subsidiary
or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the
performance or observance by the Borrower, any Subsidiary or Affiliates or any
other Person of any of their respective obligations under any Loan Document.

 

1.2.          Assignee.  The Assignee (a) represents and warrants
that (i) it has full power and authority, and has taken all action
necessary, to execute and deliver this Assignment and Assumption and to
consummate the transactions contemplated hereby and to become a Lender under
the Credit Agreement, (ii) it satisfies the requirements, if any,
specified in the Credit Agreement that are required to be satisfied by it in
order to acquire the Assigned Interest and become a Lender, (iii) from and
after the Effective Date, it shall be bound by the provisions of the Credit
Agreement as a Lender thereunder and, to the extent of the Assigned Interest,
shall have the obligations of a Lender thereunder, (iv) it has received a
copy of the Credit Agreement, together with copies of the most recent financial
statements delivered pursuant to Section 6.01 thereof, as applicable, and
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into this Assignment and Assumption
and to purchase the Assigned Interest on the basis of which it has made such
analysis and decision independently and without reliance on the Administrative
Agent or any other Lender, and (v) if it is a Foreign Lender, attached to
the Assignment and Assumption is any documentation required to be delivered by
it pursuant to the terms of the Credit Agreement, duly completed and executed
by the Assignee; and (b) agrees that (i) it will, independently and
without reliance on the Administrative Agent, the Assignor or any other Lender,
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Loan Documents, and (ii) it will perform in accordance with
their terms all of the obligations which by the terms of the Loan Documents are
required to be performed by it as a Lender.

 

2.             Payments.  From and after the Effective Date, the
Administrative Agent shall make all payments in respect of the Assigned
Interest (including payments of principal, interest, fees and other amounts) to
the Assignor for amounts which have accrued to but excluding the

 

1

 

Effective Date and
to the Assignee for amounts which have accrued from and after the Effective
Date.

 

3.             General Provisions.
 This Assignment and Assumption shall be
binding upon, and inure to the benefit of, the parties hereto and their
respective successors and assigns.  This
Assignment and Assumption may be executed in any number of counterparts, which
together shall constitute one instrument. 
Delivery of an executed counterpart of a signature page of this
Assignment and Assumption by telecopy shall be effective as delivery of a
manually executed counterpart of this Assignment and Assumption.  This Assignment and Assumption shall be
governed by, and construed in accordance with, the law of the State of New York.

 

2

 

EXHIBIT B

 

OPINION OF COUNSEL
FOR THE BORROWER

[ATTACHED]

 

B-1

 

EXHIBIT C

 

COUNTERPART AGREEMENT

 

This COUNTERPART AGREEMENT, dated [            ]
(this “Counterpart Agreement”) is
delivered pursuant to that certain Amended and Restated Credit Agreement, dated
as of March 30, 2007 (as it may be amended, supplemented or otherwise
modified, the “Credit Agreement”;
the terms defined therein and not otherwise defined herein being used herein as
therein defined), by and among EXCO PARTNERS OPERATING
PARTNERSHIP, LP, as Borrower,
CERTAIN SUBSIDIARIES OF BORROWER, as Guarantors, the LENDERS party thereto,  and JPMORGAN CHASE BANK, N.A. (successor by
merger to Bank One, N.A. (Illinois)),  as
Administrative Agent (the “Administrative
Agent”).

 

Section 1.  Pursuant to Section 6.13 of the Credit
Agreement, the undersigned hereby:

 

(a)           agrees
that this Counterpart Agreement may be attached to the Credit Agreement and
that by the execution and delivery hereof, the undersigned becomes a Guarantor
under the Credit Agreement and agrees to be bound by all of the terms thereof;

 

(b)           represents
and warrants that each of the representations and warranties set forth in the
Credit Agreement and each other Loan Document and applicable to the undersigned
is true and correct both before and after giving effect to this Counterpart
Agreement, except to the extent that any such representation and warranty
relates solely to any earlier date, in which case such representation and
warranty is true and correct as of such earlier date;

 

(c)           no
event has occurred or is continuing as of the date hereof, or will result from
the transactions contemplated hereby on the date hereof, that would constitute
an Event of Default or a Default;

 

(d)           agrees
to irrevocably and unconditionally guaranty the due and punctual payment in
full of all Obligations when the same shall become due, whether at stated
maturity, by required prepayment, declaration, acceleration, demand or otherwise
(including amounts that would become due but for the operation of the automatic
stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. § 362(a))
and in accordance with Section 8 of the Credit Agreement; and

 

(e)           the
undersigned hereby (i) agrees that this counterpart may also be attached
to the Pledge Agreement, (ii) agrees that the undersigned will comply with
all the terms and conditions of the Pledge Agreement as if it were an original
signatory thereto, (iii) grants to Secured Party (as such term is defined
in the Pledge Agreement) a security interest in all of the undersigned’s right,
title and interest in and to all “Collateral” (as such term is defined in the
Pledge Agreement) of the undersigned, in each case whether now or hereafter
existing or in which the undersigned now has or hereafter acquires an interest
and wherever the same may be located and (iv) delivers to Agent
supplements to all schedules attached to the Pledge Agreement.  All such Collateral shall be deemed to be
part of the “Collateral” and hereafter subject to each of the terms and conditions
of the Pledge Agreement.

 

C-1

 

Section 2.  The undersigned agrees from time to time,
upon request of Administrative Agent, to take such additional actions and to
execute and deliver such additional documents and instruments as Administrative
Agent may request to effect the transactions contemplated by, and to carry out
the intent of, this Agreement.  Neither
this Agreement nor any term hereof may be changed, waived, discharged or
terminated, except by an instrument in writing signed by the party (including,
if applicable, any party required to evidence its consent to or acceptance of
this Agreement) against whom enforcement of such change, waiver, discharge or
termination is sought.  Any notice or
other communication herein required or permitted to be given shall be given in
pursuant to Section 11.01 of the Credit Agreement, and for all purposes
thereof, the notice address of the undersigned shall be the address as set
forth on the signature page hereof. 
In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.

 

THIS AGREEMENT SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES THEREOF.

 

C-2

 

IN
WITNESS WHEREOF, the undersigned has caused this Counterpart
Agreement to be duly executed and delivered by its duly authorized officer as
of the date above first written.

 

 

	
   

  	
  [NAME OF
  SUBSIDIARY]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
  Address for
  Notices:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Attention:

  	
   

  	
   

  
	
   

  	
  Telecopier

  	
   

  	
   

  
	
   

  	
   

  
	
  with a copy
  to:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Attention:

  	
   

  	
   

  
	
   

  	
  Telecopier

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  ACKNOWLEDGED AND ACCEPTED,

  	
   

  
	
  as of the date above first written:

  	
   

  
	
   

  	
   

  
	
  JPMORGAN CHASE
  BANK, N.A.,

  	
   

  
	
  as Administrative Agent

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  
	
  Title:

  	
   

  
								

 

C-3

 

EXHIBIT D

 

CERTIFICATE
REGARDING SOLVENCY

 

The undersigned, as Chief
Financial Officer of EXCO Partners Operating Partnership, LP, a Delaware
limited liability company (the “Borrower”), hereby gives this
Certificate Regarding Solvency to induce JPMorgan Chase Bank, N.A., as
Administrative Agent for the Lenders (defined below) (the “Administrative
Agent”) to consummate certain financial accommodations pursuant to the
terms and conditions of that certain Amended and Restated Credit Agreement
dated the date hereof (the “Credit Agreement”) among the Borrower, the
lenders signatory thereto (the “Lenders”), and Administrative
Agent.  Capitalized terms used in this
certificate are defined in the Credit Agreement, unless otherwise stated.

 

The undersigned hereby
certifies to the Administrative Agent that:

 

The undersigned is
familiar with the business and financial affairs of the Borrower, including,
without limitation, the Transactions and the matters hereinafter described.

 

The undersigned has
reviewed the pro forma balance sheet of the Borrower, prepared as of the date
thereof and after giving effect to the Transactions (the “Pro Forma Balance
Sheet”), the pro forma operating statement, as of the date thereof (the “Pro
Forma Operating Statement”) and the Projections, all of which are attached
hereto as Exhibit “A,”  Exhibit “B” and Exhibit “C,”
respectively, and incorporated herein by reference for all purposes.  The undersigned is familiar with the process
through which the Pro Forma Balance Sheet, the Pro Forma Operating Statement
and the Projections were generated.

 

The Pro Forma Balance
Sheet fairly presents in all material respects the financial position of the
Borrower as of the date thereof after giving effect to the Transactions.  The Pro Forma Operating Statement fairly
presents in all material respects the estimated operating income and expenses
of the Borrower and its Subsidiaries for the period covered thereby.  The Projections are reasonable projections of
the balance sheet, income statement and source and application of funds for the
periods covered thereby, based upon the assumptions set forth therein.  The Borrower believes that such assumptions
set forth therein are reasonable in light of current business conditions
existing at the time of preparation thereof. 
The Projections and the Pro Forma Operating Statement represent the
Borrower’s good faith estimate as of the date thereof of the Borrower’s future
financial performance, it being recognized by the Administrative Agent that
such financial information as it relates to future events is not to be viewed
as fact and that actual results during the period or periods covered thereby
may differ from the projected results set forth therein.

 

Immediately following the
consummation of, and after giving effect to, the Transactions contemplated by
the Loan Documents and the Anadarko Asset Purchase Documents and the
application of the proceeds from the fundings being made on the Effective Date,
the Borrower is solvent.

 

The Borrower does not
intend to incur, or believe it will incur, debts beyond its ability to pay as
they mature.

 

D-1

 

	
   

  	
  DATED:

  	
  [

  	
   

  	
  ], 2007

  
	
   

  	
   

  
	
   

  	
  EXCO
  PARTNERS OPERATING

  
	
   

  	
  PARTNERSHIP,
  LP

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  EXCO Partners OLP GP, LLC

  
	
   

  	
   

  	
  Its sole general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  J. Douglas
  Ramsey, Ph.D.

  
	
   

  	
   

  	
   

  	
  Chief
  Financial Officer

  
								

 

D-2

 

EXHIBIT “A”

Pro Forma Balance Sheet

 

(see attached)

 

D-3

 

EXHIBIT “B”

Pro Forma Operating Statement

 

(see attached)

 

D-4

 

EXHIBIT “C”

Projections

 

(see attached)

 

D-5

 

EXHIBIT E

 

NOTE

 

	
  New York, New York

  	
                      ,
       

  

 

FOR VALUE RECEIVED, the
undersigned EXCO PARTNERS OPERATING PARTNERSHIP, LP, a Delaware limited
partnership (“Borrower”), hereby unconditionally promises to pay to the
order of                                        
(the “Lender”) the principal amount of the Revolving Loans advanced by
Lender and outstanding at any time or from time to time pursuant to the Credit
Agreement (as hereinafter defined) in lawful money of the United States of
America together with interest from the date hereof until paid at the rates
specified in the Credit Agreement (as hereinafter defined).  All payments of principal and interest due
hereunder are payable at the offices of at the offices of Administrative Agent
under the Credit Agreement, JPMorgan Loan Services, 21 South Clark St., 19th
Floor, Chicago, Illinois 60603-2003, Attention:  Claudia Kech, Facsimile:  (312) 385-7096, claudia.kech@jpmchase.com,
with a copy to JPMorgan Chase Bank, N.A., Mail Code TX1-2448, 1717 Main Street,
Dallas, Texas 75201, Attention: Wm. Mark Cranmer, Senior Vice President,
Facsimile:  (214) 290-2332,
mark.cranmer@chase.com, or at such other place, as from time to time may be
designated by Administrative Agent in accordance with the Credit Agreement .

 

The principal and all
accrued interest on this Note shall be due and payable in accordance with the terms
and provisions of the Credit Agreement.

 

This Note is executed
pursuant to that certain Amended and Restated Credit Agreement dated March 30,
2007 between Borrower, certain Subsidiaries of the Borrower, as Guarantors, the
Administrative Agent and Lenders (as amended, modified, supplemented or
restated from time to time, the “Credit Agreement”), and is one of the
Notes referred to therein.  Reference is
made to the Credit Agreement and the Loan Documents (as that term is defined in
the Credit Agreement) for a statement of prepayment rights and obligations of Borrower,
for a statement of the terms and conditions under which the due date of this
Note may be accelerated and for statements regarding other matters affecting
this Note (including without limitation the obligations of the holder hereof to
advance funds hereunder, principal and interest payment due dates, voluntary
and mandatory prepayments, exercise of rights and remedies, payment of
attorneys’ fees, court costs and other costs of collection and certain waivers
by Borrower and others now or hereafter obligated for payment of any sums due
hereunder).  Upon the occurrence of an
Event of Default (as that term is defined in the Credit Agreement and Loan
Documents) the Administrative Agent may declare forthwith to be entirely and
immediately due and payable the principal balance hereof and the interest
accrued hereon, and the Lender shall have all rights and remedies of the Lender
under the Credit Agreement and Loan Documents. 
This Note may be prepaid in accordance with the terms and provisions of
the Credit Agreement.

 

Regardless of any
provision contained in this Note, the holder hereof shall never be entitled to
receive, collect or apply, as interest on this Note, any amount in excess of
the Maximum Rate (as such term is defined in the Credit Agreement), and, if the
holder hereof ever receives, collects, or applies as interest, any such amount
which would be excessive interest, it shall be deemed a partial prepayment of
principal and treated hereunder as such; and, if the indebtedness evidenced
hereby is paid in full, any remaining excess shall forthwith be paid to

 

E-1

 

Borrower.  In determining whether or not the interest
paid or payable, under any specific contingency, exceeds the Maximum Rate, Borrower
and the holder hereof shall, to the maximum extent permitted under applicable
law (i) characterize any non-principal payment as an expense, fee or
premium rather than as interest, (ii) exclude voluntary prepayments and
the effects thereof, and (iii) spread the total amount of interest
throughout the entire contemplated term of the obligations evidenced by this
Note and/or referred to in the Credit Agreement so that the interest rate is
uniform throughout the entire term of this Note; provided that, if this Note is
paid and performed in full prior to the end of the full contemplated term
thereof; and if the interest received for the actual period of existence
thereof exceeds the Maximum Rate, the holder hereof shall refund to Borrower
the amount of such excess or credit the amount of such excess against the
indebtedness evidenced hereby, and, in such event, the holder hereof shall not
be subject to any penalties provided by any laws for contracting for, charging,
taking, reserving or receiving interest in excess of the Maximum Rate.

 

If any payment of
principal or interest on this Note shall become due on a day other than a
Business Day (as such term is defined in the Credit Agreement), such payment
shall be made on the next succeeding Business Day and such extension of time
shall in such case be included in computing interest in connection with such
payment.

 

If this Note is placed in
the hands of an attorney for collection, or if it is collected through any
legal proceeding at law or in equity or in bankruptcy, receivership or other
court proceedings, Borrower agrees to pay all costs of collection, including,
but not limited to, court costs and reasonable attorneys’ fees.

 

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

 

This Note shall be
governed by and construed in accordance with the applicable laws of the United
States of America and the laws of the State of New York.

 

THIS WRITTEN NOTE, THE
CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENTS
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES.

 

E-2

 

EXECUTED as of the date
and year first above written.

 

 

	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  EXCO
  PARTNERS OPERATING PARTNERSHIP, LP

  
	
   

  	
   

  
	
   

  	
  By:

  	
  EXCO Partners OLP GP, LLC

  
	
   

  	
   

  	
  Its sole general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
							

 

E-3

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00120-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00120-of-00352.parquet"}]]