Document:

Exhibit 10.1

 

EXECUTION VERSION

 

 

SENIOR
UNSECURED TERM CREDIT AGREEMENT

 

dated
as of

 

December 8,
2008,

 

among

 

EXCO
OPERATING COMPANY, 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

 

$300,000,000
Senior Unsecured Term Facility

 

 

 

 

TABLE
OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I

  	
  DEFINITIONS

  	
  1

  
	
   

  	
   

  	
   

  
	
  Section 1.01.

  	
  Defined
  Terms

  	
  1

  
	
   

  	
   

  	
   

  
	
  Section 1.02.

  	
  Types
  of Loans and Borrowings

  	
  18

  
	
   

  	
   

  	
   

  
	
  Section 1.03.

  	
  Terms
  Generally

  	
  18

  
	
   

  	
   

  	
   

  
	
  Section 1.04.

  	
  Accounting
  Terms; GAAP

  	
  19

  
	
   

  	
   

  	
   

  
	
  Section 1.05.

  	
  Oil
  and Gas Definitions

  	
  19

  
	
   

  	
   

  	
   

  
	
  Section 1.06.

  	
  Time
  of Day

  	
  19

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
  THE CREDITS

  	
  19

  
	
   

  	
   

  	
   

  
	
  Section 2.01.

  	
  Commitments

  	
  19

  
	
   

  	
   

  	
   

  
	
  Section 2.02.

  	
  Repayment
  of Loans

  	
  20

  
	
   

  	
   

  	
   

  
	
  Section 2.03.

  	
  [Reserved]

  	
  20

  
	
   

  	
   

  	
   

  
	
  Section 2.04.

  	
  Requests
  for Borrowings

  	
  20

  
	
   

  	
   

  	
   

  
	
  Section 2.05.

  	
  [Reserved]

  	
  20

  
	
   

  	
   

  	
   

  
	
  Section 2.06.

  	
  Funding
  of Borrowings

  	
  20

  
	
   

  	
   

  	
   

  
	
  Section 2.07.

  	
  Interest
  Elections

  	
  21

  
	
   

  	
   

  	
   

  
	
  Section 2.08.

  	
  Repayment of
  Loans; Evidence of Debt

  	
  22

  
	
   

  	
   

  	
   

  
	
  Section 2.09.

  	
  Optional
  Prepayment of Loans

  	
  23

  
	
   

  	
   

  	
   

  
	
  Section 2.10.

  	
  Mandatory
  Prepayment of Loans

  	
  24

  
	
   

  	
   

  	
   

  
	
  Section 2.11.

  	
  Fees

  	
  24

  
	
   

  	
   

  	
   

  
	
  Section 2.12.

  	
  Interest

  	
  25

  
	
   

  	
   

  	
   

  
	
  Section 2.13.

  	
  Alternate
  Rate of Interest

  	
  26

  
	
   

  	
   

  	
   

  
	
  Section 2.14.

  	
  Increased
  Costs

  	
  26

  
	
   

  	
   

  	
   

  
	
  Section 2.15.

  	
  Break
  Funding Payments

  	
  27

  
	
   

  	
   

  	
   

  
	
  Section 2.16.

  	
  Taxes

  	
  27

  
	
   

  	
   

  	
   

  
	
  Section 2.17.

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

  	
  29

  
	
   

  	
   

  	
   

  
	
  Section 2.18.

  	
  Mitigation
  Obligations; Replacement of Lenders

  	
  30

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
  [RESERVED]

  	
  32

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
  REPRESENTATIONS AND
  WARRANTIES

  	
  32

  
	
   

  	
   

  	
   

  
	
  Section 4.01.

  	
  Organization;
  Powers

  	
  32

  
	
   

  	
   

  	
   

  
	
  Section 4.02.

  	
  Authorization;
  Enforceability

  	
  32

  
				

 

i

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 4.03.

  	
  Governmental
  Approvals; No Conflicts

  	
  32

  
	
   

  	
   

  	
   

  
	
  Section 4.04.

  	
  Financial
  Condition; No Material Adverse Change

  	
  32

  
	
   

  	
   

  	
   

  
	
  Section 4.05.

  	
  Properties

  	
  33

  
	
   

  	
   

  	
   

  
	
  Section 4.06.

  	
  Litigation
  and Environmental Matters

  	
  33

  
	
   

  	
   

  	
   

  
	
  Section 4.07.

  	
  Compliance
  with Laws and Agreements

  	
  34

  
	
   

  	
   

  	
   

  
	
  Section 4.08.

  	
  Investment
  Company Status

  	
  34

  
	
   

  	
   

  	
   

  
	
  Section 4.09.

  	
  Taxes

  	
  34

  
	
   

  	
   

  	
   

  
	
  Section 4.10.

  	
  ERISA

  	
  34

  
	
   

  	
   

  	
   

  
	
  Section 4.11.

  	
  Disclosure

  	
  34

  
	
   

  	
   

  	
   

  
	
  Section 4.12.

  	
  Labor
  Matters

  	
  35

  
	
   

  	
   

  	
   

  
	
  Section 4.13.

  	
  Capitalization
  and Credit Party Information

  	
  35

  
	
   

  	
   

  	
   

  
	
  Section 4.14.

  	
  Margin
  Stock

  	
  35

  
	
   

  	
   

  	
   

  
	
  Section 4.15.

  	
  Oil
  and Gas Interests

  	
  35

  
	
   

  	
   

  	
   

  
	
  Section 4.16.

  	
  Insurance

  	
  35

  
	
   

  	
   

  	
   

  
	
  Section 4.17.

  	
  Solvency

  	
  36

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
  CONDITIONS

  	
  36

  
	
   

  	
   

  	
   

  
	
  Section 5.01.

  	
  Effective
  Date

  	
  36

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
  AFFIRMATIVE COVENANTS

  	
  39

  
	
   

  	
   

  	
   

  
	
  Section 6.01.

  	
  Financial
  Statements; Other Information

  	
  39

  
	
   

  	
   

  	
   

  
	
  Section 6.02.

  	
  Notices
  of Material Events

  	
  41

  
	
   

  	
   

  	
   

  
	
  Section 6.03.

  	
  Existence;
  Conduct of Business

  	
  41

  
	
   

  	
   

  	
   

  
	
  Section 6.04.

  	
  Payment
  of Obligations

  	
  42

  
	
   

  	
   

  	
   

  
	
  Section 6.05.

  	
  Maintenance
  of Properties; Insurance

  	
  42

  
	
   

  	
   

  	
   

  
	
  Section 6.06.

  	
  Books
  and Records; Inspection Rights

  	
  42

  
	
   

  	
   

  	
   

  
	
  Section 6.07.

  	
  Compliance
  with Laws

  	
  42

  
	
   

  	
   

  	
   

  
	
  Section 6.08.

  	
  Use
  of Proceeds

  	
  42

  
	
   

  	
   

  	
   

  
	
  Section 6.09.

  	
  [Reserved]

  	
  43

  
	
   

  	
   

  	
   

  
	
  Section 6.10.

  	
  [Reserved]

  	
  43

  
	
   

  	
   

  	
   

  
	
  Section 6.11.

  	
  Swap
  Agreements

  	
  43

  
	
   

  	
   

  	
   

  
	
  Section 6.12.

  	
  Operation
  of Oil and Gas Interests

  	
  43

  
	
   

  	
   

  	
   

  
	
  Section 6.13.

  	
  Restricted
  Subsidiaries

  	
  43

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
  NEGATIVE COVENANTS

  	
  44

  
				

 

ii

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 7.01.

  	
  Indebtedness

  	
  44

  
	
   

  	
   

  	
   

  
	
  Section 7.02.

  	
  Liens

  	
  45

  
	
   

  	
   

  	
   

  
	
  Section 7.03.

  	
  Fundamental
  Changes

  	
  46

  
	
   

  	
   

  	
   

  
	
  Section 7.04.

  	
  Investments,
  Loans, Advances, Guarantees and Acquisitions

  	
  47

  
	
   

  	
   

  	
   

  
	
  Section 7.05.

  	
  Swap
  Agreements

  	
  47

  
	
   

  	
   

  	
   

  
	
  Section 7.06.

  	
  Restricted
  Payments

  	
  48

  
	
   

  	
   

  	
   

  
	
  Section 7.07.

  	
  Transactions
  with Affiliates

  	
  48

  
	
   

  	
   

  	
   

  
	
  Section 7.08.

  	
  Restrictive
  Agreements

  	
  48

  
	
   

  	
   

  	
   

  
	
  Section 7.09.

  	
  Disqualified
  Stock; Fiscal Year

  	
  48

  
	
   

  	
   

  	
   

  
	
  Section 7.10.

  	
  Amendments
  to Organizational Documents and Certain Liens and Guarantees

  	
  49

  
	
   

  	
   

  	
   

  
	
  Section 7.11.

  	
  Financial
  Covenants

  	
  49

  
	
   

  	
   

  	
   

  
	
  Section 7.12.

  	
  Sale
  and Leaseback Transactions and other Off-Balance Sheet Liabilities

  	
  49

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
  GUARANTEE OF OBLIGATIONS

  	
  49

  
	
   

  	
   

  	
   

  
	
  Section 8.01.

  	
  Guarantee
  of Payment

  	
  49

  
	
   

  	
   

  	
   

  
	
  Section 8.02.

  	
  Guarantee
  Absolute

  	
  50

  
	
   

  	
   

  	
   

  
	
  Section 8.03.

  	
  Guarantee
  Irrevocable

  	
  50

  
	
   

  	
   

  	
   

  
	
  Section 8.04.

  	
  Reinstatement

  	
  50

  
	
   

  	
   

  	
   

  
	
  Section 8.05.

  	
  Subrogation

  	
  50

  
	
   

  	
   

  	
   

  
	
  Section 8.06.

  	
  Subordination

  	
  51

  
	
   

  	
   

  	
   

  
	
  Section 8.07.

  	
  Payments
  Generally

  	
  51

  
	
   

  	
   

  	
   

  
	
  Section 8.08.

  	
  Setoff

  	
  51

  
	
   

  	
   

  	
   

  
	
  Section 8.09.

  	
  Formalities

  	
  52

  
	
   

  	
   

  	
   

  
	
  Section 8.10.

  	
  Limitations
  on Guarantee

  	
  52

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX

  	
  EVENTS OF DEFAULT

  	
  52

  
	
   

  	
   

  	
   

  
	
  ARTICLE X

  	
  THE ADMINISTRATIVE AGENT

  	
  54

  
	
   

  	
   

  	
   

  
	
  ARTICLE XI

  	
  MISCELLANEOUS

  	
  56

  
	
   

  	
   

  	
   

  
	
  Section 11.01.

  	
  Notices

  	
  56

  
	
   

  	
   

  	
   

  
	
  Section 11.02.

  	
  Waivers;
  Amendments

  	
  57

  
	
   

  	
   

  	
   

  
	
  Section 11.03.

  	
  Expenses;
  Indemnity; Damage Waiver

  	
  58

  
	
   

  	
   

  	
   

  
	
  Section 11.04.

  	
  Successors
  and Assigns

  	
  59

  
	
   

  	
   

  	
   

  
	
  Section 11.05.

  	
  Survival

  	
  63

  
				

 

iii

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 11.06.

  	
  Counterparts;
  Integration; Effectiveness

  	
  63

  
	
   

  	
   

  	
   

  
	
  Section 11.07.

  	
  Severability

  	
  63

  
	
   

  	
   

  	
   

  
	
  Section 11.08.

  	
  Right
  of Setoff

  	
  63

  
	
   

  	
   

  	
   

  
	
  Section 11.09.

  	
  GOVERNING
  LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS

  	
  64

  
	
   

  	
   

  	
   

  
	
  Section 11.10.

  	
  WAIVER
  OF JURY TRIAL

  	
  64

  
	
   

  	
   

  	
   

  
	
  Section 11.11.

  	
  Headings

  	
  65

  
	
   

  	
   

  	
   

  
	
  Section 11.12.

  	
  Confidentiality

  	
  65

  
	
   

  	
   

  	
   

  
	
  Section 11.13.

  	
  Interest
  Rate Limitation

  	
  65

  
	
   

  	
   

  	
   

  
	
  Section 11.14.

  	
  USA
  PATRIOT Act

  	
  66

  

 

iv

 

SCHEDULES:

 

Schedule 2.01 – Applicable
Percentages and Initial Commitments

Schedule 4.06 – Disclosed
Matters

Schedule 4.13 –
Capitalization and Credit Party Information

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

 

v

 

SENIOR UNSECURED TERM CREDIT
AGREEMENT dated as of December 8, 2008, among EXCO OPERATING COMPANY, 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 is, 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, (a) with respect to any Eurodollar Borrowing for any Interest
Period, an interest rate per annum equal to (i) the LIBO Rate for such
Interest Period multiplied by (ii) the Statutory Reserve Rate and (b) with
respect to any ABR Borrowing for any day, an interest rate per annum equal to (i) the
LIBO Rate for a one month Interest Period on such day (or if such day is not a
Business Day, the immediately preceding Business Day) multiplied by (ii) 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 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.

 

“Agreement” means
this Senior Unsecured Term Credit Agreement, dated as of December 8, 2008,
as it may be amended, restated, supplemented or otherwise modified from time to
time.

 

“Alternate Base Rate”
means, for any day, a rate per annum equal to the greater of (a) the Prime
Rate in effect on such day, (b) the Federal Funds Effective Rate in effect
on such day plus one-half of one percent (1⁄2 of 1%) and (c) the Adjusted
LIBO Rate plus one percent (1%); provided that, for the avoidance of doubt, the
Adjusted LIBO Rate for any day shall be based on the rate appearing on the
Reuters BBA Libor Rates Page 3750 (or on any successor or substitute page of
such service) at approximately 11:00 a.m. London time on such day.  Any change in the Alternate Base Rate due to
a change in the Prime Rate, the Federal Funds Effective Rate or the Adjusted
LIBO Rate shall be effective from and including the effective date of such
change in the Prime Rate, the Federal Funds Effective Rate or the Adjusted LIBO
Rate, respectively.

 

“Applicable Percentage”
means, with respect to any Lender at any time, the percentage of the aggregate
Commitments represented by such Lender’s Commitment at such time or, from and
after the Effective Date, of the aggregate outstanding Loans represented by
such Lender’s outstanding Loans.  The
initial amount of each Lender’s Applicable Percentage is as set forth on
Schedule 2.01.

 

“Applicable Margin”
means, for any day, (i) with respect to any ABR Loan, five percent (5.00%)  and (i) with respect to any Eurodollar Loan, six
percent (6.00%).

 

“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.

 

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

 

2

 

“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.

 

“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
Operating Company, 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
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.

 

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

 

“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.

 

“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, for
purposes of Section 2.14(b), by any lending office of such Lender or by
such Lender’s holding company, if any) with any request, guideline or directive
(whether or not having the force of law) of any Governmental Authority made or
issued after the date of this Agreement.

 

“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 a
wholly

 

3

 

owned
direct or indirect Subsidiary of EXCO; (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; or (c) the occurrence of a “Change
of Control” as such term is defined in the EXCO Credit Agreement.

 

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

 

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

 

“Commitment” means,
with respect to each Lender, the commitment of such Lender to make Loans to the
Borrower on the Effective Date in the aggregate principal amount outstanding
not to exceed the amount set forth opposite such Lender’s name on
Schedule 2.01.  The amount of each
Lender’s Commitment (which amount is such Lender’s Applicable Percentage of the
aggregate Commitments) is set forth in Schedule 2.01.  The aggregate amount of the Commitments is
$300,000,000.

 

“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 defined in the Revolving Credit
Agreement) 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 Revolving 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 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

 

4

 

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.

 

“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.

 

5

 

“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.

 

“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 in 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.

 

“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 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.

 

“Engagement Letter”
means that certain engagement letter, dated as of December 5, 2008, among
Arranger, JPMorgan Chase Bank, N.A., and Borrower.

 

“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

 

6

 

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 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 is, 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 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 2.18(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 2.16(e), except to the extent that such
Foreign Lender (or its assignor, if any) was

 

7

 

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 2.16(a).

 

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

 

“EXCO Credit Agreement”
means that certain Second Amended and Restated Credit Agreement, dated as of May 2,
2007, 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 any Swap Agreement between any Credit Party and any Approved Counterparty
in effect on the Effective Date.

 

“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.

 

“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 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

 

8

 

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.

 

“Indemnified Taxes”
means Taxes other than Excluded Taxes.

 

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

 

9

 

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

 

“Interest
Election Request” means a request by the Borrower to convert or continue a
Borrowing in accordance with Section 2.07.

 

“Interest
Payment Date” means with respect to any ABR Loan or any Eurodollar Loan,
the last day of each calendar month.

 

“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.

 

“Lender
Counterparty” has the meaning assigned to such term in the Revolving Credit
Agreement.

 

“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.

 

“LIBO Rate”
means, with respect to any Eurodollar Borrowing for any Interest Period, the
greater of (i) the rate appearing on Reuters BBA Libor Rates Page 3750
(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 and (ii) four percent
(4.00%) per annum.  In the event that
such rate described in clause (i) 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 

 

10

 

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, the Engagement Letter and any other agreements, documents,
certificates and instruments executed in connection with this Agreement.

 

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

 

“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
Indebtedness” means Indebtedness permitted under Section 7.01(h) and
any other Indebtedness (other than the Loans), 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 $50,000,000.  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.

 

“Maturity
Date” means January 15, 2010.

 

“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.

 

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

 

“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 assets by the Borrower or any Restricted Subsidiary,
including any Oil and Gas Interests, 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 

 

11

 

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
Revolving 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 Oil and Gas Interests, (vii) the principal amount of the
Revolving Loans that the Borrower is required to prepay as a result of such
sale, transfer, assignment or disposition and (viii) 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 defined in the Revolving Credit Agreement) 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 2.18(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 Lenders or any of them arising under or in
connection with any Loan Document, whether for principal, interest, 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 Advance Payment Contract, or (v) 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 (v) 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,
wellbore interests, working, royalty and overriding royalty interests, mineral
interests, leasehold interests, production payments, operating rights, net
profits interests, other non-working interests, contractual interests,
non-operating interests and rights in 

 

12

 

any pooled, unitized or communitized acreage by virtue of such interest
being a part thereof; (b) interests in and rights with respect to
Hydrocarbons other minerals or revenues therefrom and contracts and agreements
in connection therewith and claims and rights thereto (including oil and gas
leases, operating agreements, unitization, communitization and pooling
agreements and orders, division orders, transfer orders, mineral deeds, royalty
deeds, oil and gas sales, exchange and processing contracts and agreements and,
in each case, interests thereunder), and surface interests, fee interests,
reversionary interests, reservations and concessions related to any of the
foregoing; (c) easements, rights-of-way, licenses, permits, leases, and
other interests associated with, appurtenant to, or necessary for the operation
of any of the foregoing; (d) interests in oil, gas, water, disposal and
injection wells, equipment and machinery (including well equipment and
machinery), oil and gas production, gathering, transmission, compression,
treating, processing and storage facilities (including tanks, tank batteries,
pipelines and gathering systems), pumps, water plants, electric plants,
gasoline and gas processing plants, refineries and other tangible or
intangible, movable or immovable, real or personal property and fixtures
located on, associated with, appurtenant to, or necessary for the operation of
any of the foregoing; and (e) all seismic, geological, geophysical and
engineering records, data, information, maps, licenses and interpretations.

 

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

 

“Other
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;

 

(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 

 

13

 

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;

 

(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 

 

14

 

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 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.

 

“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 

 

15

 

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 Unsecured Term Credit
Agreement, dated as of July 15, 2008, among Borrower, certain Subsidiaries
of Borrower, as Guarantors, the lenders party thereto and JPMorgan Chase Bank,
N.A. as Administrative Agent, as amended, restated, supplemented or otherwise
modified from time to time.

 

“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
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, 2013.

 

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

 

“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 more than 50% of the aggregate
unpaid principal amount of the Loans then outstanding.

 

“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 of any Credit Party.

 

“Revolving
Agent” means JPMorgan Chase Bank, N.A. in its capacity as contractual
representative of the financial institutions and other Persons from time to
time a party to the Revolving Facility and any successor agent appointed
pursuant to the terms of the Revolving Facility Documents.

 

16

 

“Revolving
Commitment” means the Aggregate Commitment as such term is defined in the
Revolving Credit Agreement from time to time.

 

“Revolving
Credit Agreement” means that certain Amended and Restated Credit Agreement
dated as of March 30, 2007, by and among Borrower, certain Subsidiaries of
Borrower, the lenders from time to time party thereto and JPMorgan Chase Bank,
N.A., as administrative agent, as the same may be amended, restated,
supplemented or otherwise modified from time to time.

 

“Revolving
Credit Exposure” means the Aggregate Credit Exposure as such term is
defined in the Revolving Credit Agreement from time to time.

 

“Revolving
Facility” means the revolving loan facility evidenced by the Revolving
Facility Documents.

 

“Revolving
Facility Documents” means the Revolving Credit Agreement and any promissory
notes executed in connection therewith, security instruments and any other
agreements, documents and certificates executed in connection with such
Revolving Credit Agreement, as the same may be amended, modified, supplemented
or restated from time to time.

 

“Revolving
Loans” means the revolving loans made under the Revolving Facility.

 

“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.

 

“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 

 

17

 

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.

 

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

 

“Transactions”
means the (i) the execution, delivery and performance by the Credit
Parties of this Agreement and the Loan Documents, (ii) the borrowing of
Loans on the Effective Date, and (iii) the use of the proceeds thereof in
accordance with Section 6.08.

 

“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.

 

“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.

 

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

 

18

 

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 Required 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 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 agrees to make a Loan to the Borrower on the Effective Date
in an aggregate principal amount not to exceed the amount of the Commitment of
such Lender.  The Loans may from time to
time be Eurodollar Loans or ABR Loans, as determined by the Borrower and
notified to the Administrative Agent in accordance with Sections 2.04 and 2.07.
 Amounts of Loans repaid or prepaid may
not be reborrowed.

 

19

 

Section 2.02.                             Repayment of Loans.  The Borrower shall repay the aggregate
outstanding principal balance of the Loans on the Maturity Date.

 

Section 2.03.                             [Reserved].

 

Section 2.04.                             Requests for Borrowings.  To request that the Lenders make Loans on the
Effective Date, 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 (3) Business Days before the date of the
proposed Eurodollar Borrowing or (b) in the case of an ABR Borrowing, not
later than 11:00 a.m., one (1) Business Day before the date of the
proposed ABR 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:

 

(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 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 2.06.

 

If no election as to the Type of Borrowing is specified, then the
requested Borrowing shall be an ABR Borrowing. 
If no Interest Period is specified with respect to any requested
Eurodollar Borrowing, then the Borrower shall be deemed to have selected an
Interest Period of one (1) month’s duration.  Promptly following receipt of the Borrowing
Request in accordance with this Section, the Administrative Agent shall advise
each Lender of the details thereof and of the amount of such Lender’s Loan to
be made as part of the requested Borrowing.

 

Section 2.05.                             [Reserved]

 

Section 2.06.                             Funding
of Borrowings.

 

(a)                                  Each
Lender shall make each Loan to be made by it hereunder on the Effective Date 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.  The
Administrative Agent will make such Loans available to the Borrower by promptly
crediting the amounts so received, in like funds, to an account of the Borrower
designated by the Borrower in the applicable Borrowing Request.

 

20

 

(b)                                 Unless
the Administrative Agent shall have received notice from a Lender prior to the
Effective Date that such Lender will not make available to the Administrative
Agent such Lender’s share of such Borrowing to be made on the Effective Date,
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 2.07.                             Interest
Elections.

 

(a)                                  The
Borrowing to be made on the Effective Date shall be an ABR Borrowing; provided
that the Interest Period for any Eurodollar Borrowing requested on the
Effective Date and during the thirty (30) day period following the Effective
Date pursuant to an Interest Election Request shall be of one (1) month’s
duration, unless otherwise agreed by the Borrower and the Administrative
Agent.  Thereafter, the Borrower may
elect to convert such Loans to a different Type or to continue such Loans and,
in the case of Eurodollar Loans, may elect Interest Periods therefor, all as
provided in this Section.  The Borrower
may elect different options with respect to different portions of the Loans, in
which case each such portion shall be allocated ratably among the Lenders
holding the Loans comprising such Borrowing, and the Loans comprising each such
portion shall be considered a separate Borrowing.

 

(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 2.04 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:

 

(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

 

21

 

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

 

(f)                                    All
conversions and continuations of Eurodollar Loans shall be in an aggregate
amount that is an integral multiple of $1,000,000 and not less than
$1,000,000.  All conversions and
continuations of ABR Loans shall be in an aggregate amount that is an integral
multiple of $100,000  and not less
than $100,000.  Loans 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 Borrowings
outstanding.

 

Section 2.08.                             Repayment of
Loans; Evidence of Debt.

 

(a)                                  The
Borrower hereby unconditionally promises to pay to the Administrative Agent for
the account of each Lender the then unpaid principal amount of each Loan on the
Maturity Date.

 

(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 

 

22

 

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 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 (c) or (d) 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 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 2.09.                             Optional
Prepayment of Loans.

 

(a)                                  The
Borrower shall have the right at any time and from time to time to prepay the
Loans, in whole and or in part in an aggregate amount that is an integral
multiple of $5,000,000 and not less than $10,000,000, without premium or
penalty, subject to prior notice in accordance with paragraph (b) of this
Section.

 

(b)                                 The
Borrower shall notify the Administrative Agent by telephone (confirmed by
telecopy) of any prepayment hereunder (i) in the case of prepayment of
Eurodollar Loans, not later than 11:00 a.m. three (3) Business Days
before the date of 

 

23

 

prepayment or (ii) in the
case of prepayment of an ABR Loan, not later than 11:00 a.m. one (1) Business
Day before the date of prepayment.  Each
such notice shall be irrevocable and shall specify the prepayment date and the
principal amount of the Loans or portion thereof to be prepaid.  Promptly following receipt of any such notice
relating to the Loans, the Administrative Agent shall advise the Lenders of the
contents thereof.  Each partial
prepayment of the Loans shall be in an amount that would be permitted in the
case of conversion or continuation of the same Type as provided in Section 2.07(f).  Each prepayment of the Loans shall be applied
ratably to the Loans outstanding. 
Prepayments shall be accompanied by accrued interest to the extent
required by Section 2.12 and shall be subject to the payment of any
funding indemnification amounts required by Section 2.15.

 

Section 2.10.                             Mandatory Prepayment of
Loans.

 

(a)                                  The
Borrower shall prepay the Loans as provided in Section 7.03(a).

 

(b)                                 Amounts
applied to the prepayment of the Loans pursuant to this Section shall be
first applied ratably to ABR Loans then outstanding and, upon payment in full
of all outstanding ABR Loans, second, to Eurodollar Loans 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 2.15 but without penalty or
premium.

 

Section 2.11.                             Fees.

 

(a)                                  The
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 pursuant to the terms of the Engagement
Letter.

 

(b)                                 The
Borrower agrees to pay to the Administrative Agent, for the benefit of the
Lenders, on the Effective Date, an upfront fee in an amount equal to seven
percent (7.00%) of the aggregate principal amount of the Loans made to the
Borrower on the Effective Date.

 

(c)                                  The
Borrower agrees to pay to the Administrative Agent, for the benefit of the
Lenders, (i) an initial duration fee in an amount equal to five percent
(5.00%) of the aggregate principal amount of the Loans outstanding under this
Agreement on June 15, 2009, which initial duration fee shall be payable on
such date and (ii) an additional duration fee in an amount equal to three
percent (3.00%) of the aggregate principal amount of the Loans outstanding
under this Agreement on September 15, 2009, which additional duration fee
shall be payable on such date.

 

(d)                                 All
fees payable hereunder shall be paid on the dates due, in immediately available
funds, to the Administrative Agent.  All
fees paid pursuant to clause (b) of this Section 2.11 shall be
distributed by the Administrative Agent ratably among the Lenders 

 

24

 

party to this Agreement on the
Effective Date.  All fees paid pursuant
to clause (c) of this Section 2.11 shall be distributed by the
Administrative Agent ratably among the Lenders party to this Agreement on the
date such duration fee is paid by the Borrower. 
Subject to Section 11.13, fees paid pursuant to this Section 2.11
shall not be refundable under any circumstances.

 

Section 2.12.                             Interest.

 

(a)                                  The
ABR Loans comprising each ABR Borrowing shall bear interest at a rate per annum
equal to the Alternate Base Rate plus the Applicable Margin; provided
that for the avoidance of doubt, the interest rate for any ABR Loan shall never
be less than ten percent (10%).

 

(b)                                 The
Eurodollar Loans shall bear interest at a rate per annum equal to the Adjusted
LIBO Rate for the Interest Period in effect for such Loans plus the Applicable
Margin; provided that for the avoidance of doubt, the interest rate for
any Eurodollar Loan shall never be less than ten percent (10%).

 

(c)                                  Notwithstanding
the foregoing, (i) so long as any Event of Default shall have occurred and
be continuing, the aggregate principal amount of all Loans outstanding shall
bear interest, after as well as before judgment, at a rate per annum equal to
two percent (2%) plus the rate otherwise applicable to such Loans as provided
in the preceding paragraphs of this Section, and (ii) if any interest on
any Loan or any fee or other amount payable by the Borrower or any other Credit
Party 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 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 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,
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.

 

25

 

Section 2.13.                             Alternate
Rate of Interest.  If prior to the
commencement of any Interest Period for a Eurodollar Borrowing:

 

(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 Required 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, any Interest Election
Request that requests the conversion of any Borrowing to, or continuation of
any Borrowing as, a Eurodollar Borrowing shall be ineffective.

 

Section 2.14.                             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

 

 (ii)                                 impose
on any Lender or the London interbank market any other condition affecting this
Agreement or Eurodollar Loans made by such Lender;

 

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 reduce the amount of any sum received or receivable by such Lender hereunder
(whether of principal, interest or otherwise), then the Borrower will pay to
such Lender such additional amount or amounts as will compensate such Lender
for such additional costs incurred or reduction suffered.

 

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

 

26

 

(c)                                  A
certificate of a Lender setting forth (i) the amount or amounts reasonably
necessary to compensate such Lender or its holding company, as the case may be,
as specified in 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 the amount shown as due on any such certificate within ten (10) days
after receipt thereof.

 

(d)                                 Failure
or delay on the part of any Lender to demand compensation pursuant to this Section shall
not constitute a waiver of such Lender’s right to demand such compensation; provided
that the Borrower shall not be required to compensate a Lender 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 notifies the
Borrower of the Change in Law giving rise to such increased costs or reductions
and of such Lender’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 one hundred eighty (180) day period referred to above shall
be extended to include the period of retroactive effect thereof.

 

Section 2.15.                             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 2.09(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 2.18, 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 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 2.16.                             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 

 

27

 

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 or Lender (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 and each Lender, within 10
days after written demand therefor, for the full amount of any Indemnified
Taxes or Other Taxes paid by the Administrative Agent or such Lender, 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 by the
Administrative Agent on its own behalf or on behalf of a Lender, setting forth (i) the
amount of such payment or liability reasonably necessary to compensate the
Administrative Agent or such Lender, 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 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 has paid additional amounts pursuant to this Section 2.16,
it shall pay over such refund to the Borrower (but only to the extent of
indemnity payments made, or additional amounts paid, by the 

 

28

 

Borrower under this Section 2.16 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 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 2.17.                             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 or fees or of amounts payable under Section 2.14, Section 2.15
or Section 2.16, 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
as expressly provided herein and except that payments pursuant to Section 2.14,
Section 2.15, Section 2.16 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 and to pay fully all amounts of principal, 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
then due hereunder, ratably among the parties entitled thereto in accordance
with the amounts of principal then due to such parties.

 

(c)                                  If
any Lender shall, by exercising any right of set-off or counterclaim or
otherwise, obtain payment in respect of any principal of or interest on any of
its Loans resulting in such Lender receiving payment of a greater proportion of
the aggregate amount of its Loans and accrued interest thereon than the
proportion received by any other Lender, then the Lender receiving such greater
proportion shall purchase (for cash at face value) participations in the Loans
of other Lenders to the extent necessary so that

 

29

 

the benefit of
all such payments shall be shared by the Lenders ratably in accordance with the
aggregate amount of principal of and accrued interest on their respective
Loans; provided that (i) if any such participations are purchased
and all or any portion of the payment giving rise thereto is recovered, such
participations shall be rescinded and the purchase price restored to the extent
of such recovery, without interest, and (ii) the provisions of this
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 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 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,
distribute to the Lenders the amount due. In such event, if the Borrower has
not in fact made such payment, then each of the Lenders severally agrees to
repay to the Administrative Agent forthwith on demand the amount so distributed
to such Lender with interest thereon, for each day from and including the date
such amount is distributed to it to but excluding the date of payment to the
Administrative Agent, at the greater of the Federal Funds Effective Rate and a
rate determined by the Administrative Agent in accordance with banking industry
rules on interbank compensation.

 

(e)                                  If
any Lender shall fail to make any payment required to be made by it pursuant to
Section 2.06 or Section 2.17(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 2.18.                             Mitigation
Obligations; Replacement of Lenders.

 

(a)                                  If
any Lender requests compensation under Section 2.14, 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 2.16, 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 2.14 or Section 2.16,
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 

 

30

 

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 2.14, 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 2.16, 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,
which consent shall not unreasonably be withheld, (ii) such Lender shall
have received payment of an amount equal to the outstanding principal of its
Loans, accrued interest thereon, accrued fees and all other amounts payable to
it hereunder, 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 2.14 or payments required to be made
pursuant to Section 2.16, 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 Required
Lenders shall have been obtained but the consent of one or more of such other
Lenders (each a “Non-Consenting Lender”) whose consent is required has
not been obtained; then, the Borrower may elect to replace such Non-Consenting
Lender 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, which consent shall not unreasonably be withheld, (ii) such
Lender shall have received payment of an amount equal to the outstanding
principal of its Loans, accrued interest thereon, accrued fees and all other
amounts payable to it hereunder, 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 2.14 or payments
required to be made pursuant to Section 2.16, 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.

 

31

 

Article III

 

[Reserved]

 

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.

 

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
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 unaudited consolidated
balance sheet and related statements of income and cash flows of the Borrower
and its Consolidated Subsidiaries for (i) the twelve (12) month period
ending 

 

32

 

December 31,
2007 and (ii) the nine (9) month period ending September 30,
2008.  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, 2007, 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 changes in commodity prices for Hydrocarbons affecting the oil and gas
industry as a whole do not constitute a material adverse change).

 

Section 4.05.                             Properties.

 

(a)                                  Except
as otherwise provided in Section 4.15 with respect to proved reserves
included in the Oil and Gas Interests of the Borrower and each Restricted
Subsidiary, the Borrower and each Restricted Subsidiary has good title to, or
valid leasehold interests in, all such real and personal property material to
its business, except for minor defects in title that do not interfere with its
ability to conduct its business as currently conducted or to utilize such
properties for their intended purposes.

 

(b)                                 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.

 

33

 

(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, 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 $25,000,000 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.

 

34

 

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
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.

 

Section 4.15.                             Oil
and Gas Interests. Each Credit Party has good and defensible title to
substantially all of the proved reserves included in its Oil and Gas Interests
(for purposes of this Section 4.15, “proved Oil and Gas Interests”), 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. Each
well drilled in respect of proved producing Oil and Gas Interests (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.

 

35

 

Section 4.17.         Solvency.

 

(a)           Immediately after the consummation of
the Transactions and immediately following the making of the Loans 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
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.

 

Article V

 

Conditions

 

Section 5.01.         Effective
Date.  The obligations of the Lenders
to make the Loans 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, LLP, 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
Required Lenders shall reasonably request. 
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 

 

36

 

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 (j), (k), (q) and (r) of
this Section 5.01 and (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).

 

(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.

 

(f)            The Administrative Agent shall have
received promissory notes duly executed by the Borrower for each Lender that
has requested the delivery of a promissory note pursuant to and in accordance
with Section 2.08(f).

 

(g)           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.

 

(h)           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.

 

(i)            The Lenders shall have received from
the Borrower (i) a pro forma consolidated balance sheet of the Borrower
and its Consolidated Subsidiaries based on the consolidated balance sheet of
the Borrower and its Consolidated Subsidiaries as of September 30, 2008
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 otherwise 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.

 

(j)            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 

 

37

 

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 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.

 

(k)           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
that could have a Material Adverse Effect.

 

(l)            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.

 

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

 

(n)           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
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.

 

(o)           The Revolving Agent, the Credit
Parties and the lenders party to the Revolving Facility (or at least the
required percentage thereof) shall have executed and delivered the Third Amendment
to the Revolving Facility and a duly executed copy thereof shall have been
delivered to the Administrative Agent.

 

(p)           The Administrative Agent shall have
received satisfactory evidence that contemporaneous with the funding of the
Loans on the Effective Date, the Prior Term Loan Credit Agreement will be
terminated and 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.

 

(q)           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 Effective Date.

 

38

 

(r)            At the time of and immediately after
giving effect to the Loans made on the Effective Date, no Default shall have
occurred and be continuing.

 

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 the Loans 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 December 12,
2008.

 

Article VI

 

Affirmative
Covenants

 

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

 

Section 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 Borrower and its Consolidated Subsidiaries as of
the end of and for such year, setting forth in each case in comparative form
the figures for the previous fiscal year, all reported on by a firm of
independent public accountants 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 Borrower 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 Borrower and its Consolidated Subsidiaries as of
the end of and for such fiscal quarter and the then elapsed portion of the
fiscal year, setting forth in each case in comparative form the figures for the
corresponding period or periods of (or, in the case of the balance sheet, as of
the end of) the previous fiscal year, all certified by a Responsible Officer as
presenting fairly in all material respects the financial condition and results
of operations of the Borrower and its Consolidated Subsidiaries on a
consolidated and consolidating basis in accordance with GAAP consistently
applied, subject to normal year-end audit adjustments and the absence of
footnotes;

 

(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 

 

39

 

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 clauses (a), (b) and
(c) of 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; and

 

(e)           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 Arranger
will make available to the Lenders materials and/or information 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 

 

40

 

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 Arranger 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 Arranger 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 $25,000,000;

 

(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 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

 

(g)           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

 

41

 

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 to, use commercially
reasonable efforts to cause each operator of its Oil and Gas Interests 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 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.  The proceeds of the
Loans will be used only to repay in full the outstanding principal amount of
the indebtedness under the Prior Term Loan Credit

 

42

 

Agreement.  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).

 

Section 6.09.         [Reserved].

 

Section 6.10.         [Reserved].

 

Section 6.11.         Swap
Agreements.  Except for Swap
Agreements for which the Borrower or any Restricted Subsidiary may exercise
early termination rights as a result of any breach by the Approved Counterparty
party thereto, the Borrower will, and will cause each Restricted Subsidiary to,
maintain the Existing Swap Agreements. 
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 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 (b) promptly
cause such Restricted Subsidiary to 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.  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 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

 

43

 

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
Required Lenders.

 

Article VII

 

Negative
Covenants

 

Until the
principal of and interest on each Loan and all fees payable hereunder have been
paid in full, 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;

 

(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;

 

(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.

 

44

 

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)           Indebtedness under the Revolving
Facility in an aggregate principal amount not exceeding $1,300,000,000 at any
time outstanding; and

 

(i)            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)           Permitted Encumbrances;

 

(b)           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;

 

(c)           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

 

(d)           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 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; and

 

45

 

(e)           Liens securing Indebtedness permitted
by clause (h) of Section 7.01.

 

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 Oil and Gas Interests (including any contribution or transfer of Oil and
Gas Interests in connection with the formation of any joint venture or
partnership with any Person that is not a Restricted Subsidiary) 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, (i) 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, (ii) any Restricted Subsidiary may merge into
the Borrower in a transaction in which the Borrower is the surviving entity, (iii) any
Restricted Subsidiary may merge into any other Restricted Subsidiary in a
transaction in which the surviving entity is a Restricted Subsidiary, (iv) any
Restricted Subsidiary may sell, transfer, lease or otherwise dispose of its
assets to the Borrower or to another Restricted Subsidiary, (v) any
Restricted Subsidiary may liquidate or dissolve if the Borrower determines in
good faith that such liquidation or dissolution is in the best interests of the
Borrower and is not materially disadvantageous to the Lenders, (vi) 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, and (vii) the Borrower or any Restricted
Subsidiary may sell, transfer, lease, exchange, abandon or otherwise dispose of
any of its Oil and Gas Interests and the Equity Interests of any Restricted
Subsidiary; provided that (A) the consideration received in respect
of such sale or other disposition shall be equal to or greater than the fair
market value of such assets subject to the sale or other disposition (as
reasonably determined by, in the case of any sale or disposition of assets with
a value equal to or greater than $15,000,000, the Board of Directors of the
Borrower and, if requested by the Administrative Agent, the Borrower shall
deliver a certificate of a Responsible Officer certifying to that effect), (B) 100%
of the consideration for such sale or other disposition shall be in the form of
cash or Permitted Investments and (C) to the extent that the aggregate Net
Cash Proceeds from all such sales or other dispositions since the Effective
Date exceed $10,000,000, no later than one Business Day after the receipt by
Borrower or any Restricted Subsidiary of such Net Cash Proceeds, Borrower shall
prepay the Revolving Loans to the extent required to cause the Revolving
Commitment to exceed the Revolving Credit Exposure by an amount equal to ten
percent (10%) of the Revolving Commitment and use all of the remaining Net Cash
Proceeds to prepay the Loans to the extent permitted under the Revolving Credit
Agreement as in effect on the Effective Date.

 

(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

 

46

 

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);

 

(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
(excluding, however, any joint venture or partnership with any Person that is
not a Restricted Subsidiary);

 

(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

 

47

 

floating rate
to another floating rate or otherwise) with respect to any interest-bearing
liability or investment of any Credit Party.

 

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, and (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.

 

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, and (d) any Restricted Payment permitted by Section 7.06.

 

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 set forth in the Revolving Facility Documents, (iii) 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), (iv) clause (a) of the foregoing shall not
apply to restrictions or conditions imposed by any agreement relating to
secured Indebtedness permitted by this Agreement (other than the Revolving
Facility) if such restrictions or conditions apply only to the property or
assets securing such Indebtedness and (v) clause (a) of the foregoing
shall not apply to customary provisions in leases and other contracts
restricting the assignment thereof.

 

Section 7.09.         Disqualified
Stock; 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.

 

48

 

Section 7.10.         Amendments
to Organizational Documents and Certain Liens and Guarantees.  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. 
The Borrower will not permit any Subsidiary to Guarantee all or any part
of the Indebtedness under the Revolving Facility Documents unless such
Subsidiary is (or concurrently with any such Guarantee becomes) a Guarantor.

 

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 December 31,
2008 and on or before September 30, 2009 to be less than 1.00 to 1.00;
provided that for purposes of determining compliance with this Section 7.11(a),
the calculation of Consolidated Current Liabilities as of the end of any such
fiscal quarter shall not include any Indebtedness of the Borrower under this
Agreement.

 

(b)           Leverage Ratio.  The Borrower will not permit the ratio,
determined as of the end of any fiscal quarter ending on or after December 31,
2008 and on or before September 30, 2009, 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.  The Borrower will not permit the ratio,
determined as of the end of any fiscal quarter ending on or after December 31,
2008 and on or before September 30, 2009, 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 $25,000,000.

 

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 Lenders, the punctual payment of all Obligations now or which
may in the future be owing by the Borrower under the Loan Documents (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

 

49

 

Liabilities
include interest accruing after the commencement of a proceeding under
bankruptcy, insolvency or similar laws of any jurisdiction at the rate or rates
provided in the Loan Documents, regardless of whether such interest is an
allowed claim.  Each Guarantor agrees
that, as between the Guarantor and the Administrative Agent, the Guaranteed
Liabilities may be declared to be due and payable for the purposes of this
Guarantee notwithstanding any stay, injunction or other prohibition which may
prevent, delay or vitiate any declaration as regards the Borrower or any other
Guarantor and that in the event of a declaration or attempted declaration, the
Guaranteed Liabilities shall immediately become due and payable by each
Guarantor for the purposes of this Guarantee.

 

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

 

Section 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 the other Loan Documents 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 is no
longer in effect or, if earlier, when the Guarantor has given the
Administrative Agent written notice that this Guarantee has been revoked; provided
that any notice under this Section shall not release the revoking
Guarantor from any Guaranteed Liability, absolute or contingent, existing prior
to the Administrative Agent’s actual receipt of the notice at its branches or
departments responsible for this Agreement and reasonable opportunity to act
upon such notice.

 

Section 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
Administrative Agent or any Lender 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 is no longer in effect. 
If any

 

50

 

amount is paid
to the Guarantor on account of subrogation rights under this Guarantee at any
time when all the Guaranteed Liabilities have not been paid in full, the amount
shall be held in trust for the benefit of the Lenders and shall be promptly
paid to the Administrative Agent to be credited and applied to the Guaranteed
Liabilities, whether matured or unmatured or absolute or contingent, in
accordance with the terms of this Agreement. If any
Guarantor makes payment to the Administrative Agent or any Lender of all or any
part of the Guaranteed Liabilities and all the Guaranteed Liabilities are paid
in full and this Agreement is no longer in effect, the Administrative Agent and
the Lenders shall, at such Guarantor’s request, execute and deliver to such Guarantor
appropriate documents, without recourse and without representation or warranty,
necessary to evidence the transfer by subrogation to such Guarantor of an
interest in the Guaranteed Liabilities resulting from the payment.

 

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

 

Section 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; 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 and the
Lenders harmless from any loss incurred by the Administrative Agent or any
Lender arising from any change in the value of Dollars in relation to the
Payment Currency between the date the Guaranteed Liability becomes due and the
date the Administrative Agent or such Lender is actually able, following the
conversion of the Dollars paid by such Guarantor into the Payment Currency and
remittance of such Payment Currency to the place where such Guaranteed Liability
is payable, to apply such Payment Currency to such Guaranteed Liability.

 

Section 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 or any Lender
may otherwise have, the Administrative Agent or such Lender shall be entitled,
at its option, to offset balances (general or special, time or demand,
provisional or final) held by it for the account of any Guarantor at any office
of the Administrative Agent or such Lender, in Dollars or in any other
currency, against any amount payable by such Guarantor under this Guarantee 

 

51

 

which is not
paid when due (regardless of whether such balances are then due to such
Guarantor), in which case it shall promptly notify such Guarantor thereof; provided
that the failure of the Administrative Agent or such Lender to give such notice
shall not affect the validity thereof.

 

Section 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 or any Lender, be
automatically limited and reduced to the highest amount that is valid and
enforceable as determined in such action or proceeding (such highest amount
determined hereunder being the relevant Guarantor’s “Maximum Liability”). This
Section 8.10 with respect to the Maximum Liability of the Guarantors is
intended solely to preserve the rights of the Administrative Agent and Lenders
hereunder to the maximum extent not subject to avoidance under applicable law,
and no Guarantor nor any other Person shall have any right or claim under this Section 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 when and as the same shall
become due and payable, whether at the due date thereof or at a date fixed for
prepayment thereof or otherwise;

 

(b)                                 the
Borrower shall fail to pay any interest on any Loan or any fee or any other
amount (other than an amount referred to in clause (a) of this Article)
payable under this Agreement, when and as the same shall become due and
payable, and such failure shall continue unremedied for a period of three (3) days;

 

(c)                                  any
representation or warranty made or deemed made by or on behalf of the Borrower
or any Restricted Subsidiary in or in connection with this Agreement or any
amendment or modification hereof or waiver hereunder, or in any report,
certificate, financial statement or other document furnished pursuant to or in
connection with this Agreement or any amendment or modification hereof or
waiver hereunder or in any Loan Document furnished pursuant to or in connection
with this Agreement or any amendment 

 

52

 

or modification thereof or
waiver hereunder, shall prove to have been incorrect in any material respect
when made or deemed made;

 

(d)                                 the
Borrower or any Restricted Subsidiary shall fail to observe or perform any covenant,
condition or agreement contained in Section 2.10, 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; 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;

 

53

 

(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
$50,000,000 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 Required 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 Required Lenders shall, by
notice to the Borrower, 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 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 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.

 

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, 

 

54

 

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 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
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.

 

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 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.

 

55

 

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 and the Borrower. Upon any such
resignation, the Required Lenders shall have the right, in consultation with
the Borrower, to appoint a successor. If no successor shall have been so
appointed by the Required Lenders and shall have accepted such appointment
within 30 days after the retiring Administrative Agent gives notice of its
resignation, then the retiring Administrative Agent may, on behalf of the
Lenders appoint a successor Administrative Agent which shall be a bank with an
office in 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:

 

(i)                                     if
to the Borrower, to EXCO Operating Company, 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 to JPMorgan Chase Bank, N.A., JPMorgan Loan
Services, 21 South Clark St., 19th Floor, Chicago, Illinois 

 

56

 

60603-2003, Telecopy No.: (312)
385-7096, Attention: Claudia Kech, with a copy to JPMorgan Chase Bank, N.A.,
2200 Ross Avenue, 3rd Floor, TX1-2448, Dallas, Texas 75201, Telecopy
No. (214) 965-3280, Attention:  Wm. Mark
Cranmer, Senior Vice President; and

 

(iii)                               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 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 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 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 shall not be
construed as a waiver of any Default, regardless of whether the Administrative
Agent or any Lender 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 Required Lenders or by the Credit Parties and the
Administrative Agent with the consent of the Required Lenders; provided
that no such agreement shall (1) increase the Commitment of any Lender
without the written consent of such Lender, (2) reduce the principal
amount of any Loan or reduce the rate of interest thereon, or reduce any fees
payable hereunder, without the written consent of each Lender affected thereby,
(3) postpone the scheduled date of payment of the principal amount of any
Loan 

 

57

 

or any interest thereon, or any
fees payable hereunder, or reduce the amount of, waive or excuse any such
payment, or postpone the Maturity Date, without the written consent of each
Lender affected thereby, (4) change Section 2.17(b) or Section 2.17(c) in
a manner that would alter the pro rata sharing of payments required thereby,
without the written consent of each Lender, (5) release any Credit Party
from its obligations under the Loan Documents, except in connection with any
sales, transfers, leases or other dispositions permitted in Section 7.03,
or (6) change any of the provisions of this Section or the definition
of “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 hereunder without the prior written consent of the Administrative Agent.

 

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

 

(b)                                 THE CREDIT PARTIES SHALL INDEMNIFY THE ADMINISTRATIVE
AGENT 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 THE USE OF THE PROCEEDS
THEREFROM, (III) ANY ACTUAL OR ALLEGED PRESENCE OR RELEASE OF HAZARDOUS
MATERIALS ON OR FROM ANY PROPERTY OWNED OR 

 

58

 

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 under paragraph (a) or (b) of this
Section, each Lender severally agrees to pay to the Administrative Agent, such
Lender’s Applicable Percentage (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 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 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, 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, Participants (to the extent
provided in paragraph (c) of this Section) and, to the extent expressly
contemplated 

 

59

 

hereby, the Related Parties of
each of the Administrative Agent and the Lenders) any legal or equitable right,
remedy or claim under or by reason of this Agreement.

 

(b)

 

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

 

(B)                                the
Administrative Agent, provided that no consent of the Administrative
Agent shall be required for an assignment to a Lender, an Affiliate of a Lender
or an Approved Fund.

 

(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
Loans, the amount of the 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 $1,000,000 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
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:

 

60

 

“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, 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 2.14, Section 2.15, Section 2.16
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 principal amount
of the Loans owing to each Lender pursuant to the terms hereof from time to
time (the “Register”).  The entries
in the Register shall be conclusive, and the Credit Parties, the Administrative
Agent and the Lenders may treat each Person whose name is recorded in the
Register pursuant to the terms hereof as a Lender hereunder for all purposes of
this Agreement, notwithstanding notice to the contrary.  The Register shall be available for
inspection by the Credit Parties and any Lender, at any reasonable time and
from time to time upon reasonable prior notice.

 

(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, and 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 2.06, Section 2.17(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 

 

61

 

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 or the Administrative Agent, sell participations to one or more
banks or other entities (a “Participant”) in all or a portion of such
Lender’s rights and obligations under this Agreement (including all or a
portion of the Loans owing to it); provided that (A) such Lender’s
obligations under this Agreement shall remain unchanged, (B) such Lender
shall remain solely responsible to the other parties hereto for the performance
of such obligations and (C) the Borrower, the Administrative Agent and the
other Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under this Agreement.  Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided that
such agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver
described in the first proviso to Section 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 2.14, Section 2.15 and Section 2.16 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 2.17(c) as
though it were a Lender.

 

(ii)           A Participant shall not be entitled
to receive any greater payment under Section 2.14 or Section 2.16
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 2.16
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 2.16(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.

 

62

 

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, regardless of any investigation made by any such other party or on
its behalf and notwithstanding that the Administrative Agent or any Lender may
have had notice or knowledge of any Default or incorrect representation or
warranty at the time any credit is extended hereunder, and shall continue in
full force and effect as long as the principal of or any accrued interest on
any Loan or any fee or any other amount payable under this Agreement is
outstanding and unpaid.  The provisions
of Section 2.14, Section 2.15, Section 2.16 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 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 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 

 

63

 

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.

 

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 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 

 

64

 

IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY
(WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

Section 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 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 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 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 

 

65

 

contracted
for, charged, taken, received or reserved by the Lender holding such Loan in
accordance with applicable law, the rate of interest payable in respect of such
Loan hereunder, together with all Charges payable in respect thereof, shall be
limited to the Maximum Rate and, to the extent lawful, the interest and Charges
that would have been payable in respect of such Loan but were not payable as a
result of the operation of this Section shall be cumulated 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.

 

66

 

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
  OPERATING COMPANY, LP

  
	
   

  	
  (formerly known
  as EXCO Partners Operating

  
	
   

  	
  Partnership, LP)

  
	
   

  
	
   

  	
  By:

  	
  EXCO Partners OLP GP, LLC

  
	
   

  	
   

  	
  its sole general partner

  
	
   

  	
   

  	
   

  
	
   

  
	
   

  	
  By:

  	
  /s/ J. Douglas Ramsey

  
	
   

  	
  Name:

  	
  J. Douglas Ramsey, Ph.D.

  
	
   

  	
  Title:

  	
  Vice President and Chief
  Financial

  Officer

  
					

 

 

	
   

  	
  GUARANTORS:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GARRISON GATHERING, LLC

  
	
   

  	
  VAUGHAN DE, LLC

  
	
   

  	
  VAUGHAN HOLDING COMPANY, L.L.C.

  
	
   

  	
  VERNON GATHERING, LLC

  
	
   

  	
   

  	
   

  
	
   

  
	
   

  	
  By:

  	
  /s/ J. Douglas Ramsey

  
	
   

  	
  Name:

  	
  J. Douglas Ramsey, Ph.D.

  
	
   

  	
  Title:

  	
  Vice President and Chief
  Financial Officer

  
	
   

  	
   

  	
  for each of the Credit
  Parties listed above

  
					

 

 

	
   

  	
  TALCO MIDSTREAM ASSETS, LTD.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  VAUGHAN HOLDING COMPANY, L.L.C.

  
	
   

  	
   

  	
  its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ J. Douglas Ramsey

  
	
   

  	
  Name:

  	
  J. Douglas Ramsey, Ph.D.

  
	
   

  	
  Title:

  	
  Vice President and Chief
  Financial

  Officer

  
					

 

SIGNATURE
PAGE

 

 

	
   

  	
  TGG PIPELINE, LTD.

  	
   

  
	
   

  
	
   

  	
  By:

  	
  VAUGHAN HOLDING COMPANY, L.L.C.,

  
	
   

  	
   

  	
  its General Partner

  
	
   

  
	
   

  
	
   

  	
  By:

  	
  /s/ J. Douglas Ramsey

  
	
   

  	
  Name:

  	
  J. Douglas Ramsey, Ph.D.

  
	
   

  	
  Title:

  	
  Vice President and Chief Financial

  
	
   

  	
   

  	
  Officer

  
	
   

  
	
   

  
	
   

  	
  EXCO PRODUCTION COMPANY, LP
 (formerly known as Winchester Production

  Company, Ltd.)

  
	
   

  
	
   

  	
  By:

  	
  VAUGHAN DE, LLC,

  
	
   

  	
   

  	
  its General Partner

  
	
   

  
	
   

  
	
   

  	
  By:

  	
  /s/ J. Douglas Ramsey

  
	
   

  	
  Name:

  	
  J. Douglas Ramsey, Ph.D.

  
	
   

  	
  Title:

  	
  Vice President and Chief Financial

  
	
   

  	
   

  	
  Officer

  
									

 

SIGNATURE
PAGE

 

 

	
   

  	
  JPMORGAN CHASE BANK, N.A.,

  
	
   

  	
  as Administrative Agent and as a Lender,

  
	
   

  	
   

  	
   

  
	
   

  
	
   

  	
  By:

  	
  /s/ Wm. Mark Cranmer

  
	
   

  	
  Name:

  	
  Wm. Mark Cranmer

  
	
   

  	
  Title:

  	
  Senior Vice President

  
					

 

SIGNATURE PAGE

 

 

	
   

  	
  EAST TEXAS SHALE TRUST,

  
	
   

  	
  as a Lender,

  	
   

  
	
   

  
	
   

  	
  By:

  	
  Wilmington Trust Company,

  
	
   

  	
   

  	
  not in its individual capacity, but solely as

  
	
   

  	
   

  	
  owner trustee under the Trust Agreement

  
	
   

  	
   

  	
  dated July 15, 2008

  
	
   

  
	
   

  
	
   

  	
  By:

  	
  /s/ Joseph B. Feil

  
	
   

  	
  Name:

  	
  Joseph B. Feil

  
	
   

  	
  Title:

  	
  Vice President

  
						

 

SIGNATURE
PAGE

 

 

	
   

  	
  JPM MEZZANINE CAPITAL, LLC,

  
	
   

  	
  as a Lender,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Elizabeth Caswallader

  
	
   

  	
  Name:

  	
  Elizabeth Caswallader

  
	
   

  	
  Title:

  	
  Managing Director

  

 

SIGNATURE PAGE

 

 

	
   

  	
  GREENLIGHT CAPITAL, L.P.

  
	
   

  	
  as a Lender,

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Greenlight Capital, LLC, its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Harry Brandler

  
	
   

  	
   

  	
  Name:

  	
  Harry Brandler

  
	
   

  	
   

  	
  Title:

  	
  CFO

  

 

SIGNATURE PAGE

 

 

	
   

  	
  GREENLIGHT CAPITAL QUALIFIED, L.P.

  
	
   

  	
  as a Lender,

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Greenlight Capital, LLC, its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Harry Brandler

  
	
   

  	
   

  	
  Name:

  	
  Harry Brandler

  
	
   

  	
   

  	
  Title:

  	
  CFO

  

 

SIGNATURE PAGE

 

 

	
   

  	
  GREENLIGHT CAPITAL OFFSHORE, LTD.

  
	
   

  	
  as a Lender,

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Greenlight
  Capital, Inc., its Investment Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Harry Brandler

  
	
   

  	
   

  	
  Name:

  	
  Harry Brandler

  
	
   

  	
   

  	
  Title:

  	
  CFO

  

 

SIGNATURE PAGE

 

 

	
   

  	
  GREENLIGHT REINSURANCE, LTD.

  
	
   

  	
  as a Lender,

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  DME
  Advisors, LP, its Investment Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Harry Brandler

  
	
   

  	
   

  	
  Name:

  	
  Harry Brandler

  
	
   

  	
   

  	
  Title:

  	
  CFO

  

 

SIGNATURE PAGE

 

 

	
   

  	
  CALYON NEW YORK BRANCH,  

  
	
   

  	
  as a Lender,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael
  D. Willis

  
	
   

  	
  Name:

  	
  Michael D.
  Willis

  
	
   

  	
  Title:

  	
  Managing Director

  

 

SIGNATURE PAGE

 

 

	
   

  	
  WELLS FARGO ENERGY CAPITAL, INC.,

  
	
   

  	
  as a Lender,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Zach
  Johnson

  
	
   

  	
  Name:

  	
  Zach Johnson

  
	
   

  	
  Title:

  	
  Senior Vice
  President

  

 

SIGNATURE PAGE

 

 

	
   

  	
  BNP PARIBAS,

  
	
   

  	
  as a Lender,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Juan
  Carlos Sandoval

  
	
   

  	
  Name:

  	
  Juan Carlos
  Sandoval

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Edward Pak

  
	
   

  	
  Name:

  	
  Edward Pak

  
	
   

  	
  Title:

  	
  Vice President

  

 

SIGNATURE PAGE

 

 

	
   

  	
  SUMITOMO MITSUI BANKING CORPORATION,

  
	
   

  	
  as a Lender,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William
  M. Ginn

  
	
   

  	
  Name:

  	
  William M.
  Ginn

  
	
   

  	
  Title:

  	
  General Manager

  

 

SIGNATURE PAGE

 

 

	
   

  	
  NATIXIS,

  
	
   

  	
  as a Lender,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Liana
  Tchernysheva

  
	
   

  	
  Name:

  	
  Liana
  Tchernysheva

  
	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Timothy L. Polvado

  
	
   

  	
  Name:

  	
  Timothy L. Polvado

  
	
   

  	
  Title:

  	
  Senior Managing Director

  

 

SIGNATURE PAGEExhibit 10.1

 

AMENDMENT TO EMPLOYMENT AGREEMENT

 

This AMENDMENT  to EMPLOYMENT
AGREEMENT (this “Amendment”)
is made and entered into as of December 3, 2008 (the “Effective Date”), by
and between Amylin Pharmaceuticals, Inc.,
a Delaware corporation (the “Company”), and Daniel
M. Bradbury (the “Executive”).

 

WHEREAS,
the Company and the Executive previously entered into that certain Employment
Agreement entered into effective as of March 7, 2007 (the “Prior Agreement”)
and desire to amend the Prior Agreement as set forth herein, effective as of
the Effective Date, in order to, among other things, clarify the application of
Section 409A of the Internal Revenue Code (the “Code”) to the
benefits provided to the Executive under the Prior Agreement.  Capitalized terms not defined herein shall
have the meaning ascribed to them under the Prior Agreement; and

 

WHEREAS,
the Parties have agreed, subject to the terms and conditions hereof, to amend
and modify the Prior Agreement as provided herein.

 

NOW
THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:

 

SECTION 4.2.   
Amendment to Section 4.2 of the Prior Agreement.  Section 4.2 of the Prior Agreement is
hereby deleted in its entirety and replaced by the following:

 

(a)                                  If
the Executive is terminated by the Company without Cause (as defined below) or
resigns for Good Reason (as defined below), then the Company shall pay the
Executive his base salary and accrued and unused vacation benefits earned in
accordance with Company policies through the date of such termination or
resignation at the rate in effect at the time thereof.  In addition, upon the Executive’s delivery to
the Company of a Release and
Waiver in the form attached hereto as Exhibit A
(the  “Release”) within 21 days of such
termination or resignation, or such
later period of time as may be required by applicable laws, and permits such
Release to become effective in accordance with its terms, the Executive
shall be entitled to the following benefits:

 

(i)                                     severance
pay in the form of a one-time lump sum payment (the “Severance Pay”)
equal to the greater of: (a) 12
months of the Executive’s then current base salary plus the bonus the Executive
would have earned if the Executive had been employed by the Company from the
date of such termination or resignation through the end of the fiscal year of
the Company in which such termination or resignation occurs at the full target
bonus in effect at the time of such termination or resignation and (b) other
such amount as may be determined by the Compensation Committee in its sole
discretion,

 

(ii)                                  provided
that the Executive makes a timely election for continuation coverage under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), direct payment to the insurer through
the date that is 12 months following such termination or resignation of medical
and dental insurance premiums applicable to continued coverage for the
Executive under the Company’s medical and dental plans as in effect on the date
of such termination or resignation at the full beneficiary and dependent levels
then in effect; and

 

1

 

(iii) direct payment to the insurer through the date
that is 12 months following such termination or resignation of the cost of the
Employee’s continued life and disability insurance premiums, to the extent that such coverage is reasonably similar
to that in effect at the date of such termination or resignation.

 

(b)                                If, at the time of
termination of the Executive’s employment by the Company without Cause or the
Executive’s resignation for Good Reason, the Executive is not serving as a
Board member and is not otherwise serving as a consultant to the Company, or if
at the time of such termination or resignation the Executive is continuing to
serve as a Board member or is otherwise serving as a consultant to the Company
but during the 12 month period following such termination or resignation, the
Executive ceases to serve as a Board member and is not otherwise serving as a
consultant to the Company, then, unless the Executive fails to deliver to the
Company the Release within 21
days of such termination or resignation,
or such longer period of time as may be required by applicable laws, and
permits such Release to become effective in accordance with its terms,
effective as of immediately prior to such termination, resignation, cessation
of service as a Board member or cessation of other service as a consultant to
the Company, as applicable, and until the date that is 12 months following such
termination or resignation, the Executive shall serve as a consultant to the
Company pursuant to this paragraph (b) with respect to such general
business matters as may be reasonably agreed to by the Executive and the
Company.  Such service by the Executive
as a consultant shall be performed solely in consideration of the covenants of
the Company set forth in this Section 4.2 and for no additional
consideration.  The consulting services rendered by the Executive shall in no event
exceed twenty percent (20%) of the average level of services performed by the
Executive for the Company over the thirty-six (36) month period immediately
preceding the Executive’s termination of employment by the Company without
Cause or resignation for Good Reason (or the full period of services to the
Company, if the Executive has been providing services to the Company for less
than thirty-six (36) months), as determined under Treasury Regulation Section 1.409A-1(h)(1)(ii).  Any work product or inventions
generated by the Executive during such service as a Consultant shall be deemed
work for hire and shall be the property of the Company.

 

(c)                                  For
purposes of this Section 4.2:

 

(A)                               “Cause” means that,
in the reasonable determination of the Company, the Executive has (i) been
convicted of or pleaded guilty or nolo
contendere to a felony or any crime involving moral turpitude or
dishonesty; (ii) participated in a fraud or act of dishonesty against the
Company; (iii) willfully and materially breached a Company policy; (iv) intentionally
damaged the Company’s property; (v) willfully and materially breached his
Proprietary Information and Inventions Agreement with the Company; (vi) engaged
in conduct that, in the reasonable determination of the Company, demonstrates
gross unfitness to serve; or (vii) repeatedly failed to satisfactorily
perform job duties to which he previously agreed in writing.  The conduct described under clauses (iii), (vi) and
(vii) above will only constitute Cause if such conduct is not cured within
ninety (90) days after the
Executive’s receipt of written notice from the Company or the Board specifying
the particulars of the conduct that may constitute Cause; and

 

2

 

(B)                               “Good Reason” means
the Executive voluntarily terminates his employment with the Company after any
of the following are undertaken without Cause and without the Executive’s
express written consent, provided that
Executive has first provided written notice to any member of the Board within
ninety (90) days of the first such occurrence of such event specifying the
event constituting Good Reason and specifying that Executive intends to
terminate employment not earlier than thirty (30) days after providing such
notice, and the Company has not cured such event(s) within thirty (30)
days (or such longer period as may be specified by Executive in such notice)
after such written notice is received by such member of the Board (the “Cure Period”), and Executive resigns within thirty (30)
days following the end of the Cure Period:

 

(i)                                     a
material reduction in the Executive’s
base salary, except for across-the-board reductions in base salaries of less
than ten percent (10%) similarly affecting all similarly situated executives of
comparable rank with the Executive;

 

(ii)                                a material reduction in the Executive’s authority, duties or
responsibilities as described in this Agreement;

 

(iii)                             a requirement that the Executive report to a corporate officer or
employee instead of reporting directly to the Board;

 

(iv)                            a relocation of the Company’s
principal executive offices to a
location more than fifty (50) miles from the location at which the
Executive was performing his duties immediately prior to such relocation
(excluding in any case travel on the Company’s business consistent with the
Executive’s duties as Chief Executive Officer of the Company); or

 

(v)                               the failure by the Company to comply with any material provision of this
Agreement.

 

(d)                               The
Severance Pay shall be paid within sixty (60) days after Executive’s
termination or resignation.

 

SECTION 4.6.   
Addition of new Section 4.6 of the Prior Agreement.  The following Section 4.6 is hereby
added to the Prior Agreement:

 

Application
of Internal Revenue Code Section 409A.
Notwithstanding anything to the contrary set forth herein, any payments and
benefits provided under this Agreement (the “Severance Benefits”) that constitute a “nonqualified deferred compensation plan”
within the meaning of Section 409A of the Internal Revenue Code of 1986,
as amended (the “Code”) and the regulations and other guidance thereunder and any state law of similar effect
(collectively “Section 409A”) shall not commence in connection with Executive’s termination of employment
unless and until Executive has also incurred a “separation from service” (as
such term is defined in Treasury Regulation Section 1.409A-1(h) (“Separation From Service”).  For the avoidance of doubt, it is intended
that payments of the Severance Benefits set forth in this Agreement satisfy, to
the greatest extent possible, the exemptions from the application of Section 409A
provided under Treasury Regulation Sections 1.409A-1(a)(5), 1.409A-1(b)(4), 1.409A-1(b)(5) and
1.409A-1(b)(9).  However, if the Severance Benefits constitute “nonqualified
deferred 

 

3

 

compensation plan” under Section 409A, then to the extent
required to comply with Section 409A, and, if the Executive is, on the
date of Executive’s Separation from Service, a “specified employee” of the
Company or any successor entity thereto, as such term is defined in Section 409A
(a “Specified
Employee”), then,
the timing of the Severance Benefit payments shall be delayed until the earlier
to occur of:  (i) the date that is
six months after Executive’s Separation from Service or (ii) the date of
Executive’s death.  To the extent the
payments and benefits under this Agreement are subject to Section 409A of
the Code, this Agreement shall be interpreted, construed and administered in a
manner that satisfies the requirements of Sections 409A.  As provided in Internal Revenue Notice
2007-86, notwithstanding any other provision of this Agreement, with respect to
an amendment to change a time or form of payment under this Agreement made on
or after January 1, 2008 and on or before December 31, 2008, the
amendment shall apply only with respect to payments that would not otherwise be
payable in 2008, and shall not cause payments to be made in 2008 that would not
otherwise be payable in 2008.

 

Notwithstanding
any other payment schedule set forth in this Agreement, none of the Severance
Benefits will be paid or otherwise delivered prior to the effective date of the
Release.

 

SECTION 8.   
Amendment to Section 8 of the Prior Agreement.  Section 8 of the Prior Agreement is
hereby deleted in its entirety and replaced by the following:

 

This Agreement, including the
Proprietary Information and Inventions Agreement, contains the complete, final
and exclusive agreement of the Parties relating to the terms and conditions of
the Executive’s employment and the termination of the Executive’s employment,
and supersedes all prior and contemporaneous oral and written employment
agreements or arrangements between the Parties including without limitation the
Prior Agreement.  To the extent this
Agreement conflicts with the Proprietary Information and Inventions Agreement,
the Proprietary Information and Inventions Agreement controls.  Notwithstanding
the foregoing, this Agreement shall not supersede the Executive’s rights under
the Company’s employee benefit plans, policies or arrangements as in effect
from time to time, including, without limitation, the Company’s equity plans
(and awards thereunder) and the plans, policies and arrangements described in Section 3.5,
or the Executive’s rights to indemnification or insurance for liability as an
officer, director or employee of the Company or any of its subsidiaries.

 

4

 

IN WITNESS
WHEREOF, the Parties have executed this Amendment as
of the date first above written.

 

	
   

  	
   

  	
  AMYLIN PHARMACEUTICALS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated: 

  	
          12/3/2008

  	
   

  	
  By:

  	
      /s/
  Joseph C. Cook, Jr.

  
	
   

  	
   

  	
  Name: Joseph C. Cook, Jr.

  
	
   

  	
   

  	
  Chairman of
  the Board

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated: 

  	
          12/3/2008

  	
   

  	
  By:

  	
      /s/
  Daniel M. Bradbury

  
	
   

  	
   

  	
  Name: Daniel M. Bradbury

  

 

5

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