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Exhibits 4.17 and 10.26    
  

 
 

THIRD AMENDMENT TO RESTATED CREDIT AGREEMENT    
  

        THIS THIRD AMENDMENT TO RESTATED CREDIT AGREEMENT (hereinafter referred to as the "Amendment") executed as of the 30th day of September, 2002, by and between
ADDISON ENERGY INC., an Alberta, Canada corporation ("Borrower") and BANK ONE, NA, CANADA BRANCH ("Bank One"), and each of the financial institutions which is a party thereto (as evidenced by
the signature pages to the Agreement) or which may from time to time become a party thereto pursuant to the provisions of Section 28 thereof or any successor or assignee thereof (hereinafter
collectively referred to as "Lenders", and individually, "Lender") and Bank One, as Administrative Agent (the "Agent"), BNP Paribas (Canada), as Syndication Agent, The Bank of Nova Scotia, as
Documentation Agent and Banc One Capital Markets, Inc., as Lead Arranger and Bookrunner ("Arranger"). 

WITNESSETH:  

        WHEREAS, as of April 26, 2001, Borrower, the Lenders and the Agent entered into a Credit Agreement pursuant
to which the Lenders made available to the Borrowers certain credit facilities in the form therein described; and 

        WHEREAS, as of December 18, 2001, Borrower, Lenders and Agent entered into a Restated Credit Agreement (the "Credit Agreement");
and 

        WHEREAS, as of April 26, 2002, Borrower, Lenders and Agent entered into an Amendment to Restated Credit Agreement (the "First
Amendment"); and 

        WHEREAS, as of June 24, 2002, Borrower, Lenders and Agent entered into a Second Amendment to Restated Credit Agreement (the "Second
Amendment"); and 

        WHEREAS, the Borrower has requested that the Lenders agree to make certain additional amendments to the Credit Agreement and the Lenders,
together with certain additional financial institutions who shall become a party to the Credit Agreement at the Amendment Effective Date (as hereinafter defined), have agreed to do so on the terms and
conditions hereinafter set forth. 

        NOW, THEREFORE, the parties agree to amend the Credit Agreement as follows: 

        1.    Unless
otherwise defined herein all defined terms used herein shall have the same meaning as ascribed to such terms in the Credit Agreement. 

        2.    Section 13
of the Credit Agreement is hereby amended by deleting Subsection (c) therefrom and substituting the following in lieu thereof: 

        "(c)    Debt Coverage Ratio. The Borrower will not allow the ratio of Consolidated Funded Debt to the sum of
(i) Consolidated EBITDA plus (ii) Pro-Forma Consolidated EBITDA to be greater than 3.0 to 1.0 as of the end of any fiscal quarter beginning with the fiscal quarter ending
September 30, 2002." 

        3.    Except
to the extent its provisions are specifically amended, modified or superseded by the First Amendment, the Second Amendment or this Amendment, the representations,
warranties and affirmative and negative covenants of the Borrower contained in the Credit Agreement are incorporated herein by reference for all purposes as if copied herein in full. The Borrower
hereby restates and reaffirms each and every term and provision of the Credit Agreement, as amended, including, without limitation, all representations, warranties and affirmative and negative
covenants. Except to the extent its provisions are specifically amended, modified or superseded by the First Amendment, the Second Amendment or this Amendment, the Credit Agreement, as amended, and
all terms and provisions thereof shall remain in full force and effect, and the same in all respects are confirmed and approved by the Borrower and the Lenders. 

 

        4.    This
Amendment shall be effective as of the date first above written, but only upon the satisfaction of the conditions precedent set forth in Paragraph 5 hereof. 

        5.    The
obligations of Lenders under this Amendment shall be subject to the following conditions precedent: 

        (a)  Execution and Delivery. The Borrower shall have executed and delivered this Amendment, and other required documents, all
in form and substance satisfactory to the Agent; 

        (b)  Representations and Warranties. The representations and warranties of the Borrower under this Amendment are true and
correct in all material respects as of such date, as if then made (except to the extent that such representations and warranties related solely to an earlier date); 

        (c)  No Event of Default. No Event of Default shall have occurred and be continuing nor shall any event have occurred or
failed to occur which, with the passage of time or service of notice, or both, would constitute an Event of Default; 

        (d)  Other Documents. The Agent shall have received such other instruments and documents incidental and appropriate to the
transaction provided for herein as the Agent or its counsel may reasonably request, and all such documents shall be in form and substance satisfactory to the Agent; 

        (e)  Legal Matters Satisfactory. All legal matters incident to the consummation of the transactions contemplated hereby shall
be reasonably satisfactory to special counsel for the Agent retained at the expense of Borrower. 

        6.    Borrower
hereby represents and warrants that all factual information heretofore and contemporaneously furnished by or on behalf of Borrower to Agent for purposes of or in
connection with this Amendment does not contain any untrue statement of a material fact or omit to state any material fact necessary to keep the statements contained herein or therein from being
misleading. Each of the foregoing representations and warranties shall constitute a representation and warranty of Borrower made under the Credit Agreement, and it shall be an Event of Default if any
such representation and warranty shall prove to have been incorrect or false in any material respect at the time given. Each of the representations and warranties made under the Credit Agreement
(including those made herein) shall survive and not be waived by the execution and delivery of this Amendment or any investigation by Lenders. 

        7.    The
Borrower agrees to indemnify and hold harmless the Lenders and their respective officers, employees, agents, attorneys and representatives (singularly, an
"Indemnified Party", and collectively, the "Indemnified Parties") from and against any loss, cost, liability, damage or expense (including the reasonable fees and out-of-pocket
expenses of counsel to the Lender, including all local counsel hired by such counsel) ("Claim") incurred by the Lenders in investigating or preparing for, defending against, or
providing evidence, producing documents or taking any other action in respect of any commenced or threatened litigation, administrative proceeding or investigation under any federal securities law,
federal or state environmental law, or any other statute of any jurisdiction, or any regulation, or at common law or otherwise, which is alleged to arise out of or is based upon any acts, practices or
omissions or alleged acts, practices or omissions of the Borrower or its agents or arises in connection with the duties, obligations or performance of the Indemnified Parties in negotiating,
preparing, executing, accepting, keeping, completing, countersigning, issuing, selling, delivering, releasing, assigning, handling, certifying, processing or receiving or taking any other action with
respect to the Loan Documents and all documents, items and materials contemplated thereby even if any of the foregoing arises out of an Indemnified Party's ordinary negligence. The indemnity set forth
herein shall be in addition to any other obligations or liabilities of the Borrower to the Lenders hereunder or at common law or otherwise, and shall survive any termination of this Amendment, the
expiration of the Loan and the payment of all indebtedness of the Borrower to the Lenders hereunder and under 

2

 

the Notes, provided that the Borrower shall have no obligation under this section to the Lenders with respect to any of the foregoing arising out of the gross negligence or willful misconduct of the
Lenders. If any Claim is asserted against any Indemnified Party, the Indemnified Party shall endeavor to notify the Borrower of such Claim (but failure to do so shall not affect the indemnification
herein made except to the extent of the actual harm caused by such failure). The Indemnified Party shall have the right to employ, at the Borrower's expense, counsel of the Indemnified Parties'
choosing and to control the defense of the Claim. The Borrowers may at their own expense also participate in the defense of any Claim. Each Indemnified Party may employ separate counsel in connection
with any Claim to the extent such Indemnified Party believes it reasonably prudent to protect such Indemnified Party. The parties intend for the provisions of this Section to
apply to and protect each Indemnified Party from the consequences of strict liability imposed or threatened to be imposed on any Indemnified Party as well as from the consequences of its own
negligence, whether or not that negligence is the sole, contributing, or concurring cause of any Claim.

        8.    This
Amendment may be executed in any number of counterparts and all of such counterparts taken together shall be deemed to constitute one and the same instrument. 

        9.    WRITTEN CREDIT AGREEMENT. THE CREDIT AGREEMENT, AS AMENDED BY THE FIRST AMENDMENT, THE SECOND AMENDMENT OR THIS AMENDMENT
REPRESENTS THE FINAL AGREEMENT BETWEEN AND AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN AND AMONG THE PARTIES. 

        IN WITNESS WHEREOF, the parties have caused this Amendment to Restated Credit Agreement to be duly executed as of the date first above
written. 

	

 	
 	
BORROWER:
	

 	
 	

ADDISON ENERGY INC.
	

 	
 	

By:	

/s/  J. DOUGLAS RAMSEY      
 J. Douglas Ramsey, Vice President

and Chief Financial Officer

3

 

	

 	
 	
LENDERS:
	

 	
 	

BANK ONE, NA CANADA BRANCH
 as a Lender and as Administrative Agent
	

 	
 	

By:	

/s/  MICHAEL N. TAM      

	 	 	Name:	Michael N. Tam

	 	 	Title:	Director

4

 

	

 	
 	
BNP PARIBAS (CANADA)
 as a Lender and as Syndication Agent
	

 	
 	

By:	

/s/  CHARLES RITCHIE      

	 	 	Name:	Charles Ritchie

	 	 	Title:	Vice President—Energy & Project Finance

	

 	
 	

By:	

/s/  MICHAEL GOSSELIN      

	 	 	Name:	Michael Gosselin

	 	 	Title:	Director—Energy & Project Finance

5

 

	

 	
 	
THE BANK OF NOVA SCOTIA
 as a Lender and as Documentation Agent
	

 	
 	

By:	

/s/  BRIAN WILLIAMSON      

	 	 	Name:	Brian Williamson

	 	 	Title:	Director

	

 	
 	

By:	

/s/  EUGENIA SCARLETT      

	 	 	Name:	Eugenia Scarlett

	 	 	Title:	Associate

6

 

	

 	
 	
COMERICA BANK, CANADA BRANCH
	

 	
 	

By:	

/s/  ROBERT ROSEN      

	 	 	Name:	Robert Rosen

	 	 	Title:	Vice-President

7

 

	

 	
 	
FLEET NATIONAL BANK
	

 	
 	

By:	

/s/  JEFFREY RATHKAMP      

	 	 	Name:	Jeffrey Rathkamp

	 	 	Title:	Vice President

8

 

	

 	
 	
THE TORONTO-DOMINION BANK
	

 	
 	

By:	

/s/  PARIN KANJI      

	 	 	Name:	Parin Kanji

	 	 	Title:	Assistant Manager

9

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Exhibits 4.17 and 10.26

THIRD AMENDMENT TO RESTATED CREDIT AGREEMENTQuickLinks
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Exhibit 10.27    
  

 

EXCO RESOURCES, INC.
  
    SEVERANCE PLAN
  
    (EFFECTIVE AS OF AUGUST 15, 2002)    
  

 
 
 
TABLE OF CONTENTS  

 

	Section
	 	 
	 	Page

	ONE	 	PURPOSE OF PLAN	 	1
	

TWO	
 	

PRIOR SEVERANCE ARRANGEMENTS	
 	

1
	

THREE	
 	

DEFINITIONS	
 	

1
	

FOUR	
 	

ELIGIBILITY AND SEVERANCE PAY BENEFITS	
 	

4
	4.1	 	Eligibility	 	4
	4.2	 	Release Form	 	5
	4.3	 	Termination of Eligibility for Severance Pay	 	5
	4.4	 	Severance Pay	 	5
	

FIVE	
 	

FUNDING	
 	

5
	

SIX	
 	

CLAIMS PROCEDURE	
 	

6
	6.1	 	Filing and Initial Determination of Claim	 	6
	6.2	 	Duty of Plan Administrator Upon Denial of Claim	 	6
	6.3	 	Request for Review of Claim Denial	 	6
	6.4	 	Decision on Review of Denial	 	6
	

SEVEN	
 	

ADMINISTRATION OF THE PLAN	
 	

7
	7.1	 	Plan Administrator	 	7
	7.2	 	Responsibilities	 	7
	7.3	 	Allocation and Delegation of Plan Administrator Responsibilities	 	7
	7.4	 	Actions of Fiduciaries	 	7
	7.5	 	General Administrative Powers	 	7
	7.6	 	Appointment of Professional Assistance	 	8
	7.7	 	Discretionary Acts	 	8
	7.8	 	Responsibility of Fiduciaries	 	8
	7.9	 	Indemnity by Employer	 	9
	

EIGHT	
 	

ADOPTION OF PLAN BY SUBSIDIARY	
 	

9
	

NINE	
 	

AMENDMENT OF THE PLAN	
 	

9
	

TEN	
 	

TERMINATION OF THE PLAN	
 	

9
	

ELEVEN	
 	

VESTING	
 	

10
	

TWELVE	
 	

STATUS OF EMPLOYMENT RELATIONS	
 	

10
	

THIRTEEN	
 	

RESTRICTIONS ON ASSIGNMENT	
 	

10
	

FOURTEEN	
 	

APPLICABLE LAW	
 	

10
	

FIFTEEN	
 	

INTERPRETATION OF THE PLAN	
 	

11

i

 
 

EXCO RESOURCES, INC.
  
  SEVERANCE PLAN    
  

        EXCO RESOURCES, INC. (the "Company") is adopting for its Eligible Employees a severance plan effective as of August 15, 2002 (the "Effective Date"),
in accordance with the terms and conditions contained herein. 

 
 

SECTION ONE
  
    PURPOSE OF PLAN    
  

        The purpose of the Plan is to provide financial support to Eligible Employees who incur a Termination of Employment due to a Change of Control. 

 
 

SECTION TWO
  
    PRIOR SEVERANCE ARRANGEMENTS    
  

        As of the Effective Date, the Plan replaces any and all severance pay obligations, plans, policies, practices, arrangements or programs, written or unwritten,
under which the Eligible Employees may otherwise be eligible for severance benefit payments. Notwithstanding the foregoing provisions of this Section Two, nothing in this Plan shall adversely affect
the rights an individual Eligible Employee may have to severance payments under any written agreement executed by and between the Employer and that Eligible Employee (a "Severance Agreement");
provided, however, that in the event any Eligible Employee that is a party to a Severance Agreement suffers a Termination of Employment and is entitled to and is receiving the severance benefits
intended to be provided under his or her Severance Agreement, such Eligible Employee shall not be entitled to receive severance benefits pursuant to this Plan. 

 
 

SECTION THREE
  
    DEFINITIONS    
  

        As used in the Plan: 

        3.1  "Base
Pay" shall mean the Eligible Employee's gross salary or hourly wages for a 40-hour workweek before any deductions, exclusions or any deferrals or
contributions under any Company plan or program, but excluding overtime, bonuses, incentive compensation, shift and lead premium payments, employee benefits or any other form of compensation, being
received by an Eligible Employee immediately prior to employment termination. 

        3.2  "Cause"
shall mean (i) the willful breach or habitual neglect of assigned duties related to the Company, including compliance with Company policies;
(ii) conviction (including any plea of nolo contendere) of the Eligible Employee of any felony or crime involving dishonesty or moral turpitude; (iii) any act of personal dishonesty
knowingly taken by the Eligible Employee in connection with his responsibilities as an employee and intended to result in personal enrichment of the Eligible Employee or any other person;
(iv) bad faith conduct that is materially detrimental to the Company; (v) inability of the Eligible Employee to perform the Employee's duties due to alcohol or illegal drug use;
(vi) the Eligible Employee's failure to comply with any legal written directive of the Board of Directors of the Company; (vii) any act or omission of the Eligible Employee which is of
substantial detriment to the Company because of the Eligible Employee's intentional failure to comply with any statute, rule or regulation, except any act or omission believed by the Eligible Employee
in good faith to have been in or not opposed to the best interest of the Company (without intent of the Eligible Employee to gain, directly or indirectly, a profit to which the Eligible Employee was
not legally entitled) and except that Cause shall not mean bad judgment or negligence other than habitual neglect of duty; or (viii) any 

 

other act or failure to act or other conduct which is determined by the Plan Administrator, in its sole discretion, to be demonstrably and materially injurious to the Employer, monetarily or
otherwise. 

        3.3  "Change
of Control" shall mean 

        (i)    The
Company is merged or consolidated into or with another entity, and as a result of such merger or consolidation less than a majority of the combined voting power of
the then-outstanding securities of such entity immediately after such transaction is held by the holders of Voting Stock of the Company immediately prior to such transaction; 

        (ii)  The
Company sells or otherwise transfers all or substantially all of its assets to any person or entity, and less than a majority of the combined voting power of the
then-outstanding securities of such person
or entity immediately after such sale or transfer is held by the holders of Voting Stock of the Company immediately prior to such sale or transfer; or 

        (iii)  during
any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors of the Company (together with any new
directors whose election to such Board of Directors or whose nomination for election by the shareholders of the Company was approved by a vote of a majority of the directors of the Company then still
in office either who were directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board
of Directors of the Company then in office. 

        Notwithstanding
the foregoing provisions of Subsection (i), (ii) and (iii) above, a "Change in Control" shall not be deemed to have occurred for purposes of this Plan in
the event any group of investors which includes Douglas H. Miller, currently Chairman of the Board and Chief Executive Officer of the Company, or any member of the group or any of their respective
affiliates or associates engages in any transaction described in (i) or (ii) above with the Company. 

        3.4  "Company"
shall mean EXCO Resources, Inc. 

        3.5  "Comparable
Offer of Employment" shall mean: 

        (i)    that
the proposed compensation and benefits, in the aggregate, to be paid by the Company, its parent organization or any of its affiliate organizations, or any successor
to the Company by merger or acquisition of all or substantially all of the Company's assets, offering employment are commensurate with the compensation and benefits previously paid by the Company, in
the aggregate, to such Eligible Employee; 

        (ii)  the
Eligible Employee incurs no demotion in his or her position with the Employer from the position the Eligible Employee held immediately prior to the effective date
of the Change of Control; 

        (iii)  the
Eligible Employee incurs no significant adverse change in the nature or scope of the authorities, powers, functions, responsibilities or duties attached to the
position or positions with the Employer which the Eligible Employee held immediately prior to the effective date of the Change of Control, without the prior written consent of the Eligible Employee,
which is not remedied within ten (10) calendar days after receipt by the Employer of written notice from the Eligible Employee of such change; and 

        (iv)  the
Eligible Employee's principal place of work has not changed to any location that is more than thirty-five (35) miles from his or her principal
place of work immediately prior to the effective date of the Change of Control, without the prior written consent of the Eligible Employee. 

        3.6  "Eligible
Employee" shall mean any employee employed by the Company as a regular, full-time employee on the effective date of a Change of Control, who is
listed in Schedule A of this 

2

 

Plan, and who incurs a Termination of Employment due to a Change of Control either on the date of the Change of Control or within the six-month period immediately following the effective
date of the Change of Control. 

        3.7  "Employer"
shall mean the Company and any direct or indirect subsidiary of the Company which adopts the Plan, and any successor to either the Company or any direct or
indirect subsidiary of the Company which adopted this Plan. 

        3.8  "ERISA"
shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time. References to any Section of ERISA shall include any successor
provision thereto. 

        3.9  "Good
Reason" shall mean any of the following events that occur either on the effective date of a Change of Control or within the six-month period
immediately following the effective date of a Change of Control: 

        (i)    the
Eligible Employee incurs a demotion in his or her position with the Employer from the position the Eligible Employee held immediately prior to the effective date of
the Change of Control; 

        (ii)  the
Eligible Employee incurs a reduction in his or her Base Pay from his or her Base Pay immediately prior to the effective date of a Change of Control; 

        (iii)  the
Eligible Employee incurs a significant adverse change in the nature or scope of the authorities, powers, functions, responsibilities or duties attached to the
position or positions with the Employer which the Eligible Employee held immediately prior to the effective date of the Change of Control, without the prior written consent of the Eligible Employee,
which is not remedied within ten (10) calendar days after receipt by the Employer of written notice from the Eligible Employee of such change; or 

        (iv)  the
Eligible Employee's principal place of work changed to any location that is more than thirty-five (35) miles from his or her principal place of
work immediately prior to the effective date of the Change of Control, without the prior written consent of the Eligible Employee. 

        3.10 "Internal
Revenue Code" shall mean the Internal Revenue Code of 1986, as amended from time to time. References to any Section of the Internal Revenue Code shall include
any successor provision thereto. 

        3.11 "Plan"
shall mean the EXCO Resources, Inc. Severance Plan as set forth in this document, and as hereafter amended. 

        3.12 "Plan
Administrator" shall mean the person, persons or entity administering the Plan in accordance with the provisions of Section Seven hereof. The Plan Administrator
shall be the "named fiduciary," as referred to in Section 402(a) of ERISA, with respect to the management, operation and administration of the Plan. 

        3.13 "Plan
Year" shall mean an initial period starting on the Effective Date and ending on December 31, 2002, and thereafter the twelve (12)-month period ending on
each December 31. 

        3.14 "Release
Form" shall mean a release agreement which is to be signed by the Eligible Employee releasing any and all claims against the Employer and which is in such form
as approved by the Company. 

        3.15 "Severance
Pay" shall mean an amount equal to the amount set forth with respect to the Eligible Employee in Schedule A of the Plan. 

        3.16 "Termination
of Employment" shall mean a termination of employment from the Employer which results from an affirmative discharge from employment by the Employer, other
than discharge for Cause. An Eligible Employee who voluntarily terminates employment for Good Reason shall be 

3

 

deemed to have incurred a Termination of Employment. An Eligible Employee shall not be deemed to have incurred a Termination of Employment by reason of the transfer of the Eligible Employee's
employment between the Company and any Subsidiary or among Subsidiaries (or among any department or business unit of the Company). The Plan Administrator shall determine, in its sole discretion,
whether an Eligible Employee's termination of employment from the Employer constitutes a "Termination of Employment." 

        3.17 "Voting
Stock" shall mean shares of the Company's Common Stock, par value $.02 per share, shares of the Company's 5% Convertible Preferred Stock, par value $.01 per
share and any other securities of the Company entitled to vote for the election of directors. 

        3.18 Wherever
appropriate, words used in the Plan in the singular may mean the plural, the plural may mean the singular, and the masculine may mean the feminine. 

 
 

SECTION FOUR
  
    ELIGIBILITY AND SEVERANCE PAY BENEFITS    
  

 
 
        4.1    Eligibility.     Subject to Sections 4.3 and 4.4 of this Plan, any Eligible Employee is eligible for
Severance Pay following his or her Termination of Employment if such
Termination of Employment occurs either on the effective date of a Change of Control or within the six-month period immediately following the effective date of a Change of Control,
provided that such Eligible Employee executes a Release Form pursuant to Section 4.2 of this Plan. 

 
 

           4.2    Release Form.     An Eligible Employee otherwise eligible for Severance Pay under this Plan shall be
paid such Severance Pay only if the Eligible Employee executes and files the
appropriate fully completed and executed Release Form (substantially in the form of Exhibit A-1 or Exhibit A-2, as the case may be, attached hereto) with the Plan
Administrator, in accordance with the instructions and on or before the date specified on the Release Form or any document accompanying the Release Form, and in the case of an Eligible Employee age 40
or over, does not revoke the Release Form within seven (7) days of executing the Release Form. 

 
 

           4.3    Termination of Eligibility for Severance Pay.     An Eligible Employee will cease to be eligible to
receive Severance Pay, under this Plan upon the earlier of the following: 

	(a)
	the
Eligible Employee's death, unless it occurs after the date the Release Form is executed;

	(b)
	the
Eligible Employee's discharge for Cause or misconduct;

	(c)
	the
Eligible Employee's failure to execute and file the Release Form by the date specified on the Form;

	(d)
	the
Eligible Employee's receipt of a Comparable Offer of Employment from any other United States operation of the Company or its parent organization or any of its affiliate
organizations, regardless of whether such Eligible Employee accepts such offer; or

	(e)
	the
Eligible Employee's receipt and acceptance of a transfer of employment to any other United States or Canadian operation of the Company or its parent organization or any of its
affiliate organizations. 

 
 

           4.4    Severance Pay.     The Severance Pay to which an Eligible Employee is entitled shall be paid to such
Employee in cash in a lump sum within fourteen (14) days following
receipt by the Company of an executed Release Form or, where applicable, following the expiration of the revocation period provided for on the Release Form. 

4

 

        If
an Eligible Employee dies following execution of the Release Form, but before receiving all or part of the Severance Pay to which he is entitled, the Plan Administrator shall pay such
Eligible Employee's Severance Pay to the Eligible Employee's estate. 

 
 

SECTION FIVE
  
    FUNDING    
  

        Funding for this Plan shall come solely from the general assets of the Employer. All payments of Severance Pay shall be paid from the general assets of the
Employer. Neither the Employer nor the Plan Administrator shall have any obligation to establish a trust or fund for the payment of benefits under the Plan or to insure any of the benefits under the
Plan. None of the officers, members of the Board of Directors, or agents of the Employer or the Plan Administrator guarantees in any manner the payment of benefits hereunder. 

 
 

SECTION SIX
  
    CLAIMS PROCEDURE    
  

 
 
        6.1    Filing and Initial Determination of Claim.     An Eligible Employee or his/her duly authorized
representative may file a claim for a benefit to which the claimant believes that he or she is entitled.
Such a claim must be in writing and delivered to the Plan Administrator by postage prepaid certified mail. Within fifteen (15) days after receipt of a claim, the Plan Administrator shall send
to the claimant by certified mail, postage prepaid, notice of the granting or denying, in whole or in part, of such claim, unless special circumstances require an extension of time for processing the
claim. In no event may the extension exceed fifteen (15) days from the end of the initial period. If such extension is necessary, the claimant will be given a written notice to this effect
prior to the expiration of the initial 15-day period. The extension notice shall indicate the special circumstances requiring an extension of time and the date by which the Plan expects to
render the benefit determination. The Plan Administrator shall have full discretion to deny or grant a claim in whole or in part. If notice of the denial of a claim is not furnished in accordance with
this Section 6.1, the claim shall be deemed denied and the claimant shall be permitted to exercise his/or right to review pursuant to Section 6.3. 

 
 

           6.2    Duty of Plan Administrator Upon Denial of Claim.     If a claim for benefits is denied, the Plan
Administrator shall provide to the claimant written notice setting forth in a manner calculated to be understood by
the claimant: (i) the specific reason or reasons for the denial; (ii) specific reference to pertinent Plan provisions on which the denial is based; (iii) a description of any
additional material or information necessary for the claimant to perfect the claim and an explanation of why such material is necessary; and (iv) a description of the Plan's claims review
procedure and the time limits applicable to such procedures, including a statement of the claimant's right to being a civil action under Section 502(a) of ERISA following a denial of the claim
on review. 

 
 

           6.3    Request for Review of Claim Denial.     If an Eligible Employee receives written notification of the
denial in whole or in part of his/her claim pursuant to Section 6.1, or if an employee is not
included in Schedule A and is therefore not eligible for benefits under this Plan, within sixty (60) days of the Eligible Employee's receipt of claim denial or the date the employee
becomes aware that he is not eligible for benefits under this Plan, if the claimant disagrees with such action, the claimant or his/her authorized representative shall file a written request
with the Plan Administrator that it conduct a full and fair review of the denial of the claim for benefits. In connection with any request for a review of the denial of a claim for benefits, the
claimant shall have the opportunity to submit written comments, documents, records, and other information relating to the claim for benefits. The Plan Administrator shall provide the claimant, upon
request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claimant's claim for benefits. A 

5

 

document, record, or other information shall be considered "relevant" to a claim for benefits if that document, record or other information: (i) was relied upon in making the benefit
determination; (ii) was submitted, considered, or generated in the course of making the benefit determination, without regard to whether such document, record or other information was relied
upon in making the benefit determination; or (iii) demonstrates compliance with the administrative process and safeguards required by ERISA in making the benefit determination. The review of a
denial shall take into account all comments, documents, records, and other information submitted by the claimant, without regard to whether such information was submitted or considered in the initial
benefit determination. 

 
 

           6.4    Decision on Review of Denial.     Upon receipt of the request for review, the Plan Administrator
shall review the claim and shall deliver to the claimant a written decision on the claim for
benefits within sixty (60) days after the receipt of the aforesaid request for review, except that if there are special circumstances (such as the need to hold a hearing, if necessary) that
require an extension of time for processing, the aforesaid sixty (60) day period shall be extended to one hundred twenty (120) days and the claimant will be given written notice of the
extension prior to the expiration of the initial 60-day period. In no event shall such extension exceed a period of sixty (60) days from the end of the initial 60-day
period. The extension notice shall indicate the special circumstances requiring an extension of time and the date by which the Plan expects to render the determination on review. 

        The
Plan Administrator's decision shall be written in a manner calculated to be understood by the claimant. Any notice of a denial on review shall include (i) the specific reason
or reasons for the denial on review; (ii) reference to the specific plan provisions on which the denial is based; (iii) a statement that the claimant is entitled to receive, upon request
and free of charge, reasonable access to, and copies of all documents, records, and other information relevant to the claimant's claim for benefits; and (iv) a statement of the claimant's right
to bring an action under Section 502(a) of ERISA. If notice of the decision on the review is not furnished in accordance with this Section 6.4, the claim shall be deemed denied and the
Plan Administrator will have no further duty to review such claim. 

 
 

SECTION SEVEN
  
    ADMINISTRATION OF THE PLAN    
  

 
 

          7.1    Plan Administrator.     The Plan Administrator hereunder shall be the Compensation Committee as
appointed from time to time by the Board of Directors of the Company. 

 
 

           7.2    Responsibilities.     The Plan Administrator shall be the "administrator" (as
defined in Section 3(16)(A) of ERISA) of the Plan,
and shall be responsible for all obligations under the Internal Revenue Code and ERISA and all
other obligations required or permitted to be performed by the Plan Administrator and not otherwise delegated pursuant to the Plan. The Plan Administrator shall be the designated agent for service of
legal process. 

 
 

           7.3    Allocation and Delegation of Plan Administrator Responsibilities.     The Plan Administrator may
appoint such assistants or representatives as it deems necessary for the effective exercise of its duties in administering the Plan and
may delegate to such assistants and representatives any powers and duties, both ministerial and discretionary, as it deems expedient or appropriate. The Plan Administrator also may designate any
person, firm or corporation to carry out any of the other responsibilities of the Plan Administrator under the Plan. Any such allocation or designation shall be made pursuant to a written instrument
executed by the Plan Administrator. 

 
 

           7.4    Actions of Fiduciaries.     The Plan Administrator may authorize or approve any action by written
instrument signed by a person duly authorized to act on behalf of the Plan Administrator.
Any written memorandum signed by any such duly authorized person or by any other person duly 

6

 

authorized by the Plan Administrator to act in respect of the subject matter of the memorandum, shall have the same force and effect as a formal resolution adopted by the Plan Administrator. 

        All
acts and determinations with respect to the administration of the Plan made by the Plan Administrator and any assistants or representatives appointed by it shall be duly recorded by
the Plan Administrator or by the assistant or representative appointed by it to keep such records. All records, together with such other documents as may be necessary for the administration of the
Plan, shall be preserved in the custody of the Plan Administrator or the assistants or representatives appointed by it. 

 
 

           7.5    General Administrative Powers.     Except as otherwise provided herein, the Plan Administrator is
authorized to take such actions as may be necessary to carry out the provisions and purposes of the
Plan and shall have the authority to control and manage the operation and administration of the Plan. In order to effectuate the purposes of the Plan, the Plan Administrator shall have the
discretionary authority and power to construe and interpret the Plan, to supply any omissions therein, to reconcile and correct any errors or inconsistencies, to decide any questions in the
administration and application of the Plan, and to make equitable adjustments for any mistakes or errors made in the administration of the Plan. All such actions or determinations made in good faith
by the Plan Administrator, and the application of rules and regulations to a particular case or issue by the Plan Administrator shall, subject to the claims procedures set forth in Section Six hereof,
not be subject to review by anyone, but shall be final, binding and conclusive on all persons ever interested hereunder. In construing the Plan and in exercising its power under provisions requiring
the Plan Administrator's approval, the Plan Administrator shall attempt to ascertain the purpose of the provisions in question and when such purpose is known or reasonably ascertainable, such purpose
shall be given effect to the extent feasible.
In the discharge of this discretionary authority the Plan Administrator shall have all necessary powers and duties, including but not limited to the following: 

	(a)
	to
require any person to furnish such information as is reasonably necessary or appropriate for administration of the Plan as a condition to receiving benefits under the Plan;

	(b)
	to
make such rules and regulations and prescribe the use of such forms as he shall deem necessary for the efficient administration of the Plan;

	(c)
	to
establish or cause to be established such procedures, protocols and guidelines as he shall deem necessary to interpret the terms and conditions of the Plan;

	(d)
	to
decide on questions concerning Plan eligibility, Years of Employment and employment termination in accordance with the terms of the Plan;

	(e)
	to
determine the amount of benefits payable to an Eligible Employee, in accordance with the Plan, and to provide a full and fair review to any Eligible Employee whose claim for
benefits has been denied in whole or in part; and

	(f)
	to
designate other persons to carry out any duty or power which would otherwise be a fiduciary responsibility of the Plan Administrator, under the terms of the Plan. 

 
 

           7.6    Appointment of Professional Assistance.     The Plan Administrator may engage accountants, attorneys
and such other personnel as it deems necessary or advisable. The functions of any such persons engaged by
the Plan Administrator shall be limited to the specific services and duties for which they are engaged, and such persons shall have no other duties, obligations or responsibilities under the Plan.
Unless otherwise specifically so delegated, such persons shall exercise no discretionary authority or discretionary control respecting the management of the Plan. 

 
 

           7.7    Discretionary Acts.     Any discretionary actions of the Plan Administrator with respect to the
administration of the Plan shall be made in a manner which does not discriminate in favor
of stockholders, officers and highly compensated employees. 

7

 

 
 

           7.8    Responsibility of Fiduciaries.     The Plan Administrator and its assistants and representatives
shall be free from all liability for their acts and conduct in the administration of the Plan except
for acts of gross negligence, fraud or willful misconduct; provided, however, that the foregoing shall not relieve any of them from any responsibility or liability for any responsibility, obligation
or duty that they may have pursuant to ERISA. 

 
 

          7.9    Indemnity by Employer.     In the event and to the extent not insured against by any insurance company
pursuant to provisions of any applicable insurance policy, the Employer shall
indemnify and hold harmless the Plan Administrator and its assistants and representatives from any and all claims, demands, suits or proceedings in connection with the Plan that may be brought by the
Employer's employees or their legal representatives, or by any other person, corporation, entity, government or agency thereof, including any amounts paid in settlement, with the approval of the Plan
Administrator, and any and all other losses, damages, interest, expenses, including counsel fees approved by the Plan Administrator, and penalties, including any penalties imposed by the Secretary of
Labor pursuant to Section 502(l) of ERISA relating to any breaches of fiduciary responsibility under Part 4 of Title I of ERISA, arising from any action or failure to act, except where
the same is judicially determined to be due to gross negligence, fraud, or willful misconduct of such individual in connection with the Plan. The indemnification contained in this Section shall apply
regardless of whether the event causing the liability arises in whole or in part from the negligence (other than judicially determined gross negligence) or other fault on the part of the individual,
specifically including breaches of fiduciary responsibility under ERISA. 

 
 

SECTION EIGHT
  
    ADOPTION OF PLAN BY SUBSIDIARY    
  

        Any subsidiary of the Company, whether or not presently existing, may, with the approval of the Plan Administrator, adopt this Plan. Any such subsidiary that
adopts the Plan is thereafter an Employer with respect to its employees for purposes of the Plan. 

 
 

SECTION NINE
  
    AMENDMENT OF THE PLAN    
  

        The Plan Administrator may amend the Plan at any time and in any manner with respect to all of the Employees; provided, however, any such amendment must be
approved by that certain Special Committee of the Board of Directors formed by resolution of the Company's Board of Directors on August 15, 2002, for so long as said Special Committee continues
to exist. Any amendment to this Plan shall be effectuated by a written instrument signed by the Plan Administrator and shall be incorporated into the Plan document. Any amendment or restatement may be
made retroactive if, in the judgment of the Plan Administrator, such retroactivity is necessary or advisable for any reason. Notwithstanding
the above, this Plan may not be terminated or amended within six months following a Change in Control. 

 
 

SECTION TEN
  
    TERMINATION OF THE PLAN    
  

        Continuance of the Plan is not assumed as a contractual obligation of the Employer, and the Plan Administrator reserves the right to terminate the Plan at any
time; provided, however, any such termination must be approved by that certain Special Committee of the Board of Directors formed by resolution of the Company's Board of Directors on August 15,
2002, for so long as said Special Committee continues to exist. Notwithstanding the above, this Plan may not be terminated or amended 

8

 

within six months following a Change in Control. Such termination may occur without consent being obtained from the Plan Administrator, Eligible Employees or any other interested person. The Plan
shall automatically terminate upon dissolution of the Company, unless provision is specifically made by its successors, if any, for the continuation of the Plan. If not sooner terminated, this Plan
shall terminate when all liabilities provided for hereunder have been fully discharged. 

 
 

SECTION ELEVEN
  
    VESTING    
  

        No Eligible Employee shall have a vested right to any benefit under this Plan prior to the time a determination is made by the Plan Administrator that the
particular Eligible Employee is entitled to receive benefits under the Plan. At any time prior to such determination the Plan may be amended or terminated with respect to any benefits to which such
Eligible Employee would otherwise have been entitled. 

 
 

SECTION TWELVE
  
    STATUS OF EMPLOYMENT RELATIONS    
  

        The adoption and maintenance of the Plan shall not be deemed to constitute a contract between any Employer and its employees or to be consideration for, or an
inducement or condition of, the employment of any person. Nothing herein contained shall be deemed (i) to give to any employee the right to be retained in the employ of the Employer;
(ii) to affect the right of the Employer to discipline or discharge any employee at any time; (iii) to give the Employer the right to require any employee to remain in its employ; or
(iv) to affect any employee's right to terminate his employment at any time. 

 
 

SECTION THIRTEEN
  
    RESTRICTIONS ON ASSIGNMENT    
  

        The benefits provided hereunder are not subject in any manner to the debts or other obligations of the persons to whom they are payable. The interest of an
Eligible Employee may not be sold, transferred, assigned or encumbered in any manner, either voluntarily or involuntarily, and any attempt so to anticipate, alienate, sell, transfer, assign, pledge,
encumber, or charge the same shall be null and void. 

 
 

SECTION FOURTEEN
  
    APPLICABLE LAW    
  

        To the extent not preempted by ERISA, the Plan shall be construed, regulated, interpreted and administered under and in accordance with the laws of the State of
Texas. 

 
 

SECTION FIFTEEN
  
    INTERPRETATION OF THE PLAN    
  

        It is the intention of the Employers that the Plan shall comply with the Internal Revenue Code, and the regulations thereunder, the requirements of ERISA and the
corresponding provisions of any subsequent laws; the provisions of the Plan shall be construed to effectuate such intention. 

9

 

        IN
WITNESS WHEREOF, EXCO Resources, Inc. has caused the Plan to be signed by its duly authorized officer on this 14th day of October, 2002. 

	

 	
 	

EXCO RESOURCES, INC.
	

 	
 	

By:	

/s/  T. W. EUBANK      
 T. W. Eubank
	 	 	Its:	President

10

QuickLinks

Exhibit 10.27

EXCO RESOURCES, INC. SEVERANCE PLAN (EFFECTIVE AS OF AUGUST 15, 2002)

TABLE OF CONTENTS

EXCO RESOURCES, INC. SEVERANCE PLAN

SECTION ONE PURPOSE OF PLAN

SECTION TWO PRIOR SEVERANCE ARRANGEMENTS

SECTION THREE DEFINITIONS

SECTION FOUR ELIGIBILITY AND SEVERANCE PAY BENEFITS

4.1 Eligibility.

4.2 Release Form.

4.3 Termination of Eligibility for Severance Pay.

4.4 Severance Pay.

SECTION FIVE FUNDING

SECTION SIX CLAIMS PROCEDURE

6.1 Filing and Initial Determination of Claim.

6.2 Duty of Plan Administrator Upon Denial of Claim.

6.3 Request for Review of Claim Denial.

6.4 Decision on Review of Denial.

SECTION SEVEN ADMINISTRATION OF THE PLAN

7.1 Plan Administrator.

7.2 Responsibilities.

7.3 Allocation and Delegation of Plan Administrator Responsibilities.

7.4 Actions of Fiduciaries.

7.5 General Administrative Powers.

7.6 Appointment of Professional Assistance.

7.7 Discretionary Acts.

7.8 Responsibility of Fiduciaries.

7.9 Indemnity by Employer.

SECTION EIGHT ADOPTION OF PLAN BY SUBSIDIARY

SECTION NINE AMENDMENT OF THE PLAN

SECTION TEN TERMINATION OF THE PLAN

SECTION ELEVEN VESTING

SECTION TWELVE STATUS OF EMPLOYMENT RELATIONS

SECTION THIRTEEN RESTRICTIONS ON ASSIGNMENT

SECTION FOURTEEN APPLICABLE LAW

SECTION FIFTEEN INTERPRETATION OF THE PLAN

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