Document:

Exhibit
10.1

NON-COMPETITION
AGREEMENT

This Non-Competition
Agreement (this “Agreement”) is made by and between The Pep Boys—Manny, Moe
& Jack, a Pennsylvania corporation (the “Company”), and Mark L. Page
(the “Officer”), on this 19th–day of October 2006 (the “Effective Date”).

WHEREAS, the parties are
currently parties to a Non-Competition Agreement, dated October 5, 2005;

WHEREAS, the parties wish
to Amend and Restate the existing Non-Competition Agreement in order to provide
to the Officer the enhanced severance benefit provided herein; and

WHEREAS, in exchange for
the enhanced severance benefit provided herein, the Officer is willing to
reconfirm the covenant against competition contained herein.

NOW,
THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and incorporating the foregoing
recitals, the parties agree as follows:

1.             Severance
Benefit.

a.             If
the Officer’s employment shall be terminated (i) by the Company without
Cause (as defined below) or (ii) by the Officer pursuant to the delivery
of a Letter of Resignation (as defined below), and the Officer executes, and
does not revoke, the Company’s then current standard separation and release
agreement, (A) the Officer shall have the option under the Company’s
Executive Supplemental Retirement Plan (the “SERP”) to receive an Actuarial
Equivalent Benefit (as defined in the SERP) settled in a lump sum payment as of
his termination date and (B) the Company shall pay to the Officer an
amount equal to one and one-half times his then current base salary, payable,
at the Officer’s option, (1) in a lump sum payable within 10 days of
his termination date or (2) in equal installments at the regular pay
periods of the Company for a period of eighteen months following the
termination date (together the “Severance Benefit”); provided, however,
that the Severance Benefit shall not be payable if the Officer’s employment
shall be terminated during such Officer’s Employment Period (as defined in that
certain Employment Agreement between the Company and the Officer (the “Change
in Control Agreement”)).  During the
Employment Period, the Change of Control Agreement shall supercede this
Agreement in its entirety.

b.             For
the purposes of this Agreement, “Cause” shall mean (i) the continued
failure of the Officer to perform substantially his duties with the Company
(other than any such failure resulting from the Officer’s incapacity due to physical
or mental illness), (ii) any act by the Officer of illegality, dishonesty
or fraud in connection with the Officer’s employment, (iii) the willful
engaging by the Officer in gross misconduct which is demonstrably and
materially injurious to the Company or its affiliates, (iv) the Officer’s
conviction of or pleading guilty or no contest to a felony, or (v) a
violation of Section 2 hereof.

c.             For
the purposes of this Agreement, a “Letter of Resignation” shall 

 

 

mean written notice of the Officer’s resignation of employment from the
Company, effective February 2, 2008, and delivered by the Officer to the
Company at least 90 days prior to such resignation date.  The Officer acknowledges and agrees that, if
he delivers an effective Resignation Notice, he shall not be entitled to
receive any bonus payment under the Company’s then effective Annual Incentive
Bonus Plan on account of his service rendered in fiscal 2007.

2.             Covenant
Against Competition.

a.             The Officer shall not, during his
employment with the Company and for eighteen months thereafter, directly or
indirectly, induce or attempt to influence any employee of the Company to
terminate his employment with the Company or hire or solicit for hire on behalf
of another employer any person then employed or who had been employed by the
Company during the immediately preceding six months.

 b.            The Officer shall not,
during his employment with the Company and for eighteen months thereafter,
unless the Officer is terminated by the Company without Cause, directly or
indirectly, engage in (as a principal, partner, director, officer, agent,
employee, consultant or otherwise) or be financially interested in any business
operating within the United States of America, if (i) such business’
primary business is the retail and/or
commercial sale of automotive parts, accessories, tires and/or repair/maintenance
services including, without limitation, the entities (including their franchisees and affiliates) listed on Schedule 2(b)
hereto, or (ii) the retail and/or
commercial sale of automotive parts, accessories, tires and/or
repair/maintenance services is the primary focus of such engagement or
financial interest.  However, nothing
contained in this Section 2b shall prevent the Officer from holding
for investment up to two percent (2%) of any class or equity securities of a
company whose securities are traded on a national or foreign securities
exchange.

c.             Officer
acknowledges that the restrictions contained in this Section 2, in
view of the nature of the business in which the Company is engaged, are
reasonable and necessary in order to protect the legitimate interests of the
Company, and that any violation thereof would result in irreparable injuries to
the Company, and the Officer therefore acknowledges that, in the event of his
violation of any of these restrictions, the Company shall be entitled to obtain
from any court of competent jurisdiction preliminary and permanent injunctive
relief (without the posting of any bond) as well as damages and an equitable
accounting of all earnings, profits and other benefits arising from such a
violation, which rights shall be cumulative and in addition to any other rights
or remedies to which the Company may be entitled.

d.             If the
Officer violates any of the restrictions contained in this Section 2,
the restrictive period shall be extended from the time of the commencement of
any such violation until such time as such violation shall be cured by the
Officer to the satisfaction of the Company.

e.             The
invalidity or unenforceability of any provision or provisions of this Section 2
shall not affect the validity or enforceability of any other provision or
provisions of this Section 2, which shall remain in full force and
effect.  If any provision of this Section 2
is held to be invalid, void or unenforceable in any jurisdiction, any court 

 

 2
 

 

or arbitrator so holding shall substitute a
valid, enforceable provision that preserves, to the maximum lawful extent, the
terms and intent of this Agreement and shall correspondingly modify the Company’s
obligations under Section 1. 
If any of the provisions of, or covenants contained in, this Section 2
are hereafter construed to be invalid or unenforceable in any jurisdiction, the
same shall not affect the remainder of the provisions or the enforceability
thereof in any other jurisdiction, which shall be given full effect, without
regard to the invalidity or unenforceability in such other jurisdiction.  Any such holding shall affect such provision
of this Section 2, solely as to that jurisdiction, without
rendering that or any other provisions of this Section 2 invalid,
illegal, or unenforceable in any other jurisdiction.  If any covenant contained in this Section 2
should be deemed invalid, illegal or unenforceable because its scope is
considered excessive, such covenant will be modified so that the scope of the
covenant is reduced only to the minimum extent necessary to render the modified
covenant valid, legal and enforceable and a corresponding reduction in the
scope of the Company’s obligations under Section 1 shall also be
made.

3.             Miscellaneous.

a.             This Agreement
shall inure to the benefit of and be binding upon the Company and its
successors.

b.             This
Agreement shall be governed by and construed in accordance with the laws of the
Commonwealth of Pennsylvania without reference to principles of conflict of
laws.  The parties hereto agree that
exclusive jurisdiction of any dispute regarding this Agreement shall be the
state or federal courts located in Philadelphia, Pennsylvania.  EACH PARTY HEREBY WAIVES ITS RIGHT TO A JURY
TRIAL IN CONNECTION WITH ANY PROCEEDING OVER ANY DISPUTE ARISING UNDER THIS
AGREEMENT.

c.             This
Agreement, together with the Change In Control Agreement, constitutes the
entire agreement among the parties pertaining to the subject matter hereto, and
supersedes all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the parties.

IN WITNESS WHEREOF, the
Officer has hereunto set his hand and the Company has caused this Agreement to
be executed in its name on its behalf, all as of the Effective Date.

	
  

  	
  /s/ THE PEP BOYS—MANNY,
  MOE & JACK

  
	
   

  	
   

  
	
   

  	
  /s/ MARK L. PAGE

  

 

 3Exhibit 10.2

 

EXECUTION VERSION

 

SENIOR TERM CREDIT AGREEMENT

dated as of

October 2, 2006,

as amended and restated as of

October 13, 2006,

among

EXCO PARTNERS OPERATING PARTNERSHIP, LP,

as Borrower

CERTAIN SUBSIDIARIES OF BORROWER,

as Guarantors

The Lenders Party Hereto

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent

CREDIT SUISSE, CAYMAN ISLANDS BRANCH,

as Syndication Agent

J.P. MORGAN SECURITIES INC.,

CREDIT SUISSE SECURITIES (USA) LLC,

as Joint Bookrunners and Co-Lead Arrangers

$650,000,000 Credit Facility

 

 

 

TABLE OF CONTENTS

 

	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE I DEFINITIONS

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 1.01.

  	
   

  	
  Defined Terms

  	
   

  	
  1

  
	
   

  	
  Section 1.02.

  	
   

  	
  Types of Loans and Borrowings

  	
   

  	
  28

  
	
   

  	
  Section 1.03.

  	
   

  	
  Terms Generally

  	
   

  	
  28

  
	
   

  	
  Section 1.04.

  	
   

  	
  Accounting Terms; GAAP

  	
   

  	
  28

  
	
   

  	
  Section 1.05.

  	
   

  	
  Oil and Gas Definitions

  	
   

  	
  29

  
	
   

  	
  Section 1.06.

  	
   

  	
  Time of Day

  	
   

  	
  29

  
	
   

  	
  Section 1.07.

  	
   

  	
  Second Priority Creditors.

  	
   

  	
  29

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II THE CREDITS

  	
   

  	
  29

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 2.01.

  	
   

  	
  Commitments

  	
   

  	
  29

  
	
   

  	
  Section 2.02.

  	
   

  	
  Repayment of Loans

  	
   

  	
  29

  
	
   

  	
  Section 2.03.

  	
   

  	
  Reserved

  	
   

  	
  29

  
	
   

  	
  Section 2.04.

  	
   

  	
  Requests for Borrowings

  	
   

  	
  29

  
	
   

  	
  Section 2.05.

  	
   

  	
  [Reserved]

  	
   

  	
  30

  
	
   

  	
  Section 2.06.

  	
   

  	
  Funding of Borrowings

  	
   

  	
  30

  
	
   

  	
  Section 2.07.

  	
   

  	
  Interest Elections

  	
   

  	
  30

  
	
   

  	
  Section 2.08.

  	
   

  	
  Repayment of Loans; Evidence of Debt.

  	
   

  	
  32

  
	
   

  	
  Section 2.09.

  	
   

  	
  Optional Prepayment of Loans

  	
   

  	
  33

  
	
   

  	
  Section 2.10.

  	
   

  	
  Mandatory Prepayment of Loans

  	
   

  	
  33

  
	
   

  	
  Section 2.11.

  	
   

  	
  Fees

  	
   

  	
  34

  
	
   

  	
  Section 2.12.

  	
   

  	
  Interest

  	
   

  	
  34

  
	
   

  	
  Section 2.13.

  	
   

  	
  Alternate Rate of Interest

  	
   

  	
  35

  
	
   

  	
  Section 2.14.

  	
   

  	
  Increased Costs

  	
   

  	
  36

  
	
   

  	
  Section 2.15.

  	
   

  	
  Break Funding Payments

  	
   

  	
  37

  
	
   

  	
  Section 2.16.

  	
   

  	
  Taxes

  	
   

  	
  37

  
	
   

  	
  Section 2.17.

  	
   

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

  	
   

  	
  39

  
	
   

  	
  Section 2.18.

  	
   

  	
  Mitigation Obligations; Replacement of Lenders

  	
   

  	
  40

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III [RESERVED]

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV REPRESENTATIONS AND
  WARRANTIES

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 4.01.

  	
   

  	
  Organization; Powers

  	
   

  	
  42

  
	
   

  	
  Section 4.02.

  	
   

  	
  Authorization; Enforceability

  	
   

  	
  42

  
	
   

  	
  Section 4.03.

  	
   

  	
  Governmental Approvals; No Conflicts

  	
   

  	
  42

  
	
   

  	
  Section 4.04.

  	
   

  	
  No Material Adverse Change

  	
   

  	
  43

  
	
   

  	
  Section 4.05.

  	
   

  	
  Properties

  	
   

  	
  43

  
	
   

  	
  Section 4.06.

  	
   

  	
  Litigation and Environmental Matters

  	
   

  	
  43

  
	
   

  	
  Section 4.07.

  	
   

  	
  Compliance with Laws and Agreements

  	
   

  	
  44

  
	
   

  	
  Section 4.08.

  	
   

  	
  Investment Company Status

  	
   

  	
  44

  
	
   

  	
  Section 4.09.

  	
   

  	
  Taxes

  	
   

  	
  44

  

 

 

	
  

  	
  Section 4.10.

  	
   

  	
  ERISA

  	
   

  	
  44

  
	
   

  	
  Section 4.11.

  	
   

  	
  Disclosure

  	
   

  	
  44

  
	
   

  	
  Section 4.12.

  	
   

  	
  Labor Matters

  	
   

  	
  44

  
	
   

  	
  Section 4.13.

  	
   

  	
  Capitalization and Credit Party Information

  	
   

  	
  45

  
	
   

  	
  Section 4.14.

  	
   

  	
  Margin Stock

  	
   

  	
  45

  
	
   

  	
  Section 4.15.

  	
   

  	
  Oil and Gas Interests

  	
   

  	
  45

  
	
   

  	
  Section 4.16.

  	
   

  	
  Insurance

  	
   

  	
  46

  
	
   

  	
  Section 4.17.

  	
   

  	
  Solvency

  	
   

  	
  46

  
	
   

  	
  Section 4.18.

  	
   

  	
  Deposit Accounts

  	
   

  	
  46

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V CONDITIONS

  	
   

  	
  47

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 5.01.

  	
   

  	
  Effective Date

  	
   

  	
  47

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI AFFIRMATIVE
  COVENANTS

  	
   

  	
  51

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 6.01.

  	
   

  	
  Financial Statements; Other Information

  	
   

  	
  51

  
	
   

  	
  Section 6.02.

  	
   

  	
  Notices of Material Events

  	
   

  	
  54

  
	
   

  	
  Section 6.03.

  	
   

  	
  Existence; Conduct of Business

  	
   

  	
  54

  
	
   

  	
  Section 6.04.

  	
   

  	
  Payment of Obligations

  	
   

  	
  55

  
	
   

  	
  Section 6.05.

  	
   

  	
  Maintenance of Properties; Insurance

  	
   

  	
  55

  
	
   

  	
  Section 6.06.

  	
   

  	
  Books and Records; Inspection Rights

  	
   

  	
  55

  
	
   

  	
  Section 6.07.

  	
   

  	
  Compliance with Laws

  	
   

  	
  55

  
	
   

  	
  Section 6.08.

  	
   

  	
  Use of Proceeds

  	
   

  	
  56

  
	
   

  	
  Section 6.09.

  	
   

  	
  Mortgages

  	
   

  	
  56

  
	
   

  	
  Section 6.10.

  	
   

  	
  Title Data

  	
   

  	
  56

  
	
   

  	
  Section 6.11.

  	
   

  	
  Swap Agreements

  	
   

  	
  56

  
	
   

  	
  Section 6.12.

  	
   

  	
  Operation of Oil and Gas Interests

  	
   

  	
  57

  
	
   

  	
  Section 6.13.

  	
   

  	
  Restricted Subsidiaries

  	
   

  	
  57

  
	
   

  	
  Section 6.14.

  	
   

  	
  Pledged Equity Interests

  	
   

  	
  58

  
	
   

  	
  Section 6.15.

  	
   

  	
  Production Proceeds and Bank Accounts

  	
   

  	
  58

  
	
   

  	
  Section 6.16.

  	
   

  	
  Mandatory Prepayment of the Loans

  	
   

  	
  58

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII NEGATIVE COVENANTS

  	
   

  	
  59

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 7.01.

  	
   

  	
  Indebtedness

  	
   

  	
  59

  
	
   

  	
  Section 7.02.

  	
   

  	
  Liens

  	
   

  	
  60

  
	
   

  	
  Section 7.03.

  	
   

  	
  Fundamental Changes

  	
   

  	
  61

  
	
   

  	
  Section 7.04.

  	
   

  	
  Investments, Loans, Advances, Guarantees and
  Acquisitions

  	
   

  	
  62

  
	
   

  	
  Section 7.05.

  	
   

  	
  Swap Agreements

  	
   

  	
  63

  
	
   

  	
  Section 7.06.

  	
   

  	
  Restricted Payments

  	
   

  	
  64

  
	
   

  	
  Section 7.07.

  	
   

  	
  Transactions with Affiliates

  	
   

  	
  64

  
	
   

  	
  Section 7.08.

  	
   

  	
  Restrictive Agreements

  	
   

  	
  64

  
	
   

  	
  Section 7.09.

  	
   

  	
  Disqualified Stock

  	
   

  	
  65

  
	
   

  	
  Section 7.10.

  	
   

  	
  Amendments to Organizational Documents and Certain
  Liens and Guarantees

  	
   

  	
  65

  

 

 ii
 

 

 

	
  

  	
  Section 7.11.

  	
   

  	
  Financial Covenants

  	
   

  	
  65

  
	
   

  	
  Section 7.12.

  	
   

  	
  Sale and Leaseback Transactions and other
  Off-Balance Sheet Liabilities

  	
   

  	
  66

  
	
   

  	
  Section 7.13.

  	
   

  	
  Capital Expenditures.

  	
   

  	
  66

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII GUARANTEE OF
  OBLIGATIONS

  	
   

  	
  67

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 8.01.

  	
   

  	
  Guarantee of Payment

  	
   

  	
  67

  
	
   

  	
  Section 8.02.

  	
   

  	
  Guarantee Absolute

  	
   

  	
  67

  
	
   

  	
  Section 8.03.

  	
   

  	
  Guarantee Irrevocable

  	
   

  	
  67

  
	
   

  	
  Section 8.04.

  	
   

  	
  Reinstatement

  	
   

  	
  68

  
	
   

  	
  Section 8.05.

  	
   

  	
  Subrogation

  	
   

  	
  68

  
	
   

  	
  Section 8.06.

  	
   

  	
  Subordination

  	
   

  	
  68

  
	
   

  	
  Section 8.07.

  	
   

  	
  Payments Generally

  	
   

  	
  68

  
	
   

  	
  Section 8.08.

  	
   

  	
  Setoff

  	
   

  	
  69

  
	
   

  	
  Section 8.09.

  	
   

  	
  Formalities

  	
   

  	
  69

  
	
   

  	
  Section 8.10.

  	
   

  	
  Limitations on Guarantee

  	
   

  	
  69

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX EVENTS OF DEFAULT

  	
   

  	
  70

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X THE ADMINISTRATIVE
  AGENT

  	
   

  	
  72

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XI MISCELLANEOUS

  	
   

  	
  74

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 11.01.

  	
   

  	
  Notices

  	
   

  	
  74

  
	
   

  	
  Section 11.02.

  	
   

  	
  Waivers; Amendments

  	
   

  	
  75

  
	
   

  	
  Section 11.03.

  	
   

  	
  Expenses; Indemnity; Damage Waiver

  	
   

  	
  76

  
	
   

  	
  Section 11.04.

  	
   

  	
  Successors and Assigns

  	
   

  	
  78

  
	
   

  	
  Section 11.05.

  	
   

  	
  Survival

  	
   

  	
  81

  
	
   

  	
  Section 11.06.

  	
   

  	
  Counterparts; Integration; Effectiveness

  	
   

  	
  82

  
	
   

  	
  Section 11.07.

  	
   

  	
  Severability

  	
   

  	
  82

  
	
   

  	
  Section 11.08.

  	
   

  	
  Right of Setoff

  	
   

  	
  82

  
	
   

  	
  Section 11.09.

  	
   

  	
  GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF
  PROCESS

  	
   

  	
  82

  
	
   

  	
  Section 11.10.

  	
   

  	
  WAIVER OF JURY TRIAL

  	
   

  	
  83

  
	
   

  	
  Section 11.11.

  	
   

  	
  Headings

  	
   

  	
  84

  
	
   

  	
  Section 11.12.

  	
   

  	
  Confidentiality

  	
   

  	
  84

  
	
   

  	
  Section 11.13.

  	
   

  	
  Interest Rate Limitation

  	
   

  	
  84

  
	
   

  	
  Section 11.14.

  	
   

  	
  USA PATRIOT Act

  	
   

  	
  85

  

 

 iii
 

 

 

	
  SCHEDULES:

  
	
   

  
	
  Schedule 1.01(a) - Existing Swap Agreements

  
	
  Schedule 2.01 – Applicable Percentages and
  Commitments

  
	
  Schedule 4.06 – Disclosed Matters

  
	
  Schedule 4.13 – Capitalization and Credit Party
  Information

  
	
  Schedule 4.18 – Deposit and Investment Accounts

  
	
  Schedule 7.01 – Existing Indebtedness

  
	
  Schedule 7.02 – Existing Liens

  
	
  Schedule 7.07 – Transactions with Affiliates

  
	
  Schedule 7.08 – Existing Restrictions

  
	
   

  
	
  EXHIBITS:

  
	
   

  
	
  Exhibit A – Form of Assignment and Assumption

  
	
  Exhibit B – Form of Opinion of Borrower’s Counsel

  
	
  Exhibit C – Form of Counterpart Agreement

  
	
  Exhibit D – Form of Solvency Certificate

  

 

 iv

 

SENIOR TERM CREDIT AGREEMENT dated as of October 2,
2006, as amended and restated as of October 13, 2006, among EXCO PARTNERS
OPERATING PARTNERSHIP, LP, as Borrower, CERTAIN SUBSIDIARIES OF BORROWER, as
Guarantors, the LENDERS party hereto, and JPMORGAN CHASE BANK, N.A., as
Administrative Agent.

The parties hereto agree as follows:

Article
I

Definitions

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

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

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

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

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

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

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

“Agreed Pricing”
means:

(i)            for
anticipated sales of Hydrocarbons that are fixed in a firm fixed price sales
contract with an Approved Counterparty (or another counterparty approved by the
Administrative Agent), the fixed price or prices provided for in such sales
contract during the term thereof; and 

(ii)           for
anticipated sales of Hydrocarbons that are hedged by a fixed price Swap
Agreement with an Approved Counterparty, the fixed price or prices provided for
in such Swap Agreement during the term thereof, as modified by any necessary
adjustment specified by the Administrative Agent for quality and geographical
differentials; and 

(iii)          for
anticipated sales of Hydrocarbons that are hedged by a Swap Agreement with an
Approved Counterparty which Swap Agreement provides for a range of prices
between a floor and a ceiling, the prices provided for in subsection (iv)
below, provided that during the term of such Swap Agreement such prices shall
in no event be less than such floor or exceed such ceiling, as such floor and
ceiling are modified by any necessary adjustment specified by the
Administrative Agent for quality and geographical differentials; and 

(iv)          for anticipated sales of Hydrocarbons,
if such sales are not hedged by a Swap Agreement or sales contract that is
described in paragraphs (i), (ii), or (iii) above, for the date of calculation
(or, if such date is not a Business Day, for the first Business Day
thereafter), and with any necessary adjustment specified by the Administrative
Agent for quality and geographical differentials, the “strip” price under Henry
Hub Natural Gas futures contracts and Light, Sweet Crude Oil futures contracts
for the five year period following such calculation date, in each case as
published by New York Mercantile Exchange (NYMEX) on its website currently
located at www.nymex.com, or any successor thereto (as such price may be
corrected or revised from time to time by the NYMEX in accordance with its
rules and regulations), as of the settlement of the last trading day for the
contract month coincident with the effective date of the then most recent
Reserve Report, and thereafter the price in effect at the end of such five year
period.

 “Agreement”
means this Senior Term Credit Agreement, dated as of October 2, 2006, as it may
be amended, supplemented or otherwise modified from time to time.

 2
 

 

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

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

“Applicable Rate” means, for any day, Effective
Date, a percentage determined in accordance with the table set forth below:

	
  On and after

  	
   

  	
  Applicable Rate for

  Eurocurrency Loans

  	
   

  	
  Applicable Rate for

  ABR Loans

  	
   

  
	
  October 2, 2006

  	
   

  	
  6.00

  	
  %

  	
  5.00

  	
  %

  
	
  October 2, 2007

  	
   

  	
  6.25

  	
  %

  	
  5.25

  	
  %

  
	
  January 2, 2008

  	
   

  	
  6.50

  	
  %

  	
  6.50

  	
  %

  

 

“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 or (ii) any Lender
Counterparty.

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

“Arrangers” means J.P. Morgan Securities Inc.
and Credit Suisse Securities (USA) LLC, in their capacity as joint bookrunners
and co-lead arrangers.

“Assessment Rate” means, for any day, the
annual assessment rate in effect on such day that is payable by a member of the
Bank Insurance Fund classified as “well-capitalized” and within
supervisory subgroup “B” (or a comparable successor risk classification) within
the meaning of 12 C.F.R. Part 327 (or any successor provision) to the
Federal Deposit Insurance Corporation for insurance by such Corporation of time
deposits made in Dollars at the offices of such member in the United States; provided
that if, as a result of any change in any law, rule or regulation, it is no
longer possible to determine the Assessment Rate as aforesaid, then the
Assessment Rate shall be such annual rate as shall be determined by the
Administrative Agent to be representative of the cost of such insurance to the
Lenders.

 3
 

 

“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.

“Base CD Rate” means the sum of (a) the
Three-Month Secondary CD Rate multiplied by the Statutory Reserve Rate
plus (b) the Assessment Rate.

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

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

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

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

“Borrowing” means 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 Base” means the borrowing base
determined in accordance with the Revolving Facility Documents.

“Borrowing Base Properties” means all Oil and
Gas Interests of the Borrower and the Restricted Subsidiaries evaluated by the
lenders under the Revolving Facility for purposes of establishing the Borrowing
Base, including the Midstream Assets, under the Revolving Facility (or, if the
Revolving Facility has terminated, the Oil and Gas Interests of the Borrower
and its Restricted Subsidiaries evaluated by the Lenders in a manner
substantially similar to that used by the lenders under the Revolving Facility)
but excluding the Excluded Properties.

“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.

“Capex Reimbursement Obligation” means the
obligation of the MLP to pay to EXCO up to $150,000,000 of the proceeds of the
initial funding under this Agreement as a

 4
 

 

reimbursement of certain
capital expenditures incurred by EXCO and its Subsidiaries to acquire, develop
and operate the Oil and Gas Interests owned by the Transferred Subsidiaries and
the Texas Properties.

“Capital Expenditures” means, for any period,
with respect to any Person, the aggregate of all expenditures that should be
capitalized under GAAP on a consolidated balance sheet of such Person and its
Subsidiaries for the acquisition or leasing (pursuant to a capital lease) of
fixed or capital assets or additions to equipment (including replacements,
capitalized repairs and improvements during such period) and for all other
expenditures that are capitalized under full cost accounting methods, including
land acquisition, seismic data, drill site preparatory work, drilling wells,
completing wells, equipment and production facilities and other operations
associated with connecting producing wells to gatherings systems and pipeline systems
or processing facilities.

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

 5
 

 

of the MLP; or (f) 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.

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

“Commitment” means, with respect to each
Lender, the commitment of such Lender to make Loans on the Effective Date.  The amount of each Lender’s Commitment (which
amount is such Lender’s Applicable Percentage of the aggregate Commitment) is
set forth in Schedule 2.01.  The original
aggregate amount of the Commitments is $650,000,000.

“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 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 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

 6
 

 

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.

 7
 

 

“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.

“Disposition” means, with respect to any
property, any sale, lease, sale and leaseback, assignment, conveyance, transfer
or other disposition thereof.  The terms “Dispose”
and “Disposed of” shall have correlative meanings.

“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, in whole or in part, on or prior to the Maturity Date.

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

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

“ECF Consolidated Current Assets” means, at any
date, all amounts (other than cash and Permitted Investments) that would, in
conformity with GAAP, be set forth opposite the caption “total current assets”
(or any like caption) on a consolidated balance sheet of the Borrower and its
Restricted Subsidiaries at such date.

“ECF Consolidated Current Liabilities” means,
at any date, all amounts that would, in conformity with GAAP, be set forth
opposite the caption “total current liabilities” (or any like caption) on a
consolidated balance sheet of the Borrower and its Restricted Subsidiaries at
such date, but excluding (a) the current portion of any Funded Debt of the
Borrower and its Restricted Subsidiaries and (b) without duplication of clause
(a) above, all Indebtedness consisting of Revolving Loans to the extent
otherwise included therein.

“ECF Consolidated Working Capital” means, at
any date, the excess of ECF Consolidated Current Assets on such date over
ECF Consolidated Current Liabilities on such date.

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

 8
 

 

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

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

“Engineered Value” means, the value attributed
to the Borrowing Base Properties pursuant to the terms of the Revolving
Facility Documents (or, if the Revolving Facility has terminated, on terms
substantially similar to those provided for in the Revolving Facility
Documents), based upon the discounted present value of the estimated net cash
flow to be realized from the production of Hydrocarbons from the Borrowing Base
Properties as set forth in the Reserve Report.

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

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

“Equity Contribution Agreement” means the
Second Amended and Restated Equity Contribution Agreement, dated as of October
13, 2006, among the Equity Contributor, the Borrower and the Administrative
Agent, as it may be amended, supplemented or otherwise modified from time to
time.

“Equity Contributor” means EXCO Resources,
Inc., a Texas corporation.

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

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

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

 9
 

 

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 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, 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 Properties” means certain Oil and Gas
Interests acquired by the Borrower or its Restricted Subsidiaries in connection
with the Winchester Acquisition and located in Adams County, Mississippi and
Montague, Foard, Runnels, Garza and Nacogdoches Counties, Texas.

“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
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).

 10
 

 

‘‘Excess Cash Flow”:  for any fiscal year of the Borrower, the
excess, if any, of (a) the sum, without duplication, of (i) Consolidated Net
Income for such fiscal year, (ii) the amount of all non-cash charges (including
depletion, depreciation and amortization) deducted in arriving at such
Consolidated Net Income, (iii) decreases in ECF Consolidated Working Capital
for such fiscal year, and (iv) the aggregate net amount of non-cash loss on the
Disposition of property by the Borrower and its Restricted Subsidiaries during
such fiscal year (other than sales of inventory in the ordinary course of
business), to the extent deducted in arriving at such Consolidated Net Income
over (b) the sum, without duplication, of (i) the amount of all non-cash
credits included in arriving at such Consolidated Net Income, (ii) the
aggregate amount actually paid by the Borrower and its Restricted Subsidiaries
in cash during such fiscal year on account of Capital Expenditures (excluding
the principal amount of Indebtedness incurred in connection with such
expenditures and any such expenditures financed with the proceeds of any
Reinvestment Deferred Amount), (iii) the aggregate amount of all optional
prepayments of the Loans during such fiscal year, (iv) the aggregate amount of
all regularly scheduled principal payments of Consolidated Funded Indebtedness
(including the Loans) of the Borrower and its Restricted Subsidiaries made
during such fiscal year (other than in respect of any revolving credit facility
to the extent there is not an equivalent permanent reduction in commitments
thereunder), (v) increases in ECF Consolidated Working Capital for such fiscal
year, (vi) the aggregate net amount of non-cash gain on the Disposition of
property by the Borrower and its Restricted Subsidiaries during such fiscal
year (other than sales of inventory in the ordinary course of business), to the
extent included in arriving at such Consolidated Net Income and (vii)
prepayments of Revolving Loans made pursuant to Section 2.12(a) of the
Revolving Credit Agreement in connection with any Scheduled Redetermination (as
such term is defined in the Revolving Credit Agreement) made on the
Redetermination Date (as such term is defined in the Revolving Credit
Agreement) occurring on the April 1 immediately preceding the relevant Excess
Cash Flow Application Date.

“Excess Cash Flow Application Date” has the
meaning assigned to such term in Section 2.10(b).

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

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

“EXCO Contribution Agreement” means that
certain Contribution, Conveyance and Assumption Agreement dated October 2, 2006
by and among EXCO and certain of its Subsidiaries and the Borrower and certain
of its Subsidiaries, together with the additional conveyance documents and
instruments contemplated or referenced thereunder.

 11
 

 

“EXCO Contribution Documents” means,
collectively, (i) the EXCO Contribution Agreement, (ii) the EXCO Agreements and
(iii) the other agreements, certificates and instruments executed and delivered
in connection with the agreements described in the foregoing clauses (i) and
(ii), all as amended, supplemented or modified from time to time as permitted
by this Agreement.

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

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

 “EXCO
Transfers and Conversions” means, collectively, (a) the conveyance by EXCO
and its Subsidiaries of the Texas Properties and the Equity Interests of Merger
Sub to the Borrower as a capital contribution to the Borrower, (b) the conveyance
by EXCO of the Equity Interests of ROJO Pipeline to the Borrower and the
General Partner as a capital contribution, (c) the conversion of ROJO Pipeline
from a Delaware limited liability company to a Delaware limited partnership,
(d) the conveyance by EXCO of all of the Equity Interests of the Borrower, the
General Partner and TXOK Resources Holdings to the MLP, in exchange for Equity
Interests of the MLP representing 100% of the outstanding Equity Interests of
the MLP on the Effective Date the incurrence by the MLP of the CapEx
Reimbursement Obligation and the MLP Rights, (e) the conveyance by the MLP of
all of the Equity Interests of TXOK Resources Holdings to the Borrower as a
capital contribution, (f) the conveyance by the General Partner of all of the
general partnership interests of ROJO Pipeline to TXOK Resources Holdings and
the conveyance by TXOK Resources Holdings of such general partnership interests
to TXOK Texas Holdings, (g) the conveyance by the Borrower of all of the
limited partnership interests of ROJO Pipeline to TXOK Resources Holdings as a
capital contribution.

“Existing Swap Agreements” means, collectively,
(i)  the existing Swap Agreements between
one or more of the Persons acquired by the Borrower on the Effective Date
pursuant to the Winchester Acquisition and any Lender Counterparty and defined
as the “Winchester Hedges” in the Winchester Merger Agreement, (ii) the
existing Swap Agreements between one or more of the Persons that became
Restricted Subsidiaries of the Borrower on the Effective Date pursuant to the
EXCO Transfers and Conversions and any Lender Counterparty and described on
Schedule 1.01(a) and (iii) the existing Swap Agreements to which a Lender
Counterparty is a party that will be assigned to Borrower and its Subsidiaries
on the Effective Date and described on Schedule 1.01(a).

“FASB” means Financial Accounting Standards
Board.

“Federal Funds Effective Rate” means, for any
day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds

 12
 

 

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 1/100 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.

“Funded Debt” means, as to any Person, all
Indebtedness of such Person that matures more than one year from the date of
its creation or matures within one year from such date but is renewable or
extendible, at the option of such Person, to a date more than one year from
such date or arises under a revolving credit or similar agreement that
obligates the lender or lenders to extend credit during a period of more than
one year from such date, including all current maturities and current sinking
fund payments in respect of such Indebtedness whether or not required to be
paid within one year from the date of its creation and, in the case of the
Borrower, Indebtedness in respect of the Loans.

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

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

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

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

“Guarantee” of or by any Person (in this
definition, the “guarantor”) means any obligation, contingent or
otherwise, of the guarantor guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation of any other Person (the “primary
obligor”) in any manner, whether directly or indirectly, and including any
obligation of the guarantor, direct or indirect, (a) to purchase or pay
(or advance or supply funds for the purchase or payment of) such Indebtedness
or other obligation or to purchase (or to advance or supply funds for the

 13
 

 

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.

 14
 

 

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

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

“Initial Public Offering” means a sale by the
MLP of its Equity Interests in an underwritten (firm commitment) initial public
offering registered under the Securities Act of 1933 resulting in the listing
of such Equity Interests on a nationally recognized stock exchange, including
without limitation, the NASDAQ National Market System or the New York Stock
Exchange.

 “Intercreditor
Agreement” means an Intercreditor Agreement by and among the Administrative
Agent, the Revolving Agent, and the Credit Parties, dated the date hereof and
in form and substance satisfactory to the Lenders, as amended, modified,
supplemented or restated from time to time.

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

“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.

“IPO Date” means the date the Initial Public
Offering and the Rights Offering are consummated.

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

 15
 

 

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

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

“Loan Documents” means this Agreement, any
promissory notes executed in connection herewith, Security Instruments, the Fee
Letter, the Intercreditor Agreement and any other agreements executed in
connection with this Agreement.

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

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

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

 16
 

 

value of all of the
assets, properties and interests (including Oil and Gas Interests) of the
Borrower and the Restricted Subsidiaries, on a consolidated basis.

“Material Gas Imbalance” means, with respect to
all Gas Balancing Agreements to which Borrower or any Restricted Subsidiary is
a party or by which any Oil and Gas Interests owned by Borrower or a Restricted
Subsidiary is bound, a net overproduced gas imbalance to Borrower and the
Restricted Subsidiaries, taken as a whole, in excess of $5,000,000.

“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 $5,000,000. 
For purposes of determining Material Indebtedness, the “principal amount”
of the obligations of the Borrower or any Guarantor in respect of any Swap
Agreement at any time shall be the maximum aggregate amount (giving effect to
any netting agreements) that the Borrower or such Guarantor would be required
to pay if such Swap Agreement were terminated at such time.

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

“Maturity Date” means October 2, 2011.

“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.

“Merger Sub” means Winchester Acquisition, LLC,
a Delaware limited liability company, and its successors.

“Midstream Assets” has the meaning assigned to
such term in the Winchester Merger Agreement.

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

“MLP General Partner” means EXCO GP Partners,
LP, a Delaware limited partnership, and its successors and permitted assigns.

“MLP Rights” means the rights to buy Equity
Interests of the MLP issued by the MLP to EXCO as part of the consideration for
the assets and properties contributed to the MLP by EXCO and its Subsidiaries
pursuant to the EXCO Contribution Agreement.

 17
 

 

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

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

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

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

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

“Net Cash Proceeds” means, with respect to the
sale of Borrowing Base Properties by the Borrower or any Restricted Subsidiary,
the excess, if any, of (a) the sum of cash and cash equivalents received in connection
with such sale, but only as and when so received, over (b) the sum of (i) the
principal amount of any Indebtedness that is secured by such asset and that is
required to be repaid in connection with the sale thereof (other than the Loans
and 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 of Borrowing Base Properties, and (vii)
any portion of the purchase price from such sale placed in escrow, whether as a
reserve for adjustment of the purchase price, for satisfaction of indemnities
in respect of such sale or otherwise in connection with such sale; provided
however, that upon the termination of that escrow, Net Cash Proceeds
will be increased by any portion of funds in the escrow that are released to
the Borrower or any Restricted Subsidiary.

 18
 

 

“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).

“NPV” means, as of any date of the
determination, the sum of (i) with respect to any proved and probable reserves
expected to be produced from any undivided interests in Borrowing Base
Properties, the net present value, discounted at 10% per annum, of the future
net revenues expected to accrue to any Credit Party’s interests in such
reserves (after deducting all existing burdens) during the remaining expected
economic lives of such reserves plus (ii) Pipeline EBITDA for the trailing 12
month period ending on the date of the determination multiplied by ten.  Each calculation of such expected future net
revenues with respect to the proved and probable reserves shall be made in
accordance with the then existing guidelines established by the Securities and
Exchange Commission for valuing Oil and Gas Interests or, in the case of
probable reserves, the Society of Petroleum Engineers; provided that in any
event (a) appropriate deductions shall be made for severance and ad valorem
taxes, and for operating (including purchasing and injecting water), gathering,
transportation and marketing costs required for the production and sale of such
reserves including annual increases in such costs of 3% per year, (b) the
pricing assumptions and escalations used in determining the net present value
of proved and probable reserves for any particular reserves shall be the Agreed
Pricing (or any other pricing assumptions to which the Borrower and the
Required Lenders may agree) and (c) appropriate deductions shall be made for
capital expenditures (including plugging and abandonment costs and annual
increases in the cost of such capital expenditures of at least 3% per year)
approved in writing by the Administrative Agent in which internal cash flow is
available to support such expenditures. 
For each date of determination, net present value shall be calculated
hereunder based on the then most recent Reserve Report, either by the Borrower,
by the Administrative Agent, or by the engineering firm who prepares such
Reserve Report; in the event of any conflict, the Administrative Agent’s
calculation shall be conclusive and final.

“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 or any Lender Counterparty arising under or
in connection with any Loan Document or Swap Agreement (including, any and all
obligations, contingent or otherwise, whether now existing or hereafter
arising, of any Credit Party under any Existing Swap Agreement and any and all
obligations, contingent or otherwise, whether now existing or hereafter
arising, of any Credit Party with respect to any transactions under any Swap
Agreement with any Person that was a Lender Counterparty at the time such
Credit Party entered into such transactions regardless of whether such Person
is no longer a Lender Counterparty), whether for principal, interest, payments
for early termination of Swap Agreements, funding indemnification amounts,
fees, expenses, indemnification or otherwise.

 19
 

 

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

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

 20

 

“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 and securing obligations that are not
overdue by more than 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

 21
 

 

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

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

(d)           repurchase
obligations with a term of not more than 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 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

 22
 

 

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.

“PFC” means Progress Fuels Corporation, a
Florida corporation, and its successors.

“Pipeline Assets” means the Borrower’s and its
Restricted Subsidiaries’ pipelines and natural gas gathering lines used to
transport Natural Gas produced by any Person.

“Pipeline EBITDA” means for any period, and to
the extent it relates to the Pipeline Assets of the Borrower and its Restricted
Subsidiaries, the Consolidated Net Income of such Pipeline Assets for such
period; plus, without duplication and to the extent deducted in the
calculation of such Consolidated Net Income for such period, the sum of
(a) income or franchise Taxes paid or accrued; (b) amortization,
depletion and depreciation expense; (c) losses from sales or other dispositions
and other extraordinary or non-recurring losses; and (d) 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 such Consolidated Net
Income for such period, (e) the sum of (1) extraordinary or
non-recurring gains and (2) gains from sales or other dispositions.

“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.

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

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

 23
 

 

“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.

“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.

“Reinvestment Deferred Amount” has the meaning
assigned to such term in Section 7.03(a).

“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 at least 51% of the aggregate unpaid principal amount of the Loans then
outstanding.

“Reserve Report” means an unsuperseded
engineering analysis of the Borrowing Base Properties, in form and substance
reasonably acceptable to the Revolving Agent (or, if the Revolving Facility has
been terminated, the Administrative Agent), prepared in accordance with
customary and prudent practices in the petroleum engineering industry.

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

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

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

“Revolving 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.

 24
 

 

“Revolving Credit Agreement” means that certain
Senior Revolving Credit Agreement dated October 2, 2006, by and among
Borrower, certain Subsidiaries of Borrower and JPMorgan Chase Bank, N.A., as
administrative agent.

“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 executed in connection
with such Senior Revolving Credit Agreement as the same may be amended,
modified, supplemented or restated from time to time to the extent permitted
under this Agreement.

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

“Rights Offering” means the exercise of the MLP
Rights by the holders thereof and the payment of the consideration for such
Equity Interests.

“ROJO Pipeline” means ROJO Pipeline, Inc., a
Texas corporation, and following its conversion to a partnership, ROJO
Pipeline, LP, a Delaware limited partnership.

“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.

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

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

“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 (a) with respect to the Base CD Rate, for new
negotiable nonpersonal time deposits in Dollars over $100,000 with maturities
approximately equal to three months and (b) with respect to the Adjusted LIBO
Rate, for eurocurrency funding (currently

 25
 

 

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 50% of the equity or more than 50% of the
ordinary voting power or, in the case of a partnership, more than 50% of the
general partnership interests are, as of such date, owned, controlled or held,
or (b) that is, as of such date, otherwise Controlled, by the parent or
one or more subsidiaries of the parent or by the parent and one or more
subsidiaries of the parent any subsidiary of the Borrower. 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.

“Target” means Winchester Energy Company, Ltd.,
a Texas limited partnership.

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

“Texas Properties” means certain Oil and Gas Interests
owned by EXCO or EXCO Operating and located in Cherokee, Houston, Polk,
Limestone, Rusk and Smith Counties, Texas.

“Three-Month Secondary CD Rate” means,
for any day, the secondary market rate for three-month certificates of
deposit reported as being in effect on such day (or, if such day 

 26
 

 

is not a Business Day,
the next preceding Business Day) by the Board through the public information
telephone line of the Federal Reserve Bank of New York (which rate will,
under the current practices of the Board, be published in Federal Reserve
Statistical Release H.15(519) during the week following such day) or, if
such rate is not so reported on such day or such next preceding Business Day,
the average of the secondary market quotations for three-month certificates
of deposit of major money center banks in New York City received at
approximately 10:00 a.m., New York City time, on such day (or, if
such day is not a Business Day, on the next preceding Business Day) by the
Administrative Agent from three negotiable certificate of deposit dealers of
recognized standing selected by it.

“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, (iii) the use of the proceeds thereof,
(iv) the execution, delivery and performance of the Revolving Facility
Documents, (v) the funding of the Revolving Loans, (vi) the consummation of the
Winchester Acquisition and (vii) the consummation of the EXCO Transfers and
Conversions.

“Transferred Subsidiaries” means any Subsidiary
of the Borrower (or any such Subsidiary’s predecessor) that was a “Restricted
Subsidiary” under and as defined in the EXCO Credit Agreement prior to the
consummation of the EXCO Transfers and Conversions.

“TXOK Resources Holdings” means TXOK Energy
Resources Holdings L.L.C., a Delaware limited liability company, and its
successors.

“TXOK Texas Holdings” means TXOK Texas Energy
Holdings LLC, a Delaware limited liability company, and its successors.

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

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

“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.

 27
 

 

“WGC Holdco” means WGC Holdco, LLC, a Texas
limited liability company and the general partner of the Target.

“Winchester Acquisition” means the acquisition
of all of the issued and outstanding Equity Interests of Target from PFC
pursuant to the Winchester Merger Agreement.

“Winchester Acquisition Documents” means the
Winchester Merger Agreement and all other certificates and other documents and
instruments now or hereafter executed and delivered by, between or among the
Borrower, Merger Sub, Target, WGC Holdco and PFC pursuant to the Winchester
Merger Agreement or in connection with the Winchester Acquisition.

“Winchester Merger Agreement” means,
collectively, that certain Agreement and Plan of Merger by and among PFC,
Target, WGC Holdco and Merger Sub dated as of July 22, 2006 as amended by the
First Amendment to Agreement and Plan of Merger, dated September 28, 2006.

“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”) and Borrowings also may be classified and referred to by
Type (e.g., a “Eurodollar Borrowing”).

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

Section 1.04.          Accounting
Terms; GAAP.  Except as otherwise
expressly provided herein, all terms of an accounting or financial nature shall
be construed in accordance with GAAP, as in effect from time to time; provided
that, if the Borrower notifies the Administrative 

 28
 

 

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).

Section 1.07.          Second
Priority Creditors.  The Secured
Parties are hereby designated “Second Priority Creditors” for all purposes
under and as defined in the Intercreditor Agreement and the Security
Instruments are hereby designated “Second Priority Security Instruments” for
all purposes under and as defined in the Intercreditor Agreement.

Article
II

The Credits

Section 2.01.          Commitments.  Subject to the terms and conditions set forth
herein, each Lender agrees to make Loans 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.

Section 2.02.          Repayment
of Loans.  On the 2nd day of each
October prior to the Maturity Date, commencing October 2, 2007, the Borrower
shall repay the Loans in the principal amount equal to one percent (1%) of the
aggregate original outstanding principal balance of the Loans; and on the
Maturity Date, the Borrower shall repay the outstanding principal balance of
the Loans in full.

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 Business Days before

 29
 

 

the date of the proposed
Eurodollar Borrowing or (ii) in the case of an ABR Borrowing, not later than
11:00 a.m., one Business Day before the proposed Effective Date.  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.  Such telephonic and written Borrowing Request
shall specify the following information:

(i)            the aggregate amount of the
requested Borrowing;

(ii)           the date of the proposed Effective
Date, 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 terms “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.

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.  Each Lender shall
make each Loan to be made by it hereunder on the proposed 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 Eligible Account of the
Borrower designated by the Borrower in the Borrowing Request.

Section 2.07.          Interest
Elections.

(a)           The Loans made on the Effective Date
shall be either ABR Borrowings or Eurodollar Borrowings.  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.

(b)           To make an election pursuant to this
Section, the Borrower shall notify the Administrative Agent of such election by
telephone (a) in the case of a conversion into or

 30
 

 

a continuation
as a Eurodollar Loan, not later than 11:00 a.m., three Business Days before the
date of the proposed election or (b) in the case of a conversion into or a
continuation as an ABR Loan, not later than 11:00 a.m., one Business Day before
the date of the proposed election.  Each
such telephonic Interest Election Request shall be irrevocable and shall be
confirmed promptly by hand delivery or telecopy to the Administrative Agent of
a written Interest Election Request in a form approved by the Administrative
Agent and signed by the Borrower.

(c)           Each telephonic and written Interest
Election Request shall specify the following information in compliance with
Section 2.03:

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

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

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

(iv)          if the resulting Borrowing is a Eurodollar
Borrowing, the Interest Period to be applicable thereto after giving effect to
such election, which shall be a period contemplated by the definition of the
term “Interest Period”; except that the Interest Period for any Eurodollar
Borrowing requested during the 30 day period following the Effective Date shall
be of one month’s duration, unless otherwise agreed by the Borrower and the
Administrative Agent.

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

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

 31
 

 

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)           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.

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

(d)           The entries made in the accounts
maintained pursuant to paragraph (b) or (c) 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.

(e)           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 a
form approved by the Administrative Agent. 
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).

 32
 

 

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,
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 Business Days before the date of prepayment or (ii) in the
case of prepayment of an ABR Loan, not later than 11:00 a.m. one 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.

(c)           Optional prepayments of Loans shall
be at par plus a premium.  The premium
shall be (i) during the period from the Effective Date to and including the
first anniversary thereof, 2% of the aggregate principal amount prepaid, (ii)
during the period commencing after the first anniversary of the Effective Date
to and including the second anniversary of the Effective Date, 1% of the
aggregate principal amount prepaid, and (iii) after the second anniversary of
the Effective Date, 0%.

Section 2.10.          Mandatory
Prepayment of Loans.

(a)           On or within five (5) days after the
IPO Date, the Borrower shall prepay in full all of the Loans and promptly
thereafter cause all of the Liens securing such Loans to be released and
terminated.

(b)           If, for any fiscal year of the
Borrower commencing with the fiscal year ending December 31, 2007, there shall
be Excess Cash Flow, the Borrower shall, on the relevant Excess Cash Flow
Application Date, apply 100% of such Excess Cash Flow toward the prepayment of
the Loans as set forth in Section 2.10(e). 
Each such prepayment shall be made on a date (an “Excess Cash Flow
Application Date”) no later than the later of (i) April 15 of the current
fiscal year and (ii) five Business Days after the date on which the financial
statements of the Borrower referred in Section 6.01(a) for the fiscal year with
respect to which such prepayment is made are actually delivered.

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

 33
 

 

(d)           The Borrower shall prepay the Loans
with the proceeds of any Equity Contribution (as defined in the Equity Contribution
Agreement) on the date of receipt of such proceeds.

(e)           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.

(f)            Mandatory prepayments of Loans
required by Sections 2.10(b) and 2.10(d) shall be at par.  Mandatory prepayments of Loans required by
Section 2.10(a) shall be at par plus a premium. 
The premium shall be (i) during the period from the Effective Date to
and including the first anniversary thereof, 2% of the aggregate principal
amount prepaid, (ii) during the period commencing after the first anniversary
of the Effective Date to and including the second anniversary of the Effective
Date, 1% of the aggregate principal amount prepaid, and (iii) after the second
anniversary of the Effective Date, 0%.

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.

(b)           All fees payable hereunder shall be
paid on the dates due, in immediately available funds, to the Administrative
Agent.  Fees paid shall not be refundable
under any circumstances.

Section 2.12.          Interest.

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

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

(c)           Notwithstanding the foregoing, if any
principal of or interest on any Loan or any fee or other amount payable by the
Borrower hereunder is not paid when due, whether at stated maturity, upon
acceleration or otherwise, such overdue amount shall bear interest, after as
well as before judgment, at a rate per annum equal to (i) in the case 

 34
 

 

of overdue
principal of any Loan, 2% plus the rate otherwise applicable to such Loan as
provided in the preceding paragraphs of this Section or (ii) in the case of any
other amount, 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.

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.

 35
 

 

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.

(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 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 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 

 36
 

 

increased
costs or reductions is retroactive, then the 180-day period referred to above
shall be extended to include the period of retroactive effect thereof.

Section 2.15.          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 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 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 

 37
 

 

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 have 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 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.

 38

 

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

(c)           If any Lender shall, by exercising
any right of set-off or counterclaim or otherwise, 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 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

 39
 

 

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 have 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 have 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(d) or Section
2.16(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

 40
 

 

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.

 41
 

 

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, and after the IPO Date in the case of the
MLP, the filing of this Agreement and related Loan Documents by EXCO and the
MLP with the Securities and Exchange Commission pursuant to the requirements of
the Securities Exchange Act of 1934, as amended, (b) will not violate any
applicable law or regulation or the charter, by-laws or other Organizational
Documents of the Borrower or any Restricted Subsidiary or any order of any
Governmental Authority, (c) will not violate or result in a default under any
indenture, agreement or other instrument evidencing Material Indebtedness or a
Material Sales Contract binding upon the Borrower or any Restricted Subsidiary
or any of their respective assets, or give rise to a right thereunder to
require any payment to be made by the Borrower or any Restricted Subsidiary,
and (d) will not result in the creation or imposition of any Lien on any asset
of the Borrower or any Restricted Subsidiary not otherwise permitted under
Section 7.02.

 42
 

 

Section 4.04.          No
Material Adverse Change.  Since
December 31, 2005, 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 none
of (i) the Winchester Acquisition, (ii) the EXCO Transfers and Conversions, nor
(iii) changes in commodity prices for Hydrocarbons affecting the oil and gas
industry as a whole constitute a material adverse change).

Section 4.05.          Properties.

(a)           Except as otherwise provided in
Section 4.15 with respect to Oil and Gas Interests, the Borrower and each
Restricted Subsidiary has good title to, or valid leasehold interests in, all
such real and personal property material to its business, except 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 or
proceedings by or before any arbitrator or Governmental Authority pending
against or, to the knowledge of the Borrower, threatened against or affecting
the Borrower or any Restricted Subsidiary, (i) as to which there is a
reasonable possibility of an adverse determination and that, if adversely
determined, could reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect (other than the Disclosed Matters) or
(ii) that involve this Agreement or the Transactions.

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

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

 43
 

 

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 $1,000,000 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 $1,000,000 the fair market value of the assets of
all such underfunded Plans.

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

Section 4.12.          Labor
Matters.  There are no strikes,
lockouts or slowdowns against the Borrower or any of its Restricted
Subsidiaries pending or, to the knowledge of the Borrower, threatened that
could reasonably be expected to have a Material Adverse Effect.  The hours

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worked by and payments
made to employees of the Borrower and its Restricted Subsidiaries have not been
in violation of the Fair Labor Standards Act or any other Law dealing with such
matters to the extent that such violation could reasonably be expected to have
a Material Adverse Effect.

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

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

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

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

Section 4.17.          Solvency.

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

Section 4.18.          Deposit
Accounts.  Except as set forth on
Schedule 4.18 and other deposit accounts maintained at financial institutions
other than the Administrative Agent (the aggregate balance of which does not
exceed $50,000 at any time after December 31, 2006, for all such other deposit
accounts taken as a whole), no Credit Party has any deposit or investment
accounts and no Affiliate of any Credit Party has any deposit or investment
account into which proceeds of Hydrocarbon production from the Oil and Gas
Interests included in the Borrowing Base Properties are deposited.  All proceeds of Hydrocarbon production from
the Oil and Gas Interests included in the Borrowing Base Properties and all
distributions and dividends on any Equity Interests owned by any Credit Party
are deposited and maintained, from the date of receipt by any Credit Party, in
an Eligible Account.

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Article
V

Conditions

Section 5.01.          Effective
Date.  The obligations of the Lenders
to make 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, L.L.P., counsel
for the Credit Parties, substantially in the form of Exhibit B, and covering
such other matters relating to the Credit Parties, and this Agreement as the
Required Lenders shall reasonably request and (ii) if agreed by opining counsel,
opinions delivered pursuant to the Revolving Facility Documents, the Winchester
Acquisition Documents and the EXCO Contribution Documents, if any, addressed to
the Lenders or accompanied by reliance letters in favor of the Lenders stating
that the Lenders may rely on such opinions as though they were addressed to
them.  The Credit Parties hereby request
such counsel to deliver such opinion.

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

(d)           The Administrative Agent shall have
received a certificate, dated the Effective Date and signed by a Responsible
Officer of the Borrower, confirming that the Borrower has (i) complied with the
conditions set forth in paragraphs (a) and (b) of Section 5.02, (ii)
complied with the covenants set forth in Section 6.05 (and demonstrating such
compliance by the attachment of an insurance summary and insurance certificates
evidencing the coverage described in such summary), (iii) complied with the
requirements of Section 6.09 and Section 6.10, (iv) simultaneously with the making
of the Loans under this Agreement and in accordance with applicable law,
consummated the Winchester Acquisition without waiver or amendment of any
material term or condition of any of the Winchester Acquisition Documents (not
otherwise consented to by the Administrative Agent), and (v) prior to or simultaneously with the Borrowing
under this Agreement and in accordance with applicable law, consummated

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the EXCO
Transfers and Conversions, without waiver or amendment of any material term or
condition of the EXCO Contribution Documents.

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

(f)            The Administrative Agent shall have
received the Mortgages to be executed on the Effective Date pursuant to Section
6.09 of this Agreement, duly executed and delivered by the appropriate Credit
Party, together with such other assignments, conveyances, amendments,
agreements and other writings, including, without limitation, UCC-1 financing
statements, tax affidavits and applicable department of revenue documentation,
creating Liens prior and superior in right to any other Person (except Liens
created pursuant to the Revolving Facility Documents), subject to Permitted
Encumbrances, in Oil and Gas Interests having an Engineered Value equal to or
greater than the Engineered Value required under Section 6.09 and the Midstream
Assets.

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

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

(i)            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 Loans to be made on the
Effective Date shall be ABR Loans.

(j)            [Reserved].

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

(l)            The Administrative Agent shall have
received reasonably satisfactory evidence that the Borrower has received assets
and properties from EXCO with a value of not less than $425,178,000 pursuant to
the EXCO Contribution Agreement and otherwise on terms and conditions
satisfactory to the Lenders.

(m)          The Administrative Agent shall have
received reasonably satisfactory evidence that after giving effect to the
Transactions, the MLP shall own all of the issued and outstanding Equity
Interests of the Borrower.

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

(o)           The Lenders shall have received from
the Borrower (i) pro forma consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of the Effective Date, and reflecting the
consummation of the Transactions, the related financings and other transactions
contemplated by the Loan Documents to occur on or prior to the Effective Date,
which pro forma balance sheet shall be prepared consistent in all respects with
the information previously provided by the Borrower to the Administrative Agent
and the Lenders and 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.

(p)           The Administrative Agent, the Term
Agent and the Credit Parties shall have executed and delivered the
Intercreditor Agreement.

(q)           Each Credit Party shall have obtained
all approvals required from any Governmental Authority and all consents of
other Persons, in each case that are necessary or advisable in connection with
the Transactions and each of the foregoing shall be in full force and effect
and in form and substance reasonably satisfactory to the Administrative
Agent.  All applicable waiting periods
shall have expired without any action being taken or threatened by any
competent authority which would restrain, prevent or otherwise impose adverse
conditions on the transactions contemplated by the Loan Documents, the EXCO
Contribution Documents, the Revolving Facility Documents or the Winchester
Acquisition 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

 49
 

 

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.

(r)            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,
the EXCO Contribution Documents, the Revolving Facility Documents or the
Winchester Acquisition Documents or that could have a Material Adverse Effect.

(s)           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.

(t)            The Borrower shall have delivered to
the Administrative Agent with a description of the sources and uses of funding
for the Transactions that is consistent with the terms of the Loan Documents,
the EXCO Contribution Documents, the Revolving Facility Documents and the
Winchester Acquisition Documents and otherwise satisfactory to the
Administrative Agent and the Arrangers and the capitalization, structure and
equity ownership of the Borrower after the Transactions shall be satisfactory
to the Lenders in all respects.

(u)           The Administrative Agent shall have
received evidence or assurances satisfactory to it that (i) each of the
Transferred Subsidiaries has been (or concurrently with the effectiveness of
this Agreement and the funding of the initial Loans hereunder, will be)
released from all liabilities, obligations and Indebtedness under the EXCO
Credit Agreement and all Swap Agreements with any “Lender Counterparty” under
and as defined in the EXCO Credit Agreement (other than the Existing Swap
Agreements to which any Transferred Subsidiary is a party) and that all Liens
on assets and properties of such Transferred Subsidiaries securing such
liabilities, obligations and Indebtedness and the Texas Properties have been
released and terminated, and original executed instruments releasing and
terminating any and all such Liens in a form suitable for filing in the
applicable jurisdiction have been delivered to the Administrative Agent, (ii)
the Borrower has received (or concurrently with the effectiveness of this
Agreement and the funding of the initial Loans hereunder, will receive)  $651,000,000 in cash proceeds from the
incurrence of the Indebtedness evidenced by the Revolving Facility Documents
and otherwise on terms and conditions satisfactory to the Lenders and (iii) the
CapEx Reimbursement Obligation incurred by the MLP in connection with the EXCO
Transfers and Conversions shall have been (or concurrently with the
effectiveness of this Agreement and the initial funding of the Term Loans, will
be) paid in full.

 50
 

 

(v)           The representations and warranties of
each Credit Party set forth in this Agreement shall be true and correct in all
material respects on and as of the date of the Effective Date, except to the
extent that such representations and warranties specifically refer to an
earlier date, in which case they shall be true and correct as of such earlier
date.

(w)          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 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 October 15, 2006.

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 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 MLP and its Consolidated Subsidiaries as of the end of
and for such year, setting forth in each case in comparative form the figures
for the previous fiscal year, all reported on by a firm of independent public
accountants reasonably acceptable to Administrative Agent (without a “going
concern” or like qualification or exception and without any qualification or
exception as to the scope of such audit) to the effect that such consolidated
financial statements present fairly in all material respects the financial
condition and results of operations of MLP and its Consolidated Subsidiaries on
a consolidated basis in accordance with GAAP consistently applied;

(b)           within 45 days after the end of each
fiscal quarter of the Borrower, the consolidated (and unaudited consolidating)
balance sheet and related consolidated (and with respect to statements of
operations, consolidating) statements of operations, partners’ equity and cash
flows of the MLP and its Consolidated Subsidiaries as of the end of and for
such fiscal quarter and the then elapsed portion of the fiscal year, setting
forth in each case in comparative form the figures for the corresponding period
or periods of (or, in the case of the balance sheet, as of the end of) the
previous fiscal year, all certified by a Responsible Officer as presenting
fairly in all material respects the financial

 51
 

 

condition and
results of operations of the MLP and its Consolidated Subsidiaries on a
consolidated and consolidating basis in accordance with GAAP consistently
applied, subject to normal year-end audit adjustments and the absence of
footnotes;

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

(e)           as soon as available, and in any
event no later than March 1 and September 1 of each year, the Reserve
Reports required on such dates pursuant to the terms of the Revolving Facility
Documents (or if the Revolving Facility has terminated, pursuant to the terms
of the Revolving Facility Documents in effect as of the date of termination)
together with a certificate in a form reasonably acceptable to Administrative
Agent signed by a Responsible Officer of the Borrower (i) certifying as to
whether a Default has occurred and, if a Default has occurred, specifying the
details thereof and any action taken or proposed to be taken with respect
thereto, and (ii) setting forth reasonably detailed calculations
demonstrating compliance with clause (d) of Section 7.01;

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

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

 52
 

 

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

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

The Borrower hereby acknowledges that (a) the
Administrative Agent and/or the Arrangers will make available to the Lenders
and/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 that the word “PUBLIC” shall appear prominently
on the first page thereof; (x) by marking Borrower Materials “PUBLIC,” the
Borrower shall be deemed to have authorized the Administrative Agent, the
Arrangers and the Lenders to treat such Borrower Materials as either publicly
available information or not material information (although it may be sensitive
and proprietary) with respect to the Borrower or its securities for purposes of
United States Federal and state securities laws; (y) all Borrower Materials
marked “PUBLIC” are permitted to be made available through a portion of the
Platform designated “Public Investor;” and (z) the Administrative Agent and the
Arrangers shall be entitled to treat Borrower’s Materials that are not marked “PUBLIC”
as being suitable only for posting on a portion of the Platform not designated “Public
Investor.”

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

(a)           the occurrence of any Default;

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

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

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

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

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

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

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

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

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

Section 6.03.          Existence;
Conduct of Business.  The Borrower
will, and will cause each Restricted Subsidiary to, do or cause to be done all
things necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges and

 54
 

 

franchises material to
the conduct of its business; provided that the foregoing shall not
prohibit any merger, consolidation, liquidation or dissolution permitted under
Section 7.03.

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

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

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

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Section 6.08.          Use
of Proceeds.  The proceeds of the
Loans will be used only to (a) finance the Winchester Acquisition, including a
cash equity contribution by the Borrower to, or a loan from the Borrower to,
the Merger Sub to facilitate the payment of the merger consideration required
under the Winchester Merger Agreement, (b) to make the Restricted Payment
permitted under Section 7.06(d) on the Effective Date and (c) pay the fees,
expenses and transaction costs of the Transactions.  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.          Mortgages.  Each Borrower will, and will cause each
Guarantor to, execute and deliver to the Administrative Agent, for the benefit
of the Secured Parties, Mortgages in form and substance acceptable to the
Administrative Agent together with such other assignments, conveyances,
amendments, agreements and other writings, including, without limitation, UCC-1
financing statements (each duly authorized and executed, as applicable) as the
Administrative Agent shall deem necessary or appropriate to grant, evidence,
perfect and maintain Liens in (a) not less than ninety percent (90%) of the
Engineered Value of the Borrowing Base Properties and (b) the Midstream Assets.

Section 6.10.          Title
Data.  The Borrower will, and will
cause each Guarantor to, deliver to the Administrative Agent such opinions of
counsel or other evidence of title as the Administrative Agent shall deem
reasonably necessary or appropriate to verify at all times from and after the
Effective Date, not less than eighty percent (80%) of the Engineered Value of
the Mortgaged Properties of the Borrower and the Guarantors, taken as a whole,
and the validity, perfection and priority of the Liens created by such
Mortgages and such other matters regarding such Mortgages as Administrative
Agent shall reasonably request.

Section 6.11.          Swap
Agreements.  The Borrower will, and
will cause each Restricted Subsidiary to, maintain the Existing Swap Agreements
and none of the Existing Swap Agreements may be amended, modified or cancelled
without the prior written consent of the Required Lenders.  On or within ten (10) Business Days after the
Effective Date, the Borrower will enter into and thereafter maintain one or
more hedge, collar or swap transactions pursuant to Swap Agreements with
Approved Counterparties to hedge (together with the Existing Swap Agreements)
not less than seventy-five percent (75%) of the forecasted production of Crude
Oil and Natural Gas from the total proved developed producing Oil and Gas
Interests of the Borrower and its Restricted Subsidiaries, taken as a whole,
through at least December 31, 2010, as reflected in the Reserve Report used by
the Lenders to determine the initial Borrowing Base under the Revolving Facility
and at or above prices specified by the Administrative Agent on or prior to the
Effective Date or otherwise acceptable to the Administrative Agent.  On or prior to the second anniversary of the
Effective Date, the Borrower will enter into and thereafter maintain one or
more hedge, collar or swap transactions pursuant to Swap Agreements with
Approved Counterparties to hedge (together with the Existing Swap Agreements)
not less than seventy-five percent (75%) of the forecasted production of Crude
Oil and Natural Gas from the total proved developed producing Oil and Gas
Interests of the Borrower and its Restricted Subsidiaries, taken as a whole,
through at least the fifth anniversary of the Effective Date on term and
conditions reasonably satisfactory to the Administrative Agent. Once confirmed,
no such hedge, collar or

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swap transaction nor any
Swap Agreement may be amended or modified, or cancelled without the prior
written consent of Required Lenders. 
Upon the request of the Required Lenders, the Borrower and each
Restricted Subsidiary shall use their commercially reasonable efforts to cause
each Swap Agreement to which the Borrower or any Restricted Subsidiary is a
party to (a) be collaterally assigned to the Administrative Agent, for the
benefit of the Secured Parties and (b) upon the occurrence of any default or
event of default under such agreement or contract, (i) to permit the Lenders to
cure such default or event of default and assume the obligations of such Credit
Party under such agreement or contract and (ii) to prohibit the
termination of such agreement or contract by the counterparty thereto if the
Lenders assume the obligations of such Credit Party under such agreement or
contract and the Lenders take the actions required under the foregoing clause
(i). Upon the request of the Administrative Agent, the Borrower shall, within
thirty (30) days of such request, provide to the Administrative Agent and each
Lender copies of all agreements, documents and instruments evidencing the Swap
Agreements not previously delivered to the Administrative Agent and Lenders,
certified as true and correct by a Responsible Officer of the Borrower, and
such other information regarding such Swap Agreements as the Administrative
Agent and Lenders may reasonably request.

Section 6.12.          Operation
of Oil and Gas Interests.

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

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

Section 6.13.          Restricted
Subsidiaries.  In the event any
Person is or becomes a Restricted Subsidiary, Borrower will (a) promptly take
all action necessary to comply with Section 6.14, (b) promptly take all such
action and execute and deliver, or cause to be executed and delivered, to the
Administrative Agent all such documents, opinions, instruments, agreements, and
certificates similar to those described in Section 5.01(b) and Section 5.01(c)
that the Administrative Agent may request, and (c) promptly cause such
Restricted Subsidiary to (i) become a party to this Agreement and Guarantee the
Obligations by executing and delivering to the Administrative Agent a
Counterpart Agreement in the form of Exhibit C, and (ii) to the extent required
to comply with Section 6.09 or as requested by the Administrative Agent,
execute and deliver Mortgages and other Security Instruments creating Liens
prior and superior in right to any other Person (except Liens created pursuant
to the Revolving Facility Documents), subject to Permitted Encumbrances, in
such Restricted Subsidiary’s Oil and Gas

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Interests and other
assets.  Upon delivery of any such
Counterpart Agreement to the Administrative Agent, notice of which is hereby
waived by each Credit Party, such Restricted Subsidiary shall be a Guarantor
and shall be as fully a party hereto as if such Restricted Subsidiary were an
original signatory hereto.  Each Credit
Party expressly agrees that its obligations arising hereunder shall not be
affected or diminished by the addition or release of any other Credit Party
hereunder.  This Agreement shall be fully
effective as to any Credit Party that is or becomes a party hereto regardless
of whether any other Person becomes or fails to become or ceases to be a Credit
Party hereunder.  With respect to each
such Restricted Subsidiary, the Borrower shall promptly send to the
Administrative Agent written notice setting forth with respect to such Person
the date on which such Person became a Restricted Subsidiary of the Borrower,
and supplement the data required to be set forth in the Schedules to this
Agreement as a result of the acquisition or creation of such Restricted
Subsidiary; provided that such supplemental data must be reasonably acceptable
to the Administrative Agent and Required Lenders.

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

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

Section 6.16.          
Mandatory Prepayment of the Loans. 
On or within five (5) days after the IPO Date, the Borrower shall prepay
in full all of the Indebtedness under the Loan Documents and promptly
thereafter cause all of the Liens securing such Indebtedness to be released and
terminated.

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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, and such promissory notes are subject to a security
interest in favor of the Administrative Agent for the benefit of the Secured
Parties on terms and conditions reasonably satisfactory to the Administrative
Agent prior and superior in right to any other Person (except Liens created
pursuant to the Revolving Facility Documents);

(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 $5,000,000 at any time outstanding;

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

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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 $750,000,000
at any time outstanding; and

(i)            Other unsecured
Indebtedness of the Credit Parties in an aggregate principal amount not
exceeding $1,000,000 at any time outstanding.

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

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

(b)           Permitted Encumbrances;

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

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

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

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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

(f)            Subject to the
Intercreditor Agreement, 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 Borrowing Base Properties or any of the Equity Interests
of any Restricted Subsidiary (in each case, whether now owned or hereafter
acquired), or liquidate or dissolve, except that, the Borrower or any
Restricted Subsidiary may sell Hydrocarbons produced from its Oil and Gas
Interests in the ordinary course of business, and if at the time thereof and
immediately after giving effect thereto no Default shall have occurred and be
continuing, (i) any Restricted Subsidiary may merge into the Borrower in a
transaction in which the Borrower is the surviving entity, (ii) any
Restricted Subsidiary may merge into any other Restricted Subsidiary in a
transaction in which the surviving entity is a Restricted Subsidiary, (iii) any
Restricted Subsidiary may sell, transfer, lease or otherwise dispose of its
assets to the Borrower or to another Restricted Subsidiary, (iv) any Restricted
Subsidiary may liquidate or dissolve if the Borrower determines in good faith
that such liquidation or dissolution is in the best interests of the Borrower
and is not materially disadvantageous to the Lenders, (v) the Borrower or any
Restricted Subsidiary may sell, transfer, lease or otherwise dispose of
equipment and related items in the ordinary course of business, that are
obsolete or no longer necessary in the business of the Borrower or any of its
Restricted Subsidiaries or that is being replaced by equipment of comparable
value and utility, (vi) the Borrower or any Restricted Subsidiary may sell,
transfer or otherwise dispose of the Excluded Properties; (vii) the
Borrower or any Restricted Subsidiary may sell, transfer, lease, exchange,
abandon or otherwise dispose of Borrowing Base Properties with a value not
exceeding, in the aggregate for the Borrower and its Restricted Subsidiaries
taken, as a whole, 5% of the Borrowing Base between scheduled redeterminations
as determined pursuant to the terms of the Revolving Facility Documents (or if
the Revolving Facility has been terminated, as determined by the Administrative
Agent in substantially the same manner as set forth in the Revolving Facility
Documents).  Notwithstanding the
foregoing, the Borrower or any Restricted Subsidiary may sell, transfer, lease,
exchange, abandon or otherwise dispose of Borrowing Base Properties not
otherwise permitted pursuant to the foregoing clause (vii) 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 the Borrowing Base
Properties, interest therein or Restricted Subsidiary subject to the sale or
other disposition (as reasonably determined by, in the case of any sale or
disposition of the Borrowing Base Properties with a value equal to or greater
than $15,000,000) the Board of Directors of

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the Borrower
and, if requested by the Administrative Agent, the Borrower shall deliver a
certificate of a Financial 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) except for the Net Cash Proceeds from the sale
or other disposition of the Excluded Properties, an amount equal to 100% of the
Net Cash Proceeds received from such sale or other disposition shall be used
within 90 days of such disposition (1) to acquire property, plant and equipment
or any business entity used or useful in carrying on the business of the
Borrower and its Restricted Subsidiaries and having a fair market value at
least equal to the fair market value of the properties sold or otherwise
disposed of or to improve or replace any existing property of the Borrower and
its Restricted Subsidiaries used or useful in carrying on the business of the
Borrower and its Restricted Subsidiaries (the “Reinvestment Deferred Amount”),
(2) to repay Indebtedness under the Revolving Facility (with a corresponding
permanent reduction of the commitments thereunder) or (3) to prepay the
Loans.  For purposes of the foregoing
clause (vi), the value of any Oil and Gas Interests included in the Borrowing
Base Properties shall be as determined pursuant to the terms of the Revolving
Facility Documents (or if the Revolving Facility has been terminated, as
determined by the Administrative Agent in substantially the same manner as set
forth in the Revolving Facility Documents).

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

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

(a)           Permitted Investments;

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

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

(d)           Guarantees constituting
Indebtedness permitted by Section 7.01;

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

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

(g)           other investments by
the Borrower and the Restricted Subsidiaries; provided that, on the date
any such other investment is made, the amount of such investment, together with
all other investments made pursuant to this clause (g) of Section 7.04 (in each
case determined based on the cost of such investment) since the Effective Date,
does not exceed in the aggregate, $1,000,000.

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, the Swap Agreements required under Section
6.11 and Swap Agreements entered into in the ordinary course of business with
Approved Counterparties and not for speculative purposes to (a) hedge or
mitigate Crude Oil and Natural Gas price risks to which the Borrower or any
Restricted Subsidiary has actual exposure, and (b) effectively cap, collar or
exchange interest rates (from fixed to floating rates, from one floating rate
to another floating rate or otherwise) with respect to any interest-bearing
liability or investment of any Credit Party; provided that such Swap
Agreements (at the time each transaction under such Swap Agreement is entered
into) would not cause the aggregate notional amount of Hydrocarbons under all
Swap Agreements then in effect (including the Existing Swap Agreements and the
Swap Agreements required under Section 6.11) to exceed at any time (i) ninety
percent (90%) of the “forecasted production from proved producing reserves” (as
defined below) of the Borrower and the Restricted Subsidiaries for each of the
first two years of the forthcoming five year period and (ii) eighty percent
(80%) of the forecasted production from proved producing reserves of the
Borrower and the Restricted Subsidiaries for each of the third, fourth and
fifth years of the forthcoming five year period.  As used in this Section, “forecasted
production from proved producing reserves” means the forecasted production of
Crude Oil and Natural Gas as reflected in the most recent Reserve Report
delivered to the Administrative Agent pursuant to Section 6.01, after giving
effect to any pro forma adjustments for the consummation of any acquisitions or
dispositions since the effective date of such Reserve Report.  Once the Borrower or any Restricted
Subsidiaries enters into a Swap Agreement or any hedge transaction pursuant to
any Swap Agreement, the terms and conditions of such Swap Agreement and such
hedge transaction may not be amended or modified, nor may such Swap Agreement
or hedge transaction be cancelled without the prior written consent of Required
Lenders.  Each Credit Party and each
Lender agrees and acknowledges that (i) the Existing Swap Agreements are Swap
Agreements permitted under this Section 7.05, (ii) as of the Effective Date,
the counterparty to each Existing Swap Agreement is a Lender Counterparty, and
(iii) the obligations of the Credit Parties under the

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

Section 7.06.          Restricted Payments.  The Borrower will not, nor will it permit any
of its Restricted Subsidiaries to, declare or make, or agree to pay or make,
directly or indirectly, any Restricted Payment, except that (a) the Borrower
may declare and pay dividends with respect to its Equity Interests payable
solely in additional partnership interests, (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 $1,000,000 in any
fiscal year, (c) any Restricted Subsidiary may make Restricted Payments to the
Borrower or any Guarantor and (d)
on the Effective Date, the Borrower may declare and pay a dividend to the
holders of its Equity Interests in an aggregate amount not to exceed
$150,000,000; provided that the proceeds of such dividend are used by such
holders to pay in full the CapEx Reimbursement Obligation incurred by the MLP
in connection with the EXCO Transfers and Conversions.

Section 7.07.          Transactions with Affiliates.  The Borrower will not, nor will it permit any
of its Restricted Subsidiaries to, sell, lease or otherwise transfer any
property or assets to, or purchase, lease or otherwise acquire any property or
assets from, or otherwise engage in any other transactions with, any of its
Affiliates, except (a) in the ordinary course of business at prices and on
terms and conditions not less favorable to the Borrower or such Restricted
Subsidiary than could be obtained on an arm’s-length basis from unrelated third
parties, (b) transactions between or among the Borrower and its Restricted
Subsidiaries not involving any other Affiliate, (c) transactions described on
Schedule 7.07, (d) any Restricted Payment permitted by Section 7.06 and (e) the
sales, transfers or other dispositions permitted under Section 7.03(a)(vi), and
(f) the transactions contemplated by the MLP Contribution Documents.

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)

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of the foregoing shall
not apply to customary provisions in leases and other contracts restricting the
assignment thereof.

Section 7.09.          Disqualified Stock.  The Borrower will not, nor will it permit any
of its Restricted Subsidiaries to, issue any Disqualified Stock.

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, nor
will it permit any of its Restricted Subsidiaries to grant any Liens in any
assets of the Borrower or any of its Subsidiaries to secure the Indebtedness
under the Revolving Facility Documents unless each Credit Party granting such
Lien also grants a Lien on such assets to the Administrative Agent for the
benefit of the Secured Parties.  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)           NPV.

(i)            The Borrower will not
permit the ratio, determined on March 1, 2007, but as of the immediately
preceding December 31 of (i) NPV to (ii) Consolidated Funded Indebtedness to be
less than 1.15 to 1.00.

(ii)           The Borrower will not
permit the ratio, determined on March 1 and September 1 of each year, but as of
the immediately preceding December 31 and June 30, respectively (beginning
September 1, 2007) of (i) NPV to (ii) Consolidated Funded Indebtedness to be
less than 1.25 to 1.00.

(b)           Leverage Ratio.

(i)            The Borrower will not
permit the ratio, determined as of the end of any fiscal quarter ending after
December 31, 2006 and on or before June 30, 2007, of (A) Consolidated
Funded Indebtedness as of the end of such fiscal quarter, to (B) Consolidated
EBITDAX for the period from October 1, 2006 to the end of such fiscal
quarter multiplied by a fraction, the numerator of which is four (4) and the
denominator of which is the number of fiscal quarters ended since October 1,
2006, including the then ending fiscal quarter, to be greater than 5.50 to
1.00.

(ii)           The Borrower will not
permit the ratio, determined as of the end of any fiscal quarter ending on or
after September 30, 2007, of (A) Consolidated Funded Indebtedness as of the end
of such fiscal quarter to (B) Consolidated

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EBITDAX for
the trailing four fiscal quarter period ending on such date, to be greater than
5.50 to 1.00.

(c)           Interest Coverage
Ratio.

(i)            The Borrower will not
permit the ratio, determined as of the end of any fiscal quarter, ending after
December 31, 2006 and on or before June 30, 2007, of (A) Consolidated EBITDAX
for the period from October 1, 2006 to the end of such fiscal quarter
multiplied by a fraction, the numerator of which is four (4) and the
denominator of which is the number of fiscal quarters ended since October 1,
2006, including the then ending fiscal quarter to (B) Consolidated Interest
Expense for the period from October 1, 2006 to the end of such fiscal quarter
multiplied by a fraction, the numerator of which is four (4) and the
denominator of which is the number of fiscal quarters ended since October 1,
2006, including the then ending fiscal quarter, to be less than 2.00 to 1.00.

(ii)           The Borrower will not
permit the ratio, determined as of the end of any fiscal quarter ending on or
after September 30, 2007, 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 2.00 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 $1,000,000.

Section 7.13.            Capital Expenditures.  The Borrower will not make or commit to make,
nor will it permit any Restricted Subsidiary to make or commit to make, any
Capital Expenditure, except Capital Expenditures of the Borrower and its
Restricted Subsidiaries in the ordinary course of business not exceeding
$125,000,000 in any fiscal year; provided, that (a) up to $25,000,000 of any
such amount referred to above, if not so expended in the fiscal year for which
it is permitted, may be carried over for expenditure in the next succeeding
fiscal year and (b) Capital Expenditures made pursuant to this Section during
any fiscal year shall be deemed made, first, in respect of amounts permitted
for such fiscal year as provided above and, second, in respect of amounts
carried over from the prior fiscal year pursuant to clause (a) above.

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Article
VIII

Guarantee of
Obligations

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

Section 8.02.          Guarantee Absolute.  Each Guarantor guarantees that the Guaranteed
Liabilities shall be paid strictly in accordance with the terms of this
Agreement and the Swap Agreements to which any Secured Party is a party.  The liability of each Guarantor hereunder is
absolute and unconditional irrespective of: 
(a) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Loan Documents or the Guaranteed Liabilities,
or any other amendment or waiver of or any consent to departure from any of the
terms of any Loan Document or Guaranteed Liability, including any increase or
decrease in the rate of interest thereon; (b) any release or amendment or
waiver of, or consent to departure from, any other guaranty or support
document, or any exchange, release or non-perfection of any collateral,
for all or any of the Loan Documents or Guaranteed Liabilities; (c) any present
or future law, regulation or order of any jurisdiction (whether of right or in
fact) or of any agency thereof purporting to reduce, amend, restructure or
otherwise affect any term of any Loan Document or Guaranteed Liability; (d)
without being limited by the foregoing, any lack of validity or enforceability
of any Loan Document or Guaranteed Liability; and (e) any other setoff, defense
or counterclaim whatsoever (in any case, whether based on contract, tort or any
other theory) with respect to the Loan Documents or the transactions
contemplated thereby which might constitute a legal or equitable defense
available to, or discharge of, the Borrower or a Guarantor.

Section 8.03.          Guarantee Irrevocable.  This Guarantee is a continuing guaranty of
the payment of all Guaranteed Liabilities now or hereafter existing under this
Agreement and such Swap Agreements to which any Secured Party is a party and
shall remain in full force and effect

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

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

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

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

Section 8.07.          Payments Generally.  All payments by the Guarantors shall be made
in the manner, at the place and in the currency (the “Payment Currency”)
required by the Loan 

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

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

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

Section 8.10.          Limitations on Guarantee.  The provisions of the Guarantee under this
Article VIII are severable, and in any action or proceeding involving any state
corporate law, or any state, federal or foreign bankruptcy, insolvency,
reorganization or other law affecting the rights of creditors generally, if the
obligations of any Guarantor under this Guarantee would otherwise be held or
determined to be avoidable, invalid or unenforceable on account of the amount
of such Guarantor’s liability under this Guarantee, then, notwithstanding any
other provision of this Guarantee to the contrary, the amount of such liability
shall, without any further action by the Guarantors, the Administrative Agent,
any Lender or any Lender Counterparty, be automatically limited and reduced to
the highest amount that is valid and enforceable as determined in such action
or proceeding (such highest amount determined hereunder being the relevant
Guarantor’s “Maximum Liability”). This Section 8.10 with respect to the Maximum

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Liability of the
Guarantors is intended solely to preserve the rights of the Administrative
Agent, Lenders and Lender Counterparties hereunder to the maximum extent not
subject to avoidance under applicable law, and no Guarantor nor any other
Person shall have any right or claim under this Section 8.10 with respect to
the Maximum Liability, except to the extent necessary so that none of the
obligations of any Guarantor hereunder shall not 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 days;

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

(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 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

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Indebtedness,
when and as the same shall become due and payable; provided that this
clause (f) shall not apply to Indebtedness under the Revolving Facility
unless the holder or holders of any Indebtedness under the Revolving Facility
or any trustee or agent on its or their behalf have caused such Indebtedness to
become due prior to its scheduled maturity;

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

(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 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;

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

(k)           one or more judgments
for the payment of money in an aggregate amount in excess of $5,000,000 shall
be rendered against the Borrower or any Restricted Subsidiary or any
combination thereof and the same shall remain undischarged for a

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period of
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)           (i) any representation
or warranty made by the Equity Contributor in the Equity Contribution Agreement
shall prove to have been incorrect in any material respect when made, (ii) the
Equity Contributor shall fail to observe or perform any covenant, condition or
agreement contained in the Equity Contribution Agreement (including, without
limitation, the agreements in Sections 2.1 and 4.2 thereof) or (iii) the
delivery by the Equity Contributor of written notice that its obligations under
Section 2.1 of the Equity Contribution Agreement have been revoked or are
otherwise declared invalid or unenforceable;

(o)           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

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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, 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.

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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.

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

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

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

 75
 

 

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, and neither the Equity Contribution
Agreement nor any provision thereof may be waived, amended or modified except
pursuant to an agreement or agreements in writing entered into by the Equity
Contributor, the Borrower and the Required Lenders or by the Equity
Contributor, the Borrower and the Administrative Agent with the consent of the
Required Lenders; provided that no such agreement shall (1) 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, (2) postpone the scheduled date of payment of the principal amount of
any Loan 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, (3) 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, (4)
release any Credit Party from its obligations under the Loan Documents or,
except in connection with any sales, transfers, leases or other dispositions
permitted in Section 7.03, release any of the Collateral without the written
consent of each Lender, (5) 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 or (6) waive any prepayment penalty, 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

 76
 

 

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, 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 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

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CLAIM AGAINST
ANY INDEMNITEE, ON ANY THEORY OF LIABILITY, FOR SPECIAL, INDIRECT,
CONSEQUENTIAL OR PUNITIVE DAMAGES (AS OPPOSED TO DIRECT OR ACTUAL DAMAGES)
ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF, THIS AGREEMENT OR ANY
AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY, THE TRANSACTIONS, ANY LOAN OR
LETTER OF CREDIT OR THE USE OF THE PROCEEDS THEREOF.

(e)           All amounts due under
this Section shall be payable not later than 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 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 of any Loans to an assignee that is a
Lender with a Loan immediately prior to giving effect to such assignment.

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(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:

“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

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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
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 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 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.  

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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.

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.

 81
 

 

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

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

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

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

 82
 

 

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 TEXAS 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 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.

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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, (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 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.  

 84
 

 

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.

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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 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:

  
	
   

  	
   

  
	
   

  	
  WINCHESTER ENERGY COMPANY, LP

  
	
   

  	
   

  
	
   

  	
  By TXOK Texas Energy Holdings, LLC

  
	
   

  	
  as general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ J. Douglas Ramsey

  	
   

  
	
   

  	
  Name:

  	
  J. Douglas Ramsey, Ph.D.

  
	
   

  	
  Title:

  	
  Vice President and Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  TXOK ENERGY RESOURCES HOLDINGS,

  L.L.C.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ J. Douglas Ramsey

  	
   

  
	
   

  	
  Name:

  	
  J. Douglas Ramsey, Ph.D.

  
	
   

  	
  Title:

  	
  Vice President and Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  TXOK TEXAS ENERGY HOLDINGS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ J. Douglas Ramsey

  	
   

  
	
   

  	
  Name:

  	
  J. Douglas Ramsey, Ph.D.

  
	
   

  	
  Title:

  	
  Vice President and Chief Financial Officer

  
										

 

 

 

	
  

  	
  TXOK TEXAS ENERGY RESOURCES, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  TXOK Texas Energy Holdings, LLC,

  
	
   

  	
   

  	
  as general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
      /s/ J. Douglas Ramsey

  	
   

  
	
   

  	
   

  	
  Name:

  	
   J. Douglas Ramsey, Ph.D.

  
	
   

  	
   

  	
  Title:

  	
   Vice President and Chief Financial

   Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ROJO PIPELINE, LP

  
	
   

  	
   

  
	
   

  	
  By:

  	
  TXOK Texas Energy Holdings, LLC,

  
	
   

  	
   

  	
  as general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
      /s/ J. Douglas Ramsey

  	
   

  
	
   

  	
   

  	
  Name:

  	
   J. Douglas Ramsey, Ph.D.

  
	
   

  	
   

  	
  Title:

  	
   Vice President and Chief Financial

   Officer

  
	
   

  	
   

  
	
   

  	
  VAUGHAN HOLDING COMPANY, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
      /s/ J. Douglas Ramsey

  	
   

  
	
   

  	
   

  	
  Name:

  	
   J. Douglas Ramsey, Ph.D.

  
	
   

  	
   

  	
  Title:

  	
   Vice President and Chief Financial

   Officer

  
	
   

  	
   

  
	
   

  	
  WINCHESTER PRODUCTION COMPANY,

  LTD.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Vaughan Holding Company, LLC

  
	
   

  	
   

  	
  as general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
      /s/ J. Douglas Ramsey

  	
   

  
	
   

  	
   

  	
  Name:

  	
   J. Douglas Ramsey, Ph.D.

  
	
   

  	
   

  	
  Title:

  	
   Vice President and Chief Financial Officer

  
						

 

 

 

	
  

  	
  TGG PIPELINE, LTD.

  
	
   

  	
   

  
	
   

  	
  By: Vaughan Holding company, LLC

  
	
   

  	
  as general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
      /s/ J. Douglas Ramsey

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  J. Douglas Ramsey, Ph.D.

  
	
   

  	
   

  	
  Title:

  	
  Vice President and Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TALCO MIDSTREAM ASSETS, LTD.

  
	
   

  	
   

  
	
   

  	
  By: Vaughan Holding company, LLC

  
	
   

  	
  as general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
      /s/ J. Douglas Ramsey

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  J. Douglas Ramsey, Ph.D.

  
	
   

  	
   

  	
  Title:

  	
  Vice President and Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GARRISON GATHERING, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
      /s/ J. Douglas Ramsey

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  J. Douglas Ramsey, Ph.D.

  
	
   

  	
   

  	
  Title:

  	
  Vice President and Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  VAUGHAN DE, LLC

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
      /s/ J. Douglas Ramsey

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  J. Douglas Ramsey, Ph.D.

  
	
   

  	
   

  	
  Title:

  	
  Vice President and Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
						

 

 

 

	
  

  	
  JPMORGAN
  CHASE BANK, N.A.,

  
	
   

  	
  as a Lender and as Administrative Agent,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ W. Mark
  Cranmer

  	
   

  
	
   

  	
  Name:

  	
  W. Mark Cranmer

  
	
   

  	
  Title:

  	
  Senior Vice President

  

 

 

 

	
  

  	
   

  
	
   

  	
  CREDIT
  SUISSE, CAYMAN ISLANDS

  BRANCH,

  
	
   

  	
  as a Lender and
  as Syndication Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
							

 

 

EXHIBIT A

ASSIGNMENT AND ASSUMPTION

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

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

	
  1.

  	
  Assignor:

  	
   

  
	
   

  	
   

  	
   

  
	
  2.

  	
  Assignee:

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
  3.

  	
  Borrower(s):

  	
   

  
	
   

  	
   

  	
   

  
	
  4.

  	
  Administrative Agent:

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

  

 

 

 

	
  5.

  	
  Credit Agreement:

  	
  Senior Term Credit Agreement dated as of October 2,
  2006 (as amended, supplemented or otherwise modified from time to time) among
  EXCO Partners Operating Partnership, LP, as Borrower, Certain Subsidiaries of
  Borrower, as Guarantors, the Lenders parties thereto, and JPMorgan Chase
  Bank, N.A., as Administrative Agent

  
	
   

  	
   

  	
   

  
	
  6.

  	
  Assigned Interest:

  	
   

  

 

	
   

  	
   

  	
  Aggregate Amount

  of Loans for all

  Lenders

  	
   

  	
  Amount of Loans

  Assigned

  	
   

  	
  Applicable

  Percentage of Loans

  	
   

  
	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  %

  

 

Effective Date: 
                     
       , 20    

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

	
  

  	
  ASSIGNOR

  
	
   

  	
   

  
	
   

  	
  [NAME OF
  ASSIGNOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ASSIGNEE

  
	
   

  	
   

  
	
   

  	
  [NAME OF
  ASSIGNEE]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  

 

 

[Consented to and] Accepted:

 

	
  JPMORGAN CHASE BANK, N.A.,

  
	
  as
  Administrative Agent

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
  [Consented to:]

  
	
   

  
	
   

  
	
  EXCO
  PARTNERS OPERATING PARTNERSHIP, LP

  
	
   

  
	
  By:

  	
  EXCO Partners
  OLP GP, LLC

  
	
   

  	
  Its sole general
  partner

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
				

 

 

Senior Term Credit Agreement dated October 2, 2006 (as
amended, supplemented or otherwise modified from time to time) among EXCO
Partners Operating Partnership, LP, as Borrower, Certain Subsidiaries of
Borrower, as Guarantors, the Lenders party thereto, and JPMorgan Chase Bank,
N.A., as Administrative Agent.

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

1.             Representations
and Warranties.

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

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

2.             Payments.  From and after the Effective Date, the
Administrative Agent shall make all payments in respect of the Assigned
Interest (including payments of principal, interest,

 

fees and other amounts) to the Assignor for amounts
which have accrued to but excluding the Effective Date and to the Assignee for
amounts which have accrued from and after the Effective Date.

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

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