Document:

EXHIBIT 10.3

 

SECURITIES ACCOUNT CONTROL
AGREEMENT

[JPMorgan Chase Bank]

 

This Securities Account Control Agreement dated as of
February 10, 2005 (this “Agreement”)
among EXCO RESOURCES, INC., a Texas corporation (the “Debtor”),
JPMORGAN CHASE BANK, N.A. (successor by merger to Bank One, N.A. (Illinois)),
in its capacity as administrative agent (in such capacity, the “Secured Party”) pursuant to that certain Third Amended and
Restated Credit Agreement dated January 27, 2004 among  Debtor, EXCO Operating, LP, a
Delaware limited partnership, North Coast Energy, Inc., a Delaware corporation
and North Coast Energy Eastern, Inc., a Delaware corporation, the lenders from
time to time a party thereto, Secured Party, BNP Paribas, as Syndication Agent,
The Bank of Nova Scotia, as Co-Documentation Agent and Toronto-Dominion (Texas), as Co-Documentation Agent (as
amended and in effect from time to time, the “Credit
Agreement”), WILMINGTON TRUST COMPANY, in its capacity as Collateral
Agent (in such capacity, “Other Secured Party”)  pursuant to that certain Indenture, dated
January 20, 2004, among Debtor, certain subsidiaries of Debtor and Collateral
Agent, and J.P. MORGAN SECURITIES INC.,
in its capacity as a “securities intermediary” as defined in Section 8-102 of
the UCC (in such capacity, the “Securities Intermediary”).
All references herein to the “UCC” shall
mean the Uniform Commercial Code as in effect in the State of New York.

 

WHEREAS, Debtor is a party
to an Amended and Restated Pledge Agreement For Stock, dated January 27, 2004,
(as amended and in effect from time to time, the “First Lien Pledge Agreement”) between Debtor and Secured Party by
which Debtor has granted to the Secured Party a first priority security
interest in the Securities Account (as defined below).  Subject to the terms of this Agreement,
Securities Intermediary recognizes the security interest in the Securities
Account in favor of the Secured Party granted under the First Lien Pledge
Agreement.

 

WHEREAS, Debtor is also a
party to a Pledge Agreement For Stock, dated January 20, 2004, (as amended and
in effect from time to time, the “Second Lien
Pledge Agreement”) between Debtor and Other Secured
Party by which Debtor has granted to the Other Secured Party a second priority
security interest in the Securities Account (as defined below).  The Other Secured Party, Debtor and
Securities Intermediary are contemporaneously entering into a Securities
Account Control Agreement (the “Other Control
Agreement”), pursuant to which Securities Intermediary recognizes
the Security Interest in the Securities Account in favor of the Other Secured
Party granted under the Second Lien Pledge Agreement.

 

SECTION 1.  Establishment of Securities Account.  The Securities Intermediary hereby confirms
and agrees that:

 

 

 

(a)                                  The
Securities Intermediary has established account number  36057412 to be
restyled in the name “JPMorgan Chase Bank, N.A., collateral account for  EXCO Resources, Inc.” or any abbreviations made by Securities Intermediary for operational
purposes (such account and any successor accounts, the “Securities Account”); Debtor
irrevocably directs Securities Intermediary to make all notations in Security
Intermediary’s records pertaining to the Securities Account that are necessary
or appropriate to reflect this Agreement and to move collateral from the
existing Securities Account to establish a new Securities Account, with a new
account number, for the purpose of holding the collateral.

 

(b)                                 All
securities or other property underlying any financial assets credited to the
Securities Account shall be registered in the name of the Securities
Intermediary, indorsed to the Securities Intermediary or in blank or credited
to another securities account maintained in the name of the Securities
Intermediary and in no case will any financial asset credited to the Securities
Account be registered in the name of the Debtor, payable to the order of the
Debtor or specially indorsed to the Debtor except to the extent the foregoing
have been specially indorsed to the Securities Intermediary or in blank;

 

(c)                                  All
property delivered to the Securities Intermediary pursuant to the Security
Agreement will be promptly credited to the Securities Account; and

 

(d)                                 The
Securities Account is a “securities account” within the meaning of Section
8-501 of the UCC.

 

SECTION 2.  “Financial Assets” Election.  The Securities Intermediary hereby agrees
that each item of property (including, without limitation, any investment
property, financial asset, security, instrument, general intangible or cash)
credited to the Securities Account shall be treated as a “financial asset”
within the meaning of Section 8-102(a)(9) of the UCC.

 

SECTION 3.  Control of the Securities Account.  After the Notice of Sole
Control (as defined in Section 8(a)) is received by the Securities
Intermediary, and until the date that Securities Intermediary receives either:
(i) a termination notice in the form of Exhibit B hereto from both of
Secured Party and Other Secured Party (“Termination Notice”);
or (ii) a subordination termination notice from Secured Party in the form of Exhibit
C hereto (a “Subordination Termination
Notice”)), then if the Securities Intermediary shall receive any
order from the Secured Party directing withdrawal,
transfer or redemption of any financial asset relating to the Securities
Account, the Securities Intermediary shall comply with such entitlement order
without further consent by the Debtor, the Other Secured Party or any other
person.  Securities Intermediary shall
not comply with any order it receives from the Other Secured Party directing
the withdrawal, transfer or redemption of any financial asset, until and unless
Securities Intermediary receives a Termination Notice or a Subordination
Termination Notice of this Agreement pursuant to Section 13.  Any Termination Notice is not effective as to
the Securities

 

1

 

Intermediary unless it is signed by both Secured Party and Other
Secured Party.  Before the Notice of Sole
Control is received by the Securities Intermediary, if the Securities
Intermediary shall receive any order from the Debtor directing substitution or
redemption of any financial asset relating to the Securities Account, the
Securities Intermediary shall comply with such entitlement order.  Before the Notice of Sole Control is received
by the Securities Intermediary, if a withdrawal notice in the form of Exhibit
D hereto from both the Secured Party and the Other Secured Party (the “Withdrawal
Notice”) is received by the Securities Intermediary, then the Securities
Intermediary shall follow such orders to allow withdrawals by the Debtor.  If the Debtor is otherwise entitled to issue
entitlement orders and such orders conflict with any entitlement order issued
by the Secured Party, the Securities Intermediary shall follow the orders
issued by the Secured Party.

 

SECTION 4.  Subordination of Lien; Waiver of Set-Off.  In the event that the Securities Intermediary
has or subsequently obtains by agreement, by operation of law or otherwise a
security interest in the Securities Account or any security entitlement
credited thereto, the Securities Intermediary hereby agrees that such security
interest shall be subordinate to the security interest of the Secured
Party.  The financial assets and other
items deposited to the Securities Account will not be subject to deduction,
set-off, banker’s lien, or any other right in favor of any person other than
the Secured Party and the Other Secured Party (except that the Securities
Intermediary may set off (i) all amounts due to the Securities Intermediary
arising out of this Agreement, (ii) the face amount of any checks which have
been credited to such Securities Account but are subsequently returned unpaid
because of uncollected or insufficient funds and
(iii) any unsettled trades).

 

SECTION 5.  Choice of Law.  This Agreement and the Securities Account
shall each be governed by the laws of the State of New York.  Regardless of any provision in any other
agreement, for purposes of the UCC, New York shall be deemed to be the
Securities Intermediary’s jurisdiction (within the meaning of Section 8-110 of
the UCC) and the Securities Account (as well as the securities entitlements
related thereto) shall be governed by the laws of the State of New York.

 

SECTION 6.  Conflict with Other Agreements.

 

(a)                                  
In the event of any conflict between this Agreement (or any portion thereof)
and any other agreement now existing or hereafter entered into between the
Debtor and Securities Intermediary, the terms of this Agreement shall prevail;

 

(b)                                 No
amendment or modification of this Agreement or waiver of any right hereunder
shall be binding on any party hereto unless it is in writing and is signed by
all of the parties hereto;

 

(c)                                  The
Securities Intermediary hereby confirms and agrees that:

 

2

 

(i)  There are no other agreements entered into
between the Securities Intermediary and the Debtor or between Securities
Intermediary and any other party with respect to the Securities Account other
than the Other Control Agreement, that certain Securities Account Application
and Customer Agreement between Debtor and Securities Intermediary, which shall,
subject to Sections 4 and 6(a) hereof, prevail in the event of a dispute with
the Securities Intermediary;

 

(ii)  It has not entered into, and until the
termination of this Agreement, will not enter into, any agreement with any
other person relating to the Securities Account and/or any financial assets
credited thereto pursuant to which it has agreed to comply with entitlement
orders (as defined in Section 8-102(a)(8) of the UCC) of such other person,
other than the Other Control Agreement; and

 

(iii) It has not entered
into, and until the termination of this Agreement, will not enter into, any
agreement with the Debtor or Secured Party purporting to limit or condition the
obligation of the Securities Intermediary to comply with entitlement orders as
set forth in Section 3 hereof.

 

SECTION 7.  Adverse Claims.  Except for the claims and interest of the Secured
Party, the Other Secured Party and of the Debtor in the Securities Account, the
Securities Intermediary does not have actual knowledge of any claim to, or
other interest in, the Securities Account or in any “financial asset” (as
defined in Section 8-102(a) of the UCC) credited thereto.  If any person asserts any lien, encumbrance
or adverse claim (including any writ, garnishment, judgment, warrant of
attachment, execution or similar process) against the Securities Account or in
any financial asset carried therein, the Securities Intermediary will promptly
notify the Secured Party and the Debtor thereof as provided in Section 12.

 

SECTION 8.  Maintenance of Securities Account.  In addition to, and not in lieu of, the
obligation of the Securities Intermediary to honor entitlement orders as agreed
in Section 3 hereof, the Securities Intermediary agrees to maintain the
Securities Account as follows:

 

(a)                                  Notice
of Sole Control.  If the Secured
Party delivers to the Securities Intermediary a Notice of Sole Control in
substantially the form set forth in Exhibit A hereto, the Securities
Intermediary agrees that after receipt of such notice, and until the date the
Securities Intermediary receives a Termination Notice or a Subordination
Termination Notice, it will take all instruction with respect to the Securities
Account solely from the Secured Party. 
Notwithstanding
anything to the contrary set forth herein, unless and until a notice from the Secured
Party (set out in Exhibit A hereto and,
such other persons as may be nominated as an authorized officer by the Secured
Party by written notice to the Securities
Intermediary, from time to time) that the Secured Party will exercise exclusive control over the Securities
Account

 

3

 

pursuant to the Notice of Sole Control (i) is accompanied by a telephone call that is
actually received by employees of the Securities Intermediary, at the telephone
numbers set out in the signatory section informing the Securities Intermediary
to expect the Notice of Sole Control,
(ii) is actually received by the individual employee(s) of the Securities
Intermediary to whom the notice is required hereunder to be addressed (“Receive”) or (“Received”) and
(iii) becomes Effective (as set forth below), the Debtor may:  (i) exercise any voting rights that it may
have with respect to any financial asset relating to the Securities
Account, (ii) give instructions to the
Securities Intermediary to enter into purchase or sale transactions in the
Securities Account and (iii) before the Notice of Sole Control is received
by the Securities Intermediary, if a Withdrawal Notice from both the Secured
Party and the Other Secured Party is received by the Securities Intermediary
then the Securities Intermediary shall follow such orders to allow withdrawals
by the Debtor.  Any Notice of Sole
Control Received by the Securities Intermediary
shall not be deemed effective until two hours after it is Received by the
Securities Intermediary; provided, however,
that any Notice of Sole Control Received
by the Securities Intermediary after 4:00 p.m. New York City time on any
Business Day shall not be deemed effective until 10:00 a.m. New York City time
on the next succeeding Business Day.  A Notice
of Sole Control deemed effective as set forth
in the prior sentence is referred to herein as “Effective.”  Notwithstanding the foregoing, (1) all
transactions relating to any financial asset relating to the Securities
Account consummated or processed by the
Securities Intermediary prior to a Notice of Sole Control becoming Effective (or commenced by the Securities
Intermediary prior to a Notice of Sole Control becoming Effective and consummated or processed thereafter) shall be
deemed not to constitute a violation of this Agreement, provided
that, if practicable, the Securities Intermediary shall use reasonable efforts
to reverse such transactions, but the Securities Intermediary shall have no
obligation nor any liability for any failure to reverse such transactions and
(2) the Securities Intermediary may (at its discretion and without any
obligation to do so) commence honoring solely the Secured Party’s entitlement orders concerning the financial assets
relating to the Securities Account at any time or from time to time after it
becomes aware that the Secured Party has
sent to it a Notice of Sole Control
(including without limitation reversing or redirecting any transaction referred
to in clause (1) above), whether or not the Notice of Sole Control has become Effective, with no liability whatsoever
to the Debtor or any other party for doing so. 
“Business Day” means any day other than a Saturday, Sunday or other day
on which commercial banks and registered broker-dealers in New York City, New
York and in Newark, Delaware are authorized or required to be closed. If the
Securities Intermediary receives from the Secured Party a Notice of Sole
Control, the Securities Intermediary will cease
distributing to the Debtor all interest and dividends on any financial assets relating to the Securities Account
upon the Notice of Sole Control becoming
Effective.

 

(b)                                 Permitted
Investments.  Until such time as the
Securities Intermediary receives a Notice of Sole Control signed by the Secured
Party, the Debtor shall direct the Securities Intermediary with respect to the
selection of investments to be made for the Securities Account. Before the
Notice of Sole Control is received by the Securities Intermediary, if the
Securities Intermediary shall receive any order from the Debtor directing
substitution or

 

4

 

redemption of any financial asset relating to the Securities Account,
the Securities Intermediary shall comply with such entitlement order.  Before the Notice of Sole Control is received
by the Securities Intermediary, if a Withdrawal Notice from both of Secured
Party and Other Secured Party is received by Securities Intermediary, then the
Securities Intermediary shall follow such orders to allow withdrawals by
Debtor.  If the Debtor is otherwise
entitled to issue entitlement orders and such orders conflict with any
entitlement order issued by the Secured Party, the Securities Intermediary
shall follow the orders issued by the Secured Party.

 

(c)                                  Statements
and Confirmations.  The Securities
Intermediary will promptly send copies of all statements, confirmations and
will use best efforts for other correspondence concerning the Securities
Account and/or any financial assets credited thereto simultaneously to each of
the Debtor, the Secured Party and the Other Secured Party at the address for
each set forth in Section 12 of this Agreement.

 

(d)                                 Tax
Reporting.  All items of income,
gain, expense and loss recognized in the Securities Account shall be reported
to the Internal Revenue Service and all state and local taxing authorities
under the name and taxpayer identification number of the Debtor.

 

Section 9.  Representations, Warranties and Covenants of
the Securities Intermediary. 
The Securities Intermediary hereby makes the following representations,
warranties and covenants:

 

(a)                                  The
Securities Account has been established as set forth in Section 1 above and
such Securities Account will be maintained in the manner set forth herein until
termination of this Agreement; and

 

(b)                                 This
Agreement is the valid and legally binding obligation of the Securities
Intermediary.

 

Section 10.   Indemnification of Securities Intermediary.  The Debtor and the Secured Party hereby agree
that (a) the Securities Intermediary is released from any and all liabilities
to the Debtor and the Secured Party arising from the terms of this Agreement
and the compliance of the Securities Intermediary with the terms hereof, except
to the extent that such liabilities arise from the Securities Intermediary’s
negligence and (b) the Debtor, and its successors and assigns shall at all
times indemnify and save harmless the Securities Intermediary from and against
any and all claims, actions and suits of others arising out of the terms of
this Agreement or the compliance of the Securities Intermediary with the terms
hereof, except to the extent that such arises from the Securities Intermediary’s
gross negligence, and from and against any and all liabilities, losses,
damages, costs, charges, counsel fees and other expenses of every nature and
character arising by reason of the same, except to the extent such arises from
the Securities Intermediary’s gross negligence, until the termination of this
Agreement.

 

5

 

Section 11.  Successors; Assignment.  The terms of this Agreement
shall be binding upon, and shall inure to the benefit of, the parties hereto
and their respective corporate successors or heirs and personal representatives
who obtain such rights solely by operation of law.

 

Section 12.  Notices.  
Any notice, request or other communication required or
permitted to be given under this Agreement shall be in writing and deemed to
have been properly given when delivered in person, or when sent by telecopy or
other electronic means and electronic confirmation of error free receipt is
received or two (2) days after being sent by certified or registered United
States mail, return receipt requested, postage prepaid, addressed to the party
at the address set forth below.

 

	
  Debtor:

  	
   

  	
  EXCO Resources,
  Inc.

  
	
   

  	
   

  	
  12377 Merit
  Drive

  
	
   

  	
   

  	
  Suite 1700, LB
  82

  
	
   

  	
   

  	
  Dallas, Texas
  75251

  
	
   

  	
   

  	
  Attention:

  	
  Chief Financial
  Officer

  
	
   

  	
   

  	
  Telephone:

  	
  (214) 368-2084

  
	
   

  	
   

  	
  Facsimile:

  	
  (214) 368-2087

  
	
   

  	
   

  	
   

  
	
  Secured Party:

  	
   

  	
  JPMorgan Chase Bank, N.A.

  
	
   

  	
   

  	
  1717 Main Street, TX1-2448

  
	
   

  	
   

  	
  Dallas, Texas 75201

  
	
   

  	
   

  	
  Attention:

  	
  Wm. Mark Cranmer

  
	
   

  	
   

  	
  Telephone:

  	
  (214) 240-2212

  
	
   

  	
   

  	
  Facsimile:

  	
  (214) 290-2332

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  JPMorgan Chase Bank, N.A.

  
	
   

  	
   

  	
  Mail Code IL1-0634

  
	
   

  	
   

  	
  1 Bank One Plaza

  
	
   

  	
   

  	
  Chicago, Illinois 60670-0634

  
	
   

  	
   

  	
  Attention:

  	
  Jim Moore

  
	
   

  	
   

  	
  Telephone:

  	
  (312) 385-7057

  
	
   

  	
   

  	
  Facsimile:

  	
  (312) 732-4840

  

 

6

 

	
  Other Secured Party:

  	
   

  	
  Wilmington Trust
  Company

  
	
   

  	
   

  	
  Rodney Square North

  
	
   

  	
   

  	
  1100 North Market
  Street

  
	
   

  	
   

  	
  Wilmington, DE 19890

  
	
   

  	
   

  	
  Attention:

  	
  Corporate Trust
  Department

  
	
   

  	
   

  	
  Telephone:

  	
  (302) 651-8671

  
	
   

  	
   

  	
  Facsimile:

  	
  (302) 651-8882

  
	
   

  	
   

  	
   

  
	
  Securities Intermediary:

  	
   

  	
  J.P. Morgan Securities Inc.

  
	
   

  	
   

  	
  601 Travis, 18th Floor

  
	
   

  	
   

  	
  Houston, Texas 77002

  
	
   

  	
   

  	
  All notices and Notice of Sole Control must be Received by:

  
	
   

  	
   

  	
  Attention: 

  	
  Pledged Collateral Desk

  
	
   

  	
   

  	
  Securities Division

  
	
   

  	
   

  	
  Telecopier: 

  	
  713-216-2396

  
	
   

  	
   

  	
  Telephone: 

  	
  713-216-1827

  
	
   

  	
   

  	
  AND

  
	
   

  	
   

  	
  Attention: 

  	
  Client Services

  
	
   

  	
   

  	
  Telecopier: 

  	
  713-216-1445

  
	
   

  	
   

  	
  Telephone: 

  	
  713-216-5410

  

 

Any party may change its address for notices in the
manner set forth above.

 

Section 13.  Termination.  (1) The obligations of the Securities
Intermediary to the Secured Party pursuant to this Agreement shall continue in
effect until the security interest of the Secured Party in the Securities
Account has been terminated pursuant to the terms of the First Lien Pledge
Agreement and the Securities Intermediary has been notified of such termination
in writing, as follows:  (a) Termination Notice. The Secured
Party and the Other Secured Party agree to provide Termination Notice in
substantially the form of Exhibit B hereto to the Securities
Intermediary upon the request of the Debtor on or after the termination of the
Secured Party’s security interest in the Securities Account pursuant to the
terms of the First Lien Pledge 
Agreement.  Any Termination Notice
is not effective as to the Securities Intermediary unless it is signed by both
Secured Party and Other Secured Party. 
(b) Subordination Termination Notice.  The Secured Party agrees to provide a
Subordination Termination Notice in substantially the form of Exhibit C
hereto to the Securities Intermediary after the termination of the Secured
Party’s security interest in the Securities Account pursuant to the terms of
the First Lien Pledge Agreement.  Upon
receipt of a Subordination Termination Notice, Securities Intermediary agrees
that it will comply with the terms and conditions of the Other Control
Agreement.  (2)  The termination of this Agreement shall not
terminate the Securities Account or alter the obligations of the Securities
Intermediary to the Debtor pursuant to any other agreement with respect to the

 

7

 

Securities Account.  Securities
Intermediary may at any time, with 30 business days prior notice, terminate the
Securities Account.  The Securities
Intermediary will mail notice of termination to the Secured Party, the Other
Secured Party and the Debtor thereof as provided in Section 12. If the
Securities Intermediary terminates the Securities Account after the Notice of
Sole Control is received by the Securities Intermediary, then the Securities
Intermediary shall comply with any order from the Secured Party directing withdrawal, transfer or redemption of
any financial asset relating to the Securities Account and the Securities
Intermediary shall comply with such entitlement order from the Secured Party
without further consent by the Debtor or any other person. If the Securities
Intermediary terminates the Securities Account before the Notice of Sole
Control is received by the Securities Intermediary, then the Securities
Intermediary shall comply with any order from the Debtor directing substitution
or redemption of any financial asset relating to the Securities Account.  If the Debtor is otherwise entitled to issue
entitlement orders and such orders conflict with any entitlement order issued
by the Secured Party, the Securities Intermediary shall follow the orders
issued by the Secured Party.

 

Section 14.  Force Majeure.  Securities Intermediary
shall not be liable for and performance is excused during the period of delay,
interruption or failure for any action taken, or any delay or failure to take
any action, to the extent that the taking of such action, or such delay,
interruption or failure, arises out of causes beyond the reasonable control of
Securities Intermediary or any of its third party providers, including without
limitation, any delay or failure to perform, execute or comply with
instructions that (a) are never received by Securities Intermediary, (b) are
not received by Securities Intermediary in a timely manner or within normal
business hours, (c) are received by Securities Intermediary but Securities
Intermediary or any of its third party providers is unable to perform, execute
or comply with such instructions for causes beyond the reasonable control of
Securities Intermediary or any of its third party providers, such as computer
or systems failures, damage caused by severe weather, earthquakes, wars,
insurrection, acts of terrorism, riots, acts of God, accident, fire, water damage,
explosions, mechanical breakdowns or national disasters, power or utility
failures, strikes or other stoppage of labor, governmental or other
intervention or any other cause (whether similar or dissimilar to any of the
foregoing) whatsoever beyond the control of Securities Intermediary or any of
its third party providers.

 

Section 15.  Counterparts. 
This Agreement may be executed in any number of
counterparts, all of which shall constitute one and the same instrument, and
any party hereto may execute this Agreement by signing and delivering one or
more counterparts.

 

8

 

IN
WITNESS WHEREOF, the parties hereto have caused this Securities Account Control
Agreement to be executed as of the date first above written by their respective
officers thereunto duly authorized.

 

 

	
   

  	
  EXCO RESOURCES, INC.

  
	
   

  	
  as Debtor

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ J. Douglas Ramsey

  	
   

  
	
   

  	
   

  	
  Name:

  	
  J. Douglas Ramsey

  
	
   

  	
   

  	
  Title:

  	
  Vice President and Chief Financial Officer

  

 

9

 

	
   

  	
  JPMORGAN CHASE BANK, N.A.

  
	
   

  	
  (successor by merger to Bank One, N.A. (Illinois)

  
	
   

  	
  as Secured Party

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Stephen Lescher

  	
   

  
	
   

  	
   

  	
    Name:

  	
  Stephen Lescher

  
	
   

  	
   

  	
    Title:

  	
  Director, Capital Markets

  

 

10

 

	
   

  	
  WILMINGTON TRUST COMPANY

  
	
   

  	
  as Collateral Agent

  
	
   

  	
  as Other Secured Party

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ W.T. Morris II

  	
   

  
	
   

  	
   

  	
    Name:

  	
  W. Thomas Morris, II

  
	
   

  	
   

  	
    Title:

  	
  Senior Financial Services Officer

  

 

11

 

	
   

  	
  J.P. MORGAN SECURITIES, INC.

  
	
   

  	
  as Securities Intermediary

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Terry L. Knell

  	
   

  
	
   

  	
   

  	
    Name:

  	
  Terry Knell

  
	
   

  	
   

  	
    Title:

  	
  Vice President

  

 

12

EXHIBIT A

 

NOTICE OF SOLE
CONTROL

TO SECURITIES
ACCOUNT CONTROL AGREEMENT

 

 

[Letterhead of Secured Party]

 

 

[Date]

 

	
  J.P. Morgan Securities Inc.

  	
   

  
	
  601 Travis, 18th Floor

  	
   

  
	
  Houston, Texas 77002

  	
   

  
	
  All
  notices and Notice of Sole Control must be
  Received by:

  	
   

  
	
  Attention: 

  	
  Pledged Collateral Desk

  	
   

  
	
  Securities Division

  	
   

  
	
  Telecopier: 

  	
  713-216-2396

  	
   

  
	
  Telephone: 

  	
  713-216-1827

  	
   

  
	
  AND

  	
   

  
	
  Attention: 

  	
  Client Services

  	
   

  
	
  Telecopier: 

  	
  713-216-1445

  	
   

  
	
  Telephone: 

  	
  713-216-5410

  	
   

  

 

Re:  Notice of Sole Control

 

Ladies and
Gentlemen:

 

As referenced in the Securities Account Control
Agreement dated as of February    , 2005 among EXCO Resources,
Inc., a Texas corporation (the “Debtor”), you and the undersigned, JPMorgan
Chase Bank, N.A. (as successor by merger to Bank One, N.A. (Illinois)) (a copy
of which is attached), we hereby give you notice of our sole control over
securities account number                      (the “Securities Account”)
and all financial assets credited thereto. 
You are hereby instructed not to accept any direction, instructions or
entitlement orders with respect to the Securities Account or the financial
assets credited thereto from any person other than the undersigned, unless
otherwise ordered by a court of competent jurisdiction.

 

We have also delivered a copy of this notice by
facsimile transmission to the Debtor and the Other Secured Party (as defined in
the above referenced agreement).

 

 

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  JPMORGAN CHASE BANK, N.A.

  
	
   

  	
  as Secured Party

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
    Name:

  	
   

  
	
   

  	
   

  	
    Title:

  	
   

  
					

 

 

	
  cc:

  	
   

  	
  EXCO Resources, Inc.

  
	
   

  	
   

  	
   

  

 

13

EXHIBIT B

 

TERMINATION NOTICE

TO SECURITIES ACCOUNT CONTROL AGREEMENT

 

 

[Letterhead of Secured Party]

 

 

[Date]

 

	
  J.P. Morgan Securities Inc.

  	
   

  
	
  601 Travis, 18th Floor

  	
   

  
	
  Houston, Texas 77002

  	
   

  
	
  All
  notices and Notice of Sole Control must be Received
  by:

  	
   

  
	
  Attention:

  	
   Pledged Collateral Desk

  	
   

  
	
  Securities Division

  	
   

  
	
  Telecopier: 

  	
  713-216-2396

  	
   

  
	
  Telephone: 

  	
  713-216-1827

  	
   

  
	
  AND

  	
   

  
	
  Attention: 

  	
  Client Services

  	
   

  
	
  Telecopier: 

  	
  713-216-1445

  	
   

  
	
  Telephone: 

  	
  713-216-5410

  	
   

  

 

Re:  Termination of Securities Account Control
Agreement

 

You are hereby notified that the Securities Account
Control Agreement, dated as of February     , 2005, among
EXCO Resources, Inc., a Texas corporation (“Debtor”), you and the undersigned,
JPMorgan Chase Bank, N.A. and Wilmington Trust Company (a copy of which is
attached), is terminated with respect to the undersigned only and you have no
further obligations to the undersigned pursuant to such Agreement.  Notwithstanding any previous instructions to
you, you are hereby instructed to accept all future directions with respect to account number                          
from Wilmington Trust Company. 
This notice terminates any obligations you may have to the undersigned
with respect to such account, however nothing contained in this notice shall
alter any obligations which you may otherwise owe to Wilmington Trust Company,
pursuant to any other agreement.

 

We have also
delivered a copy of this notice by facsimile transmission to EXCO Resources,
Inc.

 

 

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  JPMORGAN CHASE BANK, N.A.

  
	
   

  	
  (as successor by merger to Bank
  One, N.A. (Illinois))

  
	
   

  	
  as Secured Party

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
    Name:

  	
   

  
	
   

  	
   

  	
    Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ACCEPTED AND AGREED TO BY:

  
	
   

  	
   

  
	
   

  	
  WILMINGTON TRUST COMPANY,

  
	
   

  	
  as Collateral Agent

  
	
   

  	
  as Other Secured Party

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
    Name:

  	
   

  
	
   

  	
   

  	
    Title:

  	
   

  
					

 

	
  cc:

  	
   

  	
  EXCO Resources, Inc.

  
	
   

  	
   

  	
   

  

 

 

14

EXHIBIT C

 

SUBORDINATION TERMINATION NOTICE

TO SECURITIES ACCOUNT CONTROL AGREEMENT

 

 

[Letterhead of Secured Party]

 

 

[Date]

 

	
  J.P. Morgan Securities Inc.

  	
   

  
	
  601 Travis, 18th Floor

  	
   

  
	
  Houston, Texas 77002

  	
   

  
	
  All
  notices and Notice of Sole Control must be
  Received by:

  	
   

  
	
  Attention: 

  	
  Pledged Collateral Desk

  	
   

  
	
  Securities Division

  	
   

  
	
  Telecopier: 

  	
  713-216-2396

  	
   

  
	
  Telephone: 

  	
  713-216-1827

  	
   

  
	
  AND

  	
   

  
	
  Attention: 

  	
  Client Services

  	
   

  
	
  Telecopier: 

  	
  713-216-1445

  	
   

  
	
  Telephone: 

  	
  713-216-5410

  	
   

  

 

Re:  Subordination Termination Notice

 

You are hereby notified, pursuant to the Securities
Account Control Agreement dated as of February     , 2005
among EXCO Resources, Inc., a Texas corporation, you and the undersigned,
JPMorgan Chase Bank, N.A. and Wilmington Trust Company (a copy of which is
attached), that as of the date hereof, Secured Party authorizes and directs you
to comply with any order directing  the
withdrawal, transfer or redemption of any financial asset related to the
Securities Account that you receive from Wilmington Trust Company as Other
Secured Party and to comply with the terms and conditions of the Other Control
Agreement (notwithstanding any Notice of Sole Control you may have heretofore
received from Secured Party). 
Capitalized terms used herein but not defined herein shall have the
meanings assigned to them in said Securities Account Control Agreement.

 

 

 

We have also delivered a copy of this notice by
facsimile transmission to EXCO Resources, Inc. and Wilmington Trust Company.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  JPMORGAN CHASE BANK, N.A.

  
	
   

  	
  as Secured Party

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
    Name:

  	
   

  
	
   

  	
   

  	
    Title:

  	
   

  
					

 

	
  cc:

  	
   

  	
  EXCO Resources, Inc.

  
	
   

  	
   

  	
   

  

 

15

EXHIBIT D

 

WITHDRAWAL NOTICE

TO SECURITIES ACCOUNT CONTROL AGREEMENT

 

 

[Letterhead of Secured Party]

 

 

[Date]

 

	
  J.P. Morgan Securities Inc.

  	
   

  
	
  601 Travis, 18th Floor

  	
   

  
	
  Houston, Texas 77002

  	
   

  
	
  All
  notices and Notice of Sole Control must be
  Received by:

  	
   

  
	
  Attention: 

  	
  Pledged Collateral Desk

  	
   

  
	
  Securities Division

  	
   

  
	
  Telecopier: 

  	
  713-216-2396

  	
   

  
	
  Telephone: 

  	
  713-216-1827

  	
   

  
	
  AND

  	
   

  
	
  Attention: 

  	
  Client Services

  	
   

  
	
  Telecopier: 

  	
  713-216-1445

  	
   

  
	
  Telephone: 

  	
  713-216-5410

  	
   

  

 

Re:  Withdrawal by Debtor from Securities
Account

 

You are hereby notified that as to the Securities
Account Control Agreement, dated as of February      ,
2005, among EXCO Resources, Inc., a Texas corporation (“Debtor”), you and the
undersigned, JPMorgan Chase Bank, N.A. and Wilmington Trust Company (a copy of
which is attached), the undersigned direct you to allow the Debtor to withdraw
$                                      that
you are to follow the Debtor’s directions in that regard as to methods of
distribution to the Debtor.

 

We have also
delivered a copy of this notice by facsimile transmission to EXCO Resources,
Inc.

 

 

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  JPMORGAN CHASE BANK, N.A.

  
	
   

  	
  (as successor by merger to
  Bank One, N.A. (Illinois))

  
	
   

  	
  as Secured Party

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
    Name:

  	
   

  
	
   

  	
   

  	
    Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ACCEPTED AND AGREED TO BY:

  
	
   

  	
   

  
	
   

  	
  WILMINGTON TRUST COMPANY,

  
	
   

  	
  as Collateral Agent

  
	
   

  	
  as Other Secured Party

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
    Name:

  	
   

  
	
   

  	
   

  	
    Title:

  	
   

  
					

 

	
  cc:

  	
   

  	
  EXCO Resources, Inc.

  
	
   

  	
   

  	
   

  

 

16EXHIBIT 10.4

 

SECURITIES ACCOUNT CONTROL AGREEMENT

[Collateral Agent]

 

This
Securities Account Control Agreement dated as of February 10, 2005 (this “Agreement”) among EXCO RESOURCES, INC., a Texas corporation
(the “Debtor”), WILMINGTON TRUST COMPANY, in
its capacity as Collateral Agent (the “Secured
Party”) pursuant to that certain Indenture dated January 20,
2004, among Debtor, certain subsidiaries of Debtor and Collateral Agent (as
amended and in effect from time to time, the “Indenture”)
and J.P. MORGAN SECURITIES INC., in its capacity as a “securities intermediary”
as defined in Section 8-102 of the UCC (in such capacity, the “Securities Intermediary”). All references herein to the “UCC” shall mean the Uniform Commercial Code as in effect in
the State of New York.

 

WHEREAS, Debtor is a party to a Pledge Agreement For
Stock, dated January 20, 2004, (as amended and in effect from time to
time, the “Pledge Agreement”) between Debtor and Secured Party by
which Debtor has granted to the Secured Party a perfected security interest in
the Securities Account, subject to the terms and conditions of the Prior
Control Agreement (as defined below). 
Subject to the terms of this Agreement, Securities Intermediary
recognizes the security interest in the Securities Account in favor of the
Secured Party, granted pursuant to the Pledge Agreement.

 

WHEREAS, Debtor is also a party to an Amended and
Restated Pledge Agreement For Stock, dated January 27, 2004, among
Debtor, JPMorgan Chase Bank, N.A. (as successor by merger to Bank One, N.A.
(Illinois)) (the “Prior Secured Party”), by which
the Debtor has granted to the Prior Secured Party a first priority security
interest in the Securities Account (as defined below).  The Prior Secured Party, Debtor, Secured
Party and Securities Intermediary are contemporaneously entering into a
Securities Account Control Agreement (the “Prior
Control Agreement”), pursuant to which Securities Intermediary
recognizes the Security Interest in the Securities Account in favor of the
Prior Secured Party.  Any defined terms
used but not defined herein shall have the meanings assigned to such terms in
the Prior Control Agreement.

 

SECTION 1.  Establishment of Securities Account.  The Securities Intermediary hereby confirms
and agrees that:

 

(a)                                  Upon
receipt of a Subordination Termination Notice from the Prior Secured Party, the
Securities Intermediary will restyle account number 36057412 styled as “JPMorgan
Chase Bank, N.A., collateral account for 
EXCO Resources, Inc.” to be restyled in the name “Wilmington Trust
Company, as Collateral Agent, collateral account for  EXCO Resources, Inc.” or any abbreviations
made by Securities Intermediary for operational purposes (such account and any
successor accounts, the “Securities Account”);
Debtor irrevocably directs Securities Intermediary to make all notations in
Security Intermediary’s records pertaining to the

 

 

 

Securities Account that
are necessary or appropriate to reflect this Agreement and to move collateral
from the existing Securities Account to establish a new Securities Account,
with a new account number, for the purpose of holding the collateral.

 

(b)                                 All
securities or other property underlying any financial assets credited to the
Securities Account shall be registered in the name of the Securities
Intermediary, indorsed to the Securities Intermediary or in blank or credited
to another securities account maintained in the name of the Securities
Intermediary and in no case will any financial asset credited to the Securities
Account be registered in the name of the Debtor, payable to the order of the
Debtor or specially indorsed to the Debtor except to the extent the foregoing
have been specially indorsed to the Securities Intermediary or in blank;

 

(c)                                  All
property delivered to the Securities Intermediary pursuant to the Security
Agreement will be promptly credited to the Securities Account; and

 

(d)                                 The
Securities Account is a “securities account” within the meaning of Section 8-501
of the UCC.

 

SECTION 2.  “Financial Assets” Election.  The Securities Intermediary hereby agrees
that each item of property (including, without limitation, any investment
property, financial asset, security, instrument, general intangible or cash)
credited to the Securities Account shall be treated as a “financial asset” within
the meaning of Section 8-102(a)(9) of the UCC.

 

SECTION 3.  Control of the Securities Account.  After the Secured Party
receives a Subordination Termination Notice (a “Control Triggering Event”), then Secured Party hereunder shall
be entitled to issue a Notice of Sole Control hereunder in substantially the
form set forth in Exhibit A hereto. After the Notice of Sole Control (as
defined in Section 8(a)) is received by the Securities Intermediary at any
time following the occurrence of a Control Triggering Event, then if the
Securities Intermediary shall receive any order from the Secured Party
directing withdrawal, transfer
or redemption of any financial asset relating to the Securities Account, the
Securities Intermediary shall comply with such entitlement order without
further consent by the Debtor or any other person.  Before the Notice of Sole Control is received
by the Securities Intermediary, if the Securities Intermediary shall receive
any order from the Debtor directing substitution or redemption of any financial
asset relating to the Securities Account, the Securities Intermediary shall
comply with such entitlement order. 
After a Control Triggering Event and before the Notice of Sole Control
is received by the Securities Intermediary, if a withdrawal notice in the form
of Exhibit C hereto from the Secured Party (the “Withdrawal Notice”) is
received by the Securities Intermediary, then the Securities Intermediary shall
follow such orders to allow withdrawals by the Debtor..  If the Debtor is otherwise entitled to issue
entitlement orders and such orders conflict with any entitlement order issued
by the Secured Party, the Securities Intermediary shall follow the orders
issued by the Secured Party.

 

2

 

SECTION 4.  Subordination of Lien; Waiver of Set-Off.  In the event that the Securities Intermediary
has or subsequently obtains by agreement, by operation of law or otherwise a
security interest in the Securities Account or any security entitlement credited
thereto, the Securities Intermediary hereby agrees that such security interest
shall be subordinate to the security interest of the Secured Party.  The financial assets and other items
deposited to the Securities Account will not be subject to deduction, set-off,
banker’s lien, or any other right in favor of any person other than the Secured
Party and the Prior Secured Party (except that the Securities Intermediary may
set off (i) all amounts due to the Securities Intermediary arising out of this
Agreement, (ii) the face amount of any checks which have been credited to such
Securities Account but are subsequently returned unpaid because of uncollected
or insufficient funds and (iii) any unsettled trades).

 

SECTION 5.  Choice of Law.  This Agreement and the Securities Account
shall each be governed by the laws of the State of New York.  Regardless of any provision in any other
agreement, for purposes of the UCC, New York shall be deemed to be the
Securities Intermediary’s jurisdiction (within the meaning of Section 8-110
of the UCC) and the Securities Account (as well as the securities entitlements
related thereto) shall be governed by the laws of the State of New York.

 

SECTION 6.  Conflict with Other Agreements.

 

(a)                                  In
the event of any conflict between this Agreement (or any portion thereof) and
any other agreement now existing or hereafter entered into between the Debtor
and Securities Intermediary, the terms of this Agreement shall prevail;

 

(b)                                 No
amendment or modification of this Agreement or waiver of any right hereunder
shall be binding on any party hereto unless it is in writing and is signed by
all of the parties hereto;

 

(c)                                  The
Securities Intermediary hereby confirms and agrees that:

 

(i)  There are
no other agreements entered into between the Securities Intermediary and the
Debtor or between Securities Intermediary and any other party with respect to
the Securities Account other than the Prior Control Agreement, that certain
Securities Account Account Application and Customer Agreement between Debtor
and Securities Intermediary, which shall, subject to Sections 4 and 6(a)
hereof, prevail in the event of a dispute with the Securities Intermediary;

 

(ii)  It has not
entered into, and until the termination of this Agreement, will not enter into,
any agreement with any other person relating to the Securities

 

3

 

Account
and/or any financial assets credited thereto pursuant to which it has agreed to
comply with entitlement orders (as defined in Section 8-102(a)(8) of the
UCC) of such other person, other than the Prior Control Agreement; and

 

(iii) It has not entered into, and until the
termination of this Agreement, will not enter into, any agreement with the
Debtor or Secured Party purporting to limit or condition the obligation of the
Securities Intermediary to comply with entitlement orders as set forth in Section 3
hereof, other than the Prior Control Agreement.

 

SECTION 7.  Adverse Claims.  Except for the claims and interest of the
Secured Party, the Prior Secured Party and of the Debtor in the Securities
Account, the Securities Intermediary does not have actual knowledge of any
claim to, or other interest in, the Securities Account or in any “financial
asset” (as defined in Section 8-102(a) of the UCC) credited thereto.  If any person asserts any lien, encumbrance
or adverse claim (including any writ, garnishment, judgment, warrant of
attachment, execution or similar process) against the Securities Account or in
any financial asset carried therein, the Securities Intermediary will promptly
notify the Secured Party and the Debtor thereof as provided in Section 12.

 

SECTION 8.   Maintenance of Securities Account.  In addition to, and not in lieu of, the
obligation of the Securities Intermediary to honor entitlement orders as agreed
in Section 3 hereof, the Securities Intermediary agrees to maintain the
Securities Account as follows:

 

(a)                                  Notice
of Sole Control after a Control
Triggering Event.  Secured
Party agrees that it will not issue a Notice of Sole Control to Securities
Intermediary prior to the occurrence of a Control Triggering Event, as defined
in Section 3, and any Notice of Sole Control issued by Secured Party
hereunder to Securities Intermediary prior to the occurrence of a Control
Triggering Event shall not be effective as to Securities Intermediary.  If the Secured Party delivers to the
Securities Intermediary a Notice of Sole Control in substantially the form set
forth in Exhibit A hereto at any time after a
Control Triggering Event, the
Securities Intermediary agrees that after receipt of such notice, it will take
all instruction with respect to the Securities Account solely from the Secured Party.  Notwithstanding anything to the contrary set
forth herein, unless and until a notice (set out in Exhibit A hereto after a Control Triggering Event from the Secured Party and,
such other persons as may be nominated as an authorized officer by the Secured
Party by written notice to the Securities Intermediary, from time to time) that
the Secured Party will exercise exclusive control over the Securities Account
pursuant to the Notice of Sole Control (i) is accompanied by a telephone call
that is actually received by employees of the Securities Intermediary, at the
telephone numbers set out in the signatory section informing the
Securities Intermediary to expect the Notice of Sole Control, (ii) is actually
received by the individual employee(s) of the Securities Intermediary to whom
the notice is required hereunder to be addressed (“Receive”)
or (“Received”) and (iii) becomes Effective
(as

 

4

 

set forth below), the Debtor may:  (i) exercise any voting rights that it may
have with respect to any financial asset relating to the Securities Account,
(ii) give instructions to the Securities Intermediary to enter into
purchase or sale transactions in the Securities Account and (iii) after a Control Triggering Event and before the Notice of
Sole Control is received by the Securities Intermediary, if a Withdrawal Notice
from the Secured Party is received by the Securities Intermediary then the
Securities Intermediary shall follow such orders to allow withdrawals by the
Debtor.  Any Notice of Sole Control
Received by the Securities Intermediary shall not be deemed effective until two
hours after it is Received by the Securities Intermediary; provided,
however, that any Notice of Sole Control Received by the Securities
Intermediary after 4:00 p.m. New York City time on any Business Day shall not
be deemed effective until 10:00 a.m. New York City time on the next succeeding
Business Day.  A Notice of Sole Control
deemed effective as set forth in the prior sentence is referred to herein as “Effective.”  Notwithstanding the foregoing, (1) all
transactions relating to any financial asset relating to the Securities Account
consummated or processed by the Securities Intermediary prior to a Notice of
Sole Control becoming Effective (or commenced by the Securities Intermediary
prior to a Notice of Sole Control becoming Effective and consummated or
processed thereafter) shall be deemed not to constitute a violation of this
Agreement, provided that, if practicable, the
Securities Intermediary shall use reasonable efforts to reverse such
transactions, but the Securities Intermediary shall have no obligation nor any
liability for any failure to reverse such transactions and (2) the Securities
Intermediary may (at its discretion and without any obligation to do so)
commence honoring solely the Secured Party’s entitlement orders concerning the
financial assets relating to the Securities Account at any time or from time to
time after it becomes aware that the Secured Party has sent to it a Notice of
Sole Control (including without limitation reversing or redirecting any
transaction referred to in clause (1) above), whether or not the Notice of Sole
Control has become Effective, with no liability whatsoever to the Debtor or any
other party for doing so.  “Business Day”
means any day other than a Saturday, Sunday or other day on which commercial banks
and registered broker-dealers in New York City, New York and in Newark,
Delaware are authorized or required to be closed. If the Securities
Intermediary receives from the Secured Party a Notice of Sole Control, the
Securities Intermediary will cease distributing to the Debtor all interest and
dividends on any financial assets relating to
the Securities Account upon the Notice of Sole
Control becoming Effective.

 

(b)                                 Permitted
Investments.  Until such time as the
Securities Intermediary receives a Notice of Sole Control signed by the Secured
Party, the Debtor shall direct the Securities Intermediary with respect to the
selection of investments to be made for the Securities Account. Before the
Notice of Sole Control is received by the Securities Intermediary, if the
Securities Intermediary shall receive any order from the Debtor directing
substitution or redemption of any financial asset relating to the Securities
Account, the Securities Intermediary shall comply with such entitlement order.  After a Control Triggering Event and before
the Notice of Sole Control is received by the Securities Intermediary, if a
Withdrawal Notice from the Secured Party is received by Securities
Intermediary, then the Securities Intermediary shall

 

5

 

follow such orders to
allow withdrawals by Debtor.  If the
Debtor is otherwise entitled to issue entitlement orders and such orders
conflict with any entitlement order issued by the Secured Party, the Securities
Intermediary shall follow the orders issued by the Secured Party.

 

(c)                                  Statements
and Confirmations.  The Securities
Intermediary will promptly send copies of all statements, confirmations and
will use best efforts for other correspondence concerning the Securities
Account and/or any financial assets credited thereto simultaneously to each of
the Debtor and the Secured Party at the address for each set forth in Section 12
of this Agreement.

 

(d)                                 Tax
Reporting.  All items of income,
gain, expense and loss recognized in the Securities Account shall be reported
to the Internal Revenue Service and all state and local taxing authorities
under the name and taxpayer identification number of the Debtor.

 

Section 9.  Representations, Warranties and Covenants of
the Securities Intermediary. 
The Securities Intermediary hereby makes the following representations,
warranties and covenants:

 

(a)                                  The
Securities Account has been established as set forth in Section 1 above
and such Securities Account will be maintained in the manner set forth herein
until termination of this Agreement; and

 

(b)                                 This
Agreement is the valid and legally binding obligation of the Securities
Intermediary.

 

Section 10.   Indemnification of Securities Intermediary.  The Debtor and the Secured Party hereby agree
that (a) the Securities Intermediary is released from any and all liabilities
to the Debtor and the Secured Party arising from the terms of this Agreement
and the compliance of the Securities Intermediary with the terms hereof, except
to the extent that such liabilities arise from the Securities Intermediary’s
negligence and (b) the Debtor, and its successors and assigns shall at all
times indemnify and save harmless the Securities Intermediary from and against
any and all claims, actions and suits of others arising out of the terms of
this Agreement or the compliance of the Securities Intermediary with the terms
hereof, except to the extent that such arises from the Securities Intermediary’s
gross negligence, and from and against any and all liabilities, losses, damages,
costs, charges, counsel fees and other expenses of every nature and character
arising by reason of the same, except to the extent such arises from the
Securities Intermediary’s gross negligence, until the termination of this
Agreement.

 

Section 11.
 Successors; Assignment.  The terms of this Agreement
shall be binding upon, and shall inure to the benefit of, the parties hereto
and their respective corporate successors or heirs and personal representatives
who obtain such rights solely by operation of law.

 

6

 

Section 12.  Notices.  
Any notice, request or other communication required or
permitted to be given under this Agreement shall be in writing and deemed to
have been properly given when delivered in person, or when sent by telecopy or
other electronic means and electronic confirmation of error free receipt is
received or two (2) days after being sent by certified or registered United
States mail, return receipt requested, postage prepaid, addressed to the party
at the address set forth below.

 

	
  Debtor:

  	
  EXCO Resources, Inc.

  
	
   

  	
  12377 Merit Drive

  
	
   

  	
  Suite 1700, LB 82

  
	
   

  	
  Dallas, Texas 75251

  
	
   

  	
  Attention:

  	
  Chief Financial Officer

  
	
   

  	
  Telephone:

  	
  (214) 368-2084

  
	
   

  	
  Facsimile:

  	
  (214) 36802087

  
	
   

  	
   

  	
   

  
	
  Secured Party:

  	
  Wilmington Trust
  Company

  
	
   

  	
  Rodney Square
  North

  
	
   

  	
  1100 North
  Market Street

  
	
   

  	
  Wilmington, DE
  19890

  
	
   

  	
  Attention:

  	
  Corporate Trust
  Department

  
	
   

  	
  Telephone:

  	
  (302) 651-8671

  
	
   

  	
  Facsimile:

  	
  (302) 651-8882

  
	
   

  	
   

  	
   

  
	
  Securities
  Intermediary:

  	
  J.P. Morgan Securities Inc.

  
	
   

  	
  601 Travis, 18th Floor

  
	
   

  	
  Houston, Texas 77002

  
	
   

  	
  All
  notices and Notice of Sole Control must be Received by:

  
	
   

  	
  Attention: 

  	
  Pledged Collateral Desk

  
	
   

  	
  Securities Division

  
	
   

  	
  Telecopier: 

  	
  713-216-2396

  
	
   

  	
  Telephone: 

  	
  713-216-1827

  
	
   

  	
  AND

  
	
   

  	
  Attention: 

  	
  Client Services

  
	
   

  	
  Telecopier: 

  	
  713-216-1445

  
	
   

  	
  Telephone: 

  	
  713-216-5410

  
				

 

Any
party may change its address for notices in the manner set forth above.

 

Section 13.  Termination.  The obligations of the Securities
Intermediary to the Secured Party pursuant to this Agreement shall continue in
effect until the security interest of the

 

7

 

Secured Party in the
Securities Account has been terminated pursuant to the terms of the Pledge
Agreement and the Secured Party has notified the Securities Intermediary of
such termination in writing.  The Secured
Party agrees to provide Notice of Termination in substantially the form of Exhibit
B hereto to the Securities Intermediary upon the request of the Debtor on
or after the termination of the Secured Party’s security interest in the
Securities Account pursuant to the terms of the Security Agreement.  The termination of this Agreement shall not
terminate the Securities Account or alter the obligations of the Securities Intermediary
to the Debtor pursuant to any other agreement with respect to the Securities
Account.  Securities Intermediary may at
any time, with 30 business days prior notice, terminate the Securities
Account.  The Securities Intermediary
will mail notice of termination to the Secured Party and the Debtor thereof as
provided in Section 12. If the Securities Intermediary terminates the
Securities Account after the Notice of Sole Control is received by the
Securities Intermediary, then the Securities Intermediary shall comply with any
order from the Secured Party directing withdrawal,
transfer or redemption of any financial asset relating to the Securities
Account and the Securities Intermediary shall comply with such entitlement
order from the Secured Party without further consent by the Debtor or any other
person. If the Securities Intermediary terminates the Securities Account before
the Notice of Sole Control is received by the Securities Intermediary, then the
Securities Intermediary shall comply with any order from the Debtor directing
substitution or redemption of any financial asset relating to the Securities
Account If the Debtor is otherwise entitled to issue entitlement orders and
such orders conflict with any entitlement order issued by the Secured Party,
the Securities Intermediary shall follow the orders issued by the Secured
Party.

 

Section 14.  Force Majeure.  Securities Intermediary
shall not be liable for and performance is excused during the period of delay,
interruption or failure for any action taken, or any delay or failure to take
any action, to the extent that the taking of such action, or such delay,
interruption or failure, arises out of causes beyond the reasonable control of
Securities Intermediary or any of its third party providers, including without
limitation, any delay or failure to perform, execute or comply with
instructions that (a) are never received by Securities Intermediary, (b) are
not received by Securities Intermediary in a timely manner or within normal
business hours, (c) are received by Securities Intermediary but Securities
Intermediary or any of its third party providers is unable to perform, execute
or comply with such instructions for causes beyond the reasonable control of
Securities Intermediary or any of its third party providers, such as computer
or systems failures, damage caused by severe weather, earthquakes, wars,
insurrection, acts of terrorism, riots, acts of God, accident, fire, water
damage, explosions, mechanical breakdowns or national disasters, power or
utility failures, strikes or other stoppage of labor, governmental or other
intervention or any other cause (whether similar or dissimilar to any of the
foregoing) whatsoever beyond the control of Securities Intermediary or any of
its third party providers.

 

8

 

Section 15.  Counterparts. 
This Agreement may be executed in any number of
counterparts, all of which shall constitute one and the same instrument, and
any party hereto may execute this Agreement by signing and delivering one or more
counterparts.

 

Section 16.  Collateral Agent.  Any and all rights granted to the Secured Party under this Agreement are
to be held and exercised by the Secured Party in its capacity as collateral
agent for the benefit of the Senior Noteholders pursuant to the provisions of
the Indenture.  Nothing in this Agreement
expressed or implied is intended or shall be construed to give any person other
than the Debtor, the Secured Party and Securities Intermediary any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
covenant, condition or provision herein contained, and all such covenants,
conditions and provisions are and shall be held to be for the sole and
exclusive benefit of the Debtor, the Secured Party and Securities Intermediary.  Notwithstanding anything herein to the
contrary, the Secured Party shall exercise its rights and powers subject to the
direct and indemnity of the Senior Noteholders as provided in the Indenture.  Nothing in this Section 16 imposes any
duty whatsoever upon the Securities Intermediary except as otherwise provided
in this Agreement to Debtor, the Secured Party and the Prior Secured Party.

 

9

 

IN WITNESS WHEREOF, the parties hereto have caused
this Securities Account Control Agreement to be executed as of the date first
above written by their respective officers thereunto duly authorized.

 

 

	
   

  	
  EXCO RESOURCES, INC.

  
	
   

  	
  as Debtor

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ J. Douglas Ramsey

  
	
   

  	
   

  	
  Name: 

  	
  J. Douglas
  Ramsey

  
	
   

  	
   

  	
  Title: 

  	
  Vice President
  and Chief Financial Officer

  

 

10

 

	
   

  	
  WILMINGTON TRUST COMPANY,

  
	
   

  	
  as Collateral Agent

  
	
   

  	
  as Secured Party

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ W.T. Morris II

  
	
   

  	
   

  	
  Name:

  	
  W. Thomas
  Morris, II

  
	
   

  	
   

  	
  Title:

  	
  Senior Financial
  Services Officer

  

 

11

 

	
   

  	
  J.P.
  MORGAN SECURITIES, INC.

  
	
   

  	
  as Securities
  Intermediary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Terry L. Knell

  
	
   

  	
   

  	
  Name:

  	
  Terry L. Knell

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  

 

12

EXHIBIT A

 

NOTICE OF SOLE CONTROL

TO SECURITIES ACCOUNT CONTROL AGREEMENT

 

 

[Letterhead of Secured Party]

 

 

[Date]

 

 

	
  J.P. Morgan Securities Inc.

  	
   

  
	
  601 Travis, 18th Floor

  	
   

  
	
  Houston, Texas 77002

  	
   

  
	
  All
  notices and Notice of Sole Control must be Received by:

  	
   

  
	
  Attention: 

  	
  Pledged Collateral Desk

  	
   

  
	
  Securities Division

  	
   

  
	
  Telecopier: 

  	
  713-216-2396

  	
   

  
	
  Telephone: 

  	
  713-216-1827

  	
   

  
	
  AND

  	
   

  
	
  Attention: 

  	
  Client Services

  	
   

  
	
  Telecopier: 

  	
  713-216-1445

  	
   

  
	
  Telephone: 

  	
  713-216-5410

  	
   

  

 

 

Re:  Notice of Sole Control

 

Ladies and Gentlemen:

 

As
referenced in the Securities Account Control Agreement dated as of February [   ], 2005 among EXCO Resources, Inc., you and
the undersigned (a copy of which is attached), we hereby give you notice of our
sole control over securities account number account number                                 
(the “Securities Account”) and all financial
assets credited thereto.   The
undersigned represents and warrants to the Securities Intermediary that a
Control Triggering Event has occurred. 
You are hereby instructed not to accept any direction, instructions or
entitlement orders with respect to the Securities Account or the financial
assets credited thereto from any person other than the undersigned, unless
otherwise ordered by a court of competent jurisdiction.

 

We
have also delivered a copy of this notice by facsimile transmission to EXCO
Resources, Inc.

 

 

 

	
   

  	
  Very truly
  yours, 

  
	
   

  	
   

  
	
   

  	
  Wilmington
  Trust Company

  as Collateral Agent

  as Secured Party

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  cc:    EXCO
  Resources, Inc.

  	
   

  	
   

  	
   

  
					

 

2

EXHIBIT B

 

TERMINATION NOTICE

TO SECURITIES ACCOUNT CONTROL AGREEMENT

 

 

[Letterhead of Secured Party]

 

 

[Date]

 

 

	
  J.P. Morgan Securities Inc.

  	
   

  
	
  601 Travis, 18th Floor

  	
   

  
	
  Houston, Texas 77002

  	
   

  
	
  All
  notices and Notice of Sole Control must be Received by:

  	
   

  
	
  Attention: 

  	
  Pledged Collateral Desk

  	
   

  
	
  Securities Division

  	
   

  
	
  Telecopier: 

  	
  713-216-2396

  	
   

  
	
  Telephone: 

  	
  713-216-1827

  	
   

  
	
  AND

  	
   

  
	
  Attention: 

  	
  Client Services

  	
   

  
	
  Telecopier: 

  	
  713-216-1445

  	
   

  
	
  Telephone: 

  	
  713-216-5410

  	
   

  

 

Re:  Termination of Securities Account Control
Agreement

 

As
referenced in the Securities Account Control Agreement dated as of February       ,
2005,  among EXCO Resources, Inc., you
and the undersigned, (a copy of which is attached), is terminated with respect
to the undersigned only and you have no further obligations to the undersigned
pursuant to such Agreement. 
Notwithstanding any previous instructions to you, you are hereby
instructed to accept all future directions with respect to account number                               
from                                           .
This notice terminates any obligations you may have to the undersigned with
respect to such account, however nothing contained in this notice shall alter
any obligations which you may otherwise owe to                                                                                                 , pursuant to any other agreement.

 

We
have also delivered a copy of this notice by facsimile transmission to EXCO
Resources, Inc.

 

 

 

	
   

  	
  Very truly
  yours, 

  
	
   

  	
   

  
	
   

  	
  WILMINGTON TRUST COMPANY

  as Collateral Agent

  as Secured Party

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
					

 

2

EXHIBIT C

 

WITHDRAWAL NOTICE

TO SECURITIES ACCOUNT CONTROL AGREEMENT

 

 

[Letterhead of Secured Party]

 

 

[Date]

 

 

	
  J.P. Morgan Securities Inc.

  	
   

  
	
  601 Travis, 18th Floor

  	
   

  
	
  Houston, Texas 77002

  	
   

  
	
  All
  notices and Notice of Sole Control must be Received by:

  	
   

  
	
  Attention: 

  	
  Pledged Collateral Desk

  	
   

  
	
  Securities Division

  	
   

  
	
  Telecopier: 

  	
  713-216-2396

  	
   

  
	
  Telephone: 

  	
  713-216-1827

  	
   

  
	
  AND

  	
   

  
	
  Attention: 

  	
  Client Services

  	
   

  
	
  Telecopier: 

  	
  713-216-1445

  	
   

  
	
  Telephone: 

  	
  713-216-5410

  	
   

  

 

 

Re:  Withdrawal by Debtor from Securities
Account

 

You
are hereby notified that as to the Securities Account Control Agreement, dated
as of February       , 2005, among EXCO
Resources, Inc., a Texas corporation (“Debtor”), you and the undersigned
Wilmington Trust Company (a copy of which is attached), the undersigned direct
you to allow the Debtor to withdraw $                                            
that you are to follow the Debtor’s directions in that regard as to methods of
distribution to the Debtor.

 

We
have also delivered a copy of this notice by facsimile transmission to EXCO
Resources, Inc.

 

 

 

	
   

  	
  Very truly
  yours, 

  
	
   

  	
   

  
	
   

  	
  WILMINGTON TRUST COMPANY,

  as Collateral Agent

  as Secured Party

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
  cc:    EXCO
  Resources, Inc.

  	
   

  	
  Title:

  	
   

  
					

 

2

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