Document:

Exhibit
10.21

LEASE

This Lease is made
as of the 27 day of APRIL, 2006, by and between ARBUTUS SHOPPING CENTER LIMITED
PARTNERSHIP, with an office c/o AmCap, Incorporated, 1281 E. Main Street,
Stamford, CT 06902 (“Landlord”) and CARROLLTON BANK, a commercial banking
institution organized and existing under the laws of the state of Maryland,
having an address at 344 North Charles Street, Suite 300, Baltimore, MD 21201 (“Tenant”).

ARTICLE
1.   FUNDAMENTAL LEASE PROVISIONS

Section
1.1   Fundamental Lease Provisions.   The
fundamental provisions of this Lease (the “Fundamental Lease Provisions”) are
as follows:

Shopping
Center:   The premises (including land and buildings thereon and
any extensions thereof or additions thereto) generally known as the Arbutus Shopping
Center on Maiden Choice Lane in Arbutus, Maryland.

Tenant’s Trade Name:         CARROLLTON BANK

Leased
Premises:   Those premises located in the Shopping Center,
currently consisting of the Ground Leased Premises together with Tenant’s
improvements constructed thereon as well as the In-Line Leased Premises
(collectively, the Leased Premises) crosshatched on Exhibit A attached hereto
and made part hereof.

Square Footage:   Approximately 8,436 square feet total

Permitted
Use:   Said Leased Premises are leased only for the conduct and
operation of a commercial bank with drive-through facilities, and for no other
uses or purposes.

Lease Commencement Date:              May 1, 2006

Rent Commencement Date:                May 1, 2006

Lease Term:           The Lease Commencement Date through
the Lease Termination Date.

Extension Option:                Four (4) five-year periods (see
Addendum)

Lease Termination Date:     April 30, 2011

Lease Year:            The first Lease Year shall commence
on the Lease Commencement Date and shall end on April 30, 2007, and each
succeeding Lease Year shall run concurrently with each succeeding period of
twelve (12) months of the term of the Lease.

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  Minimum Rent:

  	
   

  	
   

  	
   

  	
  Monthly Installment

  	
   

  
	
  5/1/06-4/30/07:

  	
   

  	
  $

  	
  210,900.00

  	
   

  	
  $

  	
  17,575.00

  	
   

  
	
  5/1/07-4/30/08:

  	
   

  	
  $

  	
  217,227.00

  	
   

  	
  $

  	
  18,102.25

  	
   

  
	
  5/1/08-4/30/09:

  	
   

  	
  $

  	
  223,743.81

  	
   

  	
  $

  	
  18,645.32

  	
   

  
	
  5/1/09-4/30/10:

  	
   

  	
  $

  	
  230,456.12

  	
   

  	
  $

  	
  19,204.68

  	
   

  
	
  5/1/10-4/30/11:

  	
   

  	
  $

  	
  237,369.81

  	
   

  	
  $

  	
  19,780.82

  	
   

  

 

Percentage Rent rate:          None

Security Deposit:                 None

Promotion Charge Rate:      None

Broker:   AmCap, Inc.

Section 1.2             Effect of Reference to
Fundamental Lease Provisions.   Each reference in this Lease
to any of the Fundamental Lease Provisions shall be construed to incorporate
all of the terms provided under each such Fundamental Lease Provision.

ARTICLE 2.   PREMISES AND TERM

Section 2.1             Lease of Leased Premises.   Landlord
hereby leases Tenant, and Tenant hereby leases from Landlord, the Leased
Premises which shall include a non-exclusive license to use the common areas of
the Shopping Center (the “Leased Premises”).

Section 2.2             Term.   The
term of this Lease shall be the Lease Term.

ARTICLE 3.   RENT

Section 3.1             Minimum Rent.   Tenant
shall pay to Landlord the Minimum Rent due for each Lease Year, without notice,
demand, setoff or deduction, in equal monthly installments, in advance, on the
first day of each and every month of the Lease Term commencing on the Rent
Commencement Date.  If the Lease Term
shall commence on a date other than the last day of the month, the Minimum Rent
shall be prorated for such fraction of a month based on the actual number of
days in such month.

Section 3.2             Additional Rent.   All
payments and charges of any nature whatsoever due from Tenant under the terms
of this Lease, including, without limitation, all payments to be considered to
be additional rent due hereunder.

ARTICLE 4.   NET LEASE

Section 4.1             Net Lease.   This
is intended to be a net lease, so that all Minimum Rent and additional rent
provided for herein shall be received by Landlord free and clear of any
offsetting costs or expenses relating to the Shopping Center, whether capital
in nature or not, except as set forth in Section 4.2.  Accordingly, Tenant shall be responsible for
and obligated to pay Tenant’s Share of all costs and expenses incurred by or

 2
 

 

on behalf of Landlord in
connection with the ownership and operation of the Shopping Center, excluding
only those costs set forth in Section 4.2.

Section 4.2             Landlord’s Cost.   Tenant
shall not be responsible for certain income taxes expressly excluded from
Tenant’s responsibility in Section 5.2, the cost of construction of new
building areas, the cost of initial improvements to premises leased to tenants
of the Shopping Center other than Tenant, leasing commissions, ground rent and
debt service payable under any Mortgage (as hereinafter defined).

ARTICLE 5.   REAL ESTATE TAXES

Section 5.1             Tenant’s Payments.   Tenant
shall pay to Landlord, as additional rent, Tenant’s Share (as defined in
Section 6.1) of all Real Estate Taxes (as defined below).

Section 5.2             Definition of Real Estate Taxes.   “Real
Estate Taxes” shall mean all real estate taxes, assessments, water and sewer
rents (except water meter charges and sewage charges based on usage) and other
governmental impositions and charges of every kind and nature whatsoever,
extraordinary as well as ordinary, general and special, foreseen and
unforeseen, including those for public improvements or otherwise, which shall
or may, during the Lease Term, be assessed against, levied or imposed upon,
become a lien upon, or become due and payable in connection with the ownership,
use, occupancy or possession of the Shopping Center or any part thereof and any
expenditure incurred by Landlord in the contest or protest of any Real Estate
Tax or assessed valuation, when incurred. 
Real Estate Taxes shall not include any inheritance, estate, succession,
transfer, gift, franchise, corporation, or income or profit tax that is or may
be imposed upon Landlord; provided, however, that if, at any time after the
date hereof, the methods of taxation shall be altered so that, in lieu of, or
as a substitute for, or in addition to, the whole or any part of the taxes now
levied, assessed or imposed on real estate as such, there shall be levied,
assessed or imposed (i) a tax on the rents received from such real estate, or
(ii) a license fee measured by the rents receivable by Landlord from the
Shopping Center or any portion thereof, or (iii) a tax, license fee or other
charge imposed upon Landlord which is otherwise measured by or based in whole
or in part upon the Shopping Center or any portion thereof, or (iv) if an
income or franchise tax is imposed upon Landlord in addition to the taxes now
levied, assessed or imposed on real estate, then the same shall be included in
the computation of Real Estate Taxes, provided the Shopping Center is the only
property of Landlord subject to such tax or fee.

Section 5.3             Estimated Tax Payments.   On
each date that an installment of Minimum Rent is due, Tenant shall pay to
Landlord an amount equal to 1/12 of Tenant’s Share of the estimated Real Estate
Taxes (as determined by Landlord) next due for the Shopping Center (or such
other fraction as Landlord determines to be needed) to assure that prior to the
due date of Real Estate Taxes due for the Shopping Center Landlord shall have
received from Tenant funds sufficient to pay Tenant’s Share in full.  Landlord shall provide Tenant with a copy of
each tax bill for the Shopping Center and a statement setting forth the amount
due from Tenant as Tenant’s Share.  If
the amount due from Tenant exceeds the amount of the estimated payments
collected from Tenant, Tenant shall pay the difference to 

 3
 

Landlord within ten (10)
days of the receipt of such statement. 
If the amount of estimated payments exceeds the amount due, Landlord
shall credit such difference to the next installment or installments or
estimated payments due under this Section. 
If the Lease Term shall commence or expire on a date other than the
fiscal year end for any such tax, Tenant’s Share for each fraction of a fiscal
year shall be prorated.

Section 5.4             Right to Contest Real Estate
Taxes.   Landlord shall be under no duty or obligation
whatsoever to protest or contest any assessed valuation or Real Estate Tax
assessed against the Shopping Center or the Leased Premises.  If Landlord shall elect to contest any
assessed valuation or Real Estate Tax, no such contest by Landlord shall give
Tenant the right to withhold or reduce any payment or estimated payment of Real
Estate Taxes due under this Lease.  If
Landlord shall receive a refund of Real Estate Taxes for which Tenant has paid
Tenant’s Tax Payment, Tenant shall receive its prorate share thereof after
deducting all costs, fees and expenses incurred by Landlord in connection with
obtaining such refund, and not previously charged to Tenant.  Tenant shall have no right whatsoever to
protest or contest any assessed valuation or Real Estate Tax assessed against
the Shopping Center or the Leased Premises.

ARTICLE 6.   COMMON CHARGES

Section 6.1             Tenant’s Payments.   Tenant
shall pay to Landlord as additional rent the fraction represented by Square
Footage of the Leased Premises (8,436 square feet on the Rent Commencement
Date) divided by the total first floor leasable square footage in the Shopping
Center (91,434 square feet as of the Rent Commencement Date) as determined by
Landlord from time to time (“Tenant’s Share”) of all Common Charges (as defined
below).

Section 6.2             Definition of Common Charges.   “Common
Charges” shall mean all costs and expenses incurred by Landlord or Landlord’s
employees, agents or contractors, either pursuant to this Lease or otherwise,
arising from or in connection with or as a result of the operating, equipping,
policing, protecting, lighting, providing sanitation, sewer and other services,
insuring, maintaining, repairing and replacing the Common Areas (as hereinafter
defined), all buildings and improvements within the Shopping Center and all
other areas and facilities of the Shopping Center.  Common Charges shall include, but shall not
be limited to:    (i) the maintenance, repair and replacement of
all roofs, exterior walls and other structural and exterior portions of the
Shopping Center, curbs, gutters, sidewalks, pylons and signs, drainage and
irrigation ditches, conduits and pipes, utility systems (permanent and temporary),
sewage disposal or treatment systems, public toilets and sound systems whether
within or without the Shopping Center; (ii) the removal of trash, snow and ice;
(iii) landscaping; (iv) supplies; (v) licensing, permits, service and usage
charges; (vi) obtaining and maintaining the insurance policies described in
Section 10.3 of this Lease and the cost of any insured event deductible amounts
under such policies; (vii) the settlement or disposition of any claims against
Landlord to the extent the same are not covered by insurance; (viii) all
capital expenditures together with reserves for capital improvements required
by the holder of any Mortgage; (ix) the repaving, restriping, regrading and
general maintenance of parking areas; 

 4
 

(x) compliance with all
rules, regulations and orders of governmental authorities pertaining to the
Shopping Center, including those pertaining to traffic control, engineering and
environmental issues, air pollution control and the cost of monitoring air
quality; (xi) (intentionally deleted); (xiii) licensing and permit fees and
taxes; (xiv) audit fees and expenses and other costs and expenses of enforcing
the rules and regulations established by Landlord for the Shopping Center; (xv)
the cost, lease payment or depreciation of any equipment used in the operation
or maintenance of the Shopping Center; (xvi) total compensation and benefits
(including premiums for workers’ compensation or any other insurance or other
retirement or employee benefits, and including all costs incurred in providing
such benefits) paid to or on behalf of employees involved in the performance of
the work specified in this Section or employees otherwise providing services to
tenants or customers of the Shopping Center whether on or off site; (xvii) the
maintenance, repair and operation of any mall or enclosed common area; (xviii)
the costs of performance of all of Landlord’s obligations pursuant to this
Lease or as contemplated herein except those costs set forth in Section 4.2;
(xix) other costs and expenses incurred in connection with the operation and
management of the Shopping Center;  plus
(xx) an amount equal to fifteen  percent
(15%) of all of the foregoing costs and expenses to compensate Landlord for
administrative and overhead expenses. 
Common Charges shall include costs and expenses for services, equipment
or materials furnished by Landlord or its affiliates, including management
fees, provided the same are furnished at rates similar to those generally paid.

Section 6.3             Estimated Payments.   On
each date that an installment of Minimum Rent is due, Tenant shall pay to
Landlord an amount equal to 1/12 of the estimated Common Charges (as determined
by Landlord) for the calendar year in which such payment is made.  On or before March 1 of each year, Landlord
shall provide Tenant with a statement setting forth Tenant’s Share for the
preceding calendar year and the amount of estimated Common Charges paid by
tenant during such year.  If the amount
due from Tenant exceeds the amount of the estimated payments, Tenant shall pay
the difference to Landlord within ten (10) days of the receipt of such
statement.  If the amount of estimated
payments exceeds the amount due, Landlord shall credit such difference to the
next installment or installments of estimated payments due under this Section.  Landlord’s failure to provide such statement
by the date provided under this Section shall in no way excuse Tenant from its
obligation to pay Tenant’s Share of the Common Charges or constitute a waiver
of Landlord’s right to bill and collect Tenant’s Share of Common Charges from
Tenant in accordance with this Section. 
If the term of the Lease shall commence on a day other than January 1 or
expire on a day other than December 31, Common Charges due from Tenant for such
fraction of a calendar year shall be prorated. 
During any year, Landlord, from time to time, may revise its estimate of
the Common Charges which will be due for that year and the monthly payments to
be made by Tenant on account thereof.

ARTICLE 7.   USE OF PREMISES

Section 7.1             Permitted Use.   The
Leased Premises shall be occupied and used by Tenant solely for the Permitted
Use and for no other use or purpose.

 5
 

 

Section 7.2             Operation of the Leased Premises.   Tenant
shall use, occupy and operate the entire Leased Premises continuously and
without interruption during the Lease Term, shall not abandon or vacate the
Leased Premises, shall not permit, license, or suffer the occupancy of any
other party in the Leased Premises and shall:

a.   Keep
the Leased Premises open for business continuously and without interruption at
least from 9:00 a.m. to 5:00 p.m. Monday through Friday and 9:00 a.m. to 12:00
p.m. Saturday, or such other hours as Landlord may reasonably designate, unless
prohibited by applicable laws or regulations;

b.   Operate
its business as a financial institution in a manner as will enhance the
Shopping Center;

c.   (intentionally
deleted);

d.   Erect
no displays outside the Leased Premises or in any way obstruct the Common
Areas;

e.   Load
or unload all supplies, fixtures, equipment and furniture and cause the
collection of rubbish only through the rear service door or doors of the Leased
Premises;

f.   Keep
the Leased Premises in a safe, clean and proper manner; and not permit any
rubbish or refuse of any nature to accumulate in the Common Areas;

g.   Keep
the Leased Premises free from vermin;

h.   Prevent
the Leased Premises from being used in any way which will injure the reputation
of the same or of the Shopping Center or from being used in any way which may
be a nuisance, annoyance, inconvenience or damage to the other tenants or
occupants of the Shopping Center, including, without limitation, noise by the
playing of any musical instrument or radio or television or the use of a
microphone, loud speaker, electrical equipment or other equipment which may be
heard outside the Leased Premises;

i.   Not
violate the exclusive covenants of any other tenant in the Shopping Center; and

j.   Abide
by all rules and regulations established by Landlord, from time to time, with
respect to the Common Areas, the Shopping Center, and the operation of the
Leased Premises.

Section 7.3             Radius Restriction.   (intentionally
deleted).

Section 7.4             Compliance with Laws.   Tenant
shall not use or occupy or suffer or permit the Leased Premises or any part
thereof to be used or occupied for any purpose contrary to law or the rules or
regulations of any public authority or the requirements of any insurance
underwriters or rating bureaus or in any manner so as to increase the cost of insurance
over and above the normal cost of such insurance for the Permitted Use for the
type and location of the building of which the Leased Premises are a part.  Tenant shall promptly obtain all permits and
licenses required by and otherwise comply with all present and future laws
(including Environmental Laws as defined in Section 32.4), regulations or rules
of any local, county, state, 

 6
 

federal and other
governmental authority and any bureau or department thereof, and of the
National Board of Fire Underwriters or any other body exercising a similar
function which may be applicable to the Leased Premises or Shopping Center,
including the maintenance, service, repair, replacement and disposal of any
structure, equipment or system thereon. 
If Tenant shall install any electrical equipment that overloads the
lines in the Leased Premises, or handle any Hazardous Substances (as defined in
Section 32.4), Tenant shall, at Landlord’s option, immediately terminate the
use of such electrical equipment or Hazardous Substances or, at Tenant’s
expense, make such changes as Landlord may request to prevent such overload or
hazard or otherwise and as may be necessary to comply with the requirements of
any insurance underwriters and governmental authorities having jurisdiction.

ARTICLE 8.   ALTERATIONS

Section 8.1             Landlord’s Consent Required.   Tenant
shall not make or permit to be made any alterations, improvements or additions
of any kind or nature (excluding interior repainting, recarpeting or other
normal interior decorative changes) to the Leased Premises or any part thereof
except by and with the prior written consent of Landlord.  Plans and specifications for all desired
work, (including Tenant’s Construction associated with Tenant’s downsizing),
shall be submitted by Tenant to Landlord for Landlord’s approval prior to the
commencement of any work.  The actual
out-of-pocket cost of Landlord’s review shall be paid by Tenant within ten (10)
days of receipt of Landlord’s statement therefor.  Landlord’s approval of the plans,
specifications and/or working drawings for Tenant’s alterations or improvements
shall create no responsibility or liability on the part of Landlord for their
completeness, design sufficiency, or compliance with all laws, rules and
regulations of governmental agencies or authorities.

Section 8.2             Compliance with Law, Ownership
and Indemnification.   All alterations, improvements and
additions to the Leased Premises shall be made in compliance with all
applicable laws (including Environmental Laws) and governmental requirements
and when made or installed shall be deemed to have attached to the real
property and to have become the property of the Lease Term, or other expiration
of this Lease, in as good order and condition as they were when installed,
reasonable wear and tear excepted; provided, however, that if, prior to the
termination of this Lease, or within fifteen (15) days thereafter, Landlord so
directs, Tenant shall promptly and in compliance with all applicable laws
(including Environmental Laws), remove, and if necessary dispose of, the
additions, improvements, fixtures and installations which were placed in the
Leased Premises by Tenant including Tenant’s vault and which are designated in
such notice, and repair any damage occasioned by such removal, and, in default
thereof, Landlord may effect such removals and repairs at Tenant’s
expense.  In the event Tenant undertakes
any alterations, improvements or additions as herein provided, Tenant shall
indemnify and save Landlord harmless from and against all costs, expenses,
liens, claims or damages (including attorneys’ fees) to either persons or
property arising out of or resulting from the undertaking or making of such
alterations, additions and improvements, including without limitation any costs
or expenses to comply with The Americans With Disabilities Act and the
Regulations 

 7
 

thereunder, and Tenant
shall provide Landlord with evidence of workmen’s compensation insurance and
such other insurance as Landlord may reasonably request.

ARTICLE 9.   REPAIRS AND MAINTENANCE

Section 9.1             Landlord’s
Obligations. (a) In-Line Leased Premises: Landlord shall keep and maintain
the structural portions of the Leased Premises and the exterior area,
including, but not limited to, the roof, foundation and exterior walls of the
Leased Premises, except with respect to any damage thereto caused by any
alterations or installations by Tenant or any act or negligence of Tenant, its
employees, agents, invitees, licensees, subtenants, assignees or contractors or
otherwise arising out of Tenant’s use or occupancy of the Leased Premises, in
which event such damage shall be promptly repaired by Tenant. Except as
otherwise herein provided, Landlord shall not be responsible for maintenance,
repairs or improvement of any kind in or upon the Leased Premises.

                (b) Ground Leased Premises: Landlord shall not
be responsible for maintenance, repairs or improvements of any kind in or upon
the Ground Leased Premises or improvements thereon.

Section 9.2             Tenant’s
Obligations. (a) In-Line Leased Premises: Tenant accepts the Leased
Premises “as is”. Landlord has made no representation, warranty or other
assurance with respect to the Leased Premises or the Shopping Center. Tenant
shall keep and maintain the Leased Premises and every part thereof (excluding
only the structural elements and the roof unless repair of same arises out of
Tenant’s use or occupancy of the Leased Premises or negligence as described in
Section 9.1) in good order, condition and repair, in compliance with
Environmental Laws, as defined in Section 32.4, including, without limitation,
the exterior and interior portions of all doors, door checks, security gates,
windows and glass, all utility, plumbing and sewage facilities within the
Leased Premises or under the floor slab thereof, fixtures, heating and
air-conditioning equipment, exterior mechanical equipment, exterior utility
facilities and exterior electrical equipment serving the Leased Premises and
interior walls, floors and ceilings, and including compliance with applicable building
and fire codes relative to fire extinguishers, sprinkler systems and other
preservative measures. Tenant shall conduct all such maintenance, service,
repair, replacement and disposal activities, including those with respect to
any structure, equipment or system, in compliance with applicable laws,
including Environmental Laws. As part of its HVAC maintenance obligation,
Tenant shall enter into an annual contract with an HVAC repair firm, fully licensed
to repair HVAC units in the state in which the Shopping Center is located and
approved by Landlord, which firm shall (a) regularly service the HVAC unit(s)
on the Leased Premises on no less than a quarterly basis, changing belts,
filters and other parts as required; (b) perform emergency and extraordinary
repairs on the HVAC unit(s); and (c) keep a detailed record of all services
performed on the Leased Premises and prepare a yearly service report to be
furnished to the Tenant at the end of each calendar year. Tenant shall furnish
to Landlord, at the end of each calendar year, a copy of the HVAC maintenance
contract and report described above, and proof that the annual premium for the
maintenance contract has been paid. Nothing stated herein shall 

 8
 

limit Tenant’s obligation to maintain the HVAC unit(s)
in good condition and repair throughout the term of this Lease. If Tenant fails
or refuses to comply with its obligations in this Section 9.2, Landlord may
(but shall not be required to) make or complete such repairs and Tenant shall
pay the cost thereof to Landlord upon demand.

(b) Ground Leased
Premises: Tenant shall keep and maintain its parking area, drive-through lanes
and all other portions of the Leased Premises including all improvements
constructed thereon and every part thereof in good order, condition and repair
(normal wear and tear excepted), in compliance with “Environmental Laws”, as
defined in Section 32.4, including, without limitation, the roof and structural
portions of the building, sidewalks and passageways, exterior and interior
portions of all doors, door checks, security gates, windows and glass, all
utility, plumbing and sewage facilities within the Leased Premises or under the
floor slab thereof, fixtures, heating and air-conditioning equipment, exterior
mechanical equipment, exterior utility facilities and exterior electrical
equipment serving the Leased Premises and interior walls, floors and ceilings,
and including compliance with applicable building and fire codes relative to
fire extinguishers, sprinkler systems and other preservative measures. Tenant
shall conduct all such maintenance, service, repair, replacement and disposal
activities, including those with respect to any structure, equipment or system,
in compliance with applicable laws, including Environmental Laws.

ARTICLE 10.   INSURANCE

Section 10.1           Tenant’s
Obligation.  During the Lease Term,
Tenant, at its own expense, shall maintain the following:

(a) a commercial general liability insurance policy
relating to the Leased Premises providing for coverage of at least Two Million
Dollars ($2,000,000) with respect to injury or death and property damage
combined;

(b) (i) In-Line Leased Premises: special form property
insurance, including theft and, if applicable, boiler and machinery coverage,
written at replacement cost value in an adequate amount to avoid coinsurance
and a replacement cost endorsement insuring Tenant’s furnishings, equipment and
all items of personal property of Tenant and including property of Tenant’s
customers located in the Leased Premises;

(ii) Ground Leased Premises and the improvements
thereon: “all risk” property insurance (with extended coverage and such other
coverage as Landlord may reasonably designate) insuring the improvements
constructed by Tenant upon the Leased Premises and all fixtures and equipment,
including personal property, thereon to ninety percent (90%) of their actual
replacement value without deduction for physical depreciation, having a
deductible of not more than $10,000:

(c) workers’ compensation coverage as required by law;

(d) with respect to alterations, improvements and the
like required or permitted to be made by Tenant hereunder, contingent liability
and builder’s risk insurance, in amounts reasonably satisfactory to Landlord;

 9
 

(e) (intentionally deleted)

(f) plate glass insurance covering the glass in the
Leased Premises for which Tenant shall be entitled to self-insure;

(g) flood insurance
if applicable; and

(h) such other insurance covering such other insurable
risks as Landlord deems reasonably necessary.

Section 10.2           Requirements
of Policy.  The insurance policies
required by Section 10.1 shall be issued by a company and in a form
satisfactory to Landlord and may not be cancelable without thirty (30) days’
written notice to Landlord. Tenant shall deliver to Landlord the original of
such policy, or a certificate evidencing such policy, prior to the commencement
of the Lease Term and, thereafter, at least thirty (30) days prior to the
expiration of each policy. Each policy or certificate shall be accompanied by
proof of payment of such policy. Provided Landlord has furnished Tenant with
names and addresses of the same, each policy required under this Article shall
name Landlord, Landlord’s agents, the holder of any Mortgage and any other
party with an interest in the Shopping center as an insured as their interests
may appear. Any required insurance may be effected by a policy of blanket
insurance covering additional items or locations provided however that (1) the coverage afforded Landlord and
any other parties in interest will not be reduced or diminished by reason of
the use of such blanket policy of insurance; (ii) any such policy shall specify
therein (or Tenant shall furnish Landlord with a written statement from the
insurer under such policy specifying) the amount of the insurance allocated to
the Leased Premises; and (iii) all other requirements set forth herein are
otherwise satisfied.

Section 10.3          
Shopping Center Insurance.  Landlord shall maintain, if available at
standard rates, such availability to be determined solely by Landlord, the
following:

(a) fire insurance (with extended coverage and such
other coverage as Landlord nay choose) insuring the Shopping Center and all
fixtures and improvements thereon to their full insurable value;

(b) rent insurance covering the risks described in
paragraph (a) above in an amount equal to all Minimum Rent, Percentage Rent (as estimated by Landlord) and additional rent due under all leases relating to
the Shopping Center for a period of at least one year;

(c) comprehensive
general public liability insurance against any claims upon Landlord arising
from the ownership, operation or control of the Shopping Center with respect to
bodily injury, death, property damage or other risks of similar nature with
combined limits as Landlord deems appropriate, but in no event less than Five
Million Dollars ($5,000,000); and

(d) any such insurance coverage, in addition to or in
substitution for the coverage
set forth above, as the holder of any Mortgage may require or as Landlord may
otherwise determine.

 

 10

 

Section 10.4           Policy
Limits. The coverage limits of all insurance policies referred to in this
Lease, in the discretion of Landlord or the holder of any Mortgage, may be
increased at any time during the Lease Term.

Section 10.5           Waiver
of Subrogation. Landlord and Tenant hereby mutually waive any rights they
may have against each other to recover for loss or damage to property arising
from a casualty insured against hereunder or which is required to be insured
against hereunder. In addition, all insurance policies carried by Landlord or
Tenant covering the Leased Premises shall expressly waive any right on the part
of the insurer against the other party for damage to or destruction of the
Leased Premises resulting from the acts, omissions or negligence of the other
party.

ARTICLE 11.  
TENANTS’ ASSOCIATION AND PROMOTION

(intentionally deleted)

ARTICLE 12.   COMMON
AREAS

Section 12.1           Definition. “Common
Areas” shall mean all sidewalks, parking lots, driveways, landscaped areas,
loading areas, service areas, pedestrian malls and other areas at the Shopping
Center which may, from time to time, be provided by Landlord for general use.

Section 12.2           Tenant’s
Use. Landlord hereby grants to Tenant during the Lease Term a nonexclusive
license to use the Common Areas. The Common Areas shall be subject to the
exclusive control and management of Landlord and to such rules and regulations as Landlord may, from time to time,
establish, and Landlord reserves the right to make such changes, additions,
deletions, alterations or improvements in and to such Common Areas, as Landlord
deems desirable, provided that there shall be no permanent and material
obstruction of Tenant’s right of ingress to or egress from the Leased Premises.

Section 12.3           Maintenance. Landlord
shall maintain the Common Areas in good repair, reasonably clear of debris and
lighted and open during business hours.

Section 12.4           Kiosks. Landlord reserves the right to construct and sublease
non-financial kiosks and sales areas on any portion of the enclosed mall, if
any, or other parts of the Common Area of the Shopping Center.

ARTICLE 13. DAMAGE OR DESTRUCTION

Section 13.1          
Landlord’s Obligation. If all or any part of the Shopping Center is
damaged or destroyed by fire or other casualty insured under the hazard policy
maintained by Landlord, Landlord shall, to the extent that insurance proceeds
are available therefor, and except as otherwise provided herein, repair or
rebuild the structural portions of the Shopping Center with reasonable
diligence. Landlord shall have no obligation to repair or rebuild any property
belonging to Tenant.

Section 13.2           Abatement.
If, as a result of the damage or destruction referred to in Section 13.1, there is a substantial interference with the operation of  Tenant’s business which requires Tenant to
cease doing business at the In-Line Leased Premises, then the Minimum Rent and
additional rent

 11
 

payable hereunder shall abate in accordance with the
square footage of In-Line Leased Premises so affected. However, if Tenant has
not been able to reopen for business after six (6) months from the date of the damage or destruction, Tenant
may, upon thirty (30) days’ written notice, cancel this Lease and have no
further obligations to Landlord hereunder.

Section 13.3           Tenant’s
Obligations. (a) Unless this Lease is terminated as provided below, Tenant,
upon any damage or destruction to the In-Line Leased Premises, and subject to
Landlord’s requirement to rebuild as set
forth in Section 13.1, promptly shall repair, rebuild and redecorate such
Leased Premises in a manner at least equal in quality to that existing prior to
such damage or destruction.

(b) Unless this Lease
is terminated as provided below, Tenant, upon any damage or destruction to the
Ground Leased Premises or the improvements thereon, promptly shall rebuild,
repair, rebuild and redecorate such Leased Premises in a manner at least equal
in quality to that existing prior to such damage or destruction. There shall no
be abatement of Minimum Rent or additional rent while Tenant rebuilds or repairs
the improvements on the Ground Leased Premises

Section 13.4           Termination.
Notwithstanding anything which may be contained in this Article 13 to the
contrary, Landlord, at its option, may terminate this Lease on thirty (30) days’
written notice to Tenant given within ninety (90) days after the occurrence of
any damage or destruction to the Shopping Center or any portion thereof if (i)
such damage or destruction resulted from a risk not covered by Landlord’s
insurance or covered in a manner which fails to yield proceeds in an amount
equal to Landlord’s estimated cost of repair, or (ii) the portion of the Leased
Premises which Landlord is required to repair is damaged and the estimated cost
to repair such damage is more than twenty-five (25%) percent of the replacement
cost of the Leased Premises, or (iii) the Shopping Center is damaged and the
cost to repair such damage is more than twenty-five (25%) percent of the
replacement cost of the entire Shopping Center.

ARTICLE 14. EMINENT
DOMAIN

Section 14.1           Condemnation
of Entire Leased Premises. If all or substantially all of the In-Line
Leased Premises or the Ground Leased Premises shall be taken by condemnation or
by transfer in lieu thereof, then this Lease shall terminate as of the date
title is vested in the condemning authority.

Section 14.2           Partial
Condemnation of the Leased Premises. If less than all or substantially all
of the Leased Premises is taken by condemnation or private purchase in lieu
thereof, then, if the remainder of the Leased Premises not so taken is
determined by Landlord to be unusable for the purposes for which such Premises
were leased, either Landlord or Tenant may terminate this Lease upon thirty
(30) days’ written notice to the other, which notice must be given within
thirty (30) days after such
taking.

Section 14.3           Condemnation
of Shopping Center. If proceedings are commenced to take any portion of the
Shopping Center by condemnation or by private transfer in lieu thereof, and
Landlord, in its sole discretion, elects to discontinue the

 12
 

operation of the Shopping Center or the portion
thereof in which the Leased Premises are located as a shopping center, then Landlord may terminate this Lease upon
thirty (30) days’ notice to
Tenant.

Section 14.4           Rentals
Upon Condemnation. If this Lease is terminated pursuant to any provision of
this Article, then the Minimum Rent and all additional rent and charges payable
hereunder shall be prorated as of the date of such termination. If, upon
partial condemnation as provided
in Section 14.2, this Lease is not terminated, the Minimum Rent, additional
rent and all other charges shall be equitably adjusted. Tenant shall continue
to make all payments of Minimum Rent and additional rent, as heretofore
provided, until the adjusted rent is agreed upon, whereupon Landlord and Tenant
shall settle any excess rent or shortfall.

Section 14.5          
Proceeds of Condemnation. Landlord shall be entitled to the entire
proceeds of any and all awards made as a result of any condemnation affecting
the Shopping Center and the proceeds of any private purchase or transfer in
lieu of such condemnation. Tenant shall not be entitled to any award or
proceeds as a result of any value attributable to Tenant’s interest in this
Lease or the unexpired portion of the Lease Term. However, in the event that
the condemning authority shall entertain such claim, Tenant shall have the
right to prosecute a claim directly against the condemning authority for its
trade fixtures and relocation costs, provided that no such claim shall diminish
or otherwise adversely affect Landlord’s claims and the claims of any
mortgagees, ground lessors or owners of any interest in the Shopping Center.

ARTICLE 15.   ASSIGNMENT AND SUBLETTING

Section 15.1           Consent
Required. Tenant shall not, voluntarily, involuntarily or by operation of
law, assign, pledge or encumber this Lease or any interest or Tenant herein, in
whole or in part, or sublet the whole
or any part of the Leased Premises, or permit any other persons to Occupy the
Leased Premises, without the prior written consent of Landlord, which consent
shall not be unreasonably withheld, conditioned or delayed. Notwithstanding the
foregoing, Tenant may assign this Lease and the right to occupy the Leased
Premises to any entity controlling, controlled by or under common control with
Tenant or into which Tenant may be merged, without the prior written consent or
Landlord. The acceptance of rent from any person other than Tenant shall not be
deemed to be a waiver of any of the provisions of this Lease or to be a consent
to the assignment of this Lease or subletting of the Leased Premises. The
consent of Landlord in any instance to an assignment or subletting shall not be
deemed to be a consent, or a waiver of the requirement for the Tenant to obtain consent, to any
subsequent assignment or subletting.

Section 15.2           Corporation
or Other Entity. Tenant may, at any time, without the consent of the
Landlord, assign or otherwise transfer this Lease or any portion thereof to a parent,
subsidiary, or affiliate corporation or entity; or any corporation or entity
resulting from the consolidation or merger of Tenant into or with any other
entity: or to any person, firm or corporation acquiring a majority of Tenant’s
issued or outstanding capital stock or a substantial part of the Tenant’s physical
assets: provided, however, that in the event of any

 13
 

such assignment or transfer, the assignee shall assume
in writing the performance and observance of all the terms and conditions of
this Lease.

Section 15.3           Creditors.
An assignment for the benefit of creditors or by operation of law shall not be
effective to transfer any rights to any assignee without the prior written
consent of Landlord.

Section 15.4           Permitted
Assignment. Any subletting or assignment consented to by Landlord pursuant
to this Article 15 shall be subject
to and conditioned upon the following: (i) at the time of any proposed
subletting or assignment, Tenant shall not be in default under any of the terms, provisions or
conditions of this Lease; (ii)
the sublessee or assignee shall occupy only the Leased Premises and conduct its
business in accordance with the Permitted Use; (iii) if the rents, charges or
other sums required to be paid by any such sublessee or assignee exceed the
rents, charges or other sums reserved hereunder, then Tenant shall pay to
Landlord monthly the entire amount of such excess, which shall be deemed
additional rent; (iv) prior to
occupancy, Tenant and its assignee or sublessee shall execute, acknowledge and
deliver to Landlord a fully executed counterpart of a written assignment of
lease or sublease, as the case may be, by the terms of which: (x) in case of an assignment, Tenant
will assign to the assignee Tenant’s entire interest in this Lease, together
with all prepaid rents and security deposited hereunder, and the assignee will
accept said assignment and assume and agree to perform, directly for the
benefit of Landlord, all of the terms, covenants and conditions of this Lease
on the Tenant’s part to be performed; or (y) in case of a subletting, the
sublease in all respects will be subject and subordinate to all of the terms,
covenants and conditions of this Lease and the sublessee thereunder will agree
to be bound by and to perform all of the terms, covenants and conditions of
this Lease on the Tenant’s part to be performed; (v) in the event of an
assignment of this Lease or subletting of all or part of the Leased Premises,
Tenant shall, at its expense, comply with all requirements of The Americans
With Disabilities Act relating to the assignee or sublessee, as the case may be, and its business;
(vi) notwithstanding any such assignment or subletting under the terms of this
paragraph, Tenant will not be released or discharged from any liability
whatsoever under this Lease including the liability for payment of Minimum
Rent, additional rent and any other sums reserved hereunder and will continue to be liable for all
obligations of Tenant set forth herein with the same force and effect as though
no assignment or sublease had been made and Tenant shall confirm same to
Landlord: (vi) Tenant shall pay to Landlord Landlord’s administrative costs,
overhead and attorneys’ fees in connection with such assignment or subletting,
which costs, overhead and fees are now estimated at Five Hundred Dollars
($300); and (viii) such other conditions as Landlord may impose.

ARTICLE 16.   UTILITIES

Section 16.1           Tenant’s Obligations.
Tenant agrees to pay promptly, as and when the same become due and payable, all
water rents, rates and charges, all sewer rents and all charges for electricity,
gas, heat, steam, hot and chilled water and other utilities supplied to the
Leased Premises (whether prior to or during the Lease Term or subsequent
thereto if relating to

 14
 

Tenant’s use of the Leased Premises). If any such
utilities are not separately metered or assessed or are only partially
separately metered or assessed and are used in common with other tenants of the
Shopping Center, Tenant will pay to Landlord, in addition to Tenant’s payments of the separately metered
charges, Tenant’s pro rata share of the cost of utilities used in common with
other tenants, based on the leasable square footage of floor space leased to
each tenant using such common facilities, or such other basis as Landlord may
reasonably determine.

Section 16.2           Meters.
If Landlord shall so desire,
Landlord shall install utility meters at the Leased Premises. The costs
incurred in the installation and maintenance of such meters shall be paid by
Tenant. Further, Tenant shall pay all charges for consumption directly to the
proper public or private utility company or government unit, promptly when due.

ARTICLE 17.   ESTOPPEL CERTIFICATE,

ATTORNMENT AND
SUBORDINATION

Section 17.1           Estoppel.
Tenant agrees, at any time and from time to time, as requested by Landlord or
any Lender (as hereinafter defined), upon not less than fifteen (15) days’ prior notice, to execute
and deliver without cost or expense to the Landlord or such Lender an estoppel
certificate certifying that this Lease is unmodified and in full force and
effect (or if there have been modifications, that the same is in full force and
effect as modified and stating the modifications), certifying the dates to
which all fixed or minimum rent and any additional rent have been paid, and
stating whether or not, to the best knowledge of Tenant, Landlord is in default
in the performance of any of its obligations under this Lease, and, if so,
specifying each such default of which Tenant may have knowledge, it being
intended that any such statement delivered pursuant thereto may be relied upon
by any other person with whom Landlord or such Lender may be dealing. Upon
Tenant’s failure to timely deliver any estoppel, at provided such failure
continues after five (5) days written notice, Tenant shall, in addition to any
other remedy of Landlord, pay to Landlord the amount of One Hundred Dollars
($100) per day for each day the same remains undelivered.

Section 17.2           Notice
to Lender and Right to Cure. Once Tenant has received written notice
identifying the name and address of any lender (a “Lender”) holding a mortgage
or deed of trust (a “Mortgage”) on the property of which these premises form a
part (the “Property”), Tenant agrees to notify such Lender by certified mail,
return receipt requested, with postage prepaid, of any default on the part of
Landlord under this Lease, and Tenant further agrees that, notwithstanding any
provisions of this Lease, no cancellation or termination of this Lease and no
abatement or reduction of the rent payable hereunder shall be effective unless
the Lender has received notice of the same and have failed within thirty (30)
days after the time when it shall have become entitled under the Mortgage to
remedy the same, to commence to cure such default and thereafter diligently
prosecute such cure to completion, provided that such period may be extended,
if the Lender needs to obtain possession of the Property to cure such default,
to allow the Lender to obtain possession of the Property provided the Lender
commences judicial or nonjudicial proceedings to obtain possession within such
period and thereafter diligently prosecutes such efforts and cure to
completion. It is

 15
 

understood that the Lender shall have the right, but
not obligation, to cure any default on the part of Landlord.

Tenant agrees that if a Lender shall succeed to the
interest of Landlord under this Lease, neither the Lender nor its successors or
assigns shall be: liable for any prior act or omission of Landlord; subject to
any claims, offsets, credits or defenses which Tenant might have against any
prior landlord (including Landlord); or bound by any assignment (except as
otherwise expressly permitted hereunder), surrender, release, waiver, amendment
or modification of the Lease made without such Lender’s prior written consent;
or obligated to make any payment to Tenant or liable for refund of all or any
part of any security deposit or other prepaid charge to Tenant held by Landlord
for any purpose unless the Lender shall have come into exclusive possession of
such deposit or charge. In addition, if a Lender shall succeed to the interest
of Landlord under this Lease, the Lender shall have no obligation, nor incur
any liability, beyond its then equity interest, if any, in the Property.

In the event that a Lender (or any person or entity to
whom the Mortgage may subsequently be assigned) notifies Tenant of a default
under the Mortgage and demands that Tenant pay its rent and all other sums due
under this Lease to the Lender, Tenant shall honor such demand without inquiry
and pay its rent and all other sums due under this Lease directly to the Lender or as otherwise required
pursuant to such notice and shall not thereby incur any obligation or liability
to Landlord.

Section 17.3           Subordination
and Attornment. Tenant agrees and acknowledges that this Lease is subordinate
to the lien of any Mortgage, but that, at the Lender’s election, this Lease may
be made prior to the lien of any Mortgage, and in the event a Lender succeeds
to the interests of Landlord under this Lease, then, at the Lender’s election
(a) Tenant shall be bound to the Lender under all of the terms, covenants and
conditions of this Lease for the remaining balance of the term hereof, with the
same force and effect as if the
Lender were the lessor hereunder, and Tenant does hereby agree to attorn to the
Lender as its lessor without requiring the execution of any further instruments
immediately upon the Lender succeeding to the interests of Landlord under this
Lease; provided, however, that Tenant agrees to execute and deliver to the
Lender any instrument reasonably requested by it to evidence such attornment;
and (b) subject to the observance and performance by Tenant of all the terms,
covenants and conditions of this Lease on the part of Tenant to be observed and
performed, the Lender shall recognize the leasehold estate of Tenant under all
of the terms and conditions of this Lease for the remaining balance of the term
with the same force and effect as if the Lender were the lessor under the Lease.

Section 17.4           Execution.
Tenant, upon request of Landlord or any party in interest, shall execute
promptly such instruments or certificates as may be required to carry out the
intent and effectuate the above provisions of this Article. Tenant hereby
irrevocably appoints Landlord as attorney-in-fact for Tenant with full power
and authority to execute and deliver in the name of Tenant any such instruments
or certificates.

Section 17.5           Recording.
This Lease shall not be recorded without the prior consent of Landlord. Upon
the

 16
 

request of Landlord, Tenant shall execute a short form
or other memorandum of this Lease which may, in Landlord’s sole discretion, be
recorded.

ARTICLE 18.   INDEMNIFICATION

Section 18.1           Tenant’s
Indemnification of Landlord. Tenant shall protect, indemnify, save and keep
harmless Landlord against and from all claims, loss, liability, cost, damage or
expense (including reasonable attorneys’ fees) ln connection with any accident,
personal injury or death, property damage occurring in, on or at the Leased Premises,
or arising, directly or indirectly, out of or from Tenant’s occupancy or use of
the Leased Premises
or the Shopping
Center, the use of the utilities and fuel located therein or thereunder, any
breach of this Lease, the business conducted in the Leased Premises or, without
limiting the foregoing, as a result of any act or omission of Tenant, its
employees, agents, invitees, subtenants, licensees, assignees or contractors.
Tenant shall protect and save and keep Landlord harmless and indemnified
against and from any penalty, damage or charges imposed for any violations of
any law or ordinance. Tenant shall also protect, indemnify, save and keep
harmless Landlord against and from any and all claims, loss, liability, cost,
damage, liens or expense (including attorneys’ fees) arising out of any failure
of Tenant or its employees, agents, contractors or representatives in any
respect to comply with and perform all the requirements and provisions of this
Lease.

Section 18.2           Landlord’s
Indemnification of Tenant. Landlord shall protect, indemnify, save and keep
harmless Tenant against and from all claims, loss, liability, cost, damage or
expense (including reasonable attorneys’ fees) in connection with any accident,
personal injury or death, property damage occurring in, on or at the Common
Areas, as a result of any act or omission of Landlord, its employees, agents,
contractors or representatives.

ARTICLE 19. MECHANIC’S
LIEN OR CLAIMS

Section 19.1           Mechanic’s
Liens. Tenant shall not permit to be created or to remain undischarged any
lien, encumbrance or charge arising from or out of any work of any contractor,
mechanic, laborer or materialman, which shall be or become a lien or
encumbrance or charge upon the Leased Premises or the Shopping Center or the
income therefrom, and Tenant shall not suffer any other matter or thing whereby
the estate, right and interest of Landlord in the Leased Premises or in the
Shopping Center might be impaired. If any lien or notice of lien on account of
an alleged debt of Tenant shall be filed against the Leased Premises or the
Shopping Center, Tenant shall, within ten (10) days after notice of the filing thereof, cause the same to
be discharged of record by payment, deposit, bond, order of a court of
competent jurisdiction or otherwise. If Tenant shall fail to cause such lien or notice of lien to be discharged
within the period provided, then Landlord, in addition to any other rights or
remedies, may, but shall not be obligated to, discharge the same by either
paying the amounts claimed to be due or by procuring the discharge of such lien
by deposit or by bonding proceedings. In any such event, Landlord shall be
entitled, if Landlord so elects, to defend any prosecution of an action for
foreclosure of such lien by the lienor and to pay the amount of the judgment in
favor of the

 17
 

lienor with interest, costs and allowances. Any amount
paid by Landlord and all costs and expenses, including attorneys’ fees,
incurred by Landlord in connection therewith, together with interest thereon,
at the rate set forth in Section 28.7, from the respective dates of Landlord’s
making of the payment or incurring of the cost and expense, shall be paid by
Tenant to Landlord on demand. Notwithstanding the foregoing, not less than five
(5) days prior to the commencement of any work to be performed by or on behalf
of Tenant at the Leased Premises, Tenant shall notify Landlord of the proposed
work and the names and addresses of the persons supplying labor and materials
for the proposed work so that Landlord may avail itself of the provisions of
any laws regarding the protection of Landlord’s interest in the Leased Premises
and the Shopping Center from mechanic’s liens. During the progression of any
such work on the Leased Premises, Landlord and its representatives shall have
the right, upon at least 24 hours verbal notice, to go upon and inspect the
Leased Premises at all reasonable times, and shall have the right to post and
keep posted thereon notices regarding mechanic’s liens or to take any further
reasonable action which Landlord may deem to be proper for the protection of
Landlord’s interest in the Leased Premises and the Shopping Center.

ARTICLE 20.   ACCESS TO LEASED PREMISES

Section 20.1           Landlord’s Access. Tenant
shall permit Landlord and Landlord’s agents or designees to inspect or examine
the Leased premises at any time upon reasonable notice and shall permit
Landlord access to the Leased Premises upon reasonable notice for the purpose
of making such repairs, alterations, improvements or additions in the Leased
premises or to any portion of the Shopping Center that Landlord may deem
desirable or necessary or which Tenant has covenanted in this Lease to do and
has failed to do. Such access shall not be construed as an eviction of Tenant
in whole or in part and the rent payable hereunder, shall in no manner abate
while such repairs, alterations, improvements or additions are being made by
reason of loss or interruption of the business of Tenant because of the
performance of such work. Landlord shall use commercially reasonable efforts
not to cause disruption to Tenant’s business during such access and will
coordinate any access with respect to Tenant’s security and privacy
requirements.

ARTICLE 21.   SURRENDER OF LEASED PREMISES

Section 21.1           Surrender by Tenant. Tenant
shall deliver and surrender to Landlord possession of the Leased Premises upon
expiration of this Lease, or its earlier termination as herein provided, broom
clean and in as good condition and repair as the same shall be at the
commencement of the Lease Term.

Section 21.2           Removal of Property. Tenant
shall remove all property of Tenant and all alterations, additions and
improvements as to which Landlord shall have made the election provided in
Section 8.2, shall repair all damage to the Leased Premises caused by such
removal and restore the Leased Premises to the condition in which they were
prior to the installation of the articles so removed. Except for Tenant’s
obligation to remove its value, any property not so removed at the expiration
of the Lease Term and as to which Landlord shall have not made such election
shall be deemed to have been abandoned by Tenant

 18
 

and to be Landlord’s
property and may be retained or disposed of by Landlord, as Landlord shall
desire. tenant’s obligation to observe or perform this covenant shall survive
the expiration or termination of this Lease.

ARTICLE 22.   SECURITY AGREEMENT

(intentionally
deleted)

ARTICLE 23.   QUIET ENJOYMENT

Section 23.1           Landlord’s Covenant. Landlord
agrees that if Tenant pays the Minimum Rent, additional rent and all other
charges provided in this Lease, if any, and shall perform all of the covenants
and agreements contained herein to be performed on Tenant’s part, Tenant shall
have the peaceable and quiet enjoyment and possession of the Leased Premises
during the Lease Term, without any manner of hindrance from Landlord or any
persons lawfully claiming through Landlord, except as to such portion of the
Leased Premises as shall be taken under the power of eminent domain and
otherwise subject to the terms and provisions of this Lease, including without
limitation the terms and provisions of any Mortgage.

ARTICLE 24.   NOTICES

Section 24.1           How Given. Any notice,
consent, approval, waiver or other communication which Landlord or Tenant may
be required or permitted to give to the other under the terms of this lease
shall be in writing and shall be deemed to be delivered upon receipt or
refusal, if delivered by hand or by personal or overnight delivery service,
with receipts for delivery, or upon deposit if mailed by certified or
registered mail, return receipt requested, addressed it to Tenant, at the
address of Tenant set forth in the preamble hereto, and if to Landlord, at the
address of Landlord set forth in the preamble hereto, or to such other address
as either party shall have designated by notice to the other with a copy of all
notices or other communications delivered or sent to Landlord delivered or sent
to Richard Crystal, Esq., Brown Raysman Millstein Felder & Steiner LLP, 900
Third Avenue, New York, NY 10022.

ARTICLE 25.   BROKERAGE

Section 25.1           Broker. Tenant covenants,
warrants and represents to Landlord that there was not broker, finder or other
agent, other than Broker, instrumental in consummating this Lease and that no
conversation or prior negotiations were had by Tenant with any other broker,
finder or agent concerning renting of the Leased Premises. Tenant agrees to
protect, defend, indemnify, save and keep Landlord harmless against and from
all liabilities, claims, losses, costs, damages and expenses, including
attorneys’ fees, arising out of or from any claims for brokerage commissions or
finders’ fees resulting from any conversation or negotiations had by Tenant
with any other broker or any other person.

ARTICLE 26.   SECURITY DEPOSIT

(intentionally
deleted)

 19

 

ARTICLE 27.   TENANT’S ADDITIONAL AGREEMENTS

Section 27.1.          Affirmative Obligations.   Tenant
agrees, at its own cost and expense, to:

(1)           Light Display Windows:   keep
the display windows and signs, if any, in or on the Leased Premises
electrically lighted from dusk until 10:00 p.m. on all days during which the
majority of stores in the Shopping Center are open for business and during such
other periods as Landlord may reasonably designate;

(2)           Keep Premises Clean:   keep the Leased Premises (including, without
limitation, exterior and interior portions of all windows, doors and all other
glass) in a neat and clean condition;

(3)           Storing Merchandise:   (intentionally deleted);

(4)           Non-selling Space:    (intentionally deleted)

(5)           Keep Premises Attractive:   maintain the Leased Premises and Tenant’s
personal property therein as an attractive shopping area in accordance with the
general character of the Shopping Center and to that end Tenant shall repaint
the interior of the Leased Premises and clean and replace carpeting or other
floor covering on a regular basis;

(6)           Labor Regulations:   take no action which would violate Landlord’s
union contracts, if any, affecting the Shopping Center, nor create any work
stoppage, picketing, labor disruption or dispute, or any interference with the
business of the Landlord or any tenant or occupant in the Shopping Center or
with the rights and privileges of any customer or other persons lawfully in and
upon the Shopping Center, not cause any impairment or reduction of the good
will of the Shopping Center;

(7)           Pay Taxes:   pay before delinquency any and all taxes,
assessments and public charges levied, assessed or imposed upon Tenant’s
business or upon Tenant’s fixtures, furnishings or equipment in the Leased
Premises;

(8)           Pay License Fees:   pay when and as due all license fees, permit
fees and charges of a similar nature for the conduct by Tenant or any
concessionaire of any business or undertaking authorized hereunder and
conducted in the Leased Premises;

(9)           Shopping Center Name:   (intentionally deleted);

(10)         Cleaning Program:   participate in any widow cleaning and
exterminating program that may be established by Landlord for any businesses in
the Shopping Center;

(11)         Tenant’s Fixtures:   operate its business in the Leased Premises
with adequate equipment which when initially installed, shall, be like-new,
functional, sufficient and of first-class workmanship;

(12)         Garbage:   handle and dispose of all rubbish, garbage
and waste from Tenant’s operations in accordance with regulations established
by Landlord and not permit the accumulation (unless in concealed metal
containers to be located

 20
 

at the rear of the Leased
Premises) or burning of any rubbish or garbage in, on or about any part of the
Shopping Center.

Section 27.2           Negative Obligations.   Tenant agrees that it shall not at any time
without first obtaining Landlord’s consent:

(1)           Not Change Exterior Architecture:   change (whether by alteration, replacement,
rebuilding or otherwise) the exterior color or architectural treatment of the
Leased Premises or of the building in which the same are located, or any part
thereof;

(2)           Not Use Sidewalks or Common Areas:   use, or permit to be used, the sidewalk or
mall corridor adjacent to, or any other space outside, the Leased Premises for
display, sale or any other similar activity;

(3)           Not Use Roof:   use, or permit to be used, for the storage
of equipment other than the accommodation of air conditioning equipment, or for
any other purpose whatsoever, the roof areas of the Leased Premises or the
Shopping Center; allow any air conditioning service representative or any other
person access to the roof without prior notice to Landlord;

(4)           No Loud Speaker:   use, or permit to be used, any advertising
medium, loud speaker, sound amplifier, or radio or television broadcast which
may be heard outside the Leased Premises or which does not comply with the
general policies or rules and regulations then in effect;

(5)           Not Misuse Plumbing Facilities:   use the plumbing facilities for any purpose
other than that for which they were constructed, or dispose of any garbage or
other foreign substance therein, whether through the utilization of so-called “disposal”
or similar units, or otherwise;

(6)           No Liens:   subject any fixtures, furnishings or
equipment in or on the Leased Premises which are affixed to the realty to any
mortgages, liens, conditional sales agreements, security interests,
encumbrances or the like;

(7)           Not Damage the Premises:   perform any act or carry on any practice
which may damage, mar or deface the Leased Premises or any other portion of the
Shopping Center;

(8)           No Vending Machines:   except as expressly identified herein and
permitted hereby, operate on the Premises or in any part of the Shopping Center
any coin or token operated vending machine or similar device (including,
without limitation, amusement devices and machines for the sale of beverages,
foods, candy, cigarettes or other merchandise or commodities);

(9)           No Awnings:   install any awnings in or on the Leased Premises
which are visible to public view outside the Leased Premises;

(10)         Window Cleaning and Janitorial
Services:   permit window cleaning or
other exterior maintenance and janitorial services in and for the Leased
Premises to be performed, except by such persons as shall be approved by
Landlord and except during hours designated for such purposes by Landlord;

 21
 

(11)         Freight Handling Equipment:   use any fork-lift truck, tow truck or any
other powered machine for handling freight in the interior delivery system, if
any, except the truck passageway portion thereof, or in the Leased Premises;

(12)         Not Exceed Floor Loads:   place a load on any floor in the interior
delivery system, if any, or in the Leased Premises exceeding the floor load per
square foot which such floor was designed to carry, or install, operate or
maintain therein any heavy item of equipment except in such manner as to
achieve a proper distribution of the weight;

(13)         Not Exceed Electrical Load:   install, operate or maintain in the Leased
Premises any electrical equipment which has not been approved by Landlord, in
light of the overall system and requirements therefor in the Shopping Center;

(14)         Not Permit Odors, Noise, etc.:   suffer, allow or permit any offensive or
obnoxious vibration, noise, odor or other undesirable effect to emanate from
the Leased Premises, or any machine or other installation therein, or otherwise
suffer, allow or permit the same to constitute a nuisance or otherwise
interfere with the safety, comfort or convenience of Landlord or any of the
other occupants of the Shopping Center or their customers, agents or invitees
or any others;

(15)         Not Invalidate Insurance:   use or occupy the Leased Premises or any
part of the Shopping Center or do or permit anything to be done thereon in any
manner which shall make it more difficult for Landlord or Tenant to obtain at
standard rates any insurance required hereunder or desired, or which will
invalidate or increase the cost to Landlord of any existing insurance, or which
will cause structural injury to any building or Common Area, or which would
constitute a public or private nuisance or which would violate any present or
future laws, regulations, ordinances or requirements (ordinary or
extraordinary, foreseen or unforeseen) of the federal, state or municipal
governments, of any department, subdivisions, bureaus or offices thereof, or of
any other governmental public or quasi-public authorities now existing or
hereafter created having jurisdiction in the Leased Premises or the Shopping
Center;

(16)         Not Injure Reputation:   use or occupy the Leased Premises for any
purpose which may injure the reputation of the Leased Premises or the Shopping
Center or of the neighborhood in which the same are located or impair the value
of the Leased Premises or the Shopping Center; Tenant agrees that Landlord
shall have the right to prohibit the continued use by Tenant of any unethical
or unfair method of business operation, advertising or interior display, if, in
Landlord’s opinion, the continued use thereof would impair the reputation of
the Shopping Center as a desirable place to shop or otherwise be out of harmony
with the general character thereof, and upon notice from Landlord, Tenant shall
forthwith refrain from or discontinue such activities;

(17)         No Solicitation:   solicit business or distribute advertising
or promotional matter in the Common Areas; and

 22
 

(18)         Employee Parking:   allow or permit any employee to park in any
area other than as specifically designated by Landlord for employee parking.

ARTICLE 28.   DEFAULT

Section 28.1           Default of Tenant.   Tenant shall be in default under the terms
of this Lease if:

(i)            Tenant shall fail to pay when due
the Minimum Rent or any additional rent or other charges due hereunder provided
Tenant shall have five (5) days to cure such default upon written notice from
Landlord; or

(ii)           Tenant shall fail to observe or
perform any of the terms, covenants or conditions of this Lease other than
those set forth in Subsection 28.1(i), and such failure shall continue after
ten (10) days’ notice thereof by Landlord, or, if the default is of such a
nature that it cannot be cured within ten (10) days, if Tenant shall not have
commenced the curing of such default within such ten-day period and thereafter
proceed diligently to cure the default; or

(iii)          Tenant or any guarantor of this Lease
(a “Guarantor”) shall file a voluntary petition in bankruptcy or apply for
reorganization or make an assignment for the benefit of creditors, or if any
receiver or trustee is appointed for any of Tenant’s (or any Guarantor’s)
property or business or any petition in bankruptcy is filed against Tenant (or
any Guarantor), and such receiver, trustee or petition is not discharged within
sixty (60) days; or

(iv)          any final judgment against Tenant (or
any Guarantors) is not satisfied within sixty (60) days or any execution or
attachment is issued against Tenant (or any Guarantor) or Tenant’s (or any
Guarantor’s) property and remains unsatisfied or undischarged for ten (10)
days; or

(v)           Tenant shall vacate or abandon the
Leased Premises.

Section 28.2           Remedies of Landlord.   Upon
any default by Tenant as described in Section 28.1, Landlord shall have the
immediate right to re-enter the Leased Premises by summary proceedings, force
or otherwise and the right to change locks and to dispossess all persons
therefrom and to remove and dispose of all property therein or, at Landlord’s
election, to store such property in a public warehouse or elsewhere at the cost
and for the account of Tenant, all without service of any notice of intention
to re-enter and with or without resort to legal process (which Tenant hereby
expressly waives) and without Landlord being deemed guilty of trespass or
becoming liable for any loss or damage which may be occasioned thereby.  Upon any default of Tenant as described in
Section 28.1, Landlord shall also have the right, at its option, in addition to
and not in limitation of any other right or remedy if the Lease Term shall not
have commenced, to cancel this Lease by notice to Tenant, or, if the Lease Term
shall have commenced, to serve upon Tenant a written notice that this Lease and
the Lease Term will terminate on a date specified therein, which date shall be
not less than three (3) days after the serving of such notice, and, upon the
date so specified, this Lease and the Lease Term shall terminate and expire as
fully and completely as if such date

 23
 

were the day herein
definitely fixed for the expiration of this Lease and the Lease Term, and
thereupon Landlord shall have the immediate right of re-entry and Tenant shall
surrender the Leased Premises, but Tenant shall remain liable as provided
below.  If Tenant shall be served with a
demand for the payment of past due rent, any payments tendered thereafter to
cure any default by Tenant shall be made only be cashier’s or certified check.  In the event of any default, re-entry or
termination or dispossess, by summary proceedings or otherwise, (i) all Minimum
Rent and additional rent due at the time of such default, re-entry, termination
or dispossess shall be paid in full; and (ii) Tenant shall pay to Landlord all
expenses, including court costs and attorneys’ fees and disbursements incurred
by Landlord in recovering possession of the Leased Premises; and (iii) Landlord
may relet the Leased Premises or any part or parts thereof, either in the name
of Landlord or Tenant or otherwise, as Landlord may determine, for a term which
at Landlord’s option may be less than or exceed the period which would
otherwise have constituted the balance of the Lease Term, and may grant
concessions or free rent; and (iv) Tenant or the legal representative of Tenant
also shall pay Landlord, as liquidated damages for the failure of Tenant to
observe and perform Tenant’s covenants herein contained, for each month of the
period which would otherwise have constituted the balance of the Lease Term,
the amount by which (x) the sum of (a) the Minimum Rent and all additional rent
which would have been due, plus (y) the net amount, if any, of the rents
collected on account of the lease or leases of the Leased Premises.  Any such liquidated damages shall be paid in
monthly installments by Tenant on the day specified in this Lease for the
collection of Minimum Rent, any suit brought to collect the amount of the
deficiency for any month shall not prejudice in any way the rights of Landlord
to collect the deficiency for any subsequent month by a similar proceeding, or,
at Landlord’s option, and if permitted by law, Tenant shall pay such deficiency
on either of the accelerated bases as hereinafter set forth.  In computing such liquidated damages there
shall be added to such deficiency all expenses that Landlord may incur in
connection with reletting, such as attorneys’ fees and disbursements, brokerage
and expenses of placing and keeping the Leased Premises in good order or of
preparing the same for reletting as hereinafter provided and Landlord’s costs
of performing its covenants under the new lease of the Leased Premises to the
extent that the same are greater than Landlord’s duties hereunder.  Landlord, at Landlord’s option, may make such
alterations, repairs, replacements or decorations in the Premises as Landlord
in Landlord’s sole judgment considers advisable and necessary for the purpose
of reletting the Premises; and the making of such alterations, repairs,
replacements or decorations shall not operate or be construed to release Tenant
from liability hereunder.  Unless
otherwise required by law, Landlord shall in no event be liable in any way
whatsoever for failure to relet the Premises, or, in the event that the
Premises are relet, for failure to collect the rent thereof under such
reletting nor shall the refusal or failure of Landlord to relet the Leased
Premises or any part or parts thereof release or affect Tenant’s liability for
damages.  Notwithstanding anything
contained herein to the contrary, in the event that this Lease is terminated
pursuant to the provisions of this Lease, Landlord may recover from Tenant all
damages it may sustain by reason of Tenant’s default, including the cost of
recovering the Leased Premises and attorneys’ fees, and, upon so electing and
in lieu of the damages that might otherwise be recoverable under this

 24
 

Section or Section 28.3,
Landlord shall be entitled to recover from Tenant, as and for Landlord’s
damages, an amount equal to the total Minimum Rent and projected additional
rent and charges for the entire remaining term of the Lease agreement of the
parties.  Said amount shall be due and
payable in full upon the Tenant’s breach of this Lease agreement.  Tenant specifically acknowledges that Landlord
shall have no obligation to mitigate the damages provided for in the foregoing
portion of this paragraph, by reletting the premises or otherwise.  Landlord and Tenant specifically acknowledge that
this remedy is a provision for liquidated damages and is not a penalty, that
the damages which Landlord is likely to suffer should Tenant breach this Lease
agreement are impossible to calculate at the time this agreement is executed,
and the parties have specifically negotiated this portion of the agreement.  If, for any reason, it is determined that
Landlord cannot collect the damages provided for in the immediately foregoing
portion of this paragraph then Landlord shall be entitled to recover from Tenant,
as and for Landlord’s damages, an amount equal to the difference between the
Minimum Rent and additional rent reserved under this Lease for the period which
otherwise would have constituted the balance of the Lease Term and the then
present rental value of the Leased Premises for such period, without discount
to present worth, all of which shall immediately be due and payable by Tenant
to Landlord.

Section 28.3           Other Legal Remedies.   Each
right and remedy of Landlord provided for in this Lease shall be cumulative and
shall be in addition to every other right and remedy provided for in this Lease
or now or hereafter existing at law or in equity or by statute or otherwise,
and the exercise or beginning of the exercise by Landlord of any one or more of
the rights or remedies provided for in this Lease or now or hereafter existing
at law or in equity or by statute or otherwise shall not preclude the
simultaneous or later exercise by Landlord of any or all other rights or
remedies provided for in this Lease or now or hereafter existing at law or in
equity or by statute or otherwise.  Further,
nothing herein contained shall be construed as limiting or precluding the
recovery by Landlord against Tenant of any sums or damages to which, in
addition to or in lieu of the damages particularly provided for in Section 28.2
and otherwise herein, Landlord may lawfully be entitled at the time when such
damages are to be proved, by reason of any default hereunder on the part of the
Tenant.

Section 28.4           Waiver of Trial by Jury and
Counterclaim.   Landlord and Tenant hereby waive trial by jury
in any action, proceeding or counterclaim brought by either against the other
upon any matters whatsoever arising out of or in any way connected with this Lease,
Tenant’s use or occupancy of the Premises, or any claim of injury or damage.  It is further mutually agreed that in the
event Landlord commences any summary proceedings for nonpayment of Minimum Rent
or additional rent, Tenant will not interpose any counterclaim or offset of whatever
nature or description in any such proceeding. 
It is specifically agreed that in the event that Landlord commences any judicial
proceeding against Tenant, including a proceeding for nonpayment of Minimum
Rent or additional rent, Tenant will not interpose any defense, counterclaim or
offset of whatever nature or description.  Nor will Tenant raise any defense of waiver or
challenge the jurisdiction of the Court hearing any proceeding on the basis of
the receipt by Landlord of any rent at any time including receipt subsequent to
receipt of notice of

 25
 

termination, termination
or claimed termination of the Lease by the Landlord and prior to commencement
of judicial proceedings.  The parties
specifically agree that receipt of rent shall under no circumstances give rise
to a month to month tenancy.

Section 28.5           Holding Over.   If Tenant remains in possession of the Leased
Premises after the expiration of the term of this Lease, Tenant, at Landlord’s
election, may be deemed to be occupying the Leased Premises as a tenant from
month-to-month, at a monthly rental equal to 150% of the sum of (i) the monthly
installment of Minimum Rent payable during the last month of the Lease Term,
plus (ii) 1/12 of one hundred and twenty-five (125%) percent of Common Charges
and Real Estate Taxes payable during the last year of the term.  Such tenancy shall be subject to all of the
other terms, provisions, conditions and obligations of this Lease insofar as
they may be applicable to a month-to-month tenancy.

Section 28.6           Waiver of Redemption.   To the extent permitted by law, Tenant
hereby expressly waives any and all rights of redemption granted by or under
any present or future laws in the event of Tenant being evicted or dispossessed
for any cause, or in the event of Landlord obtaining possession of the Leased
Premises, by reason of the violation by Tenant of any of the covenants or
conditions of this Lease.

Section 28.7           Late Payments.   In
addition to any other remedies available to Landlord hereunder, Tenant shall
pay to Landlord a bookkeeping and processing charge equal to the greater of (i)
5% of any delinquent payment of Minimum Rent or additional rent or (ii) One
Hundred Dollars ($100), when any such Minimum Rent or additional rent is paid
more than ten (10) days after the due date thereof.  Such payment shall be for the purpose of
defraying the extra expense involved in processing, collecting and/or handling
delinquent payments and shall be payable by Tenant to Landlord upon demand.  Tenant also shall pay interest, at the annual
rate of 15% or the highest rate allowed by law, whichever is less, on payments
which are delinquent by more than ten (10) days and shall pay all attorneys’
fees incurred by Landlord in the collection of past due rents with interest at
the aforesaid rate.

ARTICLE 29.   LIMITED LIABILITY OF LANDLORD

Section 29.1           Damage to Leased Premises.   The
Landlord and the Landlord’s agents and employees shall not be liable for, and
Tenant waives, any and all claims for damages to person and property or
otherwise sustained by Tenant or Tenant’s agents, employees, assigns,
licensees, concessionaires, invitees or any person claiming through said
parties resulting from any accident or occurrence in or upon the Leased
Premises, or any part of the Shopping Center.  Said waiver shall include, but not be limited
to, claims for damage to person or property resulting from any equipment or
appurtenance out of repair, defective electrical, heating, air conditioning,
plumbing, sewer, water system or installations or from the operation of said
equipment or installation, or damage by fire, steam, broken glass, ice, water,
snow, gas entering the Leased Premises or for the acts, omissions or negligence
of trespassers or other occupants of the Shopping Center.

Section 29.2           Definition of Landlord.   The term “Landlord” as used in this Lease
means only the owner or the

 26
 

mortgagee in possession,
for the time being, of the building in which the Leased Premises are located so
that, in the event of any sale of such building, Landlord shall be and hereby
is entirely freed and relieved of all obligations of Landlord hereunder arising
after the date of transfer and it shall be deemed without further agreement
between the parties and such purchaser that the purchaser has assumed and
agreed to observe and perform all obligations of Landlord hereunder arising
after the date of transfer.

Section 29.3           Non-recourse to Landlord.   It is specifically understood and agreed that
neither Landlord, nor any partner of Landlord, shall have any personal liability
with respect to any of the terms, covenants, conditions or provisions of this Lease.
 In the event of a breach or default by
Landlord of any of its obligations under this Lease, Tenant shall look solely
to the equity of the Landlord in the Shopping Center for the satisfaction of
any claims which it may have against Landlord.

ARTICLE 30.   RIGHT TO CURE DEFAULTS

Section 30.1           Landlord’s Rights.   If Tenant shall fail to comply fully with
any of its obligations under this Lease (including, without limitation, its
obligations to make repairs, maintain various policies of insurance, comply
with all laws, ordinances and regulations and pay all bills for utilities),
then Landlord shall have the right, at its option and in addition to any other
remedies it has under this Lease and without hereby waiving such default, to
cure such breach at Tenant’s expense without notice in the case of emergency
and in any other case if such default continues after five (5) days written
notice by Landlord.  Tenant agrees to
reimburse Landlord (as additional rent) for all costs and expenses incurred as
a result thereof together with interest thereon at the rate set forth in
Section 28.7 promptly upon demand.

ARTICLE 31.   SIGNS

Section 31.1           Installation.   Tenant
shall not, without Landlord’s prior consent, place or install any sign on the
roof or on any exterior wall of the Leased Premises (including, without
limitation, both the interior and exterior surfaces of windows and doors)
except that Tenant may install and maintain at its own cost and expense,
including payments for permits, a storefront sign, provided same is approved by
Landlord as to dimensions, content, material, location and design, which
approval shall not be unreasonably withheld.  Tenant agrees that, if required by Landlord,
all signs shall be union made and shall not be installed on the Leased Premises
or the building in which the Leased Premises are located until all approvals
and permits from all governmental agencies having jurisdiction are first
obtained and copies thereof delivered to Landlord together with evidence of
payment for any fees pertaining to Tenant’s signs.  Notwithstanding the foregoing, Landlord’s
consent shall not be required for a banking regulation signage on the Leased
Premises.

Section 31.2           General Provisions.   Tenant
shall procure appropriate workmen’s compensation and liability insurance
policies covering the installation and maintenance of any signs, and all such
policies or certificates of such policies shall be delivered to Landlord prior
to the

 27
 

commencement of any work
and shall provide that such policies are not cancelable, except upon ten (10)
days’ written notice to Landlord.  In the
event Landlord shall deem it necessary to remove such sign or signs in order to
paint or make any repairs, alterations or improvements in and upon the Leased
Premises, or the building in which same is situated, or any part thereof,
Landlord shall have the right to do so, provided the same be removed and
replaced at Landlord’s expense, whenever such repairs, alterations or
improvements shall have been completed.

ARTICLE 32.   MISCELLANEOUS PROVISIONS

Section 32.1           Right to Relocate.    (intentionally deleted)

Section 32.2           Right to Change Payments Due.   (intentionally deleted)

Section 32.3           Easement for Pipes.   Tenants shall permit Landlord or its
designees to erect, use, maintain and repair pipes, cables, conduits, plumbing,
vents and wires, in, to and through the Leased Premises, as and to the extent
that Landlord may now or hereafter deem it to be necessary or appropriate for
the proper operation and management of the Shopping Center.  All such work shall be done, so far as
practicable in the sole determination of Landlord, in such manner as to avoid
unreasonable interference with Tenant’s use of the Leased Premises and will
coordinate any access with respect to Tenant’s security and privacy
requirements.

Section 32.4           Environmental Matters.  (a) Tenant agrees that it shall comply with
all local, state and federal laws, rules and regulations dealing with the manufacture,
generation, use, storage, treatment, transportation, disposal, release or
removal of hazardous substances, materials, pollutants, contaminants, wastes,
including but not limited to, the Comprehensive Environmental Response,
Compensation and Liability Act (“CERCLA”), 42 U.S.C. 9601 et  seq.,
the Federal Water Pollution Control Act, 33 U.S.C. 1231, et  seq.,
the Emergency Planning and Community Right to Know Act, 33 U.S.C. 11000 et
seq., the Resource Conservation and Recovery Act (“RCRA”), 42 U.S.C.
6901 et  seq. and the Clean Air Act, 42 U.S.C. 7401 et  seq.,
as such laws may be amended or modified, whether such laws are presently in
existence or promulgated during the Lease Term and all rules and regulations
promulgated hereunder (“Environmental Laws”). 
Without limiting the foregoing, Tenant agrees that it will (i) give
written notice to Landlord at least seven (7) days in advance of any
manufacture, generation, use, storage, treatment, transportation, disposal,
release or removal of Hazardous Substances from or on the Leased Premises,  (ii) give written notice to Landlord within
two (2) days of receipt of any notice of violation, claim, suit, or
investigation relating to Hazardous Substances, 
(iii) immediately notify Landlord of any Hazardous Substance spill,
release or discharge at or affecting the Leased Premises and immediately clean
up any such spill, release or discharge in compliance with all applicable
Environmental Laws, (iv) not use or employ the property, facilities, equipment
or services of the Shopping Center to manufacture, generate, use, store, treat
or dispose of or release Hazardous Substances, whether or not they were
generated or produced on the Leased Premises, and (v) defend, indemnify and
hold harmless Landlord against any and all claims (including reasonable
attorney and expert fees and

 28
 

cleanup costs), damage,
liability and costs which Landlord may suffer, incur or pay resulting from or
arising out of any manufacture, generation, use, storage, treatment,
transportation, disposal, release or threat of release of Hazardous Substances
from or on the Leased Premises or the Shopping Center (x) as a result of Tenant’s
actions or actions of Tenant’s agents, employees, guests or invitees or (y)
arising during or attributable to all periods of Tenant’s possession of the
Leased Premises.  “Hazardous Substances”
means and includes all toxic or hazardous substances, materials, chemicals,
contaminants, pollutants, and wastes, of whatever kind or nature, regulated
under, defined in, or listed in any Environmental Laws.  Hazardous Substances include, without
limitation, asbestos, PCBs, CFCs, petroleum and lead-based paint.

(b)  If Tenant fails to fully comply with the
terms of this Section, Landlord may, at its option, perform any or all of Tenant’s
obligations thereunder and all costs and expenses incurred by Landlord
(including reasonable attorney and expert fees and clean up costs) in
connection therewith shall be deemed to be additional rent payable by Tenant on
demand therefor.

(c)  Landlord agrees that it shall comply with all
local, state and federal laws, rules and regulations dealing with Hazardous
Substances which apply to the Leased Premises, whether such laws are presently
in existence or promulgated during the Lease Term, relating to environmental
conditions existing or arising prior to the commencement of the Lease Term, except
for any and all laws or matters relating to the presence of asbestos or
asbestos containing materials (hereafter“ACM”) at the Leased Premises.

(d)  Except for any and all laws or matters
relating to ACM at the Leased Premises, Landlord agrees that it shall defend,
indemnify and hold harmless Tenant against any and all claims, damage,
liability and costs which Tenant may suffer, incur or pay resulting from or arising
out of any handling, storage, treatment, transportation, disposal, release or
threat of release of Hazardous Substances from or on the Leased Premises as a
result of (i) Landlord’s actions, or (ii) conditions existing at the Leased
Premises prior to the commencement of the Lease Term.

(e)  With respect to ACM, Tenant accepts the
Leased Premises “as is” and understands that ACM may be present in the
insulation, ceiling tiles or otherwise in the Leased Premises.  Tenant agrees (i) not to conduct or permit
activities at the Leased Premises which would result in the disturbance of ACM
or the release of asbestos fibers into the air, (ii) to comply with all local,
state and federal laws, rules and regulations governing to the disturbance,
monitoring, removal, encapsulation, repair, transportation and disposal of ACM
applicable to the Leased Premises or Tenant’s employees, guests and invitees,
and (iii) defend, indemnify and hold harmless Landlord against any and all
claims, damage, liability and costs which Landlord may suffer, incur or pay
resulting from or arising out of any matters related to ACM, including but no
limited to, fines, penalties, personal injury lawsuits, or wrongful death
actions.

(f)  The terms of this Section shall survive the
expiration or termination of this Lease.

 29

 

Section 32.5           Force Majeure.   The
provisions of this Section shall be applicable if there shall occur during the
Lease Term, or prior to the Lease Commencement Date, any (i) strike, lockout or
labor dispute; (ii) the inability to obtain labor or materials, or reasonable
substitutes therefor; (iii) Acts of God, adverse weather conditions,
governmental restrictions, regulations or controls, enemy or hostile
governmental actions, civil commotion, fire or other casualty or other
conditions similar to those enumerated in this item (iii) beyond the reasonable
control of the party obligated to perform; or (iv) delays due to the act or
omission of the other party.  If Landlord
or Tenant shall, as the result of any of the above described events, fail
punctually to perform any obligation on its part to be performed under this Lease,
then such failure shall be excused and not be a breach of this Lease by the
party in question, but only to the extent occasioned by such event.  If any right or option of either party to take
any action under or with respect to this Lease is conditioned upon the same
being exercised within any prescribed period of time and such named date shall
be deemed to be extended or delayed, as the case may be, for a period equal to
the period of the delay occasioned by any above described event.  Notwithstanding anything herein contained,
however, (a) the provisions of this Section shall not be applicable to Tenant’s
obligation to pay Minimum Rent or additional rent or any other charge required
to be paid by Tenant hereunder, and (b) with respect to any other obligation of
Tenant pursuant to this Lease, only the events described in item (iii) of the
first sentence of this Section shall be deemed to excuse performance for the
purpose of this Section.

Section 32.6           Time of the Essence.   Time
shall be of the essence as to each and every obligation of Tenant hereunder.

Section 32.7           Landlord’s Consent.   Whenever
Landlord’s consent or approval is required pursuant to the terms of this Lease,
Landlord may grant or withhold such consent or approval, or may grant such
consent or approval upon such terms and conditions as Landlord may deem
advisable, in Landlord’s sole and absolute discretion.  Any such consent or approval must be
expressly given in writing signed by Landlord in order to be binding upon
Landlord.

Section 32.8           Landlord’s Costs.   Any
reference contained in this Lease to “costs incurred by Landlord” or “expenses
incurred by Landlord” or similar reference shall be deemed to include all costs
and expenses incurred by Landlord, Landlord’s agents and employees and, with
respect to any activities carried out by Landlord, Landlord’s agents, and
employees, shall further include an amount equal to the value of the time spent
engaged in such activities, as if the same were accomplished by an independent
party.

Section 32.9           Partial Payments.   No
payment by Tenant or receipt by Landlord of a lesser amount of Minimum Rent or
additional rent than that provided herein shall be deemed to be other than on
account of the earliest stipulated rent, nor shall any endorsement or statement
on any check or any letter accompanying any check or payment as rent be deemed
an accord and satisfaction, and Landlord may accept such check or payment
without prejudice to Landlord’s right to recover the balance of such rent or
pursue any other remedy provided herein.

 30
 

Section 32.10         Attorney’s Fees.   Should it
be necessary for Landlord to employ legal counsel to enforce any of the
provisions of this Lease, Tenant agrees to pay all reasonable attorneys’ fees
and other costs and expenses including court costs incurred.  In the event of any action or proceeding
brought by either party against the other under this Lease, the prevailing
party shall be entitled to recover all reasonable attorneys’ fees and other
costs and expenses incurred in connection with such action or proceeding,
including the cost of appeal, if any.

Section 32.11         No Waiver.   One or more
waivers of any covenant or condition by Landlord shall not be construed as a
waiver of a subsequent breach of the same or any other covenant or condition,
and the consent of approval by Landlord to or of any act by Tenant requiring
Landlord’s consent or approval shall not be construed to waive or render
unnecessary Landlord’s consent or approval to or of any subsequent similar act
by Tenant.

Section 32.12         Titles of Articles.   The
titles of the Articles throughout this Lease are for convenience and reference
only, and the words contained therein shall in no way be held to explain,
modify, amplify or aid in the interpretation, construction or meaning of the
provisions of this instrument.

Section 32.13         Invalidity of Particular Provisions.   If
any term or provision of this Lease or the application thereof to any person or
circumstance shall to any extent be invalid or unenforceable, the remainder of
this Lease, or the application of such term of provision to persons or
circumstances other than those as to which it is held invalid or unenforceable,
shall not be affected thereby, and each term and provision of this Lease shall
be valid and be enforced to the fullest extent permitted by law.

Section 32.14         Successors and Assigns.   Except
as herein otherwise expressly provided, the terms and provisions hereof shall
be binding upon and shall inure to the benefit of the heirs, executors,
administrators, successors and permitted assigns, respectively, of Landlord and
Tenant.  Each term and each provision of
this Lease to be performed by Tenant shall be construed to be both an
independent covenant and a condition. 
The reference contained to successors and assigns of Tenant is not
intended to constitute a consent to assignment by Tenant, but has reference
only to those instances in which Landlord may have given written consent to a
particular assignment.

Section 32.15         Guarantors.   (intentionally
deleted)

Section 32.16         Relationship of Parities.   Nothing
contained in this Lease shall be deemed or construed by the parties hereto or
by any third party to create the relationship of principal and agent or of
partnership or of joint venture or of any association whatsoever between
Landlord and Tenant, it being expressly understood and agreed that neither the
computation of rent nor any other provisions contained in this Lease nor any
act or acts of the parties hereto shall be deemed to create any relationship
between Landlord and Tenant other than the relationship of landlord and tenant.

 31
 

Section 32.17         Multiple Tenants.   If this
Lease is executed by more than one party, it is specifically agreed that the
Landlord may enforce the provisions hereof with respect to one or more of such
parties without seeking to enforce the same as to all or any other such
parties, and each of the tenants hereby waives any requirement of joinder of
all or any other of the parties hereto in any suit or proceeding to enforce the
provisions hereof.  The liability
hereunder of all parties hereto shall be joint and several.

Section 32.18         Complete Agreement.   This
writing contains the entire agreement between the parties hereto, and no agent,
representative, salesperson or officer of Landlord hereto has authority to make
or has made any statement, agreement or representation, either oral or written,
in connection herewith, modifying, adding or changing the terms and conditions
herein set forth.  No amendment or
modification of this Lease shall be binding unless such amendment or
modification is in writing and signed by the party against whom such amendment
or modification is being enforced. 
Tenant further agrees that this Lease shall have no force or validity
until and unless it is returned to Tenant duly executed by Landlord.

Section 32.19         Corporate or Other Authority.   If
the Tenant is a corporation or other entity, each individual executing this
Lease on behalf of said entity represents and warrants that he is duly
authorized to execute and deliver this Lease on behalf of said entity in
accordance with the Charter, By-Laws or other governing documents of said
entity and that this Lease is a valid and binding obligation of Tenant and any
Guarantor of this Lease, enforceable in accordance with its terms.

Section 32.20         Governing Law.   This Lease
shall be governed by and construed in accordance with the laws of the State in
which the Shopping Center is located.

Section 32.21         Exhibits.   The following
Exhibits are attached to this Lease and are made a part of this Lease by this
reference:

Exhibit A - Leased
Premises

Addendum - Extension
Option

Landlord and
Tenant have duly executed this Lease.

	
  Landlord:

  	
  ARBUTUS SHOPPING CENTER

  
	
   

  	
  LIMITED PARTNERSHIP

  
	
   

  	
   

  	
   

  
	
   

  	
  by: KSB Realty, L.L.C.

  
	
   

  	
  its: General Partner

  
	
   

  	
   

  	
   

  
	
  Date: 

  	
  4/28/06

  	
   

  	
  By: 

  	
  /s/ Ricki Singer

  
	
   

  	
  its

  	
  member

  
	
   

  	
   

  	
   

  
	
  Tenant:

  	
  CARROLLTON BANK

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
  By: 

  	
  /s/ Robert A. Altieri

  
	
   

  	
  its

  	
   

  

 

 32
 

LANDLORD

STATE OF                                                            )

                                                                                )

COUNTY OF                                                         )

On the            day of              , 20   , before me personally came                      ,  to me known, who, being by me dully sworn,
did depose and say that he is a Member of KSB Realty, L.L.C. and that    he executed the foregoing instrument with
authority on behalf of said L.L.C.

	
  

  	
   

  	
   

  
	
   

  	
  NOTARY PUBLIC

  

TENANT (Corporate)

STATE OF Maryland    )

                                       )

COUNTY OF Baltimore)

On the 27th day of
April, 2006, before me personally came Robert Altieri, to me known, who, being
by me duly sworn, did depose and say that he is the                         
of             ,      a                    corporation and that    he
executed the    foregoing instrument on behalf of said
corporation.

MY COMMISSION EXPIRES JAN. 1, 2007

	
  

  	
  [ILLEGIBLE]

  	
   

  
	
   

  	
  NOTARY PUBLIC

  

 

 33
 

EXHIBIT A

Leased Premises

(ARBUTUS SHOPPING
CENTER ARBUTUS, MARYLAND IMAGE)

 34
 

ADDENDUM TO LEASE

BETWEEN

ARBUTUS SHOPPING CENTER
LIMITED PARTNERSHIP

AND

CARROLLTON BANK

1)  Extension Option(s).  (a) 
Tenant shall have the right, at its option, to extend the term of this
Lease for the Extension Period(s) upon the same terms, covenants and conditions
herein set forth; provided, however, that the Minimum Rent for the first Lease
Year of each Extension Period shall be increased to the greater of (i) the
market rate then being charged for similar space in the Shopping Center or (ii)
the Minimum Rent for the preceding Lease Year increased by three percent
(3%).  Thereafter, the Minimum Rent for
each successive Lease Year during each Extension Period shall be an amount
equal to the Minimum Rent for the last preceding Lease Year, increased by three
percent (3%) per annum.

In order to exercise the
Extension Option, Tenant shall be required to give written notice of its
intention to extend at least six (6) months but not more than nine (9) months
prior to the Lease Termination Date, or expiration of the then current
Extension Period, as the case may be. 
Failure to deliver timely notice as required above shall cause the
Extension Option, and all remaining Extension Options, to lapse and be of no
further force and effect.  Further, if
Tenant shall be in default of the terms of this Lease, Tenant shall not have
the right to exercise the Extension Option and if Tenant shall default
hereunder after such right has been exercised but within the six (6) month
period preceding the Extension Period such election shall, at Landlord’s
option, be null and void.

(b)  In the event that Tenant shall dispute
Landlord’s determination of the market rate of rent being charged for similar
space pursuant to the paragraph above, Tenant shall give notice to Landlord
within ten (10) days of Tenant’s receipt of such Landlord’s determination, and
the market rate shall be determined as follows: 
The market rate shall be determined by a single arbitrator appointed in
accordance with the American Arbitration Association Real Estate Valuation
Arbitration Proceeding Rules.  Such
arbitrator shall be impartial and shall have not less than ten (10) year’s
experience in the County where the Shopping Center is located, in a calling
related to the leasing of commercial space in premises comparable to the
Shopping Center.  Within fifteen (15)
days following the appointment of such arbitrator each party shall submit a
report setting forth its determination of the market rate of the Leased
Premises for the applicable term, together with such other information as such
party shall deem relevant.  The
arbitrator shall, within thirty (30) days following such hearing and submission
of evidence render his decision by selecting the determination of market rate
then being charged for similar space in the Shopping Center.  It is expressly understood that such
arbitrator shall have no power or authority to select any market rate other
than the market rate submitted by Landlord or Tenant, and the decision of such
arbitrator shall be final and binding upon the Landlord and Tenant.  Prior to the determination of the arbitrator,
Tenant shall pay Minimum Rent in an amount equal to the Landlord’s
determination of market rate submitted to Tenant pursuant to this Section, and
following the arbitrator’s final determination, the amount of any overpayment
or underpayment shall be adjusted between the parties on demand.  The cost of arbitration shall be borne by the
party whose determination of Market Rate is not selected by the arbitrator.

 35Exhibit
4.1

 

EXECUTION
VERSION

 

EXCO
RESOURCES, INC.

 

7.0%
Cumulative Convertible Perpetual Preferred Stock

and

Hybrid Preferred Stock

 

REGISTRATION
RIGHTS AGREEMENT

 

This
Registration Rights Agreement (this “Agreement”), dated March 28, 2007, among
EXCO Resources, Inc., a Texas corporation (the “Company”), and the
purchasers of the Purchased Shares (as defined below) signatory hereto (each
such purchaser, a “Purchaser” and all such purchasers collectively, the “Purchasers”),
is entered into pursuant to that certain Preferred Stock Purchase Agreement,
dated the date hereof, among the Company and the Purchasers (the “Purchase
Agreement”), providing for the Company’s issuance and sale of (a) an
aggregate of 39,008 shares (the “7.0% Preferred Shares”) of 7.0% Preferred
Stock, in the series and amounts set forth on Schedule A to the Purchase
Agreement, and (b) an aggregate of 160,992 shares (the “Hybrid Preferred
Shares” and together with the 7.0% Preferred Shares, the “Purchased
Shares”) of Hybrid Preferred Stock, in the series and amounts set forth on Schedule
A to the Purchase Agreement. The Purchased
Shares will be convertible into shares of the Company’s common stock, par value
$0.001 per share (the “Common Stock”), as set forth in the applicable Statement
of Designation.

 

1.             Common Shelf Registration. So long as any Registrable Shares
are outstanding, the Company shall take the following actions:

 

(a)           The Company shall,
as soon as practicable but in any event by September 26, 2007, file with
the Securities and Exchange Commission (the “Commission”), and
thereafter use its best efforts to cause to be declared effective no later than
March 24, 2008, in each case subject to Section 3(h), a registration statement
(the “Common Shelf Registration Statement”) on an appropriate form under
the Securities Act relating to the offer and sale of the Registrable Common
Shares by the Holders thereof from time to time in accordance with the methods
of distribution set forth in the Common Shelf Registration Statement (which shall
be substantially in the form of Annex B hereto except to the extent
revised pursuant to comments received from the staff of the Commission or
otherwise required by applicable law or regulation)  and
Rule 415 under the Securities Act (hereinafter, the “Common Shelf
Registration”); provided, however, that no Holder shall be entitled to have the
Registrable Common Shares held by it covered by such Common Shelf Registration
Statement unless such Holder agrees in writing to be bound by all the
provisions of this Agreement applicable to such Holder and submits a Notice and
Questionnaire.

 

(b)           The Company shall
use its best efforts to keep the Common Shelf Registration Statement
continuously effective, in order to permit the prospectus included therein to
be lawfully delivered by the Holders of the Registrable Common Shares included
therein, until the date on which all Registrable Shares cease to be Registrable

 

1

 

Shares (such
period being called the “Common Shelf Registration Period”). The Company
shall be deemed not to have used its best efforts to keep the Common Shelf
Registration Statement effective during the Common Shelf Registration Period if
it voluntarily takes any action that would result in Holders of Registrable Common
Shares covered thereby not being able to offer and sell such Registrable Common
Shares during that period, unless such action is required by applicable law or
except as provided in Section 3(h).

 

(c)           Notwithstanding any
other provisions of this Agreement to the contrary, the Company shall cause (i)
the Common Shelf Registration Statement (as of the effective date of the Common
Shelf Registration Statement), any amendment thereof (as of the effective date
thereof) or supplement thereto (as of its date), (A) to comply in all material
respects with the applicable requirements of the Securities Act and the rules
and regulations of the Commission and (B) not to contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein not misleading,
and (ii) any related prospectus, preliminary prospectus or Free Writing
Prospectus and any amendment thereof or supplement thereto, as of its date, (A)
to comply in all material respects with the applicable requirements of the
Securities Act and the rules and regulations of the Commission and (B) not to
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided, however, the Company shall have no such obligations or
liabilities with respect to any written information pertaining to any Holder
and furnished to the Company by or on behalf of such Holder specifically for
inclusion therein.

 

(d)           The Company shall
use its best efforts to cause the Registrable Common Shares included in the
Common Shelf Registration Statement to be, upon resale thereunder, listed on
the New York Stock Exchange, Inc. (the “NYSE”) or, if the Common Stock
is not then listed on the NYSE, on the principal national securities exchange
on which the Common Stock is then listed, or if the Common Stock is not then
listed on a national securities exchange, authorized for quotation on any
automated quotation system on which the Common Stock is then quoted.

 

2.             Convertible Shelf Registration. If any Registrable
Convertible Shares are outstanding on March 30, 2011, the Company shall take
the following actions:

 

(a)           The Company shall,
as soon as practicable but in any event by June 28, 2011, file with the
Commission, and thereafter use best efforts to cause to be declared effective
no later than September 26, 2011, a registration statement (the “Convertible
Shelf Registration Statement”) on an appropriate form under the Securities
Act relating to the offer and sale of the Registrable Convertible Shares by the
Holders thereof from time to time in accordance with the methods of
distribution set forth in the Convertible Shelf Registration Statement (which
shall be substantially in the form of Annex B hereto except to the
extent revised pursuant to comments received from the staff of the Commission or
otherwise required by applicable law or regulation) and Rule 415 under the
Securities Act (hereinafter, the “Convertible Shelf Registration”); provided, however,

 

2

 

that no Holder
shall be entitled to have the Registrable Convertible Shares held by it covered
by such Convertible Shelf Registration Statement unless such Holder agrees in
writing to be bound by all the provisions of this Agreement applicable to such
Holder and submits a Notice and Questionnaire.

 

(b)           The Company shall
use its best efforts to keep the Convertible Shelf Registration Statement
continuously effective, in order to permit the prospectus included therein to
be lawfully delivered by the Holders of the Registrable Convertible Shares
included therein, until the date on which all Registrable Convertible Shares
covered by the Convertible Shelf Registration Statement cease to be Registrable
Convertible Shares (such period being called the “Convertible Shelf
Registration Period”). The Company shall be deemed not to have used its best
efforts to keep the Convertible Shelf Registration Statement effective during
the Convertible Shelf Registration Period if it voluntarily takes any action
that would result in Holders of Registrable Convertible Shares covered thereby
not being able to offer and sell such Registrable Convertible Shares during
that period, unless such action is required by applicable law or except as
provided in Section 3(h).

 

(c)           Notwithstanding any
other provisions of this Agreement to the contrary, the Company shall cause (i)
the Convertible Shelf Registration Statement (as of the effective date of the
Convertible Shelf Registration Statement), any amendment thereof (as of the
effective date thereof) or supplement thereto (as of its date), (A) to comply
in all material respects with the applicable requirements of the Securities Act
and the rules and regulations of the Commission and (B) not to contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements therein not
misleading, and (ii) any related prospectus, preliminary prospectus or Free
Writing Prospectus and any amendment thereof or supplement thereto, as of its
date, (A) to comply in all material respects with the applicable requirements
of the Securities Act and the rules and regulations of the Commission and (B)
not to contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading; provided, however, the Company shall have no such obligations
or liabilities with respect to any written information pertaining to any Holder
and furnished to the Company by or on behalf of such Holder specifically for
inclusion therein.

 

(d)           The Company shall
use its best efforts to cause the Registrable Convertible Shares included in
the Convertible Shelf Registration Statement, to be, upon resale thereunder,
listed on the NYSE or, if the Common Stock is not then listed on the NYSE, on
the principal national securities exchange on which the Common Stock is then
listed, or if the Common Stock is not then listed on a national securities
exchange, authorized for quotation on any automated quotation system on which the
Common Stock is then quoted.

 

3.             Registration Procedures. In connection with a Shelf
Registration contemplated by Section 1 or Section 2 hereof, the following
provisions shall apply:

 

3

 

(a)           At the time the Commission
declares such Shelf Registration Statement effective, each Holder that became a
Notice Holder on or prior to the date ten (10) Business Days prior to such time
of effectiveness shall be named as a selling security holder in such Shelf
Registration Statement and the related prospectus in such a manner as to permit
such Holder to deliver such prospectus to purchasers of Registrable Shares
included in the Shelf Registration Statement in accordance with applicable law,
subject to the terms and conditions hereof. Following the effective date of a
Shelf Registration Statement, each Holder that is not a Notice Holder wishing
to sell Registrable Shares pursuant to such Shelf Registration Statement and the
related prospectus agrees to deliver a Notice and Questionnaire to the Company
at least five (5) Business Days prior to any intended distribution by such
Holder of Registrable Shares under such Shelf Registration Statement. From and
after the date a Shelf Registration Statement is declared effective, the
Company shall, as promptly as practicable after the date a Notice and
Questionnaire is delivered, and in any event upon the later of (x) five (5)
Business Days after such date or (y) five (5) Business Days after the
expiration of any Deferral Period that is either in effect when the Notice and
Questionnaire is delivered or put into effect within five (5) Business Days of
such delivery date:

 

(i)            if required by
applicable law, prepare and file with the Commission a post-effective amendment
to the Shelf Registration Statement or prepare and, if required by applicable
law, file a supplement to the related prospectus or a supplement or amendment
to any document incorporated therein by reference or file with the Commission
any other required document so that the Holder delivering such Notice and
Questionnaire is named as a selling security holder in the Shelf Registration
Statement and the related prospectus in such a manner as to permit such Holder
to deliver such prospectus to purchasers of such Holder’s Registrable Shares
included in the Shelf Registration Statement in accordance with applicable law
and, if the Company shall file a post-effective amendment to the Shelf
Registration Statement, use its best efforts to cause such post-effective
amendment to be declared effective under the Securities Act as promptly as is
practicable, but in any event by the date (the “Amendment Effectiveness
Deadline Date”) that is ninety (90) days after the date such post-effective
amendment is required by this clause to be filed;

 

(ii)           provide such Holder
copies of any documents filed pursuant to Section 3(a)(i); and

 

(iii)          notify such Holder
as promptly as practicable after the effectiveness under the Securities Act of
any post-effective amendment filed pursuant to Section 3(a)(i);

 

provided,
that if such Notice and Questionnaire is delivered during a Deferral Period (as
defined in Section 3(h)), the Company shall so inform the Holder delivering
such Notice and Questionnaire and shall take the actions set forth in clauses
(i), (ii) and (iii) above upon expiration of the Deferral Period in accordance
with this Section 3(a) and Section 3(h) of this Agreement. Notwithstanding
anything contained herein to the contrary, (i) the Company shall be under no
obligation to name any Holder that is not a Notice Holder as

 

4

 

a selling
security holder in any Shelf Registration Statement or related prospectus and
(ii) the Amendment Effectiveness Deadline Date shall be extended by up to ten
(10) Business Days from the expiration of a Deferral Period (and the Company
shall incur no obligation to pay Liquidated Damages during such extension) if
such Deferral Period shall be in effect on the Amendment Effectiveness Deadline
Date; and provided, further,
that in no event shall the Company be required to file pursuant to this Section
3(a) in the case where a post-effective amendment is required, more than one
post-effective amendment to the Shelf Registration Statement in any 60-day
period.

 

(b)           The Company shall
notify the Holders of the Registrable Shares included within the coverage of
the Shelf Registration Statement (which notice may, at the discretion of the
Company (or as required pursuant to Section 3(h)), state that it constitutes a
Deferral Notice, in which event the provisions of Section 3(h) shall apply):

 

(i)            when the Shelf
Registration Statement or any amendment thereto has been filed with the
Commission and when the Shelf Registration Statement or any post-effective
amendment thereto has become effective;

 

(ii)           of any request by
the Commission for amendments or supplements to the Shelf Registration
Statement or the prospectus included therein or for additional information;

 

(iii)          of the issuance by
the Commission of any stop order suspending the effectiveness of the Shelf
Registration Statement or the initiation of any proceedings for that purpose
and of any other action, event or failure to act that would cause the Shelf
Registration Statement not to remain effective;

 

(iv)          of the receipt by
the Company of any notification with respect to the suspension of the
qualification or exemption from qualification of any Registrable Shares for
sale in any jurisdiction or the initiation of any proceeding for such purpose;
and

 

(v)           of the occurrence of
any Material Event (as defined in Section 3(h)).

 

(c)           The Company shall
use its best efforts to obtain the withdrawal at the earliest possible time of
any stop order suspending the effectiveness of the Shelf Registration Statement
and the elimination of any other impediment to the continued effectiveness of
the Shelf Registration Statement.

 

(d)           The Company shall
promptly furnish to each Holder of Registrable Shares included within the
coverage of the Shelf Registration, without charge, if the Holder so requests
in writing, at least one conformed copy of the Shelf Registration Statement and
any post-effective amendment thereto, including financial statements and
schedules and all exhibits thereto (including those, if any, incorporated by
reference).

 

(e)           The Company shall
promptly deliver to each Holder of Registrable Shares included within the
coverage of the Shelf Registration Statement, without charge, as

 

5

 

many copies of
the prospectus (including each preliminary prospectus) included in the Shelf
Registration Statement and any amendment thereof or supplement thereto and any
Free Writing Prospectus used in connection therewith as such Holder may
reasonably request. The Company consents, subject to the provisions of this
Agreement and except during such periods that a Deferral Notice is outstanding
and has not been revoked, to the use of the prospectus and each amendment or
supplement thereto and any Free Writing Prospectus used in connection therewith
by each of the selling Holders in connection with the offering and sale of the
Registrable Shares covered by the prospectus, or any amendment or supplement
thereto, included in the Shelf Registration Statement.

 

(f)            The Company shall
use its best efforts to register or qualify, or cooperate with the Holders of
the Registrable Shares included in the Shelf Registration Statement and their
respective counsel in connection with the registration or qualification of, the
resale of the Registrable Shares under the securities or “blue sky” laws of
such states of the United States as any Holder requests in writing and to do
any and all other acts or things necessary or advisable to enable the offer and
sale in such jurisdictions of the Registrable Shares covered by the Shelf
Registration Statement; provided,
however, that the Company shall not be required to (i) qualify generally to do
business in any jurisdiction where it is not then so qualified or (ii) take any
action that would subject it to general service of process or to taxation in
any jurisdiction to which it is not then so subject.

 

(g)           The Company shall
cooperate with the Holders of the Registrable Shares to facilitate the timely
preparation and delivery of certificates representing the Registrable Shares to
be delivered to a transferee pursuant to the Shelf Registration Statement,
which certificates shall be free of any restrictive legends and in such
denominations and registered in such names as the Holders may request.

 

(h)           Upon (i) the
issuance by the Commission of a stop order suspending the effectiveness of the
Shelf Registration Statement or the initiation of proceedings with respect to
the Shelf Registration Statement under Section 8(d) or 8(e) of the Securities
Act, (ii) the occurrence of any event or the existence of any fact (a “Material
Event”) as a result of which (x) the Shelf Registration Statement shall
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading or (y) any prospectus included in the Shelf Registration
Statement shall contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or (iii) the occurrence or existence of any pending
corporate development that, in the reasonable judgment of the Company, makes it
necessary to suspend the availability of the Shelf Registration Statement and
the related prospectus for a period of time:

 

(A)          in the case of clause
(ii) above, subject to clause (B) below, as promptly as practicable, the
Company shall prepare and file, if necessary pursuant to applicable law, a
post-effective amendment to such Shelf Registration Statement or a supplement
to the related prospectus or any document incorporated therein by reference or
file any other required

 

6

 

document that
would be incorporated by reference into such Shelf Registration Statement and related
prospectus so that (1) such Shelf Registration Statement does not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading
and (2) such prospectus does not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, as thereafter delivered to the
purchasers of the Registrable Shares being sold thereunder, and, in the case of
a post-effective amendment to the Shelf Registration Statement, subject to the
next sentence, use its best efforts to cause it to be declared effective as
promptly as is practicable; and

 

(B)           the Company shall give
notice to the Notice Holders with respect to such Shelf Registration Statement,
that the availability of the Shelf Registration Statement is suspended (a “Deferral
Notice”) and, upon receipt of any Deferral Notice, each Notice Holder
agrees not to sell any Registrable Shares pursuant to the Shelf Registration
Statement until such Notice Holder’s receipt of copies of the supplemented or
amended prospectus provided for in clause (A) above, or until it is advised in
writing by the Company that the prospectus may be used, and has received copies
of any additional or supplemental filings that are incorporated or deemed
incorporated by reference in such prospectus.

 

The Company
will use its best efforts to ensure that the use of the prospectus with respect
to such Shelf Registration Statement may be resumed (x) in the case of clause
(i) above, as promptly as is practicable, (y) in the case of clause (ii) above,
as soon as, in the reasonable judgment of the Company, public disclosure of
such Material Event would not be prejudicial to or contrary to the interests of
the Company or, as soon as practicable thereafter and (z) in the case of clause
(iii) above, as soon as, in the reasonable judgment of the Company, such
suspension is no longer necessary; provided, that
in no event shall (A) the aggregate duration of any such suspension arising
from an event described in clause (iii) above exceed 60 days, (B) the aggregate
duration of all such suspensions arising from events described in clause (iii)
above exceed 90 days in any 12-month period or (C) a suspension arising from an
event described in clause (iii) above be invoked more than twice in any
12-month period. Any such period during which the availability of the Shelf
Registration Statement and any related prospectus is suspended is referred to
as the “Deferral Period.”

 

(i)            Not later than the
effective date of the Shelf Registration Statement, the Company will provide
CUSIP numbers for the Registrable Shares registered for resale under such Shelf
Registration Statement and provide the transfer agent for the Registrable
Shares one or more certificates for such Registrable Shares, in a form eligible
for deposit with The Depository Trust Company. The Company will, after the NYSE
Approval Date, use its best efforts to cause the 7.0% Preferred Shares and the
Hybrid Preferred

 

7

 

Shares to have
the same CUSIP number, including, without limitation, by offering to exchange
shares of such Capital Stock.

 

(j)            The Company will
comply with all rules and regulations of the Commission to the extent and so
long as they are applicable to the Shelf Registration and will make generally
available to its security holders (or otherwise provide in accordance with
Section 11(a) of the Securities Act) an earnings statement (which need not be
audited) satisfying the provisions of Section 11(a) of the Securities Act and
Rule 158 thereunder, no later than 45 days after the end of a 12-month period
(or 90 days, if such period is a fiscal year) beginning with the first month of
the Company’s first fiscal quarter commencing after the effective date of the
Shelf Registration Statement, which statement shall cover such 12-month period.

 

(k)           If requested in
writing in connection with a disposition of Registrable Shares pursuant to a
Shelf Registration Statement, make reasonably available for inspection during
normal business hours by a representative for the Notice Holders of a majority
of the number of such Registrable Shares, any broker-dealers, attorneys and
accountants retained by such Notice Holders, and any attorneys or other agents
retained by a broker-dealer engaged by such Notice Holders, all relevant
financial and other records and pertinent corporate documents and properties of
the Company and its subsidiaries, and cause the appropriate officers, directors
and employees of the Company and its subsidiaries to make reasonably available
for inspection during normal business hours on reasonable notice all relevant
information reasonably requested by such representative for the Notice Holders,
or any such broker-dealers, attorneys or accountants in connection with such
disposition, in each case as is customary for similar “due diligence”
examinations; provided, that such persons shall
first agree in writing with the Company that any information that is reasonably
and in good faith designated by the Company in writing as confidential at the
time of delivery of such information shall be kept confidential by such persons
and shall be used solely for the purposes of exercising rights under this
Agreement, unless (i) disclosure of such information is required by court or
administrative order or is necessary to respond to inquiries of regulatory
authorities, (ii) disclosure of such information is required by law (including
any disclosure requirements pursuant to federal securities laws in connection
with the filing of the Shelf Registration Statement or the use of any
prospectus or Free Writing Prospectus referred to in this Agreement) or (iii)
such information becomes generally available to the public other than as a
result of a disclosure or failure to safeguard by any such person, and provided
further that the foregoing inspection and information gathering shall, to the
greatest extent possible, be coordinated on behalf of all the Notice Holders
and the other parties entitled thereto by one legal counsel (“Holders
Counsel”) designated by the Notice Holders of a majority of the number of
Registrable Shares with respect to such Shelf Registration Statement.

 

(l)            The Company shall
(i) permit such Holders Counsel to review and comment upon (A) a Shelf
Registration Statement at least five (5) Business Days prior to its filing with
the Commission and (B) all Free Writing Prospectuses and all amendments and
supplements to all Shelf Registration Statements within a reasonable number of
days prior to their filing with the Commission, and (ii) not file any Shelf
Registration

 

8

 

Statement or
amendment thereof or supplement thereto or any Free Writing Prospectus in a
form to which such Holders Counsel reasonably objects. The Company shall
furnish to such Holders Counsel, without charge, unless otherwise publicly
available on the Commission’s EDGAR system, (x) copies of any correspondence
from the Commission or the staff of the Commission to the Company or its representatives
relating to any Shelf Registration Statement or any document incorporated by
reference therein, (y) promptly after the same is prepared and filed with the
Commission, one copy of any Shelf Registration Statement and any amendment(s)
thereto, including financial statements and schedules, all documents
incorporated therein by reference, if requested by a Notice Holder, and all
exhibits and (z) promptly upon the effectiveness of any Shelf Registration
Statement, one copy of the prospectus included in such Shelf Registration
Statement and all amendments and supplements thereto. The Company shall
reasonably cooperate with such Holders Counsel in performing the Company’s
obligations pursuant to this Section 3.

 

(m)          The
Company shall make such representations and warranties to the Holders of
Registrable Shares included in a Shelf Registration Statement and to any
underwriters in connection with such disposition in form, substance and scope
as are customarily made by issuers to underwriters in primary underwritten
offerings. The Company will enter into and perform customary agreements
(including underwriting and indemnification and contribution agreements in
customary form with the managing underwriter or underwriters, as applicable)
and take such other commercially reasonable actions as are required in order to
expedite or facilitate each disposition of Registrable Shares and shall provide
all reasonable cooperation, including causing appropriate officers to attend
and participate in “road shows” and other information meetings organized by the
managing underwriter or underwriters, if applicable.

 

(n)           If reasonably
requested by a Holder, the Company shall as soon as practicable (i) incorporate
in a prospectus supplement or post-effective amendment such information as such
Holder reasonably requests to be included therein relating to the sale and
distribution of Registrable Shares, including, without limitation, information
with respect to the number of Registrable Shares being offered or sold, the
purchase price being paid therefor and any other terms of the offering of the
Registrable Shares to be sold in such offering; (ii) make all required filings
of such prospectus supplement or post-effective amendment after being notified
of the matters to be incorporated in such prospectus supplement or
post-effective amendment; and (iii) supplement or make amendments to any Shelf
Registration Statement if reasonably requested by a Holder holding any
Registrable Shares.

 

(o)           The Company shall
obtain opinions of counsel to the Company and updates thereof (which counsel
and opinions (in form, scope and substance) shall be reasonably satisfactory to
the managing underwriters, if any) addressed to each selling Holder of
Registrable Shares included in a Shelf Registration Statement and the
underwriters, if any, covering such matters as are customarily covered in
opinions requested in underwritten offerings and such other matters as may be
reasonably requested by such Holders and underwriters.

 

9

 

(p)           The Company shall
obtain “comfort” letters and updates thereof from the independent certified
public accountants of the Company (and, if necessary, any other independent
certified public accountants of any subsidiary of the Company or of any
business acquired by the Company for which financial statements and financial
data are, or are required to be, included in, or incorporated by reference
into, the Shelf Registration Statement), addressed to each selling Holder of
Registrable Shares included in a Shelf Registration Statement and the
underwriters, if any, in customary form and covering matters of the type
customarily covered in “comfort” letters in connection with underwritten
offerings.

 

(q)           If any Holder is
deemed to be, alleged to be or reasonably believes it may be deemed or alleged
to be, an underwriter or is required under applicable securities laws to be
described in the Shelf Registration Statement as an underwriter, at the
reasonable request of such Holder, the Company shall use its best efforts to
cause to be furnished to such Holder, on the date of the effectiveness of the
Shelf Registration Statement and thereafter from time to time on such dates as
such Holder may reasonably request (i) a letter, dated such date, from the
Company’s independent certified public accountants (and, if necessary, any
other independent certified public accountants of any subsidiary of the Company
or of any business acquired by the Company for which financial statements and
financial data are, or are required to be, included in, or incorporated by
reference into, the Shelf Registration Statement) in form and substance as is
customarily given by independent certified public accountants to underwriters
in an underwritten public offering, addressed to the Holders, and (ii) a legal
opinion, dated as of such date, in form, scope and substance as is customarily
given in an underwritten public offering, addressed to the Holders.

 

Notwithstanding
the foregoing, the actions set forth in Sections 3(m), (o) and (p) shall only
be performed in connection with an underwritten offering and only if requested
by the underwriters thereof.

 

4.             Holder’s Obligations. Each Holder agrees, by acquisition of
the Registrable Shares, that no Holder shall be entitled to sell any of such
Registrable Shares pursuant to a Shelf Registration Statement or to receive a
prospectus relating thereto, or to receive Liquidated Damages, if any, of the
type described in Section 6(b) in respect of the Registrable Shares unless such
Holder has furnished the Company with a Notice and Questionnaire as required
pursuant to Section 3(a) hereof (including the information required to be
included in such Notice and Questionnaire and under Item 507 of Regulation S-K
under the Securities Act). Each Notice Holder agrees promptly to furnish to the
Company all information required to be disclosed under Item 507 of Regulation
S-K under the Securities Act and any other material information regarding such
Notice Holder and the distribution of such Registrable Shares as the Company
may from time to time reasonably request. Any sale of any Registrable Shares by
any Holder shall constitute a representation and warranty by such Holder that
the information relating to such Holder and its plan of distribution is as set
forth in the prospectus delivered by such Holder in connection with such
disposition, that such prospectus does not as of the time of such sale contain
any untrue statement of a material fact provided in writing by such Holder and
that such prospectus does not as of the time of such sale omit to state any
material fact relating to or

 

10

 

provided in writing by such Holder necessary to make the statements in
such prospectus, in the light of the circumstances under which they were made,
not misleading.

 

5.             Registration Expenses.

 

(a)           All fees and
expenses incident to the Company’s performance of and compliance with this
Agreement will be borne by the Company, regardless of whether the applicable
Shelf Registration Statement or Requested Underwritten Offering is ever filed
or becomes effective, including without limitation:

 

(i)            all registration
and filing fees and expenses;

 

(ii)           all fees and
expenses of compliance with federal securities and state “blue sky” or
securities laws;

 

(iii)          all expenses of
printing (including without limitation printing certificates and prospectuses),
messenger and delivery services and telephone;

 

(iv)          all fees and
disbursements of counsel for the Company;

 

(v)           all application and
filing fees in connection with listing on a national securities exchange or
automated quotation system pursuant to the requirements hereof; and

 

(vi)          all fees and
disbursements of independent certified public accountants of the Company
(including without limitation the expenses of any special audit and comfort
letters required by or incident to such performance).

 

The Company
will bear its internal expenses (including, without limitation, all salaries
and expenses of its officers and employees performing legal or accounting
duties), the expenses of any annual audit and the fees and expenses of any
person, including special experts, retained by the Company.

 

(b)           In connection with a
Shelf Registration Statement, the Company will reimburse the Holders of Registrable
Shares who are selling or reselling Registrable Shares pursuant to the “Plan of
Distribution” contained in such Shelf Registration Statement for the reasonable
fees and disbursements of not more than one counsel, which shall be chosen by
the Holders of a majority in number of shares of the Registrable Shares for
whose benefit such Shelf Registration Statement is being prepared.

 

6.             Registration Defaults.

 

(a)           Each event described
in any of the following clauses (i) through (vi) is individually referred to
herein as a “Registration Default”:

 

(i)            the Common Shelf
Registration Statement has not been filed on or prior to September 26, 2007, as
such date may be extended pursuant to Section 3(h)(iii);

 

11

 

(ii)           the Common Shelf
Registration Statement has not been declared effective under the Securities Act
on or prior to March 24, 2008, as such date may be extended pursuant to Section
3(h)(iii);

 

(iii)          if so required to
be filed pursuant to Section 2(a), the Convertible Preferred Shelf Registration
Statement has not been filed on or prior to June 28, 2011, as such date may be
extended pursuant to Section 3(h)(iii);

 

(iv)          if so required to be
declared effective pursuant to Section 2(a), the Convertible Preferred Shelf
Registration Statement has not been declared effective under the Securities Act
on or prior to September 26, 2011, as such date may be extended pursuant to
Section 3(h)(iii);

 

(v)           a Shelf Registration
Statement shall cease to be effective; or

 

(vi)          (A) the aggregate
duration of any Deferral Period arising from an event described in Section 3(h)(iii)
exceeds 60 days, (B) the aggregate duration of all Deferral Periods arising
from events described in Section 3(h)(iii) exceeds 90 days in any 12-month
period or (C) a Deferral Period arising from an event described in Section
3(h)(iii) is invoked more than twice in any 12-month period.

 

(b)           Commencing on (and
including) any date that a Registration Default has begun and ending on (but
excluding) the next date on which there are no Registration Defaults that have
occurred and are continuing (a “Damages Accrual Period”), the Company
shall pay, as liquidated damages and not as a penalty, to Holders of record of
Registrable Shares included (or proposed to be included, if not filed or
effective) in the Shelf Registration Statement an amount (the “Liquidated
Damages”) accruing, for each day in the Damages Accrual Period, (i) with
respect to a Registration Default applicable to the Common Stock Shelf
Registration Statement (A) in respect of any share of 7.0% Preferred Stock and,
after the NYSE Approval Date, Hybrid Preferred Stock, at a rate equal to 0.50%
per annum of the Liquidation Preference then in effect for the first 90-day
period from (and including) the date of such Registration Default, and
thereafter for each subsequent 90-day period at an additional rate of 0.25% of
the Liquidation Preference then in effect for each subsequent 90-day period
(the “Liquidated Damages Rate”) or (B) if the 7.0% Preferred Stock or,
after the NYSE Approval Date, Hybrid Preferred Stock has been converted into
shares of Common Stock, in respect of each share of Common Stock issued in the
conversion, at a rate equal to the applicable above-referenced calculated rate
or rates for the applicable above referenced period or periods divided by a
number equal to the number of shares of Common Stock into which each share of 7.0%
Preferred Stock or, after the NYSE Approval Date, Hybrid Preferred Stock was
converted pursuant to the conversion and (ii) with respect to a Registration
Default applicable to the Convertible Shelf Registration Statement, in respect
of any shares of 7.0% Preferred Stock at the Liquidated Damages Rate. Liquidated
Damages shall accrue from and including the date of the applicable Registration
Default with respect to a Shelf Registration Statement to (but excluding) the
date on which all Registration Defaults with respect to such Shelf Registration
Statement have been cured; provided, that
Liquidated Damages shall not exceed a maximum rate of 2.00% per annum of the
Liquidation

 

12

 

Preference
then in effect (the “Maximum Rate”). Notwithstanding the foregoing, no
Liquidated Damages shall cumulate as to any Registrable Share from and after
the earlier of (x) the date such security is no longer a Registrable Share and
(y) expiration of the Effectiveness Period.

 

(c)           The Liquidated
Damages shall cumulate from the first day of the applicable Damages Accrual
Period, and shall be payable in cash on each Damages Payment Date during the
Damages Accrual Period to the Holder of record of the Registrable Shares on the
Record Date immediately preceding the applicable Damages Payment Date (and on
the Damages Payment Date next succeeding the end of the Damages Accrual Period
if the Damages Accrual Period does not end on a Damages Payment Date) to the
Holders of record of the Registrable Shares as of the date that such Damages
Accrual Period ends.

 

(d)           Subject to Section
6(e), the parties agree that the sole monetary damages payable for any
Registration Default shall be the Liquidated Damages. The parties further agree
that the Liquidated Damages provided for in this Section 6 constitute a
reasonable estimate of the monetary damages that may be incurred by Holders of
Registrable Shares by reason of any Registration Default.

 

(e)           Notwithstanding
anything contained in this Agreement to the contrary, the Company acknowledges
and affirms that in the event of its breach of this Agreement, the Liquidated
Damages may be inadequate and the Holders may have no adequate remedy at law. Accordingly,
the Company agrees that the Holders shall have the right, in addition to any
other rights and remedies existing in its favor, to enforce their rights and
the obligations hereunder of the Company not only by an action or actions for
Liquidated Damages, but also by an action or actions for specific performance,
injunctive and/or other equitable relief.

 

7.             Indemnification.

 

(a)           The Company agrees
to indemnify and hold harmless each Holder of the Registrable Shares included
within the coverage of the applicable Shelf Registration Statement, the
directors, officers, employees, Affiliates and agents of each such Holder and
each person who controls any such Holder within the meaning of the Securities
Act or the Exchange Act (collectively, the “Holder Indemnified Parties”)
from and against any losses, claims, damages or liabilities, joint or several,
or any actions in respect thereof (including, but not limited to, any losses,
claims, damages, liabilities or actions relating to purchases and sales of the
Securities) to which each Holder Indemnified Party may become subject under the
Securities Act, the Exchange Act or otherwise and shall reimburse, as incurred,
the Holder Indemnified Parties for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action in respect thereof; provided,
however, that the Company shall not be
liable in any such case to the extent that such loss, claim, damage or
liability arises out of or is based upon any untrue statement or omission made
in the Shelf Registration Statement, the Disclosure Package, any prospectus or
in any amendment thereof or supplement thereto in reliance upon and in
conformity with written information

 

13

 

pertaining to
such Holder and furnished to the Company by or on behalf of such Holder
Indemnified Party specifically for inclusion therein; provided
further, however, that
this indemnity agreement will be in addition to any liability that the Company
may otherwise have to such Holder Indemnified Party. The Company shall also
indemnify underwriters (including, without limitation, any Holder Indemnified
Party deemed or alleged to be an underwriter or required under applicable
securities laws to be described in the applicable Shelf Registration Statement
as an underwriter), their officers and directors and each person who controls
such underwriters within the meaning of the Securities Act or the Exchange Act
to the same extent as provided above with respect to the indemnification of the
Holders of the Registrable Shares if requested by such Holders. Such indemnity
shall remain in full force and effect regardless of any investigation made by
or on behalf of any Holder Indemnified Parties and shall survive the transfer
of the Registrable Shares by any Holder.

 

(b)           Each Holder of the
Registrable Shares covered by a Shelf Registration Statement severally and not
jointly agrees to indemnify and hold harmless the Company, each of its
directors, each of its officers who signs the Shelf Registration Statement and each
person, if any, who controls the Company within the meaning of the Securities
Act or the Exchange Act (a “Company Indemnified Party”) from and against
any losses, claims, damages or liabilities or any actions in respect thereof,
to which a Company Indemnified Party may become subject under the Securities
Act, the Exchange Act or otherwise, insofar as such losses, claims, damages,
liabilities or actions arise out of or are based upon (i) any untrue statement
or alleged untrue statement of a material fact contained in a Shelf
Registration Statement or in any amendment thereof, in each case at the time
such became effective under the Securities Act, or in any Disclosure Package, prospectus
or in any amendment thereof or supplement thereto, or (ii) the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein (in the case of the Disclosure
Package or any prospectus, in the light of the circumstances under which they
were made) not misleading, but in each case only to the extent that the untrue
statement or omission or alleged untrue statement or omission was made in
reliance upon and in conformity with written information pertaining to such
Holder and furnished to the Company by or on behalf of such Holder specifically
for inclusion therein; and, subject to the limitation set forth immediately
preceding this clause, shall reimburse, as incurred, the Company Indemnified
Parties for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any loss, claim, damage, liability
or action in respect thereof. This indemnity agreement will be in addition to
any liability that such Holder may otherwise have to the Company Indemnified
Parties. Notwithstanding any other provision of this Section 7(b), no Holder
shall be required to indemnify or hold harmless any Company Indemnified Party
in an amount in excess of the amount by which the net proceeds received by such
Holder from the sale of the Registrable Shares pursuant to the Shelf
Registration Statement exceeds the amount of damages that such Holder has
otherwise been required to pay by reason of such untrue statement or omission.

 

(c)           Promptly after
receipt by a Holder Indemnified Party or a Company Indemnified Party (each, an “Indemnified
Party”) of notice of the commencement of any action or proceeding
(including a governmental investigation), such Indemnified Party

 

14

 

will, if a
claim in respect thereof is to be made against the indemnifying party under
this Section 7, notify the indemnifying party of the commencement thereof; but
the omission so to notify the indemnifying party (i) will not relieve the
indemnifying party from liability under paragraph (a) or (b) above unless and
to the extent it did not otherwise learn of such action and the indemnifying
party has been materially prejudiced by such failure and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any Indemnified
Party other than the indemnification obligation provided in paragraph (a) or (b)
above. In case any such action is brought against any Indemnified Party, and it
notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel reasonably satisfactory to such Indemnified
Party (who shall not, except with the consent of the Indemnified Party, be
counsel to the indemnifying party), and after notice from the indemnifying
party to such Indemnified Party of its election so to assume the defense
thereof the indemnifying party will not be liable to such Indemnified Party
under this Section 7 for any legal or other expenses, other than reasonable costs
of investigation, subsequently incurred by such Indemnified Party in connection
with the defense thereof; provided, however, if such Indemnified Party shall have been advised
by counsel that there are one or more defenses available to it that are in conflict
with those available to the indemnifying party (in which case the indemnifying
party shall not have the right to direct the defense of such action on behalf
of the Indemnified Party), the reasonable fees and expenses of such Indemnified
Party’s counsel shall be borne by the indemnifying party. In no event shall the
indemnifying party be liable for the fees and expenses of more than one counsel
(together with appropriate local counsel) at any time for any Indemnified Party
in connection with any one action or separate but substantially similar or
related actions arising in the same jurisdiction out of the same general
allegations or circumstances. No indemnifying party shall, without the prior
written consent of the Indemnified Party (not to be unreasonably withheld or
delayed), effect any settlement of any pending or threatened action in respect
of which any Indemnified Party is or could have been a party and indemnity
could have been sought hereunder by such Indemnified Party unless such
settlement (i) includes an unconditional release of such Indemnified Party from
all liability on any claims that are the subject matter of such action and (ii)
does not include a statement as to or an admission of fault, culpability or a
failure to act by or on behalf of any Indemnified Party.

 

(d)           If the
indemnification provided for in this Section 7 is unavailable or insufficient
to hold harmless an Indemnified Party under subsections (a) or (b) above, then
each indemnifying party shall contribute to the amount paid or payable by such
Indemnified Party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to in subsection (a) or (b) above in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party or parties on the one hand and the Indemnified Party on the other in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities (or actions in respect thereof) as well as any
other relevant equitable considerations. The relative fault of the parties
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company on the
one hand or the

 

15

 

Holder or
Holder Indemnified Party, as the case may be, on the other, and the parties’
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The amount paid by an Indemnified Party as
a result of the losses, claims, damages or liabilities referred to in the first
sentence of this subsection (d) shall be deemed to include any legal or
other expenses reasonably incurred by such Indemnified Party in connection with
investigating or defending any action or claim that is the subject of this
subsection (d). The parties agree that it would not be just and equitable if
contribution were determined by pro rata allocation (even if the Holders were
treated as one entity for such purpose) or any other method of allocation that
does not take account of the equitable considerations referred to above. Notwithstanding
any other provision of this Section 7(d), no Holder shall be required to
contribute any amount in excess of the amount by which the net proceeds
received by such Holder from the sale of the Registrable Shares pursuant to the
Shelf Registration Statement exceeds the amount of damages that such Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.

 

(e)           The agreements
contained in this Section 7 shall survive the sale of the Registrable Shares
pursuant to the Shelf Registration Statement and shall remain in full force and
effect, regardless of any termination or cancellation of this Agreement or any
investigation made by or on behalf of any Indemnified Party.

 

8.             Information Requirements. The Company covenants that, if at
any time before the end of the applicable Effectiveness Period, the Company is
not subject to the reporting requirements of the Exchange Act, it will take
such further action as any Holder of Registrable Shares may reasonably request,
all to the extent required from time to time to enable such Holder to sell Registrable
Shares without registration under the Securities Act within the limitation of
the exemptions provided by Rules 144 and 144A (including the requirements of
Rule 144A(d)(4)) under the Securities Act. Upon the request of any Holder of
Registrable Shares, the Company shall deliver to such Holder a written
statement as to whether it has complied with such requirements.

 

9.             Underwritten Registrations.

 

(a)           Request for
Underwritten Offering. Upon written request, a Holder or Holders
(the “Initiating Holders”) may sell all or a portion of its Registrable
Shares in an underwritten offering, subject to the terms of this Section 9. From
time to time, upon written request by the Initiating Holders, which request
shall specify the amount of the Initiating Holders’ Registrable Shares to be
sold (the “Requested Registrable Shares”), the Company shall use its best
efforts to cause the sale of such Requested Registrable Shares to be in the
form of a firm commitment underwritten public offering if the anticipated aggregate
offering price (calculated based upon the market price of the Registrable
Shares on the date of such written request) to the public equals or exceeds $150,000,000
(a “Requested Underwritten Offering”) (including causing to be produced
and filed any necessary prospectuses or prospectus supplements with respect to
such

 

16

 

offering). The
managing underwriter or underwriters for a Requested Underwritten Offering
shall be an investment banking firm or firms of national reputation selected by
the Holders holding a majority of the Registrable Shares (the “Approved
Underwriters”); provided,
however, that the Approved Underwriters shall, in any case, also be reasonably
acceptable to the Company.

 

(b)           Participation
in Requested Underwritten Offering. The Company shall (i) as
promptly as practicable but in no event later than five (5) Business Days after
the receipt of a request for a Requested Underwritten Offering from any
Initiating Holders, give written notice thereof to all of the Holders (other
than such Initiating Holders), which notice shall specify the number of
Requested Registrable Shares, the names and notice information of the
Initiating Holders and the intended disposition of such Registrable Shares
through an underwritten public offering and (ii) subject to Section 9(c),
include in the Requested Underwritten Offering all of the Registrable Shares
requested by such Holders for inclusion in such Requested Underwritten Offering
from whom the Company has received a written request for inclusion therein
within 20 days after the receipt by such Holders of such written notice
referred to in clause (i) above. Each such request by such Holders shall
specify the number of Registrable Shares proposed to be included in the
Requested Underwritten Offering and such Holder shall send a copy of such written
request to the Company and the Initiating Holders. The failure of any Holder to
respond within such 20 day period referred to in clause (ii) above shall be
deemed to be a waiver of such Holder’s rights under this Section 9 with respect
to such Requested Underwritten Offering. Any Holder may waive its rights under
this Section 9 prior to the expiration of such 20-day period by giving written
notice to the Company, with a copy to the Initiating Holders. Notwithstanding
anything to the contrary herein, no equity securities of the Company held by
the Company or any person other than a Holder may be included in such Requested
Underwritten Offering without the prior written consent of the Holders holding
a majority of the Registrable Shares.

 

(c)           Limitation
on Requested Underwritten Offering. In connection with any Requested
Underwritten Offering, none of the Registrable Shares held by any Holder
(including the Initiating Holders) shall be included in such Requested
Underwritten Offering unless such Holder (i) agrees to sell such Holder’s
Registrable Shares on the basis reasonably provided in any underwriting
arrangements approved by the Holders holding a majority of the Registrable
Shares to be included in such Requested Underwritten Offering and (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements, and then only in such aggregate amount as,
in the opinion of the Approved Underwriters, can be sold in such offering
within a price range acceptable to the Holders holding a majority of the
Registrable Shares to be included in such Requested Underwritten Offering. If
the Approved Underwriters advise the Company in writing that the aggregate
amount of such Registrable Shares requested to be included in such offering
exceeds the amount which can be sold in such offering within such acceptable price
range, then the Approved Underwriters shall include in such Requested
Underwritten Offering only the aggregate amount of Registrable Shares that the
Approved Underwriters believe may be sold within such acceptable price range
consisting of, first, the Registrable Shares of the Holders

 

17

 

(including the
Initiating Holders) participating in such Requested Underwritten Offering, as a
group; second, any equity securities offered by the Company for its own account;
and third, any other equity securities requested to be in such Requested
Underwritten Offering, as a group, pro rata within
each group based on the amount of Registrable Shares or equity securities, as
applicable, owned by each such party.

 

(d)           Holder
Lock-up Agreements. Each Holder (including the Initiating Holders)
agrees (i) not to effect any sale or transfer of any Registrable Shares or any
securities convertible into or exchangeable or exercisable for such Registrable
Shares and (ii) not to make any request for the registration of the sale or
transfer of any Registrable Shares or any securities convertible into or
exchangeable or exercisable for such Registrable Shares, in each case, during
the period beginning on the date such holder is provided written notice of the
Requested Underwritten Offering and ending on the date that is 90 days after
the date of the final prospectus relating to the Requested Underwritten
Offering, except as part of such Requested Underwritten Offering. Upon request
by the Approved Underwriters, each Holder shall enter into customary lock-up
agreements (“Lock-up Agreements”) on terms consistent with the preceding
sentence. No Holder subject to this Section 9(d) shall be released from any
obligation under any agreement, arrangement or understanding entered into
pursuant to this Section 9(d) unless all other Holders subject to the same
obligation are also released.

 

(e)           Company
Lock-up Agreement. With respect to any Requested Underwritten
Offering, the Company shall not effect any sale or transfer of any Registrable
Shares or any securities convertible into or exchangeable or exercisable for
such Registrable Shares during the period beginning on the date it is provided
written notice of the Requested Underwritten Offering and ending on the date
that is 90 days after the date of the final prospectus relating to the
Requested Underwritten Offering, except as part of such Requested Underwritten
Offering or pursuant to a registration on Form S-4 or Form S-8 or any successor
forms thereto; provided, that in no event shall
the Company be prohibited from effecting any sale or transfer of Registrable
Shares or any securities convertible into or exchangeable or exercisable for
Registrable Shares pursuant to this Section 9(e) more than once in any 12-month
period.

 

(f)            Additional Lock-up Agreements. With respect to each
Requested Underwritten Offering, the Company shall use its best efforts to
cause all of its directors and officers who are not otherwise Holders to
execute lock-up agreements that contain restrictions that are no less
restrictive than the restrictions contained in the Lock-up Agreements.

 

10.           Miscellaneous.

 

(a)           Recapitalizations,
Exchanges, Etc. The provisions of this Agreement shall apply to the
full extent set forth herein with respect to (i) the shares of Common
Stock, (ii) any and all shares of voting Common Stock of the Company into
which the shares of Common Stock are converted, exchanged or substituted in any
recapitalization or other capital reorganization by the Company and
(iii) any and all equity securities of the Company or any successor or
assign of the Company (whether by merger, consolidation,

 

18

 

sale of assets
or otherwise) which may be issued in respect of, in conversion of, in exchange
for or in substitution of, the shares of Common Stock and shall be
appropriately adjusted for any stock dividends, splits, reverse splits,
combinations, recapitalizations and the like occurring after the date hereof. The
Company shall cause any successor or assign (whether by merger, consolidation,
sale of assets or otherwise) to assume this Agreement or enter into a new
registration rights agreement with the Holders on terms substantially the same
as this Agreement as a condition of any such transaction.

 

(b)           No
Inconsistent Agreements. The Company will not on or after the date
of this Agreement enter into any agreement with respect to its securities that
is inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. The rights granted to the
Holders hereunder do not in any way conflict with and are not inconsistent with
the rights granted to the holders of the Company’s securities under any
agreement in effect on the date hereof.

 

(c)           Interpretation.
Article, Section and Annex references are to this Agreement, unless otherwise
specified. All references to instruments, documents, contracts, and agreements
are references to such instruments, documents, contracts and agreements as the
same may be amended, supplemented and otherwise modified from time to time,
unless otherwise specified. The word “including” shall mean “including, without
limitation.”

 

(d)           Amendments
and Waivers. The provisions of this Agreement may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, except by the written consent of the Company
and the Holders of a majority in number of then outstanding Registrable Common Shares
(with Holders of 7.0% Preferred Stock and, after the NYSE Approval Date, Hybrid
Preferred Stock deemed to be the Holders, for purposes of this Section, of the
number of outstanding Registrable Common Shares into which such 7.0% Preferred
Stock or, after the NYSE Approval Date, Hybrid Preferred Stock is or would be
convertible as of the date on which such consent is requested); provided,
however, that, notwithstanding the foregoing, any amendment or modification of
or supplement to this Agreement which would materially and adversely affect any
Purchaser in a manner that is disproportionate to the other Purchasers will be
binding upon and enforceable against such Purchaser only with its prior written
consent. Notwithstanding the foregoing, a waiver or consent to depart from the
provisions hereof with respect to a matter that relates exclusively to the
rights of Holders whose securities are being sold pursuant to a Shelf
Registration Statement and that does not directly or indirectly affect the
rights of other Holders may be given by Holders of at least a majority of the
Registrable Shares being sold by such Holders pursuant to such Shelf
Registration Statement; provided, that
the provisions of this sentence may not be amended, modified, or supplemented
except in accordance with the provisions of the immediately preceding sentence.
Each Holder of Registrable Shares outstanding at the time of any such
amendment, modification, supplement, waiver or consent or thereafter shall be
bound by any such amendment, modification, supplement, waiver or consent
effected pursuant to this Section 10(d), whether or not any notice, writing or
marking indicating such amendment, modification, supplement, waiver or consent
appears on the Registrable Shares. Any amendment, supplement or modification

 

19

 

of or to any
provision of this Agreement, any waiver of any provision of this Agreement, and
any consent to any departure from the terms of any provision of this Agreement
shall be effective only in the specific instance and for the specific purpose
for which made or given. No failure or delay on the part of any party in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
right, power or remedy. The remedies provided for herein are cumulative and are
not exclusive of any remedies that may be available to a party at law or in
equity or otherwise. A copy of each amendment, modification or supplement to
this Agreement shall be delivered by the Company to each Holder.

 

(e)           Notices.
All notices and other communications provided for or permitted hereunder shall
be made in writing and shall be given by registered or certified mail, return
receipt requested, telecopy, air courier guaranteeing overnight delivery or
personal delivery to the following addresses:

 

(i)            if
to the Company, at its address as follows:

 

EXCO
Resources, Inc.

12377 Merit Drive, Suite 1700

Dallas, Texas 75251

Attention:  General Counsel

Telephone: (214) 368-2084

Facsimile:  (214) 706-3409

 

with a copy
to:

 

Vinson &
Elkins L.L.P.

2001 Ross Avenue, Suite 3700

Dallas, Texas 75201

Attention:  Jeffrey A. Chapman

Telephone: (214) 220-7797

Facsimile:  (214) 999-7797

 

(ii)           if to a Holder, at
the most current address shown for such Holder in the records of the Transfer
Agent.

 

or to such
other address as the Company or such Holder may designate in writing. All
notices and communications shall be deemed to have been duly given: at the time
delivered by hand, if personally delivered; upon actual receipt if sent by
certified mail, return receipt requested, or regular mail, if mailed; when
receipt acknowledged, if sent via facsimile; and upon actual receipt when
delivered to an air courier guaranteeing overnight delivery.

 

(f)            Successors and Assigns. This Agreement shall be binding upon
the Company, each Holder and their respective successors and permitted assigns.
Except as expressly provided in this Agreement, this Agreement shall not be
construed so as to

 

20

 

confer any
right or benefit upon any person or entity other than the parties and their
respective successors and permitted assigns. The Company shall not assign this
Agreement or any rights or obligations hereunder without the prior written
consent of each Holder. Any Holder may assign its rights under this Agreement
to any Person to whom such Holder transfers Registrable Shares in compliance
with the terms of the Purchase Agreement; provided, that
no transferee shall be entitled to have the Registrable Shares held by it included
in a Shelf Registration Statement unless such transferee agrees in writing to
be bound by this Agreement as if a party hereto and submits a Notice and Questionnaire.

 

(g)           Counterparts.
This Agreement may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which counterpart, when so executed and
delivered, shall be deemed to be an original and all of which counterparts, taken
together, shall constitute one and the same agreement.

 

(h)           Headings.
The headings in this Agreement are for convenience of reference only and shall
not limit or otherwise affect the meaning hereof.

 

(i)            Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York  without regard to principles of conflicts of laws.

 

(j)            Submission to Jurisdiction. The parties to this Agreement
(i) irrevocably submit to the exclusive jurisdiction of any state or federal
courts located in New York County, New York in connection with any disputes
arising out of or relating to this Agreement and (ii) waive any claim of
improper venue or any claim that those courts are an inconvenient forum. The
parties to this Agreement agree that mailing of process or other papers in
connection with any such action or proceeding in the manner provided in Section
10(e) or in such other manner as may be permitted by applicable laws, shall be
valid and sufficient service thereof.

 

(k)           Severability.
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by virtue of any applicable law, or due to any
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner so that the transaction contemplated hereby are fulfilled to the extent
possible.

 

(l)            Entire Agreement. This Agreement is intended by the parties
as a final expression of their agreement and is intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein, superseding all prior
agreements and understandings among the parties with respect to such subject
matter.

 

21

 

(m)          Further
Assurances.   Each of the parties shall execute such
documents and perform such further acts as may be reasonably required or
desirable to carry out or to perform the provisions of this Agreement.

 

(n)           Termination.
This Agreement and the obligations of the parties hereunder shall terminate
upon the end of the applicable Effectiveness Period, except for any liabilities
or obligations under Section 4, 5 or 7 hereof and the obligations to make
payments of and provide for Liquidated Damages under Section 6 hereof to the
extent such damages cumulate prior to the end of the applicable Effectiveness
Period, each of which shall remain in effect in accordance with its terms.

 

(o)           Securities
Held by the Company. Whenever the consent or approval of Holders of
a specified number of Registrable Shares is required hereunder, shares of
Common Stock or 7.0% Preferred Stock or, after the NYSE Approval Date, Hybrid
Preferred Stock held by the Company or its subsidiaries shall not be counted in
determining whether such consent or approval was given by the Holders of such
required percentage.

 

(p)           Independent
Nature of Obligations. The obligations of each Purchaser under this
Agreement are several and not joint with the obligations of any other Purchaser,
and no Purchaser shall be responsible in any way for the performance of the
obligations of any other Purchaser under this Agreement. The failure or waiver
of performance under this Agreement by any Purchaser shall not excuse
performance by any other Purchaser. Each Purchaser shall be entitled to
independently protect and enforce its rights, including without limitation, the
rights arising out of this Agreement, and it shall not be necessary for any
other Purchaser to be joined as an additional party in any proceeding for such
purpose.

 

(q)           Definitions.
The following terms shall have the following meanings:

 

“7.0%
Preferred Stock” means the Series A-1 Preferred Stock, Series A-2 Preferred
Stock, Series B Preferred Stock and Series C Preferred Stock.

 

 “Affiliate” means, with respect to any
specified person, an “affiliate,” as defined in Rule 144(a)(1) of the
Securities Act, of such person.

 

“Business
Day” means any day other than a Saturday, Sunday or other day on which
banking institutions are not required to be open in the State of New York.

 

“Capital
Stock” of any Person means any and all shares, interests (including
partnership interests), rights to purchase, warrants, options, participations
or other equivalents of or interests in (however designated) equity of such
Person, including any Preference Stock, but excluding any debt securities
convertible into such equity.

 

“Damages
Payment Date” means each February 15, May 15, August 15 and November 15.

 

22

 

“Disclosure
Package” means, with respect to any offering of securities, (i) the
preliminary prospectus, (ii) each Free Writing Prospectus and
(iii) all other information, in each case, that is deemed, under
Rule 159 promulgated under the Securities Act, to have been conveyed to
purchasers of securities at the time of sale of such securities (including,
without limitation, a contract of sale).

 

“Effectiveness
Period” means, as the case may be, either the Common Shelf Registration
Period or the Convertible Shelf Registration Period.

 

“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder.

 

“Free
Writing Prospectus” means any “free writing prospectus” as defined in Rule
405 promulgated under the Securities Act.

 

“Holder”
means a holder of record of Registrable Shares.

 

“Hybrid
Preferred Stock” means the Series A-1 Hybrid Preferred Stock and Series A-2
Hybrid Preferred Stock.

 

 “Liquidation Preference” has the
meaning assigned to such term in the applicable Statement of Designation.

 

“Notice and
Questionnaire” means a written notice delivered to the Company containing
the information called for by the Form of Selling Securityholder Notice and
Questionnaire attached as Annex A hereto.

 

“Notice
Holder” means, on any date, any Holder that has delivered a Notice and
Questionnaire to the Company on or prior to such date.

 

“NYSE
Approval Date” means the date on which the NYSE Shareholder Approval is
obtained.

 

“NYSE
Approval Proposal” means the proposal to approve (i) the designations,
preferences, limitations and relative rights set forth on Annex III of the
Statements of Designation of the Hybrid Preferred Stock, including the
convertibility of the Hybrid Preferred Stock into Common Stock, (ii) the
issuance of all of the shares of Common Stock issuable upon the conversion of
the Hybrid Preferred Stock and (iii) the removal of the restriction on
adjustments to the conversion price of the 7.0% Preferred Stock as set forth in
Section 10 of the Statements of Designation of the 7.0% Preferred Stock, each
in accordance with the rules of the NYSE or any other U.S. national securities
exchange on which the Common Stock is then listed.

 

“NYSE
Shareholder Approval” means the requisite approval of the NYSE Approval Proposal,
as required by the NYSE or any other U.S. national securities exchange on which
the Common Stock is then listed, by the holders of the Capital Stock of the
Company entitled to vote.

 

23

 

“Person”
means any individual, corporation, general partnership, limited partnership,
limited liability partnership, joint venture, association, joint-stock company,
trust, limited liability company, unincorporated organization or government or
any agency or political subdivision thereof.

 

“Preference
Stock”, as applied to the Capital Stock of any Person, means Capital Stock
of any series, class or classes (however designated) which is preferred as to
the payment of dividends or distributions, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such Person,
over shares of Capital Stock of any other series or class of such Person.

 

“Record
Date” has the meaning assigned to such term in the applicable Statement of
Designation.

 

“Registrable
Common Shares” means each share of Common Stock issued or issuable upon
conversion of the Purchased Shares in accordance with the applicable Statement
of Designation until the earlier of (i) the date on which such share of Common
Stock issued or issuable upon conversion of the Purchased Shares has been
effectively registered under the Securities Act and disposed of in accordance
with such registration statement and (ii) the date on which such share of
Common Stock issued or issuable upon conversion of the Purchased Shares is
distributed to the public pursuant to Rule 144 under the Securities Act or is eligible
for resale pursuant to Rule 144(k) under the Securities Act.

 

“Registrable
Convertible Shares” means (a) each share of Series A-1 Preferred Stock
included in the 7.0% Preferred Shares or issuable upon conversion of the Series
A-2 Preferred Stock, Series B Preferred Stock, or Series C Preferred Stock
included in the 7.0% Preferred Shares into shares of Series A-1 Preferred Stock
in accordance with the applicable Statement of Designation and (b) following
the NYSE Approval Date, each share of Series A-1 Hybrid Preferred Stock
included in the Hybrid Preferred Shares or issuable upon conversion of the
Series A-2 Hybrid Preferred Stock included in the Hybrid Preferred Shares into
shares of Series A-1 Hybrid Preferred Stock (clauses (a) and (b) collectively,
the “Series A-1 Stock”) until the earlier of (i) the date on which such share
of Series A-1 Stock has been effectively registered under the Securities Act
and disposed of in accordance with such registration statement and (ii) the
date on which such share of Series A-1 Stock is distributed to the public
pursuant to Rule 144 under the Securities Act or is eligible for resale
pursuant to Rule 144(k) under the Securities Act.

 

“Registrable
Shares” means, as the case may be, either the Registrable Common Shares or the
Registrable Convertible Shares.

 

“Securities
Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

 

“Series A-1
Hybrid Preferred Stock” means the series of preferred stock, par value
$0.001 per share, of the Company designated as the “Series A-1 Hybrid Preferred

 

24

 

Stock” having
the rights and privileges set forth in the Series A-1 Hybrid Preferred Stock
Statement of Designation.

 

“Series A-2
Hybrid Preferred Stock” means the series of preferred stock, par value
$0.001 per share, of the Company designated as the “Series A-2 Hybrid Preferred
Stock” having the rights and privileges set forth in the Series A-2 Hybrid
Preferred Stock Statement of Designation.

 

“Series A-1
Preferred Stock” means the series of preferred stock, par value $0.001 per
share, of the Company designated as the “Series A-1 7.0% Cumulative Convertible
Perpetual Preferred Stock” having the rights and privileges set forth in the
Series A-1 7.0% Cumulative Convertible Perpetual Preferred Stock Statement of
Designation.

 

“Series A-2
Preferred Stock” means the series of preferred stock, par value $0.001 per
share, of the Company designated as the “Series A-2 7.0% Cumulative Convertible
Perpetual Preferred Stock” having the rights and privileges set forth in the
Series A-2 7.0% Cumulative Convertible Perpetual Preferred Stock Statement of
Designation.

 

“Series B
Preferred Stock” means the series of preferred stock, par value $0.001 per
share, of the Company designated as the “Series B 7.0% Cumulative Convertible
Perpetual Preferred Stock” having the rights and privileges set forth in the
Series B 7.0% Cumulative Convertible Perpetual Preferred Stock Statement of
Designation.

 

“Series C
Preferred Stock” means the series of preferred stock, par value $0.001 per
share, of the Company designated as the “Series C 7.0% Cumulative Convertible
Perpetual Preferred Stock” having the rights and privileges set forth in the
Series C 7.0% Cumulative Convertible Perpetual Preferred Stock Statement of
Designation.

 

“Shelf
Registration” means, as the case may be, either the Common Shelf Registration
or the Convertible Shelf Registration.

 

“Shelf
Registration Statement” means, as the case may be, either the Common Shelf
Registration Statement or the Convertible Shelf Registration Statement.

 

“Statement
of Designation” means, as the case may be, either the Series A-1 7.0% Cumulative
Convertible Perpetual Preferred Stock Statement of Designation, Series A-2 7.0%
Cumulative Convertible Perpetual Preferred Stock Statement of Designation,
Series B 7.0% Cumulative Convertible Perpetual Preferred Stock Statement of
Designation, Series C 7.0% Cumulative Convertible Perpetual Preferred Stock
Statement of Designation, Series A-1 Hybrid Preferred Stock Statement of
Designation or Series A-2 Hybrid Preferred Stock Statement of Designation.

 

If the
foregoing is in accordance with your understanding of our agreement, please
sign and return to the Company a counterpart hereof, whereupon this instrument,
along with all counterparts, will become a binding agreement among the
Purchasers and the Company in accordance with its terms.

 

Very truly
yours,

 

25

 

	
   

  	
  EXCO RESOURCES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

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

  
	
   

  	
  Name:

  	
  J. Douglas Ramsey, Ph.D.

  
	
   

  	
  Title:

  	
  Vice President and Chief Financial Officer

  

 

26

 

The foregoing
Registration Rights Agreement is hereby confirmed and accepted as of the date
first above written.

 

SCHEDULE OF PURCHASERS

 

OCM PRINCIPAL OPPORTUNITIES
FUND IV, L.P.

OCM EXCO HOLDINGS, LLC

ARES CORPORATE OPPORTUNITIES
FUND, L.P.

ACOF EXCO, L.P.

ACOF EXCO 892 INVESTORS, L.P.

ARES CORPORATE OPPORTUNITIES
FUND II, L.P

ARES EXCO, L.P.

ARES EXCO 892 INVESTORS, L.P.

GREENHILL CAPITAL PARTNERS II,
L.P.

GREENHILL CAPITAL PARTNERS
(CAYMAN) II, L.P.

GREENHILL CAPITAL PARTNERS
(EXECUTIVES) II, LP.

GREENHILL CAPITAL PARTNERS
(EMPLOYEES) II, LP.

FARALLON CAPITAL PARTNERS, L.P.

FARALLON CAPITAL INSTITUTIONAL
PARTNERS, L.P.

FARALLON CAPITAL INSTITUTIONAL
PARTNERS II. L.P.

FARALLON CAPITAL INSTITUTIONAL
PARTNERS III, L.P.

TINICUM PARTNERS, L.P.

FIDELITY ADVISOR SERIES II:
FIDELITY ADVISOR HIGH INCOME ADVANTAGE

PENSION INVESTMENT COMMITTEE OF
GENERAL MOTORS FOR GENERAL MOTORS EMPLOYEES DOMESTIC GROUP PENSION TRUST

FIDELITY ADVISOR SERIES I:  FIDELITY ADVISOR LEVERAGED COMPANY STOCK FUND

FIDELITY SECURITIES FUND:  FIDELITY LEVERAGED COMPANY STOCK FUND

FIDELITY FINANCIAL TRUST:  FIDELITY CONVERTIBLE SECURITIES FUND

CREDIT SUISSE SECURITIES (USA)
LLC

BEAR, STEARNS & CO. INC.

LB I GROUP INC.

THIRD POINT PARTNERS LP

THIRD POINT PARTNERS QUALIFIED
LP

THIRD POINT OFFSHORE FUND, LTD.

THIRD POINT ULTRA LTD.

OHSF FINANCING, LTD.

OHSF FINANCING II, LTD.

OAK HILL CREDIT OPPORTUNITIES
FINANCING, LTD.

OAK HILL CREDIT ALPHA FINANCE
I, L.P.

OAK HILL CREDIT ALPHA FINANCE I
(OFFSHORE), LTD.

LERNER ENTERPRISES, L.P.

AMERICAN GENERAL LIFE INSURANCE
COMPANY

AMERICAN INTERNATIONAL LIFE
ASSURANCE COMPANY OF NEW YORK

AIG LIFE INSURANCE COMPANY

THE UNITED STATES LIFE
INSURANCE COMPANY IN THE CITY OF NEW YORK

THE VARIABLE ANNUITY LIFE
INSURANCE COMPANY

AMERICAN INTERNATIONAL GROUP,
INC. RETIREMENT PLAN

SUNAMERICA INCOME FUNDS
–SUNAMERICA STRATEGIC BOND FUND

SEASON SERIES TRUST – STRATEGIC
FIXED INCOME PORTFOLIO

SUNAMERICA INCOME FUNDS
–SUNAMERICA HIGH YIELD BOND FUND

VALIC COMPANY II – STRATEGIC
BOND FUND

 

SIGNATURE PAGE

REGISTRATION RIGHTS AGREEMENT

(7.0% CONVERTIBLE PREFERRED)

 

 

VALIC COMPANY II – HIGH YIELD
BOND FUND

SUNAMERICA SERIES TRUST – HIGH
YIELD BOND PORTFOLIO

CYRUS OPPORTUNITIES MASTER FUND
II, LTD.

CYRUS SHORT CREDIT MASTER FUND,
LTD.

CRS FUND, LTD.

KINGS ROAD INVESTMENT LTD.

STRATEGIC CO-INVESTMENT
PARTNERS, L.P.

PARTNERS GROUP ACCESS 12, L.P.

STOCKWELL FUND, L.P.

AIG ANNUITY INSURANCE COMPANY

MERIT LIFE INSURANCE CO.

AIG LIFE INSURANCE COMPANY

AMERICAN INTERNATIONAL LIFE
ASSURANCE COMPANY OF NEW YORK

AMERICAN GENERAL ASSURANCE
COMPANY

AMERICAN GENERAL LIFE INSURANCE
COMPANY

BARCLAYS BANK PLC

SILVER POINT CAPITAL OFFSHORE
FUND, LTD

SILVER POINT CAPITAL  FUND, L.P.

SPCP GROUP III, LLC

APOLLO INVESTMENT CORPORATION

BLACKROCK GLOBAL SERIES HIGH
YIELD BOND FUND

BLACKROCK FUNDS – HIGH YIELD
BOND PORTFOLIO

MET INVESTORS ADVISORY L.L.C.

BLACKROCK HIGH INCOME FUND OF
BLACKROCK BOND FUND, INC.

BLACKROCK HIGH INCOME PORTFOLIO

BLACKROCK HIGH INCOME V.I. FUND

MLIIF US DOLLAR HIGH YIELD BOND
FUND

MANAGED ACCOUNT SERIES; HIGH
INCOME PORTFOLIO

MULTI-STRATEGY FIXED INCOME
ALPHA MASTER SERIES TRUST

MAGNETITE ASSET INVESTORS III,
L.L.C.

THE GALAXITE MASTER UNIT TRUST

BLACKROCK FINANCIAL MANAGEMENT,

                SOLELY IN ITS CAPACITY AS 

                INVESTMENT ADVISOR OF THE

                OBSIDIAN MASTER FUND, A SUB-TRUST

                OF THE OBSIDIAN MASTER SERIES TRUST

BLACKROCK CORPORATE HIGH YIELD
FUND, INC.

BLACKROCK CORPORATE HIGH YIELD
FUND III, INC.

BLACKROCK CORPORATE HIGH YIELD
FUND V, INC.

BLACKROCK CORPORATE HIGH YIELD
FUND VI, INC.

MERRILL LYNCH GLOBAL INVESTMENT
SERIES: INCOME STRATEGIES PORTFOLIO

BLACKROCK DEBT STRATEGIES FUND,
INC.

BLACKROCK DIVERSIFIED INCOME
STRATEGIES FUND, INC.

 

SIGNATURE PAGE

REGISTRATION RIGHTS AGREEMENT

(7.0% CONVERTIBLE PREFERRED)

 

 

ANNEX A

 

Notice &
Questionnaire

 

Completed
questionnaires should be returned as follows:

 

Copy
by facsimile to EXCO Resources, Inc., Attn:  General Counsel

Fax:  (214) 706-3409

 

With
the original copy in the enclosed self addressed envelope to follow to:

EXCO
Resources, Inc.

12377
Merit Drive, Suite 1700

Dallas,
TX 75251

Attention:  General Counsel

 

The undersigned hereby provides the following information to EXCO
Resources, Inc. (“EXCO”) and represents and warrants that such information
is accurate and complete:

 

1.                                       Your Identity
and Background - as the Beneficial Holder of Series A-1 Preferred Stock, Series A-1
Hybrid Preferred Stock or Common Stock (collectively, the “Securities”).

 

(a)                                  Your full legal name:

 

(b)                                 Your business address
(including street address) (or residence if no business address), telephone
number and facsimile number:

 

Address:

	
   

  
	
   

  

 

	
  Telephone No.:

  	
   

  
	
  Fax No.:

  	
   

  
			

 

(c)                                  Are you a
broker-dealer registered pursuant to Section 15 of the Exchange Act?

 

o Yes.

o No.

 

(d)                                 If your response to
Item 1(c) above is no, are you an “affiliate” of a broker-dealer
registered pursuant to Section 15 of the Exchange Act?

 

o Yes.

o No.

 

For the
purposes of this Item 1(d), an “affiliate” of a registered broker-dealer shall
include any company that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,

 

A-1

 

such
broker-dealer, but does not include any individuals employed by such
broker-dealer or its affiliates.

 

(e)                                  If your response to 1(d) above
is yes, please name the broker-dealer(s) with whom you are affiliated.

 

	
   

  
	
   

  

 

(f)                                    Full legal name of
person through which you hold the Securities (i.e. name of your broker or the
DTC participant, if applicable, through which your Securities are held):

 

	
  Name of broker:

  	
   

  
	
  DTC No.:

  	
   

  
	
  Contact person:

  	
   

  
	
  Telephone No.:

  	
   

  
				

 

2.                                       Your
Relationship with EXCO.

 

(a)                                  Have you or any of
your affiliates, officers, directors or principal equity holders (owners of 5%
or more of your equity securities) held any position or office or have you had
any other material relationship with EXCO (or its predecessors or affiliates)
within the past three years?

 

o Yes.

o No.

 

(b)                                 If your response to
item 2(a) above is yes, please state the nature and duration of your
relationship with EXCO:

 

	
   

  

 

3.                                       Your Interest in
the Securities.

 

(a)                                  Check any of the
following that applies to you.

 

o                                    I own Series A-1
Preferred Stock:

 

Number of
shares of Series A-1 Preferred Stock beneficially owned:

 

	
   

  

 

o                                    I own Series A-1
Hybrid Preferred Stock:

 

Number of
shares of Series A-1 Hybrid Preferred Stock beneficially owned:

 

	
   

  

 

A-2

 

o            I own shares of Common
Stock, that were issued upon conversion of 7.0% Preferred Stock or Hybrid
Preferred Stock:

 

Number of
shares of the Common Stock beneficially owned:

 

	
   

  

 

(b)                                 Other than as set
forth in your response to Item 3(a) above, do you beneficially own any
other securities of EXCO?

 

o Yes.

o No.

 

(c)                                  If your answer to item
3(b) above is yes, state the type, the aggregate amount and, if other than
Common Stock, the CUSIP No(s). of such other securities of EXCO beneficially
owned by you:

 

	
  Type:

  	
   

  
	
  Aggregate amount:

  	
   

  
	
  CUSIP No(s).

  	
   

  
				

 

(d)                                 Did you acquire the
securities listed in Item 3(a) above in the ordinary course of business?

 

o Yes.

o No.

 

(e)                                  At the time of your
purchase of the securities listed in Item 3(a) above, did you have any
agreements or understandings, directly or indirectly, with any person to
distribute the securities?

 

o Yes.

o No.

 

(f)                                    If your response to
Item 3(e) above is yes, please describe such agreements or understandings.

 

	
   

  
	
   

  

 

4.                                       Nature of Your
Ownership.

 

(a)                                  (i)                                     If the name of the
beneficial holder of the Securities set forth in your response to Item 1(a) above
is that of a limited partnership, state the names, business addresses
(including street address) (or residence address,

 

A-3

 

if no business address), telephone numbers and facsimile numbers of the
general partners of such limited partnership:

 

	
  Full Legal Name

  	
   

  	
  Business or 

  Residence Address

  	
   

  	
  Telephone and 

  Facsimile Numbers

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

(ii)                                  With respect to each
general partner listed in Item 4(a)(i) above who is not a natural person,
and is not publicly held, name each shareholder (or other interest holder) of
such general partner, or if administered by a portfolio manager, name the
portfolio manager. If any of these named shareholders or other interest holders
are not natural persons or publicly held entities, please provide the same
information (except where the portfolio manager has been named). This process
should be repeated until you reach natural persons or a publicly held entity
(except where the portfolio manager has been named).

 

	
  Full Legal Name

  	
   

  	
  Business or 

  Residence Address

  	
   

  	
  Telephone and 

  Facsimile Numbers

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

(b)                                 (i)                                     If the name of the
beneficial holder of the Securities set forth in your response to Item 1(a) above
is that of a limited liability company, state the names, business addresses
(including street address) (or residence address, if no business address),
telephone numbers and facsimile numbers of the managing members of such limited
liability company.

 

	
  Full Legal Name

  	
   

  	
  Business or 

  Residence Address

  	
   

  	
  Telephone and 

  Facsimile Numbers

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

A-4

 

(ii)                                  With respect to each
managing member listed in Item 4(b)(i) above who is not a natural person,
and is not publicly held, name each shareholder (or other interest holder) of
such managing member, or if administered by a portfolio manager, name the
portfolio manager. If any of these named shareholders or other interest holders
are not natural persons or publicly held entities, please provide the same information
(except where the portfolio manager has been named). This process should be
repeated until you reach natural persons or a publicly held entity (except
where the portfolio manager has been named).

 

	
  Full Legal Name

  	
   

  	
  Business or 

  Residence Address

  	
   

  	
  Telephone and 

  Facsimile Numbers

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

(c)                                  (i)                                     If the name of the
beneficial holder of the Securities set forth in your response to Item l(a) above
is that of a corporation that is not publicly held, state the names, business
addresses (including street address) (or residence address, if no business
address), telephone numbers and facsimile numbers of the controlling
shareholders (the “Controlling Persons”).

 

	
  Full Legal Name

  	
   

  	
  Business or 

  Residence Address

  	
   

  	
  Telephone and 

  Facsimile Numbers

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

(ii)                                  If any Controlling
Person is not a natural person and is not a publicly held entity, name each
controlling shareholder or other interest holder of such Controlling Person. If
any of these named shareholders or other interest holders are not natural
persons or publicly held entities, please provide the same information. This
process should be repeated until you reach natural persons or a publicly held
entity.

 

	
  Full Legal Name

  	
   

  	
  Business or 

  Residence Address

  	
   

  	
  Telephone and 

  Facsimile Numbers

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

A-5

 

(d)                                 If the beneficial
holder of the Securities set forth in response to Item 1(a) is an
investment or hedge fund, name the individual or individuals who have or share
voting or investment power over the Securities and describe their relationship
with the beneficial owner.

 

	
   

  
	
   

  
	
   

  

 

(e)                                  If the beneficial
holder of the Securities set forth in response to Item 1(a) is trust, name
the trustee and describe its relationship with the beneficial owner.

 

	
   

  
	
   

  
	
   

  

 

If you need more space for this response,
please attach additional sheets of paper. Please be sure to indicate your name
and the number of the item being responded to on each such additional sheet of
paper, and to sign each such additional sheet of paper before attaching it to
this Questionnaire. Please note that you may be asked to answer additional
questions depending on your responses to the following questions.

 

The undersigned acknowledges its obligation to comply with the provisions
of the Exchange Act and the rules thereunder relating to stock
manipulation, particularly Regulation M thereunder (or any successor rules or
regulations), in connection with any offering of Securities pursuant to the
Registration Rights Agreement. The undersigned agrees that neither it nor any
person acting on its behalf will engage in any transaction in violation of such
provisions.

 

The undersigned hereby acknowledges its obligations under certain
circumstances under the Registration Rights Agreement to indemnify and hold
harmless certain persons as set forth therein. Pursuant to the Registration
Rights Agreement, EXCO has agreed under certain circumstances to indemnify the
undersigned against certain liabilities.

 

In accordance with the undersigned’s obligation under the Registration
Rights Agreement to provide such information as may be required by law
(including interpretations of the staff of the Commission with which EXCO is
required to comply) for inclusion in the Shelf Registration Statement, the undersigned
agrees to promptly notify EXCO of any inaccuracies or changes in the
information provided herein that may occur subsequent to the date hereof
at any time while the Shelf Registration Statement remains effective. In particular, the undersigned agrees to

 

A-6

 

promptly notify EXCO  if it sells or
otherwise transfers any of the Securities other than pursuant to the Shelf
Registration Statement.

 

All notices to the beneficial owner hereunder and pursuant to the
Registration Rights Agreement shall be made in writing to the undersigned at
the address set forth in Item 1(b) of this Notice and Questionnaire.

 

By signing below, the undersigned acknowledges that it is the
beneficial owner of the Securities set forth herein, represents that the
information provided herein is accurate, consents to the disclosure of the
information contained in this Notice and Questionnaire and the inclusion of
such information in the Shelf Registration Statement and the related prospectus.
The undersigned understands that such information will be relied upon by EXCO
in connection with the preparation or amendment of the Shelf Registration
Statement and the related prospectus.

 

Once this Notice and Questionnaire is executed by the undersigned
beneficial owner and received by EXCO, the terms of this Notice and
Questionnaire, and the representations and warranties contained herein, shall
be binding on, shall inure to the benefit of and shall be enforceable by the
respective successors, heirs, personal representatives and assigns of EXCO and
the undersigned beneficial owner. This Agreement shall be governed in all
respects by the laws of the State of New York.

 

IN WITNESS WHEREOF the undersigned, by authority duly given, has caused
this Notice and Questionnaire to be executed and delivered either in person or
by its duly authorized agent.

 

	
   

  	
  Name of
  Beneficial Owner:

  
	
   

  	
   

  	
   

  
	
   

  	
  (Please Print)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Signature:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
						

 

A-7

 

ANNEX B

Plan of
Distribution

 

The Company is registering the shares of [Common Stock / 7.0% Preferred
Stock / Hybrid Preferred Stock] to permit the resale of these shares of [Common
Stock / 7.0% Preferred Stock / Hybrid Preferred Stock] by its Holders from time
to time according to the terms of the Registration Rights Agreement, dated March 28,
2007, among the Company and the purchasers signatory thereto (the “Agreement”).
The Company will not receive any of the proceeds from the sale by the selling
Holders of the shares of [Common Stock / 7.0% Preferred Stock / Hybrid
Preferred Stock]. The Company will bear all fees and expenses incident to its
obligation to register the shares of [Common Stock / 7.0% Preferred Stock /
Hybrid Preferred Stock].

 

The Holders may sell all or a portion of the shares of [Common
Stock / 7.0% Preferred Stock / Hybrid Preferred Stock] beneficially owned by
them and offered hereby from time to time directly or through one or more
underwriters, broker-dealers or agents. If the shares of [Common Stock / 7.0%
Preferred Stock / Hybrid Preferred Stock] are sold through underwriters or
broker-dealers, the selling Holders will be responsible for underwriting
discounts or commissions or agent’s commissions. The shares of [Common Stock /
7.0% Preferred Stock / Hybrid Preferred Stock] may be sold in one or more
transactions at fixed prices, at prevailing market prices at the time of the
sale, at varying prices determined at the time of sale, or at negotiated
prices. These sales may be effected in transactions, which may involve:

 

•                                          crosses
or block transactions

 

•                                          on
any national securities exchange or quotation service on which the securities may be
listed or quoted at the time of sale;

 

•                                          in
the over-the-counter market;

 

•                                          in
transactions otherwise than on these exchanges or systems or in the
over-the-counter market;

 

•                                          through
the writing of options, whether such options are listed on an options exchange
or otherwise;

 

•                                          ordinary
brokerage transactions and transactions in which the broker-dealer solicits
purchasers;

 

•                                          block
trades in which the broker-dealer will attempt to sell the shares as agent but may position
and resell a portion of the block as principal to facilitate the transaction;

 

•                                          purchases
by a broker-dealer as principal and resale by the broker-dealer for its
account;

 

•                                          an
exchange distribution in accordance with the rules of the applicable
exchange;

 

B-1

 

•                                          privately
negotiated transactions;

 

•                                          short
sales;

 

•                                          sales
pursuant to Rule 144;

 

•                                          broker-dealers
may agree with the selling securityholders to sell a specified number of
such shares at a stipulated price per share;

 

•                                          a
combination of any such methods of sale; and

 

•                                          any
other method permitted pursuant to applicable law.

 

If the selling Holders effect such transactions by selling shares of [Common
Stock / 7.0% Preferred Stock / Hybrid Preferred Stock] to or through
underwriters, broker-dealers or agents, such underwriters, broker-dealers or
agents may receive commissions in the form of discounts, concessions
or commissions from the selling Holders or commissions from purchasers of the shares
of [Common Stock / 7.0% Preferred Stock / Hybrid Preferred Stock] for whom they
may act as agent or to whom they may sell as principal (which
discounts, concessions or commissions as to particular underwriters,
broker-dealers or agents may be in excess of those customary in the types
of transactions involved). In connection with sales of the shares of [Common
Stock / 7.0% Preferred Stock / Hybrid Preferred Stock] or otherwise and if then
permitted by the Preferred Stock Purchase Agreement, dated March 28, 2007,
among the Company and the purchasers signatory thereto, the selling Holders may enter
into hedging transactions with broker-dealers, which may in turn engage in
short sales of the shares of [Common Stock / 7.0% Preferred Stock / Hybrid
Preferred Stock] in the course of hedging in positions they assume. The selling
Holders may also sell shares of [Common Stock / 7.0% Preferred Stock /
Hybrid Preferred Stock] short and deliver shares of [Common Stock / 7.0%
Preferred Stock / Hybrid Preferred Stock] covered by a prospectus to close out
short positions and to return borrowed shares in connection with such short
sales. The selling Holders may also loan or pledge [Common Stock / 7.0%
Preferred Stock / Hybrid Preferred Stock] to broker-dealers that in turn may sell
such shares.

 

The selling Holders may pledge or grant a security interest in
some or all of the shares of [Common Stock / 7.0% Preferred Stock / Hybrid
Preferred Stock] owned by them and, if they default in the performance of their
secured obligations, the pledgees or secured parties may offer and sell
the shares of [Common Stock / 7.0% Preferred Stock / Hybrid Preferred Stock]
from time to time pursuant to a prospectus or any amendment to such prospectus
under Rule 424(b)(3) or other applicable provision of the Securities
Act, amending, if necessary, the list of selling Holders to include the
pledgee, transferee or other successors in interest as selling Holders under
such prospectus. The selling Holders also may transfer and donate the
shares of [Common Stock / 7.0% Preferred Stock / Hybrid Preferred Stock] in
other circumstances in which case the transferees, donees, pledgees or other
successors in interest will be the selling beneficial owners for purposes of
such prospectus.

 

The selling Holders and any broker-dealer participating in the
distribution of the shares of [Common Stock / 7.0% Preferred Stock / Hybrid Preferred
Stock] may be deemed to be “underwriters” within the meaning of the
Securities Act, and any commission paid, or any

 

B-2

 

discounts or concessions allowed to, any such broker-dealer may be
deemed to be underwriting commissions or discounts under the Securities Act. At
the time a particular offering of the shares of [Common Stock / 7.0% Preferred
Stock / Hybrid Preferred Stock] is made, a prospectus, if required, will be
distributed which will set forth the aggregate amount of shares of [Common
Stock / 7.0% Preferred Stock / Hybrid Preferred Stock] being offered and the
terms of the offering, including the name or names of any broker-dealers or
agents, any discounts, commissions and other terms constituting compensation
from the selling Holders and any discounts, commissions or concessions allowed
or reallowed or paid to broker-dealers.

 

Under the securities laws of some states, the shares of [Common Stock /
7.0% Preferred Stock / Hybrid Preferred Stock] may be sold in such states
only through registered or licensed brokers or dealers. In addition, in some
states the shares of [Common Stock / 7.0% Preferred Stock / Hybrid Preferred
Stock] may not be sold unless such shares have been registered or qualified
for sale in such state or an exemption from registration or qualification is
available and is complied with.

 

There can be no assurance that any selling Holder will sell any or all
of the shares of [Common Stock / 7.0% Preferred Stock / Hybrid Preferred Stock]
registered pursuant to the Shelf Registration Statement.

 

The selling Holders and any other person participating in such
distribution will be subject to applicable provisions of the Exchange Act,
including, without limitation, Regulation M of the Exchange Act, which may limit
the timing of purchases and sales of any of the shares of [Common Stock / 7.0%
Preferred Stock / Hybrid Preferred Stock] by the selling Holders and any other
participating person. Regulation M may also restrict the ability of any
person engaged in the distribution of the shares of Common Stock to engage in
market-making activities with respect to the shares of [Common Stock / 7.0%
Preferred Stock / Hybrid Preferred Stock]. All of the foregoing may affect
the marketability of the shares of [Common Stock / 7.0% Preferred Stock /
Hybrid Preferred Stock] and the ability of any person or entity to engage in
market-making activities with respect to the shares of [Common Stock / 7.0%
Preferred Stock / Hybrid Preferred Stock].

 

The Company will pay all expenses of the registration of the shares of
[Common Stock / 7.0% Preferred Stock / Hybrid Preferred Stock] pursuant to the
Agreement, including, without limitation, Commission filing fees and expenses
of compliance with state securities or “blue sky” laws; provided, however, that
a selling Holder will pay all underwriting discounts and selling commissions,
if any. The Company will indemnify the selling Holders against liabilities,
including some liabilities under the Securities Act, in accordance with the
Agreement, or the selling Holders will be entitled to contribution. The Company
may be indemnified by the selling Holders against civil liabilities,
including liabilities under the Securities Act, that may arise from any
written information furnished to the Company by the selling Holder specifically
for use in a prospectus, in accordance with Agreement, or the Company may be
entitled to contribution.

 

Once sold under the registration statement, the shares of [Common Stock
/ 7.0% Preferred Stock / Hybrid Preferred Stock] will be freely tradable in the
hands of persons other than the Company’s affiliates.

 

B-3

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