Document:

Exhibit 10.1

 

EXECUTION VERSION

 

$60,000,000

 

Egalet Corporation

 

5.50% Convertible Senior Notes due 2020

 

Purchase Agreement

 

April 1, 2015

 

JMP Securities LLC

Guggenheim Securities, LLC

As Representatives of the Initial Purchasers listed in Schedule 1 hereto

 

c/o JMP Securities LLC

600 Montgomery Street, Suite 1100

San Francisco, CA 94111

 

c/o Guggenheim Securities, LLC

330 Madison Avenue

New York, NY 10017

 

Ladies and Gentlemen:

 

Egalet Corporation, a Delaware corporation (the “Company”), proposes to issue and sell to the initial purchasers listed in Schedule 1 hereto (the “Initial Purchasers”), for whom you are acting as representatives (the “Representatives”), $60,000,000 principal amount of its 5.50% Convertible Senior Notes due 2020 (the “Underwritten Securities”) and, at the option of the Initial Purchasers, up to an additional $9,000,000 principal amount of its 5.50% Convertible Senior Notes due 2020 (the “Option Securities”) if and to the extent that the Initial Purchasers shall have determined to exercise the option to purchase such 5.50% Convertible Senior Notes due 2020 granted to the Initial Purchasers in Section 2 hereof.  The Underwritten Securities and the Option Securities are herein referred to as the “Securities”.  The Securities will be issued pursuant to an Indenture expected to be dated as of April 7, 2015 (the “Indenture”) between the Company and The Bank of New York Mellon, as trustee (the “Trustee”).  The Securities will be convertible into cash and shares, if any (the “Underlying Securities”), of common stock of the Company, par value $0.001 per share (the “Common Stock”), in accordance with the terms of the Indenture.

 

The Company hereby confirms its agreement with the Initial Purchasers concerning the purchase and resale of the Securities, as follows:

 

1

 

1.                                      The Securities will be sold to the Initial Purchasers without being registered under the Securities Act of 1933, as amended (the “Securities Act”), in reliance upon an exemption therefrom.  The Company has prepared a preliminary offering memorandum dated March 25, 2015 (the “Preliminary Offering Memorandum”) and will prepare an offering memorandum dated the date hereof (the “Offering Memorandum”) setting forth information concerning the Company and the Securities.  Copies of the Preliminary Offering Memorandum have been, and copies of the Offering Memorandum will be, delivered by the Company to the Initial Purchasers pursuant to the terms of this Purchase Agreement (this “Agreement”).  The Company hereby confirms that it has authorized the use of the Preliminary Offering Memorandum, the other Time of Sale Information (as defined below) and the Offering Memorandum in connection with the offering and resale of the Securities by the Initial Purchasers in the manner contemplated by this Agreement.  References herein to the Preliminary Offering Memorandum, the Time of Sale Information and the Offering Memorandum (each, an “Applicable Memorandum” and collectively, the “Applicable Memoranda”) shall be deemed to refer to and include any document incorporated by reference therein and any reference to “amend,” “amendment” or “supplement” with respect to the Preliminary Offering Memorandum and the Offering Memorandum shall be deemed to refer to and include any documents filed after such date and incorporated by reference therein.

 

At or prior to 9:00 A.M., New York City time, on the date of this Agreement (the “Time of Sale”), the Company had prepared the following information (collectively, the “Time of Sale Information”): the Preliminary Offering Memorandum, as supplemented and amended by the written communications listed on Annex A hereto.

 

2.                                      Purchase and Resale of the Securities.  (a)  On the basis of the representations, warranties and agreements set forth herein and subject to the conditions set forth herein, the Company agrees to issue and sell the Underwritten Securities to the Initial Purchasers as provided in this Agreement, and each Initial Purchaser agrees, severally and not jointly, to purchase from the Company the respective principal amount of Underwritten Securities set forth opposite such Initial Purchaser’s name in Schedule 1 hereto at a price equal to 94.0% of the principal amount thereof (the “Purchase Price”) plus accrued interest, if any, from April 7, 2015 to the Closing Date (as defined below).

 

In addition, the Company agrees to issue and sell the Option Securities to the Initial Purchasers as provided in this Agreement, and the Initial Purchasers, on the basis of the representations, warranties and agreements set forth herein and subject to the conditions set forth herein, shall have the option to purchase, severally and not jointly, from the Company the Option Securities at the Purchase Price.

 

If any Option Securities are to be purchased, the amount of Option Securities to be purchased by each Initial Purchaser shall be the amount of Option Securities which bears the same ratio to the aggregate amount of Option Securities being purchased as the amount of Underwritten Securities set forth opposite the name of such Initial Purchaser in Schedule 1 hereto (or such amount increased as set forth in Section 11 hereof) bears to the aggregate amount of Underwritten Securities being purchased from the Company by the Initial Purchasers, subject, however, to such adjustments to eliminate Securities in denominations other than $1,000 as the Representatives in their reasonable discretion shall make.

 

2

 

The Initial Purchasers may exercise the option to purchase the Option Securities at any time in whole, or from time to time in part, on or before the thirtieth day following the date of this Agreement, by written notice from the Representatives to the Company.  Such notice shall set forth the aggregate amount of Option Securities as to which the option is being exercised and the date and time when the Option Securities are to be delivered and paid for which may be the same date and time as the Closing Date (as hereinafter defined) but shall not be earlier than the Closing Date nor later than the tenth full business day (as hereinafter defined) after the date of such notice (unless such time and date are postponed in accordance with the provisions of Section 11 hereof).  Any such notice shall be given at least two business days prior to the date and time of delivery specified therein.

 

(b)                                 The Initial Purchasers hereby advise the Company that they intend to offer the Securities for resale on the terms set forth herein and in the Time of Sale Information.  Each Initial Purchaser, severally and not jointly, represents, warrants and agrees that:

 

(i)                                     it is a qualified institutional buyer within the meaning of Rule 144A under the Securities Act (a “QIB”) and an accredited investor within the meaning of Rule 501(a) of Regulation D under the Securities Act (“Regulation D”);

 

(ii)                                  it has not solicited offers for, or offered or sold, and will not solicit offers for, or offer or sell, the Securities in any manner involving a public offering within the meaning of Section 4(a)(2) of the Securities Act; and

 

(iii)                               it has not sold the Securities as part of the initial offering except to persons (including the relevant principal in the case of any offer or sale involving a fiduciary or agent) whom it reasonably believes to be QIBs in transactions pursuant to Rule 144A under the Securities Act (“Rule 144A”) and in connection with each such sale, it has taken or will take reasonable steps to ensure that the purchaser of the Securities is aware that such sale is being made in reliance on Rule 144A.

 

(c)                                  Each Initial Purchaser acknowledges and agrees that the Company and, for purposes of the opinions to be delivered to the Initial Purchasers pursuant to Sections 7(f) and 7(g), counsel for the Company and counsel for the Initial Purchasers, respectively, may rely upon the accuracy of the representations and warranties of the Initial Purchasers, and compliance by the Initial Purchasers with their agreements, contained in paragraph (b) above, and each Initial Purchaser hereby consents to such reliance.

 

(d)                                 The Company acknowledges and agrees that the Initial Purchasers may, in accordance with applicable law, offer and sell Securities to or through any affiliate of an Initial Purchaser and that any such affiliate may offer and sell Securities purchased by it to or through any Initial Purchaser.

 

(e)                                  The Company acknowledges and agrees that the Initial Purchasers are acting solely in the capacity of an arm’s length contractual counterparty to the Company with respect to the offering of Securities contemplated hereby (including in connection with determining the terms of the offering) and not as financial advisors or fiduciaries to, or agents of, the Company or any other person.  Additionally, neither the Representatives nor any other Initial Purchaser is

 

3

 

advising the Company or any other person as to any legal, tax, investment, accounting or regulatory matters in any jurisdiction.  The Company shall consult with its own advisors concerning such matters and shall be responsible for making its own independent investigation and appraisal of the transactions contemplated hereby, and neither the Representatives nor any other Initial Purchaser shall have any responsibility or liability to the Company with respect thereto.  Any review by the Representatives or any Initial Purchaser of the Company and the transactions contemplated hereby or other matters relating to such transactions will be performed solely for the benefit of the Representatives or such Initial Purchaser, as the case may be, and shall not be on behalf of the Company or any other person.

 

3.                                      Payment and Delivery.  Payment for the Securities shall be made by wire transfer in immediately available funds to the account specified by the Company to the Representatives in the case of the Underwritten Securities, at the offices of Cooley LLP, One Freedom Square, Reston Town Center, 11951 Freedom Drive, Reston, VA 20190, at 10:00 a.m., New York City time, on April 7, 2015, or at such other time or place on the same or such other date, including by electronic exchange of documents, not later than the fifth business day thereafter, as the Representatives and the Company may agree upon in writing, or, in the case of the Option Securities, on the date and at the time and place specified by the Representatives in the written notice of the Initial Purchasers’ election to purchase such Option Securities.  The time and date of such payment for the Underwritten Securities is referred to herein as the “Closing Date” and the time and date for such payment for the Option Securities, if other than the Closing Date, is herein referred to as the “Additional Closing Date”.

 

Payment for the Securities to be purchased on the Closing Date or the Additional Closing Date, as the case may be, shall be made against delivery to the nominee of The Depository Trust Company (“DTC”), for the respective accounts of the Initial Purchasers of the Securities to be purchased on such date of one or more global notes representing the Securities (collectively, the “Global Note”), with any transfer taxes payable in connection with the sale of such Securities duly paid by the Company.  The Global Note will be made available for inspection by the Representatives at the office of JMP Securities LLC set forth above not later than 1:00 p.m., New York City time, on the business day prior to the Closing Date or the Additional Closing Date, as the case may be.

 

4.                                      Representations and Warranties of the Company.  The Company represents and warrants to each Initial Purchaser that:

 

(a)                                 Preliminary Offering Memorandum.  The Preliminary Offering Memorandum, as of its date, did not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that the Company makes no representation and warranty with respect to any statements or omissions made in reliance upon and in conformity with information relating to any Initial Purchaser furnished to the Company in writing by such Initial Purchaser through the Representatives or its counsel expressly for use in any Preliminary Offering Memorandum, it being understood and agreed that the only such information furnished by any Initial Purchaser consists of the information described as such in Section 8(b) hereof.

 

4

 

(b)                                 Time of Sale Information. The Time of Sale Information, at the Time of Sale, did not, and as of the Closing Date and as of the Additional Closing Date, as the case may be, will not, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that the Company makes no representation and warranty with respect to any statements or omissions made in reliance upon and in conformity with information relating to any Initial Purchaser furnished to the Company in writing by such Initial Purchaser through the Representatives or its counsel expressly for use in such Time of Sale Information, it being understood and agreed that the only such information furnished by any Initial Purchaser consists of the information described as such in Section 8(b) hereof.

 

(c)                                  Additional Written Communications.  Other than the Preliminary Offering Memorandum and the Offering Memorandum, the Company (including its agents and representatives, other than the Initial Purchasers in their capacity as such) has not made, used, prepared, authorized, approved or referred to and will not prepare, make, use, authorize, approve or refer to (x) any “written communication” that constitutes an offer to sell or solicitation of an offer to buy the Securities (each such communication by the Company or its agents and representatives (other than a communication referred to in clauses (i), (ii) and (iii) below) an “Issuer Written Communication”) other than (i) the Preliminary Offering Memorandum, (ii) the Offering Memorandum, (iii) the documents listed on Annex A hereto, including a term sheet substantially in the form of Annex B hereto, which constitute part of the Time of Sale Information, and (iv) each electronic road show that is a “written communication” within the meaning of the Securities Act and any other written communications approved in writing in advance by the Representatives, in each case used in accordance with Section 5(c) or (y) any general solicitation.  Each such Issuer Written Communication, when taken together with the Time of Sale Information, did not, and as of the Closing Date and as of the Additional Closing Date, as the case may be, will not, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that the Company makes no representation and warranty with respect to any statements or omissions made in each such Issuer Written Communication in reliance upon and in conformity with information relating to any Initial Purchaser furnished to the Company in writing by such Initial Purchaser through the Representatives or its counsel expressly for use in such Issuer Written Communication, it being understood and agreed that the only such information furnished by any Initial Purchaser consists of the information described as such in Section 8(b) hereof.  Each such Issuer Written Communication, as of its issue date and at all subsequent times through the completion of the offer and sale of the Securities or until any earlier date that the Company notified or notifies the Representatives as described in Section 5(d), did not, does not and will not include any information that conflicted, conflicts or will conflict with the information contained in the Time of Sale Information or the Offering Memorandum, including any document incorporated by reference therein.

 

(d)                                 Offering Memorandum.  As of the date of the Offering Memorandum and as of the Closing Date and as of the Additional Closing Date, as the case may be, the Offering Memorandum does not and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that the Company makes

 

5

 

no representation and warranty with respect to any statements or omissions made in reliance upon and in conformity with information relating to any Initial Purchaser furnished to the Company in writing by such Initial Purchaser through the Representatives or its counsel expressly for use in the Offering Memorandum, it being understood and agreed that the only such information furnished by any Initial Purchaser consists of the information described as such in Section 8(b) hereof.

 

(e)                                  Incorporated Documents.  The documents incorporated by reference in each of the Time of Sale Information and the Offering Memorandum, when filed with the Securities and Exchange Commission (the “Commission”) (or, in the case of documents that have been amended by amendments filed with the Commission and incorporated by reference in each of the Time of Sale Information and the Offering Memorandum, when so amended), conformed or will conform, as the case may be, in all material respects to the requirements of the Exchange Act, and the rules and regulations of the Commission thereunder, and when filed with the Commission (or, in the case of documents that have been amended by amendments filed with the Commission and incorporated by reference in each of the Time of Sale Information and the Offering Memorandum, upon the filing of such amendment) did not or will not, as the case may be, 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 the light of the circumstances under which they were made, not misleading.

 

(f)                                   Organization and Good Standing of the Company.  The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware, with power and authority (corporate and other) to own, lease and operate its properties and conduct its business as described in the Applicable Memoranda and to enter into and perform its obligations under this Agreement, and has been duly qualified as a foreign corporation for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties or conducts any business so as to require such qualification, except where the failure so to qualify or be in good standing would not have a material adverse effect on the business, properties, financial position, results of operations or business prospects of the Company and its Subsidiaries taken as a whole or would prevent or impair the consummation of the transactions contemplated by this Agreement (a “Material Adverse Effect”).

 

(g)                                  Organization and Good Standing of the Company’s subsidiaries. Each subsidiary of the Company (each a “Subsidiary”) has been duly incorporated (or organized) and is validly existing as a corporation (or other organization) in good standing under the laws of the jurisdiction of its incorporation (or organization), with power and authority to own, lease and operate its properties and conduct its business as described in the Applicable Memoranda, and has been duly qualified as a foreign corporation (or other organization) for the transaction of business and is in good standing under the laws of each other jurisdiction in which its owns or leases properties or conducts any business so as to require such qualification, except where the failure so to qualify or be in good standing would not have a material adverse effect on the company and the Subsidiaries, considered as one enterprise; all of the issued and outstanding capital stock (or other ownership interests) of each Subsidiary has been duly and validly authorized and issued, is fully paid and non-assessable and is owned by the Company, directly or through Subsidiaries, free and clear of any security interest, mortgage, pledge, lien,

 

6

 

encumbrance, claim or equity. The Subsidiaries listed in Schedule 2 to this Agreement are the only significant subsidiaries (as defined in Rule 1-02 of Regulation S-X under the Exchange Act) of the Company.

 

(h)                                 Financial Statements. The financial statements and the related notes thereto included or incorporated by reference in each of the Time of Sale Information and the Offering Memorandum present fairly the consolidated financial position of the Company and its Subsidiaries as of the dates indicated and the consolidated results of their operations and the consolidated changes in their cash flows for the periods specified; such financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) applied on a consistent basis throughout the periods covered thereby; the other financial information included or incorporated by reference in each of the Time of Sale Information and the Offering Memorandum has been derived from the accounting records of the Company and its Subsidiaries and presents fairly in all material respects the information shown thereby; the pro forma financial information and the related notes thereto included or incorporated by reference in each of the Time of Sale Information and the Offering Memorandum have been prepared in accordance with the Commission’s rules and guidance with respect to pro forma financial information, and the assumptions underlying such pro forma financial information are reasonable and are set forth in each of the Time of Sale Information and the Offering Memorandum; assuming the Time of Sale Information and the Offering Memorandum were a prospectus included in a registration statement under the Securities Act, there are no financial statements (historical or pro forma) that are required to be included or incorporated by reference in the Time of Sale Information or the Offering Memorandum (or any document incorporated by reference) that are not included or incorporated by reference as required; the Company and its Subsidiaries do not have any material liabilities or obligations, direct or contingent (including any off-balance sheet obligations) that, assuming the Time of Sale Information and the Offering Memorandum were a prospectus included in a registration statement under the Securities Act, would be required to be described in the Time of Sale Information or Offering Memorandum.

 

(i)                                     No Material Adverse Change.  Except as described in the Time of Sale Information or the Offering Memorandum, since the date of the most recent financial statements of the Company included or incorporated by reference therein, (i) there has not been any change in the capital stock or long-term debt of the Company or any of its Subsidiaries, or any dividend or distribution of any kind declared, set aside for payment, paid or made by the Company on any class of capital stock, or any material adverse change, or any development involving a prospective material adverse change, in or affecting the business, properties, management, financial position or results of operations of the Company and its Subsidiaries taken as a whole; (ii) neither the Company nor any of its Subsidiaries has entered into any transaction or agreement that is material to the Company and its Subsidiaries taken as a whole or incurred any liability or obligation, direct or contingent, that is material to the Company and its Subsidiaries taken as a whole; and (iii) neither the Company nor any of its Subsidiaries has sustained any material loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor disturbance or dispute or any action, order or decree of any court or arbitrator or governmental or regulatory authority.

 

(j)                                    Capitalization.  The Company has an authorized capitalization as set forth in each of the Time of Sale Information and the Offering Memorandum under the heading

 

7

 

“Capitalization”; such authorized capital stock of the Company conforms as to legal matters in all material respects to the description thereof contained in the Time of Sale Information and the Offering Memorandum; there are no outstanding options to purchase, or any rights or warrants to subscribe for, or any securities or obligations convertible into, or any contracts or commitments to issue or sell, any shares of Common Stock, any shares of capital stock of any subsidiary, or any such warrants, convertible securities or obligations, except (A) as referred to or incorporated by reference in the Time of Sale Information and the Offering Memorandum, (B) for shares of Common Stock and options to purchase shares of Common Stock granted under, or contracts or commitments pursuant to, the Company’s previous or currently existing stock option and other similar officer, director or employee benefit plans, and (C) subsequent issuances, if any, pursuant to this Agreement; except for stock purchase plans or as set forth or incorporated by reference in the Time of Sale Information and the Offering Memorandum, there are no contracts, commitments, agreements, arrangements, understandings or undertakings of any kind to which the Company is a party, or by which it is bound, granting to any person the right to require either the Company to file a registration statement under the Securities Act with respect to any securities of the Company or requiring the Company to include such securities with the Securities registered pursuant to any registration statement; the shares of Common Stock outstanding on the date hereof have been duly authorized and are validly issued, fully paid and non-assessable; and all the outstanding shares of capital stock or other equity interests of each subsidiary of the Company have been duly and validly authorized and issued, are fully paid and non-assessable and (except, in the case of any foreign subsidiary, for directors’ qualifying shares) are owned directly or indirectly by the Company, free and clear of any lien, charge, encumbrance, security interest, restriction on voting or transfer or any other claim of any third party, except for such liens, charges, encumbrances, security interests or claims that would not individually or in the aggregate, have a Material Adverse Effect.

 

(k)                                 Stock Options.  Except as described in each of the Time of Sale Information and the Offering Memorandum, with respect to the stock options (the “Stock Options”) granted pursuant to the stock-based compensation plans of the Company and its Subsidiaries (the “Company Stock Plans”), (i) each Stock Option designated by the Company at the time of grant as an “incentive stock option” under Section 422 of the Code so qualifies, (ii) each grant of a Stock Option was duly authorized no later than the date on which the grant of such Stock Option was by its terms to be effective (the “Grant Date”) by all necessary corporate action, including, as applicable, approval by the board of directors of the Company (or a duly constituted and authorized committee thereof) and any required stockholder approval by the necessary number of votes or written consents, (iii) each such grant was made in accordance with the material terms of the Company Stock Plans, the Exchange Act and all other applicable laws and regulatory rules or requirements, including the rules of The NASDAQ Global Market (“NASDAQ”) and any other exchange on which Company securities are traded and (iv) each such grant was or has now been properly accounted for in accordance with GAAP in the financial statements (including the related notes) of the Company and disclosed in the Company’s filings with the Commission in accordance with the Exchange Act and all other applicable laws, except, in the cases of clauses (i), (ii), (iii), and (iv), where any such failure, violation or default that would not individually or in the aggregate, have a Material Adverse Effect.

 

(l)                                     Due Authorization.  The Company has full right, power and authority to execute and deliver this Agreement, the Securities and the Indenture (collectively, the “Transaction

 

8

 

Documents”) and to perform its obligations hereunder and thereunder; and all action required to be taken by the Company for the due and proper authorization, execution and delivery of each of the Transaction Documents and the consummation of the transactions contemplated thereby has been duly and validly taken.

 

(m)                             The Indenture.  The Indenture has been duly authorized by the Company and, when duly executed and delivered in accordance with its terms by each of the parties thereto, will constitute a valid and legally binding agreement of the Company enforceable against the Company in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally or by equitable principles relating to enforceability (collectively, the “Enforceability Exceptions”).

 

(n)                                 The Purchase Agreement.  This Agreement has been duly authorized, executed and delivered by the Company.

 

(o)                                 The Securities.  The Securities have been duly authorized by the Company and, when duly executed, authenticated, issued and delivered as provided in the Indenture and paid for as provided herein, will be duly and validly issued and outstanding and will constitute valid and legally binding obligations of the Company enforceable against the Company in accordance with their terms, subject to the Enforceability Exceptions, and will be entitled to the benefits of the Indenture.

 

(p)                                 The Underlying Securities.  The maximum number of shares of Underlying Securities issuable upon conversion of the Securities (including the maximum number of shares of Underlying Securities that may be issued upon conversion of the Securities in connection with a Make-Whole Fundamental Change (as such term is defined in the Indenture), and assuming the Company elects to issue and deliver solely shares of Underlying Securities in respect of all such conversions) (the “Maximum Number of Underlying Securities”) have been duly authorized and reserved for issuance upon such conversion by all necessary corporate action and such Maximum Number of Underlying Shares, when issued upon such conversion, will be validly issued and will be fully paid and non-assessable; no holder of such shares will be subject to personal liability solely by reason of being such a holder; and the issuance of such Maximum Number of Underlying Shares upon such conversion will not be subject to the preemptive or other similar rights of any securityholder of the Company.

 

(q)                                 Descriptions of Certain Transaction Documents.  The Common Stock and the Indenture will conform in all material respects to the description thereof contained in each of the Time of Sale Information and the Offering Memorandum.

 

(r)                                    No Violation or Default.  Neither the Company nor any of the Subsidiaries is (i) in violation of its certificate or articles of incorporation or bylaws (or other organization documents) or (ii) in violation of any law, ordinance, administrative or governmental rule or regulation applicable to the Company or any of the Subsidiaries, or (iii) in violation of any decree of any court or governmental agency or body having jurisdiction over the Company or any of the Subsidiaries, or (iv) in default in the performance of any obligation, agreement or condition contained in any bond, debenture, note or any other evidence of indebtedness or in any agreement, indenture, lease or other instrument to which the Company or any of the Subsidiaries

 

9

 

is a party or by which any of them or any of their respective properties may be bound, except, in the case of clauses (ii), (iii) and (iv), where any such violation or default, individually or in the aggregate, would not have a Material Adverse Effect.

 

(s)                                   No Conflicts.  The execution, delivery and performance by the Company of each of the Transaction Documents, the issuance and sale of the Securities (including the issuance of the Maximum Number of Underlying Securities upon conversion thereof) and compliance by the Company with the terms thereof and the consummation of the transactions contemplated by the Transaction Documents or the Time of Sale Information and the Offering Memorandum will not (i) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of its Subsidiaries pursuant to, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound or to which any of the property or assets of the Company or any of its Subsidiaries is subject, (ii) result in any violation of the provisions of the certificate or articles of incorporation or by-laws (or other organization documents) of the Company or any of the Subsidiaries, or (iii) result in the violation of any law or statute or any judgment, order, rule or regulation of any court or arbitrator or governmental or regulatory authority, except, in the case of clauses (i) and (iii) above, for any such conflict, breach, violation or default that would not, individually or in the aggregate, have a Material Adverse Effect.

 

(t)                                    No Consents Required.  No consent, approval, authorization, order, registration or qualification of or with any court or arbitrator or governmental or regulatory authority is required for the execution, delivery and performance by the Company of each of the Transaction Documents, the issuance and sale of the Securities (including the issuance of the Maximum Number of Underlying Securities upon conversion thereof) and compliance by the Company with the terms thereof and the consummation of the transactions contemplated by the Transaction Documents or the Time of Sale Information and the Offering Memorandum, except for such consents, approvals, authorizations, orders and registrations or qualifications as may be required under applicable state securities laws in connection with the purchase and resale of the Securities by the Initial Purchasers, and except for the other consents, approvals, authorizations, orders, registrations or qualifications expressly contemplated by this Agreement.

 

(u)                                 Legal Proceedings.  Other than as set forth in the Time of Sale Information and Offering Memorandum, there are no legal or governmental proceedings pending to which the Company or any of the Subsidiaries is a party or of which any property of the Company or any of the Subsidiaries is the subject which, if determined adversely to the Company or the Subsidiary, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect, or which are required to be described in the Applicable Memoranda; and, to the Company’s knowledge, no such proceedings are threatened or contemplated by governmental authorities or others.

 

(v)                                 Independent Accountants.  Grant Thornton LLP, who has certified certain financial statements of the Company’s Subsidiaries are independent public accountants as required by the Securities Act and the rules and regulations adopted by the Commission and the Public Company Accounting Oversight Board (United States).  The financial statements,

 

10

 

together with related schedules and notes, included in the Applicable Memoranda comply in all material respects with the requirements of the Securities Act and present fairly the consolidated financial position, results of operations and changes in financial position of the Company’s Subsidiaries on the basis stated in the Applicable Memoranda at the respective dates or for the respective periods to which they apply; such statements and related schedules and notes have been prepared in accordance with generally accepted accounting principles consistently applied throughout the periods involved, except as disclosed therein; and the selected financial data and the summary financial data included or incorporated by reference in the Applicable Memoranda present fairly the information shown therein and have been compiled on a basis consistent with that of the financial statements included in the Applicable Memoranda.

 

(w)                               Title to Real and Personal Property.  Each of the Company and each Subsidiary has good and marketable title to all real and personal property owned by it, in each case free and clear of all liens, encumbrances and defects except such as are described in the Applicable Memoranda except where such failure of good and marketable title, individually or in the aggregate, would not be reasonably expected to have a Material Adverse Effect; and any real property and buildings held under lease by the Company or any Subsidiary are held under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings by the Company or any Subsidiary.

 

(x)                                 Intellectual Property.  The Company and the Subsidiaries own or possess, all inventions, copyrights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures), trademarks, service marks and trade names, patents and patent rights (collectively “Intellectual Property”) material to carrying on their businesses as described in the Applicable Memoranda, except where the failure to possess sufficient rights to such Intellectual Property would not, alone or in the aggregate, reasonably be expected to have a Material Adverse Effect. Neither the Company nor any Subsidiary has received any correspondence relating to any Intellectual Property, apart from any correspondence received from any intellectual property office during prosecution of the Intellectual Property, or notice of infringement of or conflict with asserted rights of others with respect to any Intellectual Property which would render any Intellectual Property invalid or inadequate to protect the interest of the Company and the Subsidiaries and which infringement or conflict (if the subject of any unfavorable decision, ruling or finding) or invalidity or inadequacy, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.

 

(y)                                 No Undisclosed Relationships.  No relationship, direct or indirect, exists between or among the Company or any of its Subsidiaries, on the one hand, and the directors, officers, stockholders or other affiliates of the Company or any of its Subsidiaries, on the other, that would be required by the Securities Act to be described in a registration statement to be filed with the Commission and that is not so described in each of the Time of Sale Information and the Offering Memorandum.

 

(z)                                  Investment Company Act.  Neither the Company nor any of its Subsidiaries is, and after giving effect to the offering and sale of the Securities and the application of the proceeds thereof as described in each of the Time of Sale Information and the Offering Memorandum,

 

11

 

none of them will be required to register as an “investment company” or an entity “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940, as amended, and the rules and regulations of the Commission thereunder (collectively, the “Investment Company Act”).

 

(aa)                          Taxes.  All United States federal income tax returns of the Company and the Subsidiaries required by law to be filed have been filed (or the Company has properly requested and received an extension thereon) and all taxes shown by such returns or otherwise assessed, which are due and payable, have been paid, except assessments against which appeals have been or will be promptly taken and as to which adequate reserves have been provided. The Company and the Subsidiaries have filed (or properly requested and received an extension on) all other tax returns that are required to have been filed by them pursuant to applicable foreign, state, local or other law, and have paid all taxes due pursuant to such returns or pursuant to any assessment received by the Company or any Subsidiary except for such taxes, if any, as are being contested in good faith and as to which adequate reserves have been provided, except insofar as the failure to file such returns or pay such taxes or assessments, individually or in the aggregate, would not result in a Material Adverse Effect.  The charges, accruals and reserves on the books of the Company and the Subsidiaries in respect of any income and corporation tax liability for any years not finally determined are adequate to meet any assessments or re-assessments for additional income tax for any years not finally determined.

 

(bb)                          Licenses and Permits.  The Company and the Subsidiaries possess all permits, licenses, approvals, consents and other authorizations (collectively, “Permits”) issued by the appropriate federal, state, local or foreign regulatory agencies or bodies necessary to conduct the businesses now operated by them, except where the failure to so possess would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Company and the Subsidiaries are in compliance with the terms and conditions of all such Permits and all of the Permits are valid and in full force and effect, except, in each case, where the failure so to comply or where the invalidity of such Permits or the failure of such Permits to be in full force and effect, individually or in the aggregate, would not have a Material Adverse Effect; and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or material modification of any such Permits.

 

(cc)                            No Labor Disputes.  No material labor dispute with the employees of the Company or the Subsidiaries exists, or, to the knowledge of the Company, is imminent.  The Company is not aware of any existing or imminent labor disturbance by the employees of any of its or any Subsidiary’s principal suppliers, manufacturers, customers or contractors, which, individually or in the aggregate, would reasonably be expected to result in a Material Adverse Effect.

 

(dd)                          Compliance with Environmental Laws.  Neither the Company nor any of the Subsidiaries is in violation of any statute or any rule, regulation, decision or order of any governmental agency or body or any court, domestic or foreign, relating to the use, production, disposal or release of hazardous or toxic substances or relating to the protection or restoration of the environment or human exposure to hazardous or toxic substances (collectively, “environmental laws”), owns or operates any real property contaminated with any substance that is subject to any environmental laws, is liable for any off-site disposal or contamination

 

12

 

pursuant to any environmental laws, or is subject to any claim relating to any environmental laws, which violation, contamination, liability or claim, individually or in the aggregate, would have a Material Adverse Effect; and the Company is not aware of any pending investigation which might lead to such a claim.

 

(ee)                            Compliance with ERISA.  Each employee benefit plan, including any plan within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) and any plan governed by laws and regulations of jurisdictions outside of the United States, that is maintained, administered or contributed to by the Company or any Subsidiary for employees or former employees of the Company, any Subsidiary or their respective affiliates has been maintained in compliance with its terms and the requirements of any applicable statutes, orders, rules and regulations, including but not limited to ERISA, the Internal Revenue Code of 1986, as amended (the “Code”), and all applicable foreign laws and regulations, except to the extent that failure to so comply, individually or in the aggregate, would not have a Material Adverse Effect.  No prohibited transaction, within the meaning of Section 406 of ERISA or Section 4975 of the Code has occurred with respect to any such plan excluding transactions effected pursuant to a statutory or administrative exemption.

 

(ff)                              Disclosure Controls.  The Company and its subsidiaries maintain disclosure controls and procedures (as such term is defined in Rule 13a-15 (e) of the Exchange Act) that comply with the requirements of the Exchange Act. The Company and its Subsidiaries have carried out evaluations of the effectiveness of their disclosure controls and procedures as required by Rule 13a-15 of the Exchange Act, and such disclosure controls and procedures are effective.

 

(gg)                            Accounting Controls.  The Company and its Subsidiaries maintain systems of “internal control over financial reporting” (as defined in Rule 13a-15(f) of the Exchange Act) that comply with the requirements of the Exchange Act and that are sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.  Except as disclosed in each of the Time of Sale Information and the Offering Memorandum, there were no material weaknesses in the Company’s internal controls as of December 31, 2014.  The Company’s auditors and the Audit Committee of the Board of Directors of the Company have been advised of: (i) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting.

 

(hh)                          eXtensible Business Reporting Language.  The interactive data in eXtensible Business Reporting Language incorporated by reference in the Time of Sale Information and the Offering Memorandum fairly presents the information called for in all material respects and has been prepared in accordance with the Commission’s rules and guidelines applicable thereto.

 

13

 

(ii)                                  Insurance.  The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts the Company deems adequate for their respective businesses as currently conducted; neither the Company nor any Subsidiary has been refused any insurance coverage sought or applied for; and the Company has no reason to believe that either it or any Subsidiary will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that in the aggregate, would not have a Material Adverse Effect.

 

(jj)                                No Unlawful Payments.  Neither the Company nor any of its Subsidiaries, or to the knowledge of the Company, any director, officer, agent, employee or other person associated with or acting on behalf of the Company or any of its Subsidiaries, has (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds, (iii) violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977, or (iv) made any bribe, unlawful rebate, payoff, influence payment, kickback or other unlawful payment.

 

(kk)                          Compliance with Money Laundering Laws.  The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements, including those of the Bank Secrecy Act, as amended by Title III of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act), and the money laundering statutes of all jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “Money Laundering Laws”) and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its Subsidiaries with respect to the Money Laundering Laws is pending or, to the knowledge of the Company, threatened.

 

(ll)                                  Compliance with OFAC.

 

(i)                                     Neither the Company nor any of its Subsidiaries, nor any director, officer, or employee thereof, nor, to the Company’s knowledge, any agent, affiliate or representative of the Company or any of its Subsidiaries, is an individual or entity (“Person”) that is, or is owned or controlled by a Person that is: (A) the subject of any sanctions administered or enforced by the U.S. Department of Treasury’s Office of Foreign Assets Control, the United Nations Security Council, the European Union, Her Majesty’s Treasury, or other relevant sanctions authority (collectively, “Sanctions”); nor (B) located, organized or resident in a country or territory that is the subject of Sanctions (including, without limitation, Cuba, Iran, North Korea, Sudan and Syria).

 

(ii)                                  the Company will not directly or indirectly use the proceeds of the offering of the Securities hereunder, or lend, contribute or otherwise make available such proceeds to any Subsidiary, joint venture partner or other Person: (A) to fund or facilitate any activities or business of or with any Person or in any country or territory that, at the time of such funding or facilitation, is the subject of Sanctions; or (B) in any other

 

14

 

manner that will result in a violation of Sanctions by any Person (including any Person participating in the offering, whether as underwriter, advisor, investor or otherwise).

 

(iii)                               For the past five years, the Company and its Subsidiaries have not knowingly engaged in, are not now knowingly engaged in, and will not engage in, any dealings or transactions with any Person, or in any country or territory, that at the time of the dealing or transaction is or was the subject of Sanctions.

 

(mm)                  Restrictions on Subsidiaries.  Except as disclosed in the Time of Sale Information and the Offering Memorandum, no Subsidiary of the Company is currently prohibited, directly or indirectly, under any agreement or other instrument to which it is a party or is subject, from paying any dividends to the Company, from making any other distribution on such Subsidiary’s capital stock, from repaying to the Company any loans or advances to such Subsidiary from the Company or from transferring any of such Subsidiary’s properties or assets to the Company or any other Subsidiary of the Company.

 

(nn)                          No Broker’s Fees.  Neither the Company nor any of its Subsidiaries is a party to any contract, agreement or understanding with any person (other than the Transaction Documents) that would give rise to a valid claim against any of them or any Initial Purchaser for a brokerage commission, finder’s fee or like payment in connection with the offering and sale of the Securities.

 

(oo)                          Rule 144A Eligibility.  On the Closing Date, the Securities will not be of the same class as securities listed on a national securities exchange registered under Section 6 of the Exchange Act or quoted in an automated inter-dealer quotation system.

 

(pp)                          No Integration.  Neither the Company nor any of its affiliates (as defined in Rule 501(b) of Regulation D) has, directly or through any agent, sold, offered for sale, solicited offers to buy or otherwise negotiated in respect of, any security (as defined in the Securities Act), that is or will be integrated with the sale of the Securities in a manner that would require registration of the Securities under the Securities Act.

 

(qq)                          No General Solicitation.  None of the Company or any of its affiliates or any other person acting on its or their behalf (other than the Initial Purchasers, as to which no representation is made) has solicited offers for, or offered or sold, the Securities by means of any form of general solicitation or general advertising within the meaning of Rule 502(c) of Regulation D or in any manner involving a public offering within the meaning of Section 4(a)(2) of the Securities Act.

 

(rr)                                Securities Law Exemptions.  Assuming the accuracy of the representations and warranties of the Initial Purchasers contained in Section 2(b) and their compliance with their agreements set forth therein, it is not necessary, in connection with the issuance and sale of the Securities to the Initial Purchasers and the offer, resale and delivery of the Securities by the Initial Purchasers in the manner contemplated by this Agreement, the Time of Sale Information and the Offering Memorandum, to register the Securities under the Securities Act or to qualify the Indenture under the Trust Indenture Act.

 

15

 

(ss)                              No Stabilization.  The Company has not taken, directly or indirectly, any action designed to or that could reasonably be expected to cause or result in any stabilization or manipulation of the price of the Securities or the Underlying Securities.

 

(tt)                                Margin Rules.  Neither the issuance, sale and delivery of the Securities nor the application of the proceeds thereof by the Company as described in each of the Time of Sale Information and the Offering Memorandum will violate Regulation T, U or X of the Board of Governors of the Federal Reserve System or any other regulation of such Board of Governors.

 

(uu)                          Forward-Looking Statements.  No forward-looking statement (within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act) included or incorporated by reference in any of the Time of Sale Information or the Offering Memorandum has been made or reaffirmed without a reasonable basis or has been disclosed other than in good faith.

 

(vv)                          Statistical and Market Data.  Nothing has come to the attention of the Company that has caused the Company to believe that the statistical and market-related data included or incorporated by reference in each of the Time of Sale Information and the Offering Memorandum is not based on or derived from sources that are reliable and accurate.

 

(ww)                      Registration Rights. Except as disclosed in the Time of Sale Information or Offering Memorandum, there are no persons with registration rights or other similar rights to have securities registered pursuant to a registration statement or otherwise registered by the Company or any Subsidiary under the Securities Act or on any public securities exchange.

 

(xx)                          Health Care Laws.  Except as described in the Applicable Memoranda, and except as would not, individually or in the aggregate, have or may reasonably be expected to have a Material Adverse Effect: (i) neither the Company nor any of its Subsidiaries has received any notice of adverse filing, warning letter, untitled letter or other correspondence or written notice from the U.S. Food and Drug Administration or other relevant regulatory authorities, or any other court or arbitrator or federal, state, local or foreign governmental or regulatory authority, alleging or asserting noncompliance with the Federal Food, Drug and Cosmetic Act (21 U.S.C. § 301 et seq.) (the “FFDCA”), or similar state, federal or foreign law or regulation; (ii) the Company and each Subsidiary is and has been in compliance with applicable health care laws, including without limitation, the FFDCA and the federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)), and the regulations promulgated pursuant to such (a) laws, (b) comparable state laws and (c) all other local, state, federal, national, supranational and foreign laws (collectively, “Health Care Laws”); (iii) the Company and each Subsidiary possesses all licenses, certificates, approvals, clearances, authorizations, permits and supplements or amendments thereto required by any such Health Care Laws and/or to carry on its businesses as now or proposed to be conducted (“Authorizations”) and such Authorizations are valid and in full force and effect and neither the Company nor any Subsidiary is in violation of any term of any such Authorizations; (iv) neither the Company nor any Subsidiary received written notice of any ongoing claim, action, suit, proceeding, hearing, enforcement, investigation, arbitration or other action from any U.S. or non-U.S. federal, national, state, local or other governmental or regulatory authority, governmental or regulatory agency or body, court, arbitrator or self-regulatory organization (each, a “Governmental Authority”) alleging that any product operation or activity is in

 

16

 

violation of any Health Care Laws or Authorizations or has any knowledge that any such Governmental Authority or third party is considering any such claim, litigation, arbitration, action, suit, investigation or proceeding; (v) neither the Company nor any Subsidiary has received written notice that any Governmental Authority has taken, is taking or intends to take action to limit, suspend, modify or revoke any Authorizations or has any knowledge that any such Governmental Authority is considering such action; and (vi) the Company and each Subsidiary has filed, maintained or submitted all reports, documents, forms, notices, applications, records, claims, submissions and supplements or amendments as required by any Health Care Laws or Authorizations and that all such reports, documents, forms, notices, applications, records, claims, submissions and supplements or amendments were complete, correct and not misleading on the date filed (or were corrected or supplemented by a subsequent submission).

 

(yy)                          Clinical Trials.  To the knowledge of the Company, the pre-clinical and clinical studies and trials conducted by or on behalf of the Company and each Subsidiary have been and, if still pending, are being conducted with reasonable care and in accordance with the protocols submitted to the FDA or comparable Governmental Authorities and all Health Care Laws and Authorizations; the descriptions of the results of such pre-clinical and clinical studies and trials contained in the Applicable Memoranda are accurate and complete in all material respects and fairly present the data derived from such pre-clinical and clinical studies and trials; except to the extent disclosed in the Applicable Memoranda, neither the Company nor any Subsidiary is aware of any pre-clinical or clinical studies or trials, the results of which the Company believes reasonably call into question the pre-clinical or clinical studies or trials described or referred to in the Applicable Memoranda when viewed in the context in which such results are described; and neither the Company nor any of the Subsidiaries has received any written notices or correspondence from any Governmental Authority requiring the termination, suspension or material modification of any pre-clinical or clinical study or trial conducted by or on behalf of the Company or any Subsidiary.

 

(zz)                            Material Relationship.  Except as disclosed in the Applicable Memoranda, neither the Company nor any Subsidiary (i) has any material lending or similar relationship with any Initial Purchaser or lending affiliate of any Initial Purchaser and (ii) intends to use any of the proceeds from the sale of the Securities to repay any outstanding debt owed to any affiliate of any Initial Purchaser.

 

(aaa)                   Sarbanes-Oxley Act.  There is and has been no failure on the part of the Company or any of the Company’s directors or officers, in their capacities as such, to comply with any provision of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith, including Section 402 related to loans and Section 302 and 906 related to certifications.

 

5.                                      Further Agreements of the Company.  The Company covenants and agrees with each Initial Purchaser that:

 

(a)                                 Delivery of Copies.  The Company will deliver to the Initial Purchasers as many copies of the Preliminary Offering Memorandum, any other Time of Sale Information, any Issuer Written Communication (other than electronic road show presentations) and the Offering

 

17

 

Memorandum (including all amendments and supplements thereto) as the Representatives may reasonably request.

 

(b)                                 Offering Memorandum, Amendments or Supplements.  Before finalizing the Offering Memorandum or making or distributing any amendment or supplement to any of the Time of Sale Information or the Offering Memorandum or filing with the Commission any document that will be incorporated by reference therein, the Company will furnish to the Representatives and counsel for the Initial Purchasers a copy of the proposed Offering Memorandum or such amendment or supplement or document to be incorporated by reference therein for review, and will not distribute any such proposed Offering Memorandum, amendment or supplement or file any such document with the Commission to which the Representatives reasonably object.

 

(c)                                  Additional Written Communications.  Before using, authorizing, approving or referring to any Issuer Written Communication, the Company will furnish to the Representatives and counsel for the Initial Purchasers a copy of such written communication for review and will not use, authorize, approve or refer to any such written communication to which the Representatives reasonably object.

 

(d)                                 Notice to the Representatives.  The Company will advise the Representatives promptly, and confirm such advice in writing, (i) of the issuance by any governmental or regulatory authority of any order preventing or suspending the use of any of the Time of Sale Information, any Issuer Written Communication or the Offering Memorandum or the initiation or threatening of any proceeding for that purpose; (ii) of the occurrence of any event at any time prior to the completion of the resales of the Securities by the Initial Purchasers as a result of which any of the Time of Sale Information, any Issuer Written Communication or the Offering Memorandum as then amended or supplemented would include any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing when such Time of Sale Information, Issuer Written Communication or the Offering Memorandum is delivered to a purchaser, not misleading; and (iii) of the receipt by the Company of any notice with respect to any suspension of the qualification of the Securities for offer and sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and the Company will use its reasonable best efforts to prevent the issuance of any such order preventing or suspending the use of any of the Time of Sale Information, any Issuer Written Communication or the Offering Memorandum or suspending any such qualification of the Securities and, if any such order is issued, will obtain as soon as possible the withdrawal thereof.

 

(e)                                  Ongoing Compliance of the Offering Memorandum and Time of Sale Information.  (1) If at any time prior to the completion of the resales of the Securities by the Initial Purchasers (i) any event shall occur or condition shall exist as a result of which the Offering Memorandum as then amended or supplemented would include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances existing when the Offering Memorandum is delivered to a purchaser, not misleading or (ii) it is necessary to amend or supplement the Offering Memorandum to comply with applicable law, the Company will promptly notify the Initial Purchasers thereof and forthwith prepare and, subject to paragraph (b) above, furnish to the Initial Purchasers such

 

18

 

amendments or supplements to the Offering Memorandum (or any document to be filed with the Commission and incorporated by reference therein) as may be necessary so that the statements in the Offering Memorandum as so amended or supplemented (or including such document to be incorporated by reference therein) will not, in the light of the circumstances existing when the Offering Memorandum is delivered to a purchaser, be misleading or so that the Offering Memorandum will comply with law and (2) if at any time prior to the Closing Date (i) any event shall occur or condition shall exist as a result of which any of the Time of Sale Information as then amended or supplemented would include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading or (ii) it is necessary to amend or supplement any of the Time of Sale Information to comply with law, the Company will immediately notify the Initial Purchasers thereof and forthwith prepare and, subject to paragraph (b) above, furnish to the Initial Purchasers such amendments or supplements to any of the Time of Sale Information (or any document to be filed with the Commission and incorporated by reference therein) as may be necessary so that the statements in any of the Time of Sale Information as so amended or supplemented will not, in light of the circumstances under which they were made, be misleading.

 

(f)                                   Blue Sky Compliance.  The Company will qualify the Securities for offer and sale under the securities or Blue Sky laws of such jurisdictions as the Representatives shall reasonably request and will continue such qualifications in effect so long as required for the offering and resale of the Securities; provided that the Company shall not be required to (i) qualify as a foreign corporation or other entity or as a dealer in securities in any such jurisdiction where it would not otherwise be required to so qualify, (ii) file any general consent to service of process in any such jurisdiction or (iii) subject itself to taxation in any such jurisdiction if it is not otherwise so subject.

 

(g)                                  Clear Market.  Without the prior written consent of the Representatives, the Company will not, during the period ending 90 days after the date of the Offering Memorandum, (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock or (ii) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of Common Stock, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Common Stock or such other securities, in cash or otherwise, other than (1) the issuance of equity based awards granted pursuant to the Company’s benefit plans existing on the date hereof that are referred to in the Offering Memorandum, as such plans may be amended, (2) the issuance of shares of Common Stock upon the exercise of any such equity based awards, (3) any shares of stock of the Company issued upon the conversion of securities outstanding on the date of this Agreement and described in the Time of Sale Information, (4) the filing of a registration statement on Form S-8 relating to the shares of Common Stock granted pursuant to the Company’s equity incentive plans existing as of the Closing Date, and (5) shares of Common Stock or any securities convertible into, or exercisable, or exchangeable for, shares of Common Stock issued, sold or delivered in connection with any acquisition or strategic investment (including any joint venture, strategic alliance or partnership) as long as (x) the aggregate number of shares of Common Stock issued or issuable does not exceed 5% of the number of

 

19

 

shares of Common Stock outstanding immediately after the issuance and sale of the Underwritten Securities, and (y) each recipient of any such shares or other securities agrees to restrictions on the resale of such securities that are consistent with the lock-up letter set forth in Exhibit A hereof for the remainder of the 90-day restricted period.

 

(h)                                 Use of Proceeds.  The Company will apply the net proceeds from the sale of the Securities as described in each of the Time of Sale Information and the Offering Memorandum under the heading “Use of Proceeds”.

 

(i)                                     Underlying Securities. The Company will reserve and keep available at all times, free of pre-emptive rights, the Maximum Number of Underlying Securities for the purpose of enabling the Company to satisfy all obligations to issue the Underlying Securities upon conversion of the Securities (assuming the maximum conversion rate under any “make-whole” adjustment applies).  The Company will use its reasonable best efforts to cause the Maximum Number of Underlying Securities to be listed on NASDAQ and maintain such listing.

 

(j)                                    Supplying Information.  While the Securities remain outstanding and are “restricted securities” within the meaning of Rule 144(a)(3) under the Securities Act, the Company will, during any period in which the Company is not subject to and in compliance with Section 13 or 15(d) of the Exchange Act, furnish to holders of the Securities, prospective purchasers of the Securities designated by such holders and securities analysts, in each case upon request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.

 

(k)                                 DTC.  The Company will assist the Initial Purchasers in arranging for the Securities to be eligible for clearance and settlement through DTC.

 

(l)                                     No Resales by the Company.  During the period from the Closing Date until one year after the Closing Date or the Additional Closing Date, if applicable, the Company will not, and will not permit any of its affiliates (as defined in Rule 144 under the Securities Act) to, resell any of the Securities that have been acquired by any of them, except for Securities purchased by the Company or any of its affiliates and resold in a transaction registered under the Securities Act or resold pursuant to an exemption from the registration requirements of the Securities Act in a transaction that results in such Security no longer being a “restricted security” (as defined in Rule 144 under the Securities Act).

 

(m)                             No Integration.  Neither the Company nor any of its affiliates (as defined in Rule 501(b) of Regulation D) will, directly or through any agent, sell, offer for sale, solicit offers to buy or otherwise negotiate in respect of, any security (as defined in the Securities Act), that is or will be integrated with the sale of the Securities in a manner that would require registration of the Securities under the Securities Act.

 

(n)                                 No General Solicitation.  None of the Company or any of its affiliates or any other person acting on its or their behalf (other than the Initial Purchasers, as to which no covenant is given) will solicit offers for, or offer or sell, the Securities by means of any form of general solicitation or general advertising within the meaning of Rule 502(c) of Regulation D or

 

20

 

in any manner involving a public offering within the meaning of Section 4(a)(2) of the Securities Act.

 

(o)                                 No Stabilization.  The Company will not take, directly or indirectly, any action designed to or that could reasonably be expected to cause or result in any stabilization or manipulation of the price of the Securities and will not take any action prohibited by Regulation M under the Exchange Act in connection with the distribution of the Securities contemplated hereby.

 

(p)                                 No Actions that Impact the Conversion Rate.  Between the date hereof and the Closing Date, the Company will not take or authorize any action that would result in an adjustment of the conversion rate of the Securities.

 

(q)                                 Investment Company.  During the period of one year after the Closing Date or any Additional Closing Date, if later, the Company will not be, and will not become, an open-end investment company, unit investment trust or face-amount certificate company that is or is required to be registered under Section 8 of the Investment Company Act.

 

6.                                      Certain Agreements of the Initial Purchasers.  Each Initial Purchaser hereby represents and agrees that it has not and will not use, authorize use of, refer to, or participate in the planning for use of, any written communication that constitutes an offer to sell or the solicitation of an offer to buy the Securities other than (i) the Preliminary Offering Memorandum and the Offering Memorandum, (ii) a written communication that contains only “issuer information” (as defined in Rule 433(h)(2) under the Securities Act) that was included (including through incorporation by reference) in the Preliminary Offering Memorandum and the Time of Sale Information or the Offering Memorandum, (iii) any written communication listed on Annex A or prepared pursuant to Section 5(c) above (including any electronic road show) or Section 5(n) above, or (iv) any written communication prepared by such Initial Purchaser and approved by the Company and the Representatives in advance in writing.

 

7.                                      Conditions of Initial Purchasers’ Obligations.  The obligation of each Initial Purchaser to purchase the Underwritten Securities on the Closing Date or the Option Securities on the Additional Closing Date, as the case may be, as provided herein is subject to the performance by the Company of its covenants and other obligations hereunder and to the following additional conditions:

 

(a)                                 Representations and Warranties.  The representations and warranties of the Company contained herein shall be true and correct on the date hereof and on and as of the Closing Date or the Additional Closing Date, as the case may be; and the statements of the Company and its officers made in any certificates delivered pursuant to this Agreement shall be true and correct on and as of the Closing Date or the Additional Closing Date, as the case may be.

 

(b)                                 No Downgrade.  Subsequent to the earlier of (A) the Time of Sale and (B) the execution and delivery of this Agreement, (i) no downgrading shall have occurred in the rating accorded the Securities or any other debt securities or preferred stock issued or guaranteed by the Company or any of its Subsidiaries by any “nationally recognized statistical rating organization”, as such term is defined under Section 3(a)(62) under the Exchange Act; and (ii) no such

 

21

 

organization shall have publicly announced that it has under surveillance or review, or has changed its outlook with respect to, its rating of the Securities or of any other debt securities or preferred stock issued or guaranteed by the Company or any of its Subsidiaries (other than an announcement with positive implications of a possible upgrading).

 

(c)                                  No Material Adverse Change.  No material change in the capital stock or long-term debt of the Company and no event or condition of a type described in Section 4(i) or 10 hereof shall have occurred or shall exist, which change, event or condition is not described in each of the Time of Sale Information (excluding any amendment or supplement thereto) and the Offering Memorandum (excluding any amendment or supplement thereto) the effect of which in the sole judgment of the Representatives makes it impracticable or inadvisable to proceed with the offering, sale or delivery of the Securities on the Closing Date or the Additional Closing Date, as the case may be, on the terms and in the manner contemplated by this Agreement, the Time of Sale Information and the Offering Memorandum.

 

(d)                                 Officer’s Certificate.  The Representatives shall have received on and as of the Closing Date or the Additional Closing Date, as the case may be, a certificate of a senior executive officer of the Company who has specific knowledge of the Company’s financial matters and is satisfactory to the Representatives (i) confirming that such officer has reviewed the Time of Sale Information and the Offering Memorandum and the representations set forth in Sections 4(b) and 4(d) hereof are true and correct, (ii) confirming that the other representations and warranties of the Company in this Agreement are true and correct and that the Company has complied with all agreements and satisfied all conditions on its part to be performed or satisfied hereunder at or prior to such Closing Date or such Additional Closing Date, as the case may be and (iii) to the effect set forth in paragraphs (b) and (c) above.

 

The officer signing and delivering such certificate may rely upon the best of his or her knowledge as to proceedings threatened.

 

(e)                                  Comfort Letters.  On the date of this Agreement and on the Closing Date or the Additional Closing Date, as the case may be, Grant Thornton LLP shall have furnished to the Representatives, at the request of the Company, letters, dated the respective dates of delivery thereof and addressed to the Initial Purchasers, in form and substance reasonably satisfactory to the Representatives, containing statements and information of the type customarily included in accountants’ “comfort letters” to underwriters with respect to the financial statements and certain financial information contained or incorporated by reference in each of the Time of Sale Information and the Offering Memorandum; provided that the letter delivered on the Closing Date or the Additional Closing Date, as the case may be, shall use a “cut-off” date no more than three business days prior to such Closing Date or such Additional Closing Date, as the case may be.

 

(f)                                   Opinion and 10b-5 Statement of Counsel for the Company.  Dechert LLP, counsel for the Company, shall have furnished to the Representatives, at the request of the Company, their written opinion and 10b-5 statement, dated the Closing Date or the Additional Closing Date, as the case may be, and addressed to the Initial Purchasers, in form and substance reasonably satisfactory to the Representatives.

 

22

 

(g)                                  Opinion of Intellectual Property Counsel for the Company.  Mayer Brown LLP, intellectual property counsel for the Company, shall have furnished to the Representatives, at the request of the Company, their written opinion, dated the Closing Date or the Additional Closing Date, as the case may be, and addressed to the Initial Purchasers, in form and substance reasonably satisfactory to the Representatives.

 

(h)                                 Opinion and 10b-5 Statement of Counsel for the Initial Purchasers.  The Representatives shall have received on and as of the Closing Date or the Additional Closing Date, as the case may be, an opinion and 10b-5 statement of Cooley LLP, counsel for the Initial Purchasers, with respect to such matters as the Representatives may reasonably request, and such counsel shall have received such documents and information as they may reasonably request to enable them to pass upon such matters.

 

(i)                                     No Legal Impediment to Issuance.  No action shall have been taken and no statute, rule, regulation or order shall have been enacted, adopted or issued by any federal, state or foreign governmental or regulatory authority that would, as of the Closing Date or the Additional Closing Date, as the case may be, prevent the issuance or sale of the Securities; and no injunction or order of any federal, state or foreign court shall have been issued that would, as of the Closing Date or the Additional Closing Date, as the case may be, prevent the issuance or sale of the Securities.

 

(j)                                    Good Standing.  The Representatives shall have received on and as of the Closing Date or the Additional Closing Date, as the case may be, satisfactory evidence of the good standing of the Company in the State of Delaware and the good standing of the Company and the Company’s Subsidiaries listed on Schedule 2 in the jurisdictions listed on Schedule 2 (or the functional equivalent concept in such jurisdictions to the extent applicable), in each case in writing or any standard form of telecommunication, from the appropriate governmental authorities of such jurisdictions.

 

(k)                                 DTC.  The Securities shall be eligible for clearance and settlement through DTC.

 

(l)                                     Listing.  A “Listing of Additional Shares Notification Form” relating to the Maximum Number of Underlying Securities shall have been submitted to The NASDAQ Stock Market, and The NASDAQ Stock Market shall have informed the Company that it has completed its review of such form.

 

(m)                             Lock-up Agreements.  The “lock-up” agreements, each substantially in the form of Exhibit A hereto, between you and each of the executive officers and directors of the Company relating to sales and certain other dispositions of shares of Common Stock or certain other securities, delivered to you on or before the date hereof, shall be in full force and effect on the Closing Date or the Additional Closing Date, as the case may be.

 

(n)                                 Additional Documents.  On or prior to the Closing Date or the Additional Closing Date, as the case may be, the Company shall have furnished to the Representatives such further certificates and documents as the Representatives may reasonably request.

 

23

 

All opinions, letters, certificates and evidence mentioned above or elsewhere in this Agreement shall be deemed to be in compliance with the provisions hereof only if they are in form and substance reasonably satisfactory to counsel for the Initial Purchasers.

 

8.                                      Indemnification and Contribution.

 

(a)                                 Indemnification of the Initial Purchasers.  The Company agrees to indemnify and hold harmless each Initial Purchaser, its affiliates, directors and officers and each person, if any, who controls such Initial Purchaser within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against any and all losses, claims, damages and liabilities (including, without limitation, legal fees and other expenses reasonably incurred in connection with any suit, action or proceeding or any claim asserted, as such fees and expenses are incurred), joint or several, that arise out of, or are based upon, any untrue statement or alleged untrue statement of a material fact contained in the Preliminary Offering Memorandum, any of the other Time of Sale Information, any Issuer Written Communication, any road show as defined in Rule 433(h) under the Securities Act (a “road show”) or the Offering Memorandum (or any amendment or supplement thereto) or any omission or alleged omission to state therein a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, in each case except insofar as such losses, claims, damages or liabilities arise out of, or are based upon, any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with any information relating to any Initial Purchaser furnished to the Company in writing by such Initial Purchaser through the Representatives or its counsel expressly for use therein, it being understood and agreed that the only such information furnished by any Initial Purchaser consists of the information described as such in paragraph (b) below.

 

(b)                                 Indemnification of the Company.  Each Initial Purchaser agrees, severally and not jointly, to indemnify and hold harmless the Company, each of its directors and officers and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act to the same extent as the indemnity set forth in paragraph (a) above, but only with respect to any losses, claims, damages or liabilities that arise out of, or are based upon, any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with any information relating to such Initial Purchaser furnished to the Company in writing by such Initial Purchaser through the Representatives or its counsel expressly for use in the Preliminary Offering Memorandum, any of the other Time of Sale Information, any Issuer Written Communication, any road show or the Offering Memorandum (or any amendment or supplement thereto), it being understood and agreed that the only such information consists of the following: (i) the fourth and fifth sentences in the third paragraph under the caption “Plan of Distribution——New Issue of Notes”; (ii) the first paragraph concerning over-allotment, stabilizing transactions and syndicate covering transactions under the caption “Plan of Distribution——Price Stabilization and Short Positions; Repurchase of Common Stock”; (iii) the names of the Initial Purchasers on the front cover page; (iv) the table between the first and second paragraph under the heading, “Plan of Distribution”; (v) the third and fourth sentences in the second paragraph under the caption “The Offering—Transfer Restrictions; Absence of a Public Market for the Notes”; and (vi) the second and third sentence under the caption “Risk Factors—We cannot assure you that an active trading market will develop for the notes.”

 

24

 

(c)                                  Notice and Procedures.  If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand shall be brought or asserted against any person in respect of which indemnification may be sought pursuant to either paragraph (a) or (b) above, such person (the “Indemnified Person”) shall promptly notify the person against whom such indemnification may be sought (the “Indemnifying Person”) in writing; provided that the failure to notify the Indemnifying Person shall not relieve it from any liability that it may have under this Section 8 except to the extent that it has been materially prejudiced (through the forfeiture of substantive rights or defenses) by such failure; and provided, further, that the failure to notify the Indemnifying Person shall not relieve it from any liability that it may have to an Indemnified Person otherwise than under this Section 8.  If any such proceeding shall be brought or asserted against an Indemnified Person and it shall have notified the Indemnifying Person thereof, the Indemnifying Person shall retain counsel reasonably satisfactory to the Indemnified Person (who shall not, without the consent of the Indemnified Person, be counsel to the Indemnifying Person) to represent the Indemnified Person and any others entitled to indemnification pursuant to this Section 8 that the Indemnifying Person may designate in such proceeding and shall pay the fees and expenses of such proceeding and shall pay the fees and expenses of such counsel related to such proceeding, as incurred.  In any such proceeding, any Indemnified Person shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Person unless (i) the Indemnifying Person and the Indemnified Person shall have mutually agreed to the contrary; (ii) the Indemnifying Person has failed within a reasonable time to retain counsel reasonably satisfactory to the Indemnified Person; (iii) the Indemnified Person shall have reasonably concluded, based on the advice of counsel (including internal counsel) that there may be legal defenses available to it that are different from or in addition to those available to the Indemnifying Person; or (iv) the named parties in any such proceeding (including any impleaded parties) include both the Indemnifying Person and the Indemnified Person and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them.  It is understood and agreed that the Indemnifying Person shall not, in connection with any proceeding or related proceeding in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all Indemnified Persons, and that all such fees and expenses shall be reimbursed as they are incurred.  Any such separate firm for any Initial Purchaser, its affiliates, directors and officers and any control persons of such Initial Purchaser shall be designated in writing by the Representatives and any such separate firm for the Company, its directors and officers and any control persons of the Company shall be designated in writing by the Company.  The Indemnifying Person shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the Indemnifying Person agrees to indemnify each Indemnified Person from and against any loss or liability by reason of such settlement or judgment.  Notwithstanding the foregoing sentence, if at any time an Indemnified Person shall have requested that an Indemnifying Person reimburse the Indemnified Person for fees and expenses of counsel as contemplated by this paragraph, the Indemnifying Person shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 45 days after receipt by the Indemnifying Person of such request and (ii) the Indemnifying Person shall not have reimbursed the Indemnified Person in accordance with such request prior to the date of such settlement.  No Indemnifying Person shall, without the written consent of the Indemnified Person, effect any settlement of any pending or threatened proceeding

 

25

 

in respect of which any Indemnified Person is or could have been a party and indemnification could have been sought hereunder by such Indemnified Person, unless such settlement (x) includes an unconditional release of such Indemnified Person, in form and substance reasonably satisfactory to such Indemnified Person, from all liability on claims that are the subject matter of such proceeding and (y) does not include any statement as to or any admission of fault, culpability or a failure to act by or on behalf of any Indemnified Person.

 

(d)                                 Contribution.  If the indemnification provided for in paragraphs (a) and (b) above is unavailable to an Indemnified Person or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then each Indemnifying Person under such paragraph, in lieu of indemnifying such Indemnified Person thereunder, shall contribute to the amount paid or payable by such Indemnified Person as a result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by the Company, on the one hand, and the Initial Purchasers, on the other, from the offering of the Securities or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) but also the relative fault of the Company, on the one hand, and the Initial Purchasers, on the other, in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations.  The relative benefits received by the Company, on the one hand, and the Initial Purchasers, on the other, shall be deemed to be in the same respective proportions as the net proceeds (before deducting expenses) received by the Company from the sale of the Securities and the total discounts and commissions received by the Initial Purchasers in connection therewith, as provided in this Agreement, bear to the aggregate offering price of the Securities.  The relative fault of the Company, on the one hand, and the Initial Purchasers, on the other, 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 or by the Initial Purchasers and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

 

(e)                                  Limitation on Liability.  The Company and the Initial Purchasers agree that it would not be just and equitable if contribution pursuant to this Section 8 were determined by pro rata allocation (even if the Initial Purchasers were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in paragraph (d) above.  The amount paid or payable by an Indemnified Person as a result of the losses, claims, damages and liabilities referred to in paragraph (d) above shall be deemed to include, subject to the limitations set forth above, any legal or other expenses incurred by such Indemnified Person in connection with any such action or claim.  Notwithstanding the provisions of this Section 8, in no event shall an Initial Purchaser be required to contribute any amount in excess of the amount by which the total discounts and commissions received by such Initial Purchaser with respect to the offering of the Securities exceeds the amount of any damages that such Initial Purchaser 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.  The Initial Purchasers’ obligations to contribute pursuant to this Section 8 are several in proportion to their respective purchase obligations hereunder and not joint.

 

26

 

(f)                                   Non-Exclusive Remedies.  The remedies provided for in this Section 8 are not exclusive and shall not limit any rights or remedies that may otherwise be available to any Indemnified Person at law or in equity.

 

9.                                      Effectiveness of Agreement.  This Agreement shall become effective upon the execution and delivery hereof by the parties hereto.

 

10.                               Termination.  This Agreement may be terminated in the absolute discretion of the Representatives, by notice to the Company, if after the execution and delivery of this Agreement and on or prior to the Closing Date or, in the case of the Option Securities, on or prior to the Additional Closing Date (i) trading generally shall have been suspended or materially limited on or by any of the New York Stock Exchange or The NASDAQ Global Market; (ii) trading of any securities issued or guaranteed by the Company shall have been suspended on any exchange or in any over-the-counter market; (iii) a general moratorium on commercial banking activities shall have been declared by federal or New York State authorities; or (iv) there shall have occurred any outbreak or escalation of hostilities or any change in financial markets or any calamity or crisis, either within or outside the United States, that, in the sole judgment of the Representatives, is material and adverse and makes it impracticable or inadvisable to proceed with the offering, sale or delivery, of the Securities on the Closing Date or the Additional Closing Date, as the case may be, on the terms and in the manner contemplated by this Agreement, the Time of Sale Information and the Offering Memorandum.

 

11.                               Defaulting Initial Purchaser.  (a)  If, on the Closing Date or the Additional Closing Date, as the case may be, any Initial Purchaser defaults on its obligation to purchase the Securities that it has agreed to purchase hereunder on such date, the non-defaulting Initial Purchasers may in their discretion arrange for the purchase of such Securities by other persons satisfactory to the Company on the terms contained in this Agreement.  If, within 36 hours after any such default by any Initial Purchaser, the non-defaulting Initial Purchasers do not arrange for the purchase of such Securities, then the Company shall be entitled to a further period of 36 hours within which to procure other persons satisfactory to the non-defaulting Initial Purchasers to purchase such Securities on such terms.  If other persons become obligated or agree to purchase the Securities of a defaulting Initial Purchaser, either the non-defaulting Initial Purchasers or the Company may postpone the Closing Date or the Additional Closing Date, as the case may be, for up to five full business days in order to effect any changes that in the opinion of counsel for the Company or counsel for the Initial Purchasers may be necessary in the Time of Sale Information, the Offering Memorandum or in any other document or arrangement, and the Company agrees to promptly prepare any amendment or supplement to the Time of Sale Information or the Offering Memorandum that effects any such changes.  As used in this Agreement, the term “Initial Purchaser” includes, for all purposes of this Agreement unless the context otherwise requires, any person not listed in Schedule 1 hereto that, pursuant to this Section 11, purchases Securities that a defaulting Initial Purchaser agreed but failed to purchase.

 

(b)                                 If, after giving effect to any arrangements for the purchase of the Securities of a defaulting Initial Purchaser or Initial Purchasers by the non-defaulting Initial Purchasers and the Company as provided in paragraph (a) above, the aggregate principal amount of such Securities that remains unpurchased on the Closing Date or the Additional Closing Date, as the case may be, does not exceed one-eleventh of the aggregate principal amount of the Securities to be

 

27

 

purchased on such date, then the Company shall have the right to require each non-defaulting Initial Purchaser to purchase the principal amount of Securities that such Initial Purchaser agreed to purchase on such date plus such Initial Purchaser’s pro rata share (based on the principal amount of Securities that such Initial Purchaser agreed to purchase on such date) of the Securities of such defaulting Initial Purchaser or Initial Purchasers for which such arrangements have not been made.

 

(c)                                  If, after giving effect to any arrangements for the purchase of the Securities of a defaulting Initial Purchaser or Initial Purchasers by the non-defaulting Initial Purchasers and the Company as provided in paragraph (a) above, the aggregate principal amount of such Securities that remains unpurchased on the Closing Date or the Additional Closing Date, as the case may be, exceeds one-eleventh of the aggregate principal amount of the Securities to be purchased on such date, or if the Company shall not exercise the right described in paragraph (b) above, then this Agreement or, with respect to any Additional Closing Date, the obligation of the Initial Purchasers to purchase Securities on the Additional Closing Date, as the case may be, shall terminate without liability on the part of the non-defaulting Initial Purchasers.  Any termination of this Agreement pursuant to this Section 11 shall be without liability on the part of the Company, except that the Company will continue to be liable for the payment of its own expenses as set forth in Section 12 hereof and except that the provisions of Section 8 hereof shall not terminate and shall remain in effect.

 

(d)                                 Nothing contained herein shall relieve a defaulting Initial Purchaser of any liability it may have to the Company or any non-defaulting Initial Purchaser for damages caused by its default.

 

28

 

12.                               Payment of Expenses.  (a) Whether or not the transactions contemplated by this Agreement are consummated or this Agreement is terminated, the Company agrees to pay or cause to be paid all costs and expenses incident to the performance of its obligations hereunder, including without limitation, (i) the costs incident to the authorization, issuance, sale, preparation and delivery of the Securities and any taxes payable in that connection; (ii) the costs incident to the preparation and printing of the Preliminary Offering Memorandum, any other Time of Sale Information, any Issuer Written Communication and the Offering Memorandum (including any amendment or supplement thereto) and the distribution thereof; (iii) the costs of reproducing and distributing each of the Transaction Documents; (iv) the fees and expenses of the Company’s counsel and independent accountants; (v) the fees and expenses incurred in connection with the registration or qualification and determination of eligibility for investment of the Securities under the laws of such jurisdictions as the Representatives may designate; (vi) any fees charged by rating agencies for rating the Securities; (vii) the fees and expenses of the Trustee and any paying agent (including related fees and expenses of any counsel to such parties); (viii) all expenses and application fees incurred in connection with the approval of the Securities for book-entry transfer by DTC; (ix) any fees or costs incident to listing the Underlying Securities on NASDAQ; and (x) all expenses incurred by the Company in connection with any “road show” presentation to potential investors.  For clarity, except as expressly required by this Section 12 or Section 8 or as otherwise agreed between the Company and any Initial Purchaser, the Company shall have no obligation to pay any costs and expenses of the Representatives or the other Initial Purchasers (including any travel expenses and the legal costs and fees of counsel to the Representatives and the other Initial Purchasers).

 

(b)                                 If (i) this Agreement is terminated pursuant to Section 10(ii), (ii) the Company for any reason fails to tender the Securities for delivery to the Initial Purchasers or (iii) the Initial Purchasers decline to purchase the Securities for any reason permitted under Section 7, the Company agrees to reimburse the Initial Purchasers for all out-of-pocket costs and expenses (including the fees and expenses of their counsel) reasonably incurred by the Initial Purchasers in connection with this Agreement and the offering contemplated hereby.

 

13.                               Persons Entitled to Benefit of Agreement.  This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and any controlling persons referred to herein, and the affiliates, officers and directors of the Company and each Initial Purchaser referred to in Section 8 hereof.  Nothing in this Agreement is intended or shall be construed to give any other person any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision contained herein.  No purchaser of Securities from any Initial Purchaser shall be deemed to be a successor merely by reason of such purchase.

 

14.                               Survival.  The respective indemnities, rights of contribution, representations, warranties and agreements of the Company and the Initial Purchasers contained in this Agreement or made by or on behalf of the Company or the Initial Purchasers pursuant to this Agreement or any certificate delivered pursuant hereto shall survive the delivery of and payment for the Securities and shall remain in full force and effect, regardless of any termination of this Agreement or any investigation made by or on behalf of the Company or the Initial Purchasers.

 

15.                               Certain Defined Terms.  For purposes of this Agreement, (a) except where otherwise expressly provided, the term “affiliate” has the meaning set forth in Rule 405 under the

 

29

 

Securities Act; (b) the term “business day” means any day other than a day on which banks are permitted or required to be closed in New York City; (c) the term “Exchange Act” means the Securities Exchange Act of 1934, as amended; and (d) the term “written communication” has the meaning set forth in Rule 405 under the Securities Act.

 

16.                               Miscellaneous.  (a)  Notices.  All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or transmitted and confirmed by any standard form of telecommunication.  Notices to the Initial Purchasers shall be given to the Representatives c/o JMP Securities LLC, 600 Montgomery Street, Suite 1100, San Francisco, CA 94111, Attention: General Counsel, and c/o Guggenheim Securities, LLC, 330 Madison Avenue, New York, NY 10017, Attention: Equity Capital Markets with a copy to General Counsel.  Notices to the Company shall be given to it at Egalet Corporation, 460 East Swedesford Road, Suite 1050, Wayne, Pennsylvania 19087 (fax no.: (484) 875-9273); Attention:  Stan Musial.

 

(b)                                 Governing Law.  This Agreement and any claim, controversy or dispute arising under or related to this Agreement shall be governed by and construed in accordance with the laws of the State of New York.

 

(c)                                  Counterparts.  This Agreement may be signed in counterparts (which may include counterparts delivered by any standard form of telecommunication), each of which shall be an original and all of which together shall constitute one and the same instrument.

 

(d)                                 Amendments or Waivers.  No amendment or waiver of any provision of this Agreement, nor any consent or approval to any departure therefrom, shall in any event be effective unless the same shall be in writing and signed by the parties hereto.

 

(e)                                  Headings.  The headings herein are included for convenience of reference only and are not intended to be part of, or to affect the meaning or interpretation of, this Agreement.

 

(f)                                   Xtract Research LLC.  The Company hereby agrees that the Initial Purchasers may provide copies of the Preliminary Offering Memorandum and the Offering Memorandum relating to the offering of the Securities and any other agreements or documents relating thereto, including, without limitation, any trust indentures, to Xtract Research LLC (“Xtract”) following the completion of the offering for inclusion in an online research service sponsored by Xtract, access to which is restricted to “qualified institutional buyers” as defined in Rule 144A under the Securities Act.

 

(g)                                  Patriot Act Information.  In accordance with the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)), the Initial Purchasers are required to obtain, verify and record information that identifies their respective clients, including the Company, which information may include the names and addresses of their respective clients, as well as other information that will allow the Initial Purchasers to properly identify their respective clients.

 

(h)                                 Entire Agreement.  This Agreement, along with the other Transaction Documents, constitute the entire agreement of the parties to this agreement, and supersede all prior written or

 

30

 

oral and all contemporaneous oral agreements, understandings and negotiations with respect to the subject matter hereof and thereof.

 

[Signature pages follow]

 

31

 

If the foregoing is in accordance with your understanding, please indicate your acceptance of this Agreement by signing in the space provided below.

 

 

	
 
    	
Very   truly yours,
    
	
 
    	
 
    
	
 
    	
Egalet   Corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   
    	
/s/   Robert Radie
    
	
 
    	
 
    	
Title:   Chief Executive Officer
    

 

[Signature Page — Purchase Agreement]

 

 

	
Accepted   as of the date hereof
    	
 
    
	
 
    	
 
    
	
JMP   Securities LLC
    	
 
    
	
Guggenheim   Securities, LLC
    	
 
    
	
For themselves and on behalf of the several
    	
 
    
	
Initial Purchasers listed in Schedule 1 hereto
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
JMP   Securities LLC
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/   David J. Kellman
    	
 
    
	
 
    	
Authorized   Signatory
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Guggenheim   Securities, LLC
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/   Stuart Duty
    	
 
    
	
 
    	
Authorized   Signatory
    	
 
    

 

33

 

SCHEDULE 1

 

	
Initial Purchaser
    	
 
    	
Principal Amount
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
JMP Securities LLC
    	
 
    	
$
    	
36,000,000
    	
 
    
	
Guggenheim Securities, LLC
    	
 
    	
$
    	
24,000,000
    	
 
    
	
Total
    	
 
    	
$
    	
60,000,000
    	
 
    

 

 

SCHEDULE 2

 

Significant Subsidiaries of the Company

 

·                  Egalet US Inc.

 

·                  Egalet Ltd.

 

 

ANNEX A

 

Additional Time of Sale Information

 

Pricing term sheet containing the terms of the Securities, substantially in the form of Annex B.

 

 

ANNEX B

 

Pricing Term Sheet

 

 

	
PRICING TERM SHEET
    	
 
    	
Strictly Confidential
    
	
Dated   April 1, 2015
    	
 
    	
 
    

 

Egalet Corporation
 $60,000,000
 5.50% Convertible Senior Notes due 2020

 

The information in this pricing term sheet (the “Pricing Term Sheet”) supplements Egalet Corporation’s preliminary offering memorandum, dated March 31, 2015 (the “Preliminary Offering Memorandum”), and supersedes the information in the Preliminary Offering Memorandum only to the extent inconsistent with the information in the Preliminary Offering Memorandum.  In all other respects, the Pricing Term Sheet is qualified in its entirety by reference to the Preliminary Offering Memorandum, including all other documents incorporated by reference therein.  Terms used herein but not defined herein shall have the respective meanings as set forth in the Preliminary Offering Memorandum.  All references to dollar amounts are references to U.S. dollars.

 

	
Issuer:
    	
 
    	
Egalet   Corporation, a Delaware corporation.
    
	
 
    	
 
    	
 
    
	
Ticker   / Exchange for Common Stock:
    	
 
    	
EGLT   / The NASDAQ Global Market (“NASDAQ”).
    
	
 
    	
 
    	
 
    
	
Title   of Securities:
    	
 
    	
5.50%   Convertible Senior Notes due 2020 (the “Notes”).
    
	
 
    	
 
    	
 
    
	
Aggregate   Principal Amount Offered:
    	
 
    	
$60,000,000   aggregate principal amount of Notes.
    
	
 
    	
 
    	
 
    
	
Initial   Purchasers’ Option to Purchase Additional Notes:
    	
 
    	
$9,000,000   aggregate principal amount of Notes.
    
	
 
    	
 
    	
 
    
	
Trade   Date:
    	
 
    	
April 1,   2015.
    
	
 
    	
 
    	
 
    
	
Expected   Settlement Date:
    	
 
    	
April 7,   2015.
    
	
 
    	
 
    	
 
    
	
Issue   Price:
    	
 
    	
The   Notes will be issued at a price of 100% of their principal amount.
    
	
 
    	
 
    	
 
    
	
Maturity:
    	
 
    	
The   Notes will mature on April 1, 2020, unless earlier repurchased or   converted.
    
	
 
    	
 
    	
 
    
	
Interest   Rate:
    	
 
    	
5.50%   per year.
    
	
 
    	
 
    	
 
    
	
Interest   Payment Dates:
    	
 
    	
Interest   will accrue from the Expected Settlement Date and will be payable   semi-annually in arrears on April 1 and October 1 of each year,   beginning on October 1, 2015.
    
	
 
    	
 
    	
 
    
	
NASDAQ   Last Reported Sale Price on March 31, 2015:
    	
 
    	
$12.93   per share of the Issuer’s common stock.
    
	
 
    	
 
    	
 
    
	
Conversion   Premium:
    	
 
    	
Approximately   15% above the NASDAQ Last Reported Sale Price on March 31, 2015.
    
	
 
    	
 
    	
 
    
	
Initial   Conversion Price:
    	
 
    	
Approximately   $14.87 per share of the Issuer’s common stock.
    
	
 
    	
 
    	
 
    
	
Initial   Conversion Rate:
    	
 
    	
67.2518   shares of the Issuer’s common stock per $1,000 principal amount of Notes.
    

 

 

	
Conversion   Rights:
    	
 
    	
Holders   may convert all or any portion of their Notes, in multiples of $1,000   principal amount, at their option at any time prior to the close of business   on the business day immediately preceding January 1, 2020 only under the   following circumstances:

 

·      on or after the date that is six months after the last date   of original issuance of the Notes, if the last reported sale price of the   Issuer’s common stock for at least 20 trading days (whether or not   consecutive) during a period of 30 consecutive trading days ending within the   five trading days immediately preceding a conversion date is greater than or   equal to the conversion price for the Notes on each applicable trading day;

 

·      during the five business day period after any five   consecutive trading day period (the “measurement period”) in which the   “trading price” (as defined under “Description of Notes—Conversion   Rights—Conversion upon Satisfaction of Trading Price Condition” in the   Preliminary Offering Memorandum) per $1,000 principal amount of Notes for   each trading day of the measurement period was less than 98% of the product   of the last reported sale price of the Issuer’s common stock and the   conversion rate on each such trading day; or

 

·      upon the occurrence of specified corporate events described   under “Description of Notes—Conversion Rights—Conversion upon Specified   Corporate Events” in the Preliminary Offering Memorandum.
    
	
 
    	
 
    	
 
    
	
Use   of Proceeds:
    	
 
    	
The   Issuer estimates that the net proceeds from this offering will be   approximately $56.0 million (or $64.0 million if the initial purchasers   exercise their option to purchase additional Notes in full), after deducting   initial purchaser discounts and commissions and estimated offering expenses.   The Issuer intends to use the aggregate net proceeds of this offering to fund   the commercialization of its approved products, OXAYDO and SPRIX, to fund   research and development operations related to its product candidates,   Egalet-001 and Egalet-002 and for working capital and other general corporate   purposes. See “Use of Proceeds” in the Preliminary Offering Memorandum.
    
	
 
    	
 
    	
 
    
	
Interest   Make-Whole Payment:
    	
 
    	
On   or after the date that is six months after the last date of original issuance   of the Notes, if the last reported sale price of the Issuer’s common stock   for at least 20 trading days (whether or not consecutive) during a period of   30 consecutive trading days ending within the five trading days immediately   preceding a conversion date is greater than or equal to the conversion price   for the Notes on each applicable trading day, the Issuer will, in addition to   the other consideration payable or deliverable in connection with such   conversion, make an interest make-whole payment to the converting holder   equal to the sum of the present value of the remaining scheduled payments of   interest that would have been made on the Notes to be converted had such   Notes remained outstanding from the conversion date through April 1,   2018, computed using a discount rate equal to 2%. The Issuer will pay any   interest make-whole payment by delivering shares of the Issuer’s common stock   valued at 95% of the simple average of the daily VWAP for the 10 trading days   ending on and including the trading day immediately preceding the conversion   date.
    

 

2

 

	
 
    	
 
    	
Notwithstanding   the foregoing, the number of shares the Issuer may deliver in connection with   a conversion of the Notes, including those delivered in connection with an   interest make-whole payment, will not exceed 77.3395 shares of the Issuer’s   common stock of per $1,000 principal amount of Notes, subject to adjustment   at the same time and in the same manner as the conversion rate as set forth   under “Description of Notes—Conversion Rights—Conversion Rate Adjustments” in   the Preliminary Offering Memorandum. We will not be required to make any cash   payments in lieu of any fractional shares or have any further obligation to   deliver any shares of our common stock or pay any cash in excess of the   threshold described above. In addition, if in connection with any conversion   the conversion rate is adjusted as described under “Description of   Notes—Conversion Rights—Increase in Conversion Rate upon Conversion upon a   Make-Whole Fundamental Change,” then such holder will not receive the   interest make-whole payment with respect to such Note.

 

See   “Description of Notes—Conversion Rights—Interest Make-Whole Payment upon   Certain Conversions” in the Preliminary Offering Memorandum.
    
	
 
    	
 
    	
 
    
	
Joint   Book-Running Managers:
    	
 
    	
JMP   Securities LLC
   Guggenheim Securities, LLC
    
	
 
    	
 
    	
 
    
	
CUSIP   Number:
    	
 
    	
28226B   AA2
    
	
 
    	
 
    	
 
    
	
ISIN:
    	
 
    	
US28226BAA26
    
	
 
    	
 
    	
 
    
	
Increase   in Conversion Rate upon Conversion upon a Make-Whole Fundamental Change:
    	
 
    	
The   following table sets forth the number of additional shares by which the   conversion rate will be increased per $1,000 principal amount of Notes for a   holder that converts its Notes in connection with a make-whole fundamental   change (as defined in the Preliminary Offering Memorandum) for each stock   price and effective date set forth below:
    

 

	
 
    	
 
    	
Stock Price
    	
 
    
	
Effective Date
    	
 
    	
$12.93
    	
 
    	
$15.00
    	
 
    	
$17.50
    	
 
    	
$20.00
    	
 
    	
$22.50
    	
 
    	
$25.00
    	
 
    	
$27.50
    	
 
    	
$30.00
    	
 
    	
$35.00
    	
 
    	
$40.00
    	
 
    	
$45.00
    	
 
    	
$50.00
    	
 
    	
$55.00
    	
 
    	
$60.00
    	
 
    	
$65.00
    	
 
    
	
April 7,   2015
    	
 
    	
10.0877
    	
 
    	
7.9907
    	
 
    	
6.2263
    	
 
    	
4.9730
    	
 
    	
4.0427
    	
 
    	
3.3284
    	
 
    	
2.7647
    	
 
    	
2.3107
    	
 
    	
1.6300
    	
 
    	
1.1505
    	
 
    	
0.8002
    	
 
    	
0.5376
    	
 
    	
0.3373
    	
 
    	
0.1840
    	
 
    	
0.0711
    	
 
    
	
April 1,   2016
    	
 
    	
10.0877
    	
 
    	
7.7267
    	
 
    	
5.9309
    	
 
    	
4.6885
    	
 
    	
3.7849
    	
 
    	
3.1008
    	
 
    	
2.5676
    	
 
    	
2.1413
    	
 
    	
1.5074
    	
 
    	
1.0630
    	
 
    	
0.7393
    	
 
    	
0.4972
    	
 
    	
0.3129
    	
 
    	
0.1730
    	
 
    	
0.0708
    	
 
    
	
April 1,   2017
    	
 
    	
10.0877
    	
 
    	
7.3927
    	
 
    	
5.5154
    	
 
    	
4.2755
    	
 
    	
3.4067
    	
 
    	
2.7676
    	
 
    	
2.2800
    	
 
    	
1.8960
    	
 
    	
1.3323
    	
 
    	
0.9408
    	
 
    	
0.6558
    	
 
    	
0.4418
    	
 
    	
0.2787
    	
 
    	
0.1543
    	
 
    	
0.0632
    	
 
    
	
April 1,   2018
    	
 
    	
10.0877
    	
 
    	
6.8960
    	
 
    	
4.8451
    	
 
    	
3.6025
    	
 
    	
2.7942
    	
 
    	
2.2348
    	
 
    	
1.8262
    	
 
    	
1.5143
    	
 
    	
1.0674
    	
 
    	
0.7600
    	
 
    	
0.5349
    	
 
    	
0.3638
    	
 
    	
0.2313
    	
 
    	
0.1288
    	
 
    	
0.0529
    	
 
    
	
April 1,   2019
    	
 
    	
10.0877
    	
 
    	
5.8767
    	
 
    	
3.5217
    	
 
    	
2.3485
    	
 
    	
1.7124
    	
 
    	
1.3312
    	
 
    	
1.0789
    	
 
    	
0.8970
    	
 
    	
0.6451
    	
 
    	
0.4723
    	
 
    	
0.3431
    	
 
    	
0.2422
    	
 
    	
0.1618
    	
 
    	
0.0970
    	
 
    	
0.0454
    	
 
    
	
April 1,   2020
    	
 
    	
10.0877
    	
 
    	
0.0000
    	
 
    	
0.0000
    	
 
    	
0.0000
    	
 
    	
0.0000
    	
 
    	
0.0000
    	
 
    	
0.0000
    	
 
    	
0.0000
    	
 
    	
0.0000
    	
 
    	
0.0000
    	
 
    	
0.0000
    	
 
    	
0.0000
    	
 
    	
0.0000
    	
 
    	
0.0000
    	
 
    	
0.0000
    	
 
    

 

The exact stock prices and effective dates may not be set forth in the table above, in which case

 

·    If the stock price is between two stock prices in the table or the effective date is between two effective dates in the table, the number of additional shares by which the conversion rate will be increased will be determined by a straight-line interpolation between the number of additional shares set forth for the higher and lower stock prices and the earlier and later effective dates, as applicable, based on a 365-day year.

 

·    If the stock price is greater than $65.00 per share (subject to adjustment in the same manner as the stock prices set forth in the column headings of the table above), no additional shares will be added to the conversion rate.

 

3

 

·    If the stock price is less than $12.93 per share (subject to adjustment in the same manner as the stock prices set forth in the column headings of the table above), no additional shares will be added to the conversion rate.

 

Notwithstanding the foregoing, in no event will the conversion rate per $1,000 principal amount of Notes exceed 77.3395 shares of the Issuer’s common stock, subject to adjustment in the same manner as the conversion rate as set forth under “Description of Notes—Conversion Rights—Conversion Rate Adjustments” in the Preliminary Offering Memorandum.

 

[Remainder of Page Intentionally Blank]

 

4

 

CAPITALIZATION

 

The following table sets forth the Issuer’s consolidated cash and capitalization as of December 31, 2014:

 

·      on an actual basis;

 

·      on a pro forma basis to give effect to:

 

·      the borrowing of $15.0 million on January 8, 2015 under the Senior Secured Loan Agreement, net of lender fees paid and proceeds allocated to the Issuer’s issuance of a warrant to Hercules;

 

·      the Issuer’s use of cash to make certain upfront payment required under its license agreement with Acura Pharmaceuticals, Inc. entered into on January 7, 2015; and

 

·      the Issuer’s use of cash to acquire certain assets associated with SPRIX from Luitpold Pharmaceuticals, Inc. on January 8, 2015; and

 

·      on a pro forma as adjusted basis to give effect to the issuance and sale of $60 million in aggregate principal amount of Notes in this offering and the Issuer’s receipt of net proceeds therefrom, after deducting initial purchase discounts and commissions and estimated offering expenses payable by us.

 

The following information should be read together with the Issuer’s consolidated financial statements and accompanying Notes incorporated by reference herein and “Description of Other Indebtedness” appearing elsewhere in the in the Preliminary Offering Memorandum.

 

	
 
    	
 
    	
As of December 31, 2014
    	
 
    
	
 
    	
 
    	
Actual
    	
 
    	
Pro
   Forma
    	
 
    	
Pro
   Forma
   as
   Adjusted
    	
 
    
	
 
    	
 
    	
(in thousands, except share
   amounts)
    	
 
    
	
Cash
    	
 
    	
 
    	
52,738
    	
 
    	
 
    	
54,054
    	
 
    	
 
    	
110,054
    	
 
    
	
Debt under the Senior Secured Loan Agreement
    	
 
    	
—
    	
 
    	
14,455
    	
 
    	
14,455
    	
 
    
	
Acura payment obligation
    	
 
    	
—
    	
 
    	
2,500
    	
 
    	
2,500
    	
 
    
	
5.50% Convertible Senior Notes due 2020, offered hereby(1)
    	
 
    	
 
    	
—
    	
 
    	
 
    	
—
    	
 
    	
 
    	
56,500
    	
 
    
	
Stockholders’ (deficit) equity:
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Common stock, $0.001 par value per share; 75,000,000 shares   authorized, 17,283,663 shares issued and outstanding, actual, pro forma and   pro forma as adjusted(2)
    	
 
    	
17
    	
 
    	
17
    	
 
    	
17
    	
 
    
	
Additional paid-in capital(1)
    	
 
    	
121,028
    	
 
    	
121,357
    	
 
    	
121,357
    	
 
    
	
Accumulated other comprehensive income 
    	
 
    	
(171
    	
)
    	
(171
    	
)
    	
(171
    	
)
    
	
Accumulated deficit
    	
 
    	
(76,613
    	
)
    	
(77,751
    	
)
    	
(77,751
    	
)
    
	
Total stockholders’ (deficit) equity(1)
    	
 
    	
44,261
    	
 
    	
43,452
    	
 
    	
43,452
    	
 
    
	
Total capitalization
    	
 
    	
 
    	
44,261
    	
 
    	
 
    	
60,407
    	
 
    	
 
    	
116,407
    	
 
    

 

(1)   In accordance with ASC 470-20, convertible debt instruments that may be settled entirely or partially in cash upon conversion (including the Notes) are required to be separated into a liability and an equity component, such that interest expense reflects the issuer’s non-convertible debt interest rate. Upon issuance, a debt discount will be recognized as a decrease in debt and an increase in equity, specifically to additional paid-in capital. The debt component will accrete up to the principal amount over the expected term of the debt. Such accounting guidance does not affect the actual amount that the Issuer is required to repay. The amount shown in the table above for the Notes is the aggregate principal amount of the Notes without reflecting the debt

 

5

 

discount or fees and expenses that the Issuer is required to recognize or the increase in additional paid-in capital on its consolidated balance sheet.

 

(2)   The outstanding share information set forth above is as of December 31, 2014 (actual and as adjusted) and excludes, as of that date:

 

·      2,283,840 shares of common stock reserved for future issuance under the Issuer’s 2013 Stock-Based Incentive Compensation Plan (which includes 638,548 shares of common stock issuable upon the exercise of options outstanding at December 31, 2014 at a weighted average exercise price of $7.47 per share);

 

·      113,421 shares of common stock issuable upon the exercise of warrants issued on January 7, 2015 at a weighted-average exercise per share price of $5.29; and

 

·      the shares of the Issuer’s common stock reserved for issuance upon conversion of the Notes offered hereby.

 

6

 

This communication is intended for the sole use of the person to whom it is provided by the sender. This information does not purport to be a complete description of the Notes or the offering.

 

This communication shall not constitute an offer to sell or the solicitation of an offer to buy the Notes, or any shares of the Issuer’s common stock underlying the Notes, nor shall there be any sale of the Notes, or any shares of the Issuer’s common stock underlying the Notes, in any state in which such solicitation or sale would be unlawful prior to registration or qualification of the Notes or such common stock under the laws of any such state.

 

Neither the Notes nor the shares of common stock issuable upon conversion of the Notes, if any, have been registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state securities laws, and neither may be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act or any other applicable securities laws. Accordingly, the Notes are being offered and sold only to “qualified institutional buyers” (as defined in Rule 144A under the Securities Act). The Notes are not transferable except in accordance with the restrictions described under “Transfer Restrictions” in the Preliminary Offering Memorandum.

 

ANY DISCLAIMER OR OTHER NOTICES THAT MAY APPEAR BELOW ARE NOT APPLICABLE TO THIS COMMUNICATION AND SHOULD BE DISREGARDED.  SUCH DISCLAIMERS OR OTHER NOTICES WERE AUTOMATICALLY GENERATED AS A RESULT OF THIS COMMUNICATION BEING SENT VIA BLOOMBERG OR ANOTHER EMAIL SYSTEM.

 

 

EXHIBIT A

 

Form of Lock-Up Letter

 

EGALET CORPORATION

460 E. Swedesford Road

Suite 1050

Wayne, PA 19087

 

JMP SECURITIES LLC

GUGGENHEIM SECURITIES, LLC

c/o JMP Securities LLC

600 Montgomery Street, Suite 1100

San Francisco, CA 94111

 

Ladies and Gentlemen:

 

The undersigned refers to the proposed Purchase Agreement (the “Purchase Agreement”) between Egalet Corporation, a Delaware corporation (the “Company”) and the several initial purchasers named therein (the “Initial Purchasers”).  As an inducement to the Initial Purchasers to execute the Purchase Agreement in connection with the proposed offering of Senior Convertible Notes due 2020 (the “Securities”), which Securities are convertible into shares of the Company’ common stock, par value $0.001 per share (the “Common Stock”), the undersigned hereby agrees that from the date set forth on the final offering memorandum used to sell the Securities (the “Offering Date”) and until 90 days after the Offering Date, pursuant to the Purchase Agreement (such 90-day period being referred to herein as the “Lock-Up Period”), to which you are or expect to become parties, the undersigned will not (and will cause any spouse or immediate family member of the spouse or the undersigned living in the undersigned’s household, any partnership, corporation or other entity within the undersigned’s control, and any trustee of any trust that holds Common Stock or other securities of the Company (together with the Common Stock, the “Restricted Securities”) for the benefit of the undersigned or such spouse or family member not to) offer, sell, contract to sell (including any short sale), pledge, hypothecate, establish an open “put equivalent position” within the meaning of Rule 16a-1(h) under the Securities Exchange Act of 1934, as amended, grant any option, right or warrant for the sale of, purchase any option or contract to sell, sell any option or contract to purchase, or otherwise encumber, dispose of or transfer, or grant any rights with respect to, directly or indirectly, any of the Restricted Securities or securities convertible into or exchangeable or exercisable for any of the Restricted Securities, enter into a transaction which would have the same effect, or enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of the Restricted Securities, whether any such aforementioned transaction is to be settled by delivery of the Restricted Securities or such other securities, in cash or otherwise, or publicly disclose the intention to make any such offer, sale, pledge or disposition, or to enter into any such transaction, swap, hedge or other arrangement, without, in each case, the prior written consent of JMP Securities LLC and Guggenheim Securities, LLC (together, the “Representatives”), which consent may be withheld in the Representatives’ sole discretion.

 

The foregoing restrictions shall not apply to (i) bona fide gifts by the undersigned, (ii) the surrender or forfeiture of Restricted Securities to the Company to satisfy tax withholding obligations upon exercise or vesting of stock options or equity awards, (iii) transfers of Restricted Securities or any security convertible into or exercisable for Restricted Securities to an immediate family member or a trust for the benefit of the undersigned or an immediate family member or to any corporation, partnership, limited liability company or other entity all of the beneficial ownership interests of which are held exclusively by the undersigned and/or one or more family members of the undersigned in a transaction not involving a disposition for value, (iv) transfers of Restricted Securities or any security convertible into or exercisable for Restricted Securities upon death by will or intestate succession, (v) the exercise of any option, warrant or other right to acquire Restricted Securities, the settlement of any stock-settled stock appreciation rights, restricted stock or restricted stock units or the conversion of any convertible security into Restricted

 

 

Securities, (vi) securities transferred to one or more affiliates of the undersigned and distributions of securities to partners, members or stockholders of the undersigned, (vii) transactions relating to securities acquired in open market transactions after the Offering Date, and (viii) transactions effectuated pursuant to a trading plan that satisfies all of the requirements of Rule 10b5-1 under the Exchange Act existing on the date hereof, provided that any sales or other dispositions of Restricted Securities shall not exceed 15,146 shares in the aggregate during the Lock-Up Period or the entry into any trading plan established pursuant to Rule 10b5-1 under the Exchange Act, provided that such plan does not provide for any sales or other dispositions of Restricted Securities during the Lock-Up Period and no public announcement or filing under the Exchange Act is made by or on behalf of the undersigned or the Company regarding the establishment of such plan; provided that, in the case of a transfer or distribution pursuant to the preceding clauses (i), (iii), (iv), (v) or (vi), (A) each resulting transferee or recipient, as the case may be, of the Restricted Securities executes and delivers to the Representatives an agreement satisfactory to the Representatives certifying that such transferee is bound by the terms of this Agreement and has been in compliance with the terms hereof since the date first above written as if it had been an original party hereto and to the extent any interest in the Restricted Securities is retained by the undersigned (or such spouse or family member), such securities shall remain subject to the restrictions contained in this Agreement and (B) no public filing under Section 13 or Section 16(a) of the Exchange Act (other than a Form 5), or other public announcement, reporting a reduction in beneficial ownership of shares of Common Stock, shall be required or shall be voluntarily made during the Lock-Up Period in connection with such transfer or distribution.

 

In addition, the undersigned agrees that, during the period commencing on the date hereof and ending 90 days after the Offering Date, without the prior written consent of the Representatives (which consent may be withheld in each Representative’s sole discretion): (i) the undersigned will not request, make any demand for or exercise any right with respect to, the registration of any Restricted Security or any security convertible into or exercisable or exchangeable for any Restricted Security and (ii) the undersigned waives any and all notice requirements and rights with respect to the registration of any such security pursuant to any agreement, understanding or otherwise to which the undersigned is a party.

 

Any Restricted Security received upon exercise of options granted to the undersigned will also be subject to this Agreement.

 

In furtherance of the foregoing, the Company and its transfer agent and registrar are hereby authorized to (i) decline to make any transfer of Restricted Securities if such transfer would constitute a violation or breach of this Agreement and (ii) place legends and stop transfer instructions on any such Restricted Securities owned or beneficially owned by the undersigned.

 

This Agreement is irrevocable and shall be binding on the undersigned and the successors, heirs, personal representatives and assigns of the undersigned.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to choice of law rules.  This Agreement shall lapse and become null and void if the Offering Date shall not have occurred on or before (i) such time as the Representatives, on the one hand, or the Company, on the other hand, advises the other in writing, prior to the execution of the Purchase Agreement that it has determined not to proceed with the offering, (ii) termination of the Purchase Agreement or (iii) on May 31, 2015, in the event the Purchase Agreement has not been executed by that date (provided, however, that the Company may extend the May 31, 2015 date by three months with written notice to the undersigned prior thereto).

 

	
 
    	
Very   truly yours,
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Printed   Name:
    	
 
    
	
 
    	
Date:EX-10.1

 Exhibit 10.1 

SERVICES AND INVESTMENT AGREEMENT 

By And Among 
 EXCO RESOURCES,
INC., 
 As EXCO, 
 And 

ENERGY STRATEGIC ADVISORY SERVICES LLC, 

As ESAS, 
 Dated as of
March 31, 2015 

 TABLE OF CONTENTS 

 

							
	 ARTICLE 1 DEFINITIONS
		 	1	  
			
	 Section 1.1
		Certain Definitions		 	1	  
	 Section 1.2
		Interpretation		 	11	  
		
	 ARTICLE 2 WARRANTS; INITIAL SHARES
		 	12	  
			
	 Section 2.1
		Warrants		 	12	  
	 Section 2.2
		Initial Shares		 	12	  
		
	 ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF ESAS
		 	13	  
			
	 Section 3.1
		Formation		 	13	  
	 Section 3.2
		Power and Authority		 	13	  
	 Section 3.3
		Execution and Delivery		 	13	  
	 Section 3.4
		Restricted Securities		 	14	  
	 Section 3.5
		Investment Intent		 	14	  
	 Section 3.6
		Sophistication		 	14	  
	 Section 3.7
		No Conflicts		 	14	  
	 Section 3.8
		Consents, Approvals or Waivers		 	15	  
	 Section 3.9
		No Broker’s Fee		 	15	  
	 Section 3.10
		Bankruptcy		 	15	  
		
	 ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF EXCO
		 	15	  
			
	 Section 4.1
		Organization and Qualification		 	15	  
	 Section 4.2
		Corporate Power and Authority		 	16	  
	 Section 4.3
		Execution and Delivery; Enforceability		 	16	  
	 Section 4.4
		Capitalization		 	16	  
	 Section 4.5
		Issuance		 	17	  
	 Section 4.6
		No Conflict		 	17	  
	 Section 4.7
		Consents and Approvals		 	18	  
	 Section 4.8
		Arm’s Length		 	18	  
	 Section 4.9
		EXCO SEC Filings		 	18	  
	 Section 4.10
		Financial Statements		 	19	  
	 Section 4.11
		No Registration Rights Agreements		 	20	  
	 Section 4.12
		No EXCO Material Adverse Effect		 	20	  
	 Section 4.13
		No Broker’s Fees		 	21	  
	 Section 4.14
		Anti-takeover Provisions		 	21	  
	 Section 4.15
		Investment Company Status		 	21	  
	 Section 4.16
		Bankruptcy		 	21	  
		
	 ARTICLE 5 COVENANTS OF THE PARTIES
		 	21	  
			
	 Section 5.1
		No Stabilization		 	21	  
	 Section 5.2
		Closing Efforts		 	21	  
	 Section 5.3
		Expenses		 	22	  
	 Section 5.4
		Confidentiality		 	22	  
	 Section 5.5
		Press Releases		 	23	  
	 Section 5.6
		Regulatory Filings		 	24	  

  
 -ii- 

 TABLE OF CONTENTS 

(continued) 
  

							
	 Section 5.7
		Non-Solicitation		 	25	  
	 Section 5.8
		Listing		 	25	  
	 Section 5.9
		Proxy Statement		 	25	  
	 Section 5.10
		Shareholder Approval; Meeting of Shareholders		 	26	  
	 Section 5.11
		Registration Rights Agreement		 	27	  
	 Section 5.12
		Blue Sky		 	27	  
	 Section 5.13
		Designation of Director		 	27	  
	 Section 5.14
		Reservation of Shares		 	27	  
	 Section 5.15
		Warrant Exercise Procedures		 	27	  
	 Section 5.16
		Beneficial Ownership Limitation		 	27	  
	 Section 5.17
		Indemnity for Certain Liabilities		 	28	  
	 Section 5.18
		Strategic Advisory Services		 	28	  
	 Section 5.19
		Director Nomination Rights and Wilder’s Service to the Board of Directors		 	31	  
	 Section 5.20
		Agreement to Invest		 	32	  
	 Section 5.21
		Limitation on Losses		 	32	  
	 Section 5.22
		Standstill		 	32	  
	 Section 5.23
		EXCO Credit Agreement		 	33	  
	 Section 5.24
		Purchase Restrictions Prior to Anniversary Dates		 	33	  
	 Section 5.25
		Further Assurances		 	33	  
		
	 ARTICLE 6 INITIAL SHARES CLOSING
		 	34	  
			
	 Section 6.1
		Conditions of ESAS to Initial Shares Closing		 	34	  
	 Section 6.2
		Conditions of EXCO to Initial Shares Closing		 	35	  
	 Section 6.3
		Time and Place of Initial Shares Closing		 	36	  
	 Section 6.4
		Obligations of ESAS at Initial Shares Closing		 	36	  
	 Section 6.5
		Obligations of EXCO at Initial Shares Closing		 	37	  
		
	 ARTICLE 7 CONDITIONS TO CLOSING
		 	38	  
			
	 Section 7.1
		Conditions of ESAS to Closing		 	38	  
	 Section 7.2
		Conditions of EXCO to Closing		 	39	  
		
	 ARTICLE 8 CLOSING
		 	41	  
			
	 Section 8.1
		Time and Place of Closing		 	41	  
	 Section 8.2
		Obligations of ESAS at Closing		 	41	  
	 Section 8.3
		Obligations of EXCO at Closing		 	42	  
		
	 ARTICLE 9 TERMINATION
		 	42	  
			
	 Section 9.1
		Term		 	42	  
	 Section 9.2
		Early Termination		 	42	  
	 Section 9.3
		Effect of Termination		 	43	  
		
	 ARTICLE 10 INDEMNIFICATION
		 	44	  
			
	 Section 10.1
		ESAS’s Indemnification Rights		 	44	  
	 Section 10.2
		EXCO’s Indemnification Rights		 	45	  

  
 -iii- 

 TABLE OF CONTENTS 

(continued) 
  

							
	 Section 10.3
		Survival; Limitation on Actions		 	45	  
	 Section 10.4
		Exclusive Remedy and Certain Limitations		 	46	  
	 Section 10.5
		Indemnification Actions		 	47	  
		
	 ARTICLE 11 MISCELLANEOUS
		 	50	  
			
	 Section 11.1
		Notices		 	50	  
	 Section 11.2
		Governing Law		 	51	  
	 Section 11.3
		Forum Selection; Waiver of Jury Trial		 	51	  
	 Section 11.4
		Dispute Resolution		 	52	  
	 Section 11.5
		Headings and Construction		 	53	  
	 Section 11.6
		Waivers		 	53	  
	 Section 11.7
		Severability		 	54	  
	 Section 11.8
		Assignment		 	54	  
	 Section 11.9
		Entire Agreement		 	54	  
	 Section 11.10
		Amendment		 	54	  
	 Section 11.11
		No Third-Person Beneficiaries		 	54	  
	 Section 11.12
		Limitation on Damages		 	55	  
	 Section 11.13
		Time of the Essence; Calculation of Time		 	55	  
	 Section 11.14
		Counterparts		 	55	  

  

			
	Exhibit A		Form of Fourth Amended and Restated Articles of Incorporation of EXCO
	Exhibit B		Form of Warrants
	Exhibit C		Form of Registration Rights Agreement
	Exhibit D		Form of Nomination Letter Agreement
	Exhibit E		Executive Chairman Description

 SCHEDULES 

 

			
	Schedule 1.1		Knowledge Persons
	Schedule 4.11		Registration Rights Agreements

  
 -iv- 

 SERVICES AND INVESTMENT AGREEMENT 

This SERVICES AND INVESTMENT AGREEMENT (this “Agreement”), is dated as of March 31, 2015 (the “Execution
Date”), by and among EXCO Resources, Inc., a Texas corporation (“EXCO”), and Energy Strategic Advisory Services LLC, a Delaware limited liability company (“ESAS”). Each of EXCO and ESAS are sometimes
referred to collectively as the “Parties” and individually as a “Party.” 
 RECITALS: 

WHEREAS, ESAS desires to provide, and EXCO desires to engage ESAS for, the Services upon the terms and conditions hereinafter set forth; 

WHEREAS, EXCO desires to sell and issue, and ESAS desires to receive from EXCO, the Initial Shares (defined below) and the Warrants (defined
below), upon the terms and conditions hereinafter set forth; and 
 WHEREAS, ESAS desires to purchase at least fifty million dollars
($50,000,000) of EXCO Common Stock prior to the first anniversary of the Closing Date, including the Initial Shares. 
 NOW, THEREFORE, in
consideration of the premises and of the mutual promises, representations, warranties, covenants, conditions and agreements contained herein, and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties agree as follows: 
 ARTICLE 1 

DEFINITIONS 
 Section 1.1
Certain Definitions. As used herein: 
 “2005 Registration Rights Agreement” means that certain First Amended
and Restated Registration Rights Agreement of EXCO, originally dated as of October 3, 2005, as amended and restated as of December 30, 2005. 

“2007 Registration Rights Agreement” means that certain Registration Rights Agreement of EXCO, dated March 28, 2007, in
respect of 7.0% Cumulative Convertible Perpetual Preferred Stock and Hybrid Preferred Stock. 
 “AAA” is defined in
Section 11.4(a). 
 “Accounting Principles” means the United States generally accepted accounting principles,
consistently applied. 
 “Affiliate” means, with respect to any Person, any Person that (a) directly or indirectly
(through one or more Subsidiaries) controls such Person, (b) is controlled directly or indirectly (through one or more Subsidiaries) by such Person, (c) is under the common control, whether

 
directly or indirectly (through one or more Subsidiaries), with such Person by the same ownership or control of the parent or general partner of such Person, or (d) is the successor or
surviving Person by a merger or consolidation of any such Person pursuant to applicable Law. For purposes of this definition “control” means (i) the ownership, directly or indirectly or beneficially, of fifty percent
(50%) of the outstanding voting securities or the beneficial interest of another Person or (ii) the direct or indirect ability to direct the management, policies or business decisions of another Person, whether as the general partner, sole
member, sole shareholder, through voting securities, contracts or otherwise. 
 “Arbitration Panel” is defined in
Section 11.4(a). 
 “beneficially own,” “beneficially owned,” “beneficial
ownership” and similar phrases have the same meanings as such terms have under Rule 13d-3 (or any successor rule then in effect) under the Exchange Act, except that, in calculating the beneficial ownership of any Person, such Person shall
be deemed (i) to have beneficial ownership of all securities that such Person has the right to acquire, whether such right is currently exercisable or is exercisable upon the occurrence of a subsequent event or after the passage of time, and
(ii) to beneficially own all of the shares of Capital Stock held by any of its Affiliates. 
 “Board of Directors”
means the Board of Directors of EXCO. 
 “BRC” is defined in Section 3.1. 

“Business Day” means any day other than a Saturday, a Sunday, or a day on which banks are closed for business in Dallas,
Texas or New York, New York. 
 “Business Opportunities Waiver” means the renouncement of any interest or expectancy of
EXCO in, or in being offered an opportunity to participate in, any business opportunities by each of the members of the Board of Directors of EXCO (and their respective Affiliates and related funds and other related Persons, including any ESAS
nominees or representatives serving on the Board of Directors of EXCO or any of its Subsidiaries, including the position of Executive Chairman) in the form set forth in Exhibit A. 

“Business Plan” is defined in Section 5.18(a). 

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

“Certificate of Amendment” means the certificate of amendment published by the secretary of state of the State of Texas on
Form 424 completed to give effect to the amendment and restatement of EXCO’s Articles of Incorporation pursuant to the Organizational Document Amendment Proposal. 

“Claim Notice” is defined in Section 10.5(b). 

“Closing” is defined in Section 8.1. 

  
 -2- 

 “Closing Date” is defined in Section 8.1. 

“Closing Warrants” means (i) a warrant exercisable for 20,000,000 shares of Common Stock with a strike price of $7.00
per share of Common Stock, and (ii) a warrant exercisable for 25,000,000 shares of Common Stock with a strike price of $10.00 per share of Common Stock, each as evidenced by the certificates in the Form of Warrants attached hereto as Exhibit
B. 
 “Code” means the United States Internal Revenue Code of 1986. 

“Common Stock” shall mean the common stock of EXCO, par value $0.001 per share. 

“Confidential Information” is defined in Section 5.4. 

“Confidentiality Agreement” means that certain Confidentiality Agreement dated as of August 20, 2014 by and among EXCO
and ESAS, as amended from time to time. 
 “Consolidated Subsidiaries” means, for any Person, any Subsidiary or other
entity the accounts of which would be consolidated with those of such Person in its consolidated financial statements in accordance with the Accounting Principles. 

“Damages” is defined in Section 10.4(b). 

“Direct Claim” is defined in Section 10.5(g). 

“Dispute” is defined in Section 11.4(a). 

“ESAS” is defined in the introductory paragraph hereof. 

“ESAS Forfeiture Event” shall mean: 

(a) any material willful or intentional breach by ESAS of any of its covenants set forth in this Agreement or any other
Transaction Document that are to be performed by ESAS after the Closing Date but on or prior to the Termination Date; 
 (b)
ESAS’s failure to purchase, hold or satisfy all or any portion the Investment or to comply with the terms of Section 5.20 as and when required under the terms of this Agreement; or 

(c) any time after the Closing Date and on or prior to the date a Party delivers a notice of termination of this Agreement, the
occurrence or existence of any of the following: 
 (i) Wilder’s failure to agree to be nominated for election to serve
on the Board of Directors as the Executive Chairman at any annual meeting of the shareholders or special meeting held to elect members of the Board of Directors or the Executive Chairman; 

(ii) Wilder’s resignation from the Board of Directors; 

  
 -3- 

 (iii) Wilder’s failure to agree to serve on the Board of Directors as
Executive Chairman when properly elected; 
 (iv) the prohibition or disqualification of Wilder from serving as a director of
EXCO under any final non-appealable Order or decree of any court with competent jurisdiction, the SEC or any other regulatory body, rule or regulation of the SEC, the NYSE or any other exchange on which the Common Stock is listed, or by applicable
Law; 
 (v) Wilder’s engagement in acts or omissions constituting a breach of his fiduciary duties to EXCO and its
shareholders (other than such duties that are waived in the Articles of Incorporation of EXCO), as determined under a final non-appealable Order or decree of any court with competent jurisdiction; 

(vi) Wilder being subject to a disqualification event described in Rule 506(d) of Regulation D of the Securities Act of 1933;
or 
 (vii) any final non-appealable conviction by a court with competent jurisdiction or any plea of nolo contendere of
Wilder of any felony (other than any driving violation) or crime involving dishonesty or moral turpitude; or 
 (viii)
Wilder’s death or failure to possess sufficient mental and physical capacities, as determined by a medical doctor appointed by EXCO’s CEO from the medical staff at Texas Health Presbyterian Hospital Dallas, to perform his obligations as
Executive Chairman of EXCO (other than periods of temporary disability or incapacity not to exceed sixty (60) consecutive days); 
 provided,
however, (i) ESAS Forfeiture Event shall not exist and shall not be valid (and any invalid termination of this Agreement for ESAS Forfeiture Event shall be deemed a termination not for ESAS Forfeiture Event) unless (A) EXCO notifies
ESAS in writing in reasonable detail of the circumstances forming the basis for an ESAS Forfeiture Event termination, (B) such notice is given within sixty (60) days after EXCO obtains knowledge of such circumstances and (C) such
notice indicates that EXCO elects to terminate this Agreement for ESAS Forfeiture Event based on such circumstances, and (ii) with respect to subpart (a) of this definition, “ESAS Forfeiture Event” shall not be deemed to exist
unless ESAS has failed to cure any such breaches described in such subpart within sixty (60) days’ notice from EXCO of such breach. 

“ESAS Group” means ESAS and each Affiliate of ESAS. 

“ESAS Initial Warrantholders” shall mean, at the Execution Date and such other date or dates that the Warrants are issued, as
applicable, ESAS and any of its Affiliates to whom, pursuant to Section 11.8, ESAS has assigned (with the consent of EXCO, which consent shall not be unreasonably withheld) the right to be issued by EXCO all or a portion of the Warrants.

 “ESAS Material Adverse Effect” means any event, change or circumstance (whether foreseeable or not) that, individually
or in the aggregate, results or would be reasonably likely to result in a material adverse effect on the ability of ESAS to perform its obligations hereunder or under the other Transaction Documents; provided, however, that “ESAS
Material Adverse 

  
 -4- 

 
Effect” shall not include material adverse effects resulting from (A) general changes in hydrocarbon prices; (B) changes in condition or developments generally applicable to the
oil and gas industry in the United States so long as such conditions do not have a materially disproportionate effect on ESAS, (C) economic, financial, credit or political conditions and general changes in markets so long as such conditions do
not have a materially disproportionate effect on ESAS; (D) acts of God, including hurricanes and storms; (E) acts or failures to act of Governmental Authorities (where not caused by the willful or negligent acts of ESAS); (F) civil
unrest or similar disorder; terrorist acts; or any outbreak of hostilities or war; (G) any reclassification or recalculation of reserves in the ordinary course of business; (H) changes in Laws; (I) effects or changes that are cured at
no cost to EXCO or no longer exist by the earlier of the Closing and the termination of this Agreement pursuant to Article 8; (J) any effect resulting from any action taken by EXCO or any Affiliate of EXCO, other than those actions
expressly permitted or required in accordance with the terms of this Agreement; (K) natural declines in well performance; or (L) any matters, facts or disclosures set forth in the schedules herein as of the Execution Date. 

“EXCO” is defined in the introductory paragraph hereof. 

“EXCO Credit Agreement” means that certain Amended and Restated Credit Agreement, dated as of July 31, 2013, among EXCO,
as borrower, certain Subsidiaries of EXCO, as guarantors, the lender parties thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent, as amended. 

“EXCO Forfeiture Event” shall mean: 

(a) any material willful or intentional breach by EXCO of any of its covenants set forth in this Agreement or any other
Transaction Document that are to be performed by EXCO after the Closing Date but on or prior to the Termination Date; or 

(b) if any time after the Closing Date and on or prior to the date a Party delivers a notice of termination of this Agreement,
Wilder is not elected as the Executive Chairman of the Board of Directors or is removed as Executive Chairman of the Board of Directors except as a result of any of the following: 

(i) Wilder’s failure to agree to be nominated for election to serve on the Board of Directors as the Executive Chairman at
any annual meeting of the shareholders or special meeting held to elect members of the Board of Directors or the Executive Chairman; 

(ii) Wilder’s resignation from the Board of Directors; 

(iii) Wilder’s failure to agree to serve on the Board of Directors as Executive Chairman when properly elected; 

(iv) the prohibition or disqualification of Wilder from serving as a director of EXCO under any final non-appealable Order or
decree of any court with competent jurisdiction, the SEC or any other regulatory body, rule or regulation of the SEC, the NYSE or any other exchange on which the Common Stock is listed, or by applicable Law; 

 

  
 -5- 

 (v) Wilder’s engagement in acts or omissions constituting a breach of his
fiduciary duties to EXCO and its shareholders (other than such duties that are waived in the Articles of Incorporation of EXCO), as determined under a final non-appealable Order or decree of any court with competent jurisdiction; 

(vi) Wilder being subject to a disqualification event described in Rule 506(d) of Regulation D of the Securities Act of 1933;

 (vii) any final non-appealable conviction by a court with competent jurisdiction or any plea of nolo contendere of Wilder
of any felony (other than any driving violation) or crime involving dishonesty or moral turpitude; or 
 (viii) Wilder’s
death or failure to possess sufficient mental and physical capacities, as determined by a medical doctor appointed by EXCO’s CEO from the medical staff at Texas Health Presbyterian Hospital Dallas, to perform his obligations as Executive
Chairman of the EXCO (other than periods of temporary disability or incapacity not to exceed sixty (60) consecutive days); 
 provided,
however, (i) EXCO Forfeiture Event shall not exist and shall not be valid (and any invalid termination of this Agreement for EXCO Forfeiture Event shall be deemed a termination not for EXCO Forfeiture Event) unless (A) ESAS notifies
EXCO in writing in reasonable detail of the circumstances forming the basis for an EXCO Forfeiture Event termination, (B) such notice is given within sixty (60) days after ESAS obtains knowledge of such circumstances and (C) such
notice indicates that ESAS elects to terminate this Agreement for EXCO Forfeiture Event based on such circumstances, and (ii) with respect to subpart (a) of this definition, “EXCO Forfeiture Event” shall not be deemed to exist
unless EXCO has failed to cure any such breaches described in such subpart within sixty (60) days’ notice from ESAS of such breach. 

“EXCO Group” means EXCO and each Affiliate of EXCO except for members of ESAS Group. 

“EXCO Material Adverse Effect” means any event, change or circumstance (whether foreseeable or not) that, individually or in
the aggregate, results or would be reasonably likely to result in a material adverse effect on (i) EXCO’s ability to perform its obligations hereunder or under the other Transaction Documents or (ii) the ownership, financial
condition, capitalization, liabilities or operation of EXCO as currently conducted as of the Execution Date; provided, however, that “EXCO Material Adverse Effect” shall not include material adverse effects resulting from
(A) general changes in hydrocarbon prices; (B) changes in condition or developments generally applicable to the oil and gas industry in the United States so long as such conditions do not have a materially disproportionate effect on EXCO,
(C) economic, financial, credit or political conditions and general changes in markets; (D) acts of God, including hurricanes and storms; (E) acts or failures to act of Governmental Authorities (where not caused by the willful or
negligent acts of EXCO); (F) civil unrest or similar disorder; terrorist acts; or any outbreak of hostilities or war; (G) any reclassification or recalculation of reserves in the ordinary course of business; (H) changes in Laws;
(I) effects or changes that are cured at no cost 

  
 -6- 

 
to ESAS or no longer exist by the earlier of the Closing and the termination of this Agreement pursuant to Article 8; (J) any effect resulting from any action taken by ESAS or any of
ESAS’s respective Affiliates with the intent of causing such effect, other than those actions expressly permitted or required in accordance with the terms of this Agreement; (K) any effect resulting from any action taken by EXCO or any
Affiliate of EXCO with ESAS’s written consent; (L) natural declines in well performance; or (M) any matters, facts or disclosures set forth in the schedules herein as of the Execution Date. 

“EXCO Organizational Documents” shall mean the Third Amended and Restated Articles of Incorporation of EXCO, as amended, and
the Second Amended and Restated Bylaws of EXCO. 
 “EXCO Stock Plans” is defined in Section 4.4. 

“Escrow Account” means the escrow account maintained by the Escrow Agent in accordance with the terms of the Escrow
Agreement. 
 “Escrow Agent” means a United States national banking association, as appointed by mutual agreement of the
Parties to serve as escrow agent hereunder, and any successor to such banking association. 
 “Escrow Agreement” means an
escrow agreement between the Parties and the Escrow Agent, as such may be amended, modified, supplemented or replaced from time to time. 

“Exceptions” is defined in Section 3.3. 

“Exchange Act” means the Securities Exchange Act of 1934, as amended. 

“Execution Date” is defined in the introductory paragraph hereof. 

“Fundamental Representations” means (a) with respect to EXCO, the representations and warranties of EXCO set forth in
Section 4.3 through Section 4.6, inclusive, and Section 4.13, and the corresponding representations and warranties with respect thereto given in the certificates delivered by EXCO at Closing pursuant to
Section 8.3(e) and (b) with respect to ESAS, the representations and warranties of ESAS set forth in Section 3.3, Section 3.7, and Section 3.9, and the corresponding representations and warranties
with respect thereto given in the certificates delivered by ESAS at Closing pursuant to Section 8.2(c). 
 “Governmental
Authority” means any court, tribunal, arbitrator, authority, agency, commission, official or other instrumentality of the United States, any foreign country or any domestic or foreign state, county, city, tribal, quasi-governmental entity
or other political subdivision or authority exercising or entitled to exercise any administrative, executive, judicial, legislative, regulatory or taxing authority or power. 

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. 

 

  
 -7- 

 “Incentive Payment” means a payment in an amount equal to zero to $2.4 million
as determined in accordance with Section 5.18(d)(ii). For purposes of Section 5.18(d)(ii), the maximum Incentive Payment shall be $2.4 million. 

“Indemnified Person” is defined in Section 10.5(a). 

“Indemnifying Party” is defined in Section 10.5(a). 

“Initial Investment” is defined in Section 2.2. 

“Initial Shares” is defined in Section 2.2. 

“Initial Shares Closing” is defined in Section 2.2. 

“Initial Shares Closing Date” is defined in Section 2.2. 

“Initial Warrants” means (i) a warrant exercisable for 15,000,000 shares of Common Stock with a strike price of $2.75
per share of Common Stock and (ii) a warrant exercisable for 20,000,000 shares of Common Stock with a strike price of $4.00 per share of Common Stock, each as delivered in connection with the execution of this Agreement. 

“Investment” means the Initial Investment and the Remaining Investment. 

“Investment Obligation Termination Event” means the occurrence of any of the following events: (a) an event of default
(other than defaults to which contractual cure periods or lender forbearance agreements apply) by EXCO or any of its Affiliates under (i) the EXCO Credit Agreement or any other credit agreement or similar agreement for borrowed money or
(ii) any EXCO indenture, (b) EXCO is removed from, and the Common Stock is no longer listed on, the NYSE, (c) EXCO becomes insolvent, (d) any bankruptcy proceeding is commenced by, in favor of or against EXCO pursuant to Chapter
11, United States Code, or any similar federal, state or foreign bankruptcy Law; provided, however, no Investment Obligation Termination Event shall occur until ESAS notifies EXCO in writing in reasonable detail of the circumstances
giving rise to such Investment Obligation Termination Event, (e) the failure of EXCO to make all SEC Filings as and when required by applicable Law or (f) the issuance of any “going concern” opinion in any audit report from any
outside auditors of EXCO. 
 “Investment Obligation Test Date” is defined in Section 5.20. 

“Knowledge” means, (i) with respect to ESAS, the actual conscious knowledge, without any duty or obligation of
investigation or inquiry, of only those officers of ESAS named on Schedule 1.1 and (ii) with respect to EXCO the actual conscious knowledge, without any duty or obligation of investigation or inquiry, of only those officers and
employees of EXCO named on Schedule 1.1. 
 “Laws” means all laws, statutes, rules, regulations, ordinances,
Orders, decrees, requirements, judgments and codes of Governmental Authorities. 
  

  
 -8- 

 “Lien” means any (a) lien, mortgage, pledge, collateral assignment or
security interest, of any kind, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of Capital Stock or securities, any purchase option, call or similar right of a Third Party with respect to such securities (including, in each case of subpart (a) through (c), any
agreement to give any of the foregoing, any conditional sale or other title retention agreement) and any option, trust or other preferential arrangement having the practical effect of any of the foregoing. 

“Monthly Fee” means a monthly payment of $300,000 that EXCO shall pay to ESAS for the Services. 

“Nomination Letter Agreement” is defined in Section 5.19. 

“Notice” is defined in Section 11.1. 

“NYSE” shall mean the New York Stock Exchange LLC. 

“NYSE Approval Proposal” shall mean the proposal to approve the issuance of a portion of the Warrants and the Warrant Shares
in accordance with the rules of the NYSE or any other U.S. national securities exchange on which the Common Stock is then listed. 

“Open Market Shares” means Common Stock constituting the Investment that ESAS shall purchase in the open market as described
in Section 5.20. 
 “Order” means any order, injunction, judgment, doctrine, decree, ruling, writ, assessment,
arbitration award or similar action of a Governmental Authority. 
 “Organizational Document Amendment Proposal” means the
proposal to approve the amendment and restatement of the Third Amended and Restated Articles of Incorporation of EXCO in the form attached hereto as Exhibit A, which shall include the Business Opportunities Waiver. 

“Ownership Change” is defined in Section 5.21. 

“Percentile Rank” means, with respect to any anniversary of the Execution Date, the Percentile Rank as such term is defined
in the Form of Warrants attached hereto as Exhibit B except that the Performance Measurement Date shall be the date of such anniversary and the Initial Value Date shall be the date 364 days prior to such anniversary date. 

“Permits” means any approvals, authorizations, consents, licenses, registrations, variances, franchise, permission,
clearance, qualification, permits or certificates issued, granted, given, obtained, or otherwise made available by or under the authority of a Governmental Authority or pursuant to any Law, and applications therefor and renewals thereof. 

“Person” means any individual, corporation, partnership, limited liability company, trust, estate, Governmental Authority or
any other entity. 
 “Preferred Stock” is defined in Section 4.4. 

  
 -9- 

 “Proxy Statement” is defined in Section 5.9. 

“Registration Rights” is defined in Section 4.11. 

“Registration Rights Agreement” means the Registration Rights Agreement between ESAS, each ESAS Initial Warrantholder and
EXCO in substantially the form attached hereto as Exhibit C with such changes as the Parties reasonably agree to in good faith negotiations covering the registration of the Initial Shares, the Warrants, the Warrant Shares and any other shares
of Common Stock owned or hereafter purchased by the ESAS Group. 
 “Remaining Investment” is defined in
Section 5.20. 
 “Representatives” means, with respect to a Party, such Party, its Affiliates and each of their
respective officers, employees, accountants, attorneys, environmental consultants and other authorized representatives. 
 “Required
Shareholder Approval” shall mean the requisite approval by (a) the holders of EXCO’s Capital Stock 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, and (b) the approval of the holders of two-thirds of the outstanding Common Stock and disinterested holders of Common Stock representing a majority of the votes cast (excluding abstentions) by all disinterested holders of Common
Stock of the Organizational Document Amendment Proposal, as required by applicable Law and the EXCO Organizational Documents. 

“Rule 10b5-1 Plan” means a written plan of ESAS to acquire the Remaining Investment in accordance with Rule 10b5-1(c)
promulgated under the Exchange Act. 
 “SEC” means the U.S. Securities and Exchange Commission. 

“SEC Filings” is defined in Section 4.9. 

“Securities” means the Initial Shares, the Warrants and the Warrant Shares. 

“Securities Act” means the Securities Act of 1933, as amended. 

“Services” means the strategic advisory services that ESAS shall provide to EXCO pursuant to Section 5.18 of this
Agreement, which shall have the goal of repositioning EXCO in accordance with the Business Plan. 
 “Shareholder Meeting”
means the annual or special meeting of the holders of Common Stock to be called by EXCO for the purpose of obtaining the Required Shareholder Approval. 

“Shareholder Proposals” means the Organizational Document Amendment Proposal and the NYSE Approval Proposal. 

“SOX” is defined in Section 4.10(e). 
  

  
 -10- 

 “Subsidiary” shall mean, with respect to any Person, (i) any corporation,
association, partnership or other business entity of which more than fifty percent (50%) of the total voting power of shares ordinarily entitled to vote in the election of directors or other members of the governing body of such Person (other
than solely by reason of a contingency) is at the time owned or controlled, directly or indirectly, by (a) such Person, (b) such Person and one or more subsidiaries of such Person or (c) one or more subsidiaries of such Person,
(ii) a partnership or limited liability company of which such Person or one of its subsidiaries is the general partner or managing member, as applicable, or (iii) any other Person in which such Person has the power to elect or direct the
election of a majority of the directors or other governing body of such Person. 
 “Termination Date” is defined in
Section 9.2(c). 
 “Third Party” means any Person other than ESAS and EXCO or any of their respective
Affiliates. 
 “Third Party Claim” is defined in Section 10.5(c) 

“Trading Day” is defined in the Form of Warrants attached hereto as Exhibit B. 

“Transaction Documents” means this Agreement, the Confidentiality Agreement, the Registration Rights Agreement, the Warrants,
the Nomination Letter Agreement, the Escrow Agreement and the certificates delivered by the applicable Parties under Sections 8.2(c) and 8.3(e). 

“Warrant Shares” means the shares of Common Stock issued by EXCO upon exercise of the Warrants in accordance with the terms
of the Warrants. 
 “Warrants” means the Initial Warrants and the Closing Warrants. 

“Wilder” means C. John Wilder, a resident of Dallas County, Texas. 

Section 1.2 Interpretation. In this Agreement, unless a clear contrary intention appears: (a) the singular number includes
the plural number and vice versa; (b) reference to any Person includes such Person’s successors and assigns but only if such successors and assigns are not prohibited by this Agreement, and reference to a Person in a particular capacity
excludes such Person in any other capacity or individually; (c) reference to any gender includes each other gender; (d) reference to any agreement (including this Agreement), document or instrument means, unless specifically provided
otherwise, such agreement, document or instrument as amended or modified and in effect from time to time in accordance with the terms thereof; (e) reference to any law means, unless specifically provided otherwise, such law as amended,
modified, codified, replaced or reenacted, in whole or in part, and in effect from time to time, including rules and regulations promulgated thereunder and reference to any section or other provision of any law means, unless specifically provided
otherwise, that provision of such law from time to time in effect and constituting the substantive amendment, modification, codification, replacement or reenactment of such section or other provision; (f) reference in this Agreement to any
Article, Section, Appendix, Schedule or Exhibit means such Article or Section hereof or Appendix, Schedule or Exhibit thereto; (g) “hereunder”, “hereof”, “hereto” and words of similar import shall be deemed
references to this Agreement as a whole and not to any particular Article, Section or other provision thereof; (h) “including” (and with correlative meaning “include”) 

  
 -11- 

 
means including without limiting the generality of any description preceding such term; (i) “or” shall be disjunctive, but not exclusive; (j) relative to the determination of
any period of time, “from” means “from and including” and “to” means “to but excluding”; (k) the Schedules and Exhibits attached to this Agreement shall be construed with and as an integral part of this
Agreement to the same extent as if the same had been set forth verbatim herein; provided that in the event a word or phrase defined in this Agreement is expressly given a different meaning in any Schedule or Exhibit, such different definition
shall apply only to such Schedule or Exhibit defining such word or phrase independently, and the meaning given such word or phrase in this Agreement shall control for purposes of this Agreement, and such alternative meaning shall have no bearing or
effect, on the interpretation of this Agreement; and (l) except as otherwise provided herein, all actions which any Person may take and all determinations which any Person may make pursuant to this Agreement may be taken and made at the sole
and absolute discretion of such Person. 
 ARTICLE 2 

WARRANTS; INITIAL SHARES 

Section 2.1 Warrants. 

(a) On the terms and conditions contained in this Agreement, on the Execution Date, EXCO shall issue to ESAS the Initial
Warrants, as partial consideration for the performance of the Services in accordance with this Agreement. 
 (b) On the terms
and conditions contained in this Agreement, at Closing, or such earlier date, to be mutually agreed upon by EXCO and ESAS, as soon as practicable after the necessary approvals have been obtained for the issuance of the Closing Warrants, EXCO shall
issue to ESAS the Closing Warrants, which shall be exercisable pursuant to the terms of the Form of Warrants attached hereto as Exhibit B, as partial consideration for the continued performance of the Services in accordance with this
Agreement. 
 Section 2.2 Initial Shares. 

(a) On the terms and conditions contained in this Agreement, EXCO shall issue to ESAS, and ESAS shall purchase and acquire from
EXCO, 5,882,353 shares of Common Stock (the “Initial Shares”) on or promptly after the date when a registration statement has been declared effective by the SEC covering the resale of the Initial Shares (the “Initial Shares
Closing”, and such date, the “Initial Shares Closing Date”) as consideration for the payment in cash by ESAS of an amount equal to ten million dollars ($10,000,000) (the “Initial Investment”). 

(b) Promptly after the date hereof the Parties shall mutually agree upon the Escrow Agent and execute a mutually agreeable
Escrow Agreement. 

  
 -12- 

 (c) No later than three (3) Business Days after the execution of the Escrow
Agreement by the Parties and the Escrow Agent, ESAS shall deposit an amount equal to the Initial Investment with the Escrow Agent via wire transfer of immediately available funds to the Escrow Account, such amount to be held in escrow by the Escrow
Agent in accordance with the terms of the Escrow Agreement. 
 (d) Upon the Initial Shares Closing in accordance with
Article 6, on the Initial Shares Closing Date the Initial Investment shall be disbursed to EXCO and the remainder, if any, of the amounts held in the Escrow Account attributable to any interest accrued upon the Initial Investment shall be
disbursed to or on behalf of ESAS. 
 (e) If for any reason this Agreement is terminated prior to Closing in accordance with
Section 9.2 below, then all amounts held in the Escrow Account shall be disbursed or retained as provided in Section 5.18(e) and Section 9.3. 

ARTICLE 3 

REPRESENTATIONS AND WARRANTIES OF ESAS 

ESAS represents and warrants to, and agrees with, EXCO as set forth below. Except for representations, warranties and agreements that are
expressly limited as to a particular date, each representation, warranty and agreement is made as of the Execution Date and as of the Closing Date after giving effect to the transactions contemplated hereby: 

Section 3.1 Formation. ESAS has been duly organized and is validly existing as a limited liability company in good standing
under the Laws of the State of Delaware. ESAS is a wholly-owned, direct subsidiary of Bluescape Resources Company LLC (“BRC”). 

Section 3.2 Power and Authority. ESAS has the requisite limited liability company power and authority to enter into, execute and
deliver this Agreement and the other Transaction Documents and each other agreement, document, and instrument to which it is or will be a party or which it has executed and delivered, or will execute and deliver, in connection with the transactions
contemplated by this Agreement and to perform its obligations and consummate the transactions contemplated hereunder and thereunder and has taken all necessary limited liability company action required for the due authorization of the Transaction
Documents, the performance of its obligations thereunder and the consummation of the transaction contemplated thereby. 
 Section 3.3
Execution and Delivery. Each Transaction Document to which ESAS is, or will be, a party has been, or at the time of its execution and delivery by ESAS, will be, duly and validly authorized, executed and delivered by ESAS, and
constitutes, or at the time of its execution and delivery by ESAS, will constitute, a valid and binding obligation of ESAS, enforceable against ESAS in accordance with its terms, except as may be limited by the effect of bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or similar Laws affective the enforcement of creditors’ rights generally, subject to principles of equity and public policy and except to the extent that the indemnification and contribution
provisions in this Agreement may be limited by federal or state securities Laws (the “Exceptions”). 

  
 -13- 

 Section 3.4 Restricted Securities. ESAS understands that the Securities have not
been registered under the Securities Act and may not be resold without registration under the Securities Act except pursuant to a specific exemption from the registration provisions of the Securities Act. As a result, ESAS acknowledges and
understands that, upon the original issuance thereof and until such time as the same is no longer required under any applicable requirements of the Securities Act or applicable state securities Laws, EXCO and its transfer agent shall make such
notation in the stock book and transfer records of EXCO as may be necessary to record that the Securities have not been registered under the Securities Act and may not be resold without registration under the Securities Act except pursuant to a
specific exemption from the registration provisions of the Securities Act. ESAS acknowledges that Rule 144 promulgated under the Securities Act may not be available to exempt all sales of the Securities. ESAS recognizes that EXCO is under no
obligation to register the Securities except pursuant to this Agreement and the Registration Rights Agreement. ESAS understands that the certificates representing the Securities may carry one or more legends incorporating such restrictions. 

Section 3.5 Investment Intent. ESAS is acquiring the Securities for investment for its own account, and not with the view to, or
for resale in connection with, any distribution thereof not in compliance with the Securities Act and any applicable state securities or “blue sky” Laws, and ESAS has no present intention of selling, granting any participation in, or
otherwise distributing the same, except in compliance with the Securities Act and any applicable state securities or “blue sky” Laws. 

Section 3.6 Sophistication. Each of ESAS and BRC is an “accredited investor” within the meaning of Rule 501(a)
promulgated under the Securities Act, and ESAS has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of its investment in the Securities being acquired hereunder. ESAS understands
and is able to bear any economic risks associated with such investment. Without derogating from or limiting the representations and warranties of EXCO, ESAS acknowledges that it has been afforded the opportunity to ask questions and receive answers
concerning EXCO and to obtain additional information that it has requested to verify the information contained in this Section 3.6. With the assistance of ESAS’s own professional advisors, to the extent that ESAS has deemed
appropriate, ESAS has made its own legal, tax, accounting and financial evaluation of the merits and risks of an investment in Securities and the consequences of this Agreement. ESAS has considered the suitability of the Securities as an investment
in light of its own circumstances and financial condition, and ESAS is able to bear any economic risks associated with such investment. Notwithstanding the foregoing, nothing contained herein will operate to modify or limit in any respect the other
representations, warranties or covenants of EXCO or to relieve it from any obligations to ESAS for breach thereof or for the making of misleading statements or the omission of material facts in connection with the transactions contemplated herein.

 Section 3.7 No Conflicts. The acquisition of the Securities, the execution and delivery by ESAS of each of the Transaction
Documents to which it is, or will be, a party and the performance of and compliance with all of the provisions thereof by ESAS, and the consummation of the transactions contemplated therein (i) will not conflict with, or result in a breach or
violation of, any of the terms or provisions of, or constitute a default under (in each case, with or without notice or lapse of time, or both), or result, in the acceleration of, or the creation of any Lien under, any indenture, mortgage, deed of
trust, loan agreement or other 

  
 -14- 

 
agreement, instrument, contract or other arrangement to which ESAS is a party or by which ESAS is bound or to which any of the property or assets of ESAS is subject, (ii) will not result in
any violation of the provisions of the certificate of formation, operating agreement or similar governance documents of ESAS, and (iii) will not result in any material violation of, or any termination or material impairment of any rights under,
any applicable Law, including any license, authorization, injunction, judgment, Order, decree, rule or regulation of any Governmental Authority, except in the case of each of clauses (i) through (iii), for any conflict, breach, violation,
default, acceleration, Lien, termination or impairment which would not reasonably be expected to result in an ESAS Material Adverse Effect. 

Section 3.8 Consents, Approvals or Waivers. No consent, approval, authorization, Order, Permit, registration or qualification of
any Third Party or with any Governmental Authority is required to be obtained or made by ESAS in connection with the execution and delivery of the Transaction Documents, the compliance by ESAS with any of the provisions hereof and thereof, or the
consummation of the transactions contemplated hereby, except for (i) such consents, approvals, authorizations, registrations or qualifications as may be required under state securities or “blue sky” Laws in connection with the
acquisition of the Securities by ESAS, (ii) any consent, approval, authorization, registration or qualification which, if not made or obtained, would not reasonably be expected to prohibit or materially and adversely affect ESAS’s
performance of its obligations under this Agreement, (iii) if applicable, filings required under, and compliance with other applicable requirements of, the HSR Act, (iv) filings required with the NYSE in connection with listing of the
Securities and (v) the registration of the resale of the Securities, including such “blue sky” consents, approval authorizations, registrations or qualifications as may be necessary or appropriate. 

Section 3.9 No Broker’s Fee. Neither ESAS nor any of its Affiliates is a party to any contract, agreement or understanding
with any Person that would give rise to a claim against EXCO for a financial advisory fee, brokerage commission, finder’s fee or like payment in connection with any transaction contemplated in any of the Transaction Agreements. 

Section 3.10 Bankruptcy. There are no bankruptcy, reorganization or receivership proceedings pending, being contemplated by, or,
to the Knowledge of ESAS, threatened in writing against, ESAS. 
 ARTICLE 4 

REPRESENTATIONS AND WARRANTIES OF EXCO 

EXCO represents and warrants to, and agrees with, ESAS as set forth below. Except for representations, warranties and agreements that are
expressly limited as to a particular date, each representation, warranty and agreement is made as of the Execution Date and as of the Closing Date after giving effect to the transactions contemplated hereby: 

Section 4.1 Organization and Qualification. EXCO has been duly incorporated and is validly existing as a corporation in good
standing under the Laws of the State of Texas, with the corporate power and authority to own its properties and conduct its business as currently conducted, and, except as has not had and would not reasonably be expected to have,

  
 -15- 

 
individually or in the aggregate, an EXCO Material Adverse Effect, has been duly qualified as a foreign corporation for the transaction of business and is in good standing under the Laws of each
other jurisdiction in which it owns or leases properties, or conducts any business so as to require such qualification. Each Subsidiary of EXCO that is a “significant subsidiary” within the meaning of Rule 1-02(w) of Regulation S-X under
the Securities Act has been duly organized and is validly existing in good standing under the Laws of its jurisdiction of organization, with the corporate or analogous power and authority to own its properties and conduct its business as currently
conducted, and, except as has not had and would not reasonably be expected to have, individually or in the aggregate, an EXCO Material Adverse Effect, has been duly qualified as a foreign corporation, limited liability company or partnership, as
applicable, for the transaction of business and is in good standing under the Laws of each other jurisdiction in which it owns or leases properties, or conducts any business so as to require such qualification. 

Section 4.2 Corporate Power and Authority. EXCO has the requisite corporate power and authority to enter into, execute and
deliver this Agreement, the other Transaction Documents and each other agreement, document, and instrument to which it is or will be a party or which it has executed and delivered, or will execute and deliver, in connection with the transactions
contemplated by this Agreement and, assuming receipt of the Required Shareholder Approval, to perform its obligations and consummate the transactions contemplated hereunder and thereunder, including the issuance of the Securities. EXCO has taken all
necessary corporate action required for the due authorization of the Transaction Documents, the performance of its obligations thereunder and the consummation of the transaction contemplated thereby, including the issuance of the Securities, except
for receiving the Required Shareholder Approval and, once such Required Shareholder Approval is received, filing the Certificate of Amendment with the secretary of state of the State of Texas. 

Section 4.3 Execution and Delivery; Enforceability. Each Transaction Document to which EXCO is, or will be, a party has been, or
at the time of its execution and delivery by EXCO, will be, duly and validly authorized, executed and delivered by EXCO, and constitutes, or at the time of its execution and delivery by EXCO, will constitute, a valid and binding obligation of EXCO,
enforceable against EXCO in accordance with its terms, except as may be limited by the Exceptions. 
 Section 4.4
Capitalization. The authorized Capital Stock of EXCO consists of 350,000,000 shares of Common Stock of which, as of the Execution Date, 273,702,116 shares were issued and outstanding, of which 2,157,885 are shares of restricted stock
issued pursuant to and subject to the vesting requirements of compensatory equity plans of EXCO in effect as of the Execution Date (the “EXCO Stock Plans”) (excluding, for the avoidance of doubt, shares held in treasury and an
additional 1,371,536 shares of unvested, performance-based restricted share units reserved for issuance under the EXCO Stock Plans), and 10,000,000 shares of Preferred Stock, par value $0.001 per share (the “Preferred Stock”), of
which, as of the Execution Date, no shares are either designated or issued and outstanding. As of the Execution Date, EXCO held 578,042 shares of Common Stock in its treasury. As of the Execution Date, no shares of Common Stock or Preferred Stock
were reserved for issuance, except for 10,020,193 shares of Common Stock reserved for issuance under the EXCO Stock Plans upon the exercise of stock options outstanding as of such date and granted under the EXCO Stock Plans, with a weighted average
exercise price of $12.63 per share and 1,371,536 restricted share units reserved for issuance 

  
 -16- 

 
under the EXCO Stock Plan subject to the achievement of certain criteria. The outstanding shares of Common Stock have been duly authorized and are validly issued and outstanding, fully paid and
nonassessable, and subject to no preemptive rights (and were not issued in violation of any preemptive rights, EXCO Organizational Documents, or any applicable Laws). As of the Execution Date, except as set forth above or pursuant to this Agreement,
there are no (A) shares of Capital Stock or other equity interests or voting securities of EXCO authorized, reserved for issuance, issued or outstanding, (B) options, warrants, calls, preemptive rights, subscription or other rights,
instruments, agreements, arrangements or commitments of any character, obligating EXCO or any of its Subsidiaries to issue, transfer or sell or cause to be issued, transferred or sold any shares of Capital Stock or other equity interest or voting
security in EXCO or any securities or instruments convertible into or exchangeable for such shares of Capital Stock or other equity interests or voting securities, or obligating EXCO or any of its Subsidiaries to grant, extend or enter into any such
option, warrant, call, preemptive right, subscription or other right, instrument, agreement, arrangement or commitment, (C) except in connection with the vesting, settlement or forfeiture of, or tax payment or withholding with respect to, any
equity-based awards under the EXCO Stock Plans, outstanding contractual obligations of EXCO or any of its Subsidiaries to repurchase, redeem or otherwise acquire any Capital Stock or other equity interest or voting securities of EXCO, or
(D) issued or outstanding restricted stock awards, units, rights to receive any Capital Stock or other equity interest or voting securities of EXCO on a deferred basis, or rights to purchase or receive any Capital Stock or equity interest or
voting securities issued or granted by EXCO to any current or former director, officer, employee or consultant of EXCO. No Subsidiary of EXCO owns any shares of Capital Stock or other equity interest or voting securities of EXCO. There are no voting
trusts or other agreements or understandings to which EXCO or any of its Subsidiaries is a party with respect to the voting of the Capital Stock or other equity interest or voting securities of EXCO. 

Section 4.5 Issuance. Subject to the Required Shareholder Approval and the acceptance of the Certificate of Amendment by the
secretary of state of the State of Texas, the issuance of the Securities has been duly and validly authorized and, when such Securities are issued and delivered against payment therefor, will be duly authorized, validly issued and delivered and
fully paid and nonassessable, free and clear of any and all Liens, other than Liens arising as a matter of applicable securities Law. 

Section 4.6 No Conflict. Subject to the Required Shareholder Approval and the acceptance of the Certificate of Amendment by the
secretary of state of the State of Texas, the sale, issuance and delivery of the Securities and the execution and delivery by EXCO of the Transaction Documents and the performance of and compliance with all of the provisions thereof by EXCO and the
consummation of the transactions contemplated therein (i) will not conflict with, or result in a breach or violation of, any of the terms or provisions of, or constitute a default under (in each case, with or without notice or lapse of time, or
both), or result in the acceleration of, or the creation of any Lien under, any indenture, mortgage, deed of trust, loan agreement or other agreement, instrument, contract or other arrangement to which EXCO or any of its Subsidiaries is a party or
by which EXCO or any of its Subsidiaries is bound or to which any of the property or assets of EXCO or any of its Subsidiaries is subject, other than the EXCO Credit Agreement, (ii) will not result in any violation of the provisions of the EXCO
Organizational Documents or any of the organizational or governance documents of any of EXCO’s Subsidiaries, and (iii) will not result in any material violation of, or any termination or material

  
 -17- 

 
impairment of any rights under, any applicable Law, including any license, authorization, injunction, judgment, Order, decree, rule or regulation of any Governmental Authority, except, in any
such case in clauses (i) and (iii), for any conflict, breach, violation, default, acceleration, Lien, termination or impairment which would not reasonably be expected to have, individually or in the aggregate, an EXCO Material Adverse Effect.

 Section 4.7 Consents and Approvals. No consent, approval, authorization, Order, registration or qualification of or with
any Third Party or any Governmental Authority is required for the sale, issuance and delivery of the Securities, and the execution and delivery by EXCO of this Agreement and the other Transaction Documents and performance of and compliance by EXCO
with all of the provisions hereof and thereof and the consummation of the transactions contemplated herein and therein, except (i) the Required Shareholder Approval, (ii) the acceptance of the Certificate of Amendment by the secretary of
state of the State of Texas, (iii) such consents, approvals, authorizations, registrations or qualifications as may be required under state securities or “blue sky” Laws in connection with the issuance of the Securities, (iv) if
applicable, filings required under, and compliance with other applicable requirements of, the HSR Act, (v) filings required with the NYSE in connection with listing of the Securities, (vi) the registration of the resale of the Securities,
including such “blue sky” consents, approval authorizations, registrations or qualifications as may be necessary or appropriate and (vii) as required under the EXCO Credit Agreement. 

Section 4.8 Arm’s Length. In connection with all aspects of each transaction contemplated by this Agreement, EXCO
acknowledges and agrees that: (i) the transactions contemplated by this Agreement are arm’s-length commercial transactions between EXCO and ESAS, (ii) EXCO is capable of evaluating, and understands and accepts, the terms, risks and
conditions of the transactions contemplated by this Agreement, (iii) in connection with the transactions contemplated by this Agreement and the process leading to the foregoing, ESAS has been, are, and will be acting solely as a principal and
has not been, is not, and will not be acting as an advisor, agent or fiduciary for EXCO or any of EXCO’s Affiliates, shareholders, creditors or employees or any other Person, and (iv) ESAS has no obligation to EXCO or EXCO’s
Affiliates, shareholders, creditors or employees or any other Person with respect to the transactions contemplated hereby except those obligations expressly set forth in this Agreement. To the fullest extent permitted by Law, EXCO hereby waives and
releases any claims that EXCO or EXCO’s Affiliates, shareholders, creditors or employees or any other Person may have against ESAS or any of their Affiliates with respect to any breach or alleged breach of agency or fiduciary duty in connection
with any aspect of any transaction contemplated by this Agreement. 
 Section 4.9 EXCO SEC Filings. Since January 1,
2012, EXCO has filed or furnished all required reports, schedules, forms, statements and other documents (including exhibits and all other information incorporated therein) (the “SEC Filings”) with the SEC. As of their respective
dates, each of the SEC Filings complied in all material respects with the requirements of the Securities Act or the Exchange Act, as applicable, and the rules and regulations of the SEC promulgated thereunder applicable to such SEC Filings. No SEC
Filing filed after December 31, 2011, when filed, and, in the case of any SEC Filing amended or superseded prior to the Execution Date, on the date of such amending or superseding filing, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were 

  
 -18- 

 
made, not misleading. Any SEC Filing filed with the SEC after the Execution Date but prior to the Closing Date, when filed, will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they are made, not misleading. 

Section 4.10 Financial Statements. 

(a) Each of (i) the financial statements and the related notes of EXCO and its Consolidated Subsidiaries included or
incorporated by reference in the SEC Filings, and (ii) the financial statements and the related notes of EXCO and its Consolidated Subsidiaries to be included or incorporated by reference in the Proxy Statement, if any, comply or will comply,
as the case may be, in all material respects with the applicable requirements of the Securities Act, the Exchange Act, and the rules and regulations of the SEC thereunder, and fairly present, or will fairly present, as the case may be, in all
material respects the financial position, results of operations and cash flows of EXCO and its Subsidiaries as of the dates indicated and for the periods specified, subject, in the case of the unaudited financial statements, to the absence of
disclosures normally made in footnotes and to customary year-end adjustments that are not and shall not be material; such financial statements have been prepared, or will be prepared, as the case may be, in conformity with the Accounting Principles
applied on a consistent basis throughout the periods covered thereby (except as disclosed in the SEC Filings filed before the Execution Date), and each of (A) the supporting schedules included or incorporated by reference in the SEC Filings,
and (B) the supporting schedules to be included or incorporated by reference in the Proxy Statement, if any, fairly present, or will fairly present, as the case may be, in all material respects, the information required to be stated therein;
and each of (x) the other financial information included or incorporated by reference in the SEC Filings, and (y) the other financial information to be included or incorporated by reference in the Proxy Statement, if any, has been, or will
be, as the case may be, derived from the accounting records of EXCO and its Subsidiaries and presents fairly, or will present fairly, as the case may be, the information shown thereby. 

(b) Neither EXCO nor any of EXCO’s Subsidiaries is a party to, or has any commitment to become a party to, any joint
venture, off-balance sheet partnership or any similar agreement or arrangement, where the result, purpose or effect of such agreement or arrangement is to avoid disclosure of any material transaction involving, or material liabilities of, EXCO or
any of its Subsidiaries in the SEC Filings (including the financial statements contained therein). Except to the extent specifically reflected or reserved against on the December 31, 2014 consolidated balance sheet of EXCO (including the notes
thereto) included in EXCO’s Form 10-K as filed with the Commission on February 25, 2015, neither EXCO nor any of its Subsidiaries has any (i) liabilities (whether or not accrued, fixed, contingent, asserted or known) or (ii) any
impairments (including impairments that would reasonably be expected to occur or be taken) to assets or reserves, except for liabilities or impairments, respectively, that (A) are otherwise disclosed in the SEC Filings or (B) would not
reasonably be expected to have, individually or in the aggregate, an EXCO Material Adverse Effect. 

  
 -19- 

 (c) EXCO has designed and maintains a system of internal control over financial
reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) sufficient to provide reasonable assurances regarding the reliability of financial reporting. EXCO (1) has designed and maintains disclosure controls and procedures (as
defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) to provide reasonable assurance that information required to be disclosed by EXCO in the reports that it files or submits with the SEC is recorded, processed, summarized and reported
within the time periods specified in the SEC’s rules, regulations and forms, and is accumulated and communicated to EXCO’s management as appropriate to allow timely decisions regarding required disclosure, and (2) has disclosed, based
on its most recent evaluation of internal control over financial reporting, to EXCO’s outside auditors and the Audit Committee of the Board of Directors (A) all significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting that would reasonably be expected to adversely affect EXCO’s ability to record, process, summarize and report financial information and (B) any fraud, whether or not material, that involves
management or other employees who have a significant role in EXCO’s internal control over financial reporting, all of which information described in clauses (A) and (B) above has been disclosed by EXCO to ESAS prior to the Execution
Date. 
 (d) Any material change in internal control over financial reporting required to be disclosed in any SEC Filings has
been so disclosed. Since December 31, 2011, to the Knowledge of EXCO, neither EXCO nor any of its Subsidiaries has received any complaint, allegation, assertion or claim regarding the accounting or auditing practices, procedures, methodologies
or methods of EXCO or any of its Subsidiaries or their respective internal accounting controls relating to periods after December 31, 2011, except for any complaints, allegations, assertions or claims that have not had, and would not reasonably
be expected to have, individually or in the aggregate, an EXCO Material Adverse Effect. 
 (e) Each of the principal
executive officer of EXCO and the principal financial officer of EXCO (or each former principal executive officer of EXCO and each former principal financial officer EXCO, as applicable) has made all certifications required by Rules 13a-14 and
15d-14 under the Exchange Act and Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, as amended (“SOX”), with respect to the SEC Filings, and the statements contained in such certifications are true and complete. For purposes
of this Agreement, “principal executive officer” and “principal financial officer” shall have the meanings given to such terms in SOX. 

Section 4.11 No Registration Rights Agreements. Other than the 2005 Registration Rights Agreement and the 2007 Registration
Rights Agreement, EXCO is not bound by any agreement, contract or other arrangement with respect to its equity securities granting any demand, shelf, incidental/piggyback or other registration rights (“Registration Rights”) to any
Person. Except as set forth on Schedule 4.11, there have not been any amendments, modification or supplements to, or any waivers under, either the 2005 Registration Rights Agreement or the 2007 Registration Rights Agreement. 

Section 4.12 No EXCO Material Adverse Effect. Between January 1, 2015 and the Execution Date, other than as disclosed in
the SEC Filings filed prior to the Execution Date and except for actions to be taken in connection with the transactions contemplated under this Agreement, there has not occurred any EXCO Material Adverse Effect. 

  
 -20- 

 Section 4.13 No Broker’s Fees. Neither EXCO nor any of its Subsidiaries is a
party to any contract, agreement or understanding with any Person that would give rise to a claim against ESAS for a financial advisory fee, brokerage commission, finder’s fee or like payment in connection with the issuance of the Securities or
the other transactions contemplated in any of the Transaction Documents. 
 Section 4.14 Anti-takeover Provisions. The actions
taken by the Board of Directors to approve this Agreement, the other Transaction Documents and the transactions contemplated hereby and thereby constitute all the action necessary to render inapplicable to this Agreement, the other Transaction
Documents, the acquisition of shares by the ESAS Group to comply with its obligation under Section 5.20 and the acquisition of the Warrants by ESAS hereunder and the purchase of the Warrant Shares to be purchased upon exercise of the
Warrants, the provisions of any potentially applicable anti-takeover, control share, fair price, moratorium, interested shareholder or similar law and any potentially applicable provision of the EXCO Organizational Documents. 

Section 4.15 Investment Company Status. EXCO is not an “investment company” or an entity “controlled” by an
“investment company” within the meaning of the Investment Company Act of 1940, as amended. 
 Section 4.16
Bankruptcy. There are no bankruptcy, reorganization or receivership proceedings pending, being contemplated by, or, to the Knowledge of EXCO, threatened in writing against, EXCO. 

ARTICLE 5 
 COVENANTS OF
THE PARTIES 
 Section 5.1 No Stabilization. EXCO will not take, directly or indirectly, any action designed to or that
would reasonably be expected to cause or result in any stabilization or manipulation of the price of the shares of Common Stock. 
 Section
5.2 Closing Efforts. Each of the Parties shall use its commercially reasonable efforts to take all actions and to do all things necessary, proper or advisable to consummate the transactions contemplated by this Agreement, including
using its commercially reasonable efforts (a) to ensure that such Party’s representations and warranties are true and correct in all material respects on the Closing Date and all covenants of such Party to be performed prior to Closing are
performed in all material respects, (b) to ensure that the Required Shareholder Approval is received and, once such Required Shareholder Approval is received, file the Certificate of Amendment with the secretary of state of the State of Texas
and (c) to obtain, at such Party’s expense, all waivers, Permits, consents, clearances, approvals or other authorizations from Governmental Authorities and to effect all registrations, filings and notices with or to Governmental
Authorities, as may be required by applicable Laws for such Party to consummate the transactions contemplated by this Agreement and to otherwise comply with all applicable Laws in connection with the consummation of the transactions contemplated by
this Agreement. 

  
 -21- 

 Section 5.3 Expenses. Except as expressly set forth herein, all expenses incurred
by or on behalf of ESAS in connection with or related to the authorization, preparation or execution of this Agreement, and the Exhibits and Schedules hereto and thereto, and all other matters related to the Closing, including all fees and expenses
of counsel, accountants and financial advisers employed by or on behalf of ESAS, shall be borne solely and entirely by ESAS, and all such expenses incurred by EXCO shall be borne solely and entirely by EXCO. 

Section 5.4 Confidentiality. Each Party hereby agrees to keep and to cause such Party’s Representatives to keep all
Confidential Information confidential and not to use such Confidential Information for any purpose except exercising its rights, or fulfilling its obligations, under this Agreement, or as may be authorized in writing by the disclosing Party. The
confidentiality obligation set forth in this Section 5.4 shall not apply to (a) Confidential Information (i) that becomes, through no violation of the provisions of this Section 5.4 by the applicable Party or such
Party’s Representatives, part of the public domain or publically available by publication or otherwise, (ii) which is obtained by the applicable Party or such Party’s Representatives from a source that is not known to it to be
prohibited from disclosing such Confidential Information to such Party or such Party’s Representatives, by any legal, fiduciary or contractual obligation of confidentiality to another Party, as evidenced by the receiving Party’s written
records, or (iii) which is developed independently by the applicable Party or such Party’s Representatives without use of the Confidential Information or violation of such Party’s and its Representatives’ obligations under this
Section 5.4, in each case, as evidenced by the receiving Party’s written records, or (b) disclosures of Confidential Information (i) in the course of any trial or other legal proceeding involving the applicable Party or
such Party’s Representatives (including any such trial or legal proceeding relating to, or arising out of, this Agreement), or (ii) as required by any applicable securities Law or other Law (including any subpoena, interrogatory, or other
similar requirement for such information to be disclosed or the request or requirement of any regulatory, governmental or self-regulatory authority with jurisdiction over the receiving Party or its Representatives) or the rules of any applicable
national stock exchange. In any such circumstance outlined in clause (b) above, the disclosing Party shall as promptly as practicable give the other Parties written notice of such required disclosure and thereafter disclose only that portion of
the Confidential Information as such disclosing Party is advised by legal counsel that it is reasonably required to disclose and shall exercise its commercially reasonable efforts to obtain reliable assurance that confidential treatment shall be
accorded such Confidential Information. The confidentiality restrictions on each Party set forth in this Section 5.4 shall terminate upon the first anniversary of the earlier of (a) Closing Date and (b) the Termination Date.
Each Party, on behalf of itself and its applicable Representatives, acknowledges the competitive and confidential nature of the Confidential Information and that irreparable damage may result to the other Party if any Confidential Information is
disclosed to any Third Party, except as herein permitted or under the Confidentiality Agreement and except to (A) its lenders, auditors or tax advisors and (B) Representatives who reasonably need to know such information to assist the
receiving Party in exercising its rights, or fulfilling its obligations, under this Agreement, provided that each Party shall be responsible for any of its lenders’, auditors’, tax advisors’ or Representatives’ breaches of
this Section 5.4, as if such Representatives were a signatory to this Agreement for the purposes of this Section 5.4. It is 

  
 -22- 

 
further understood and agreed that monetary damages would not be a sufficient remedy for any breach of this Section 5.4. Accordingly, it is agreed by each Party that the other Parties
shall be entitled to an injunction or injunctions (without the posting of any bond and without proof of actual damages) to prevent breaches or threatened breaches of this Section 5.4 and/or to specific performance of this
Section 5.4, and that neither a Party nor any of its Representatives may oppose the granting of such relief, provided, however, that such Party and its Representatives are entitled to dispute whether or not any Confidential
Information has been disclosed in violation of this Section 5.4. Each Party agrees that equitable relief is not exclusive of other remedies to which the other Parties may be entitled at Law or in equity for a breach of this
Section 5.4. “Confidential Information” means any and all information, documents, instruments, data with respect to EXCO, ESAS or of any other nature provided by or on behalf of a Party to any Representative or another
Party, confidential, proprietary and other information of a Party or the its assets whether disclosed orally, visually, in writing or in other tangible form, and any and all nonpublic or proprietary information of any nature (including prices, trade
secrets, technological know-how, data and all other nonpublic or proprietary concepts, methods of doing business, ideas, materials or information), and all information derived from any nonpublic or proprietary information. 

Section 5.5 Press Releases. 

(a) EXCO and ESAS shall, on or before 8:30 a.m., New York, New York time, on the first Trading Day (as defined in the Warrant)
following the Execution Date, issue a press release disclosing the transactions contemplated hereby. Within four (4) Business Days after the Execution Date, EXCO shall file a Current Report on Form 8-K with the SEC describing the terms of the
transactions contemplated by the Transaction Documents and including the Transaction Documents as exhibits to such Current Report on Form 8-K, to the extent required by the Exchange Act. Thereafter, EXCO shall timely file any filings and notices
required by the SEC or applicable Law with respect to the transactions contemplated hereby. Except as may be required by applicable Law or the rules and regulations of the SEC or the NYSE (in which case prior written notice of such inclusion shall,
to the extent practicable, be provided to ESAS), EXCO shall not include the name of any member of the ESAS Group (that was not previously disclosed in any public disclosure) in any press release with respect to the transactions set forth herein or
in the other Transaction Documents without the prior written consent and approval of ESAS. 
 (b) From and after the
Execution Date, except as contemplated by this Section 5.5, neither EXCO, on the one hand, nor ESAS, on the other hand, shall make, and each of EXCO and ESAS shall cause each of its Affiliates not to make, any public press release or
public disclosure regarding the existence of this Agreement, the contents hereof or the transactions contemplated hereby, or the identities of any Parties hereto without the prior written consent of EXCO, on the one hand, and ESAS, on the other
hand; provided, however, the foregoing shall not restrict disclosures by EXCO and ESAS (i) to the extent that such disclosures are required by applicable securities or other Laws or the applicable rules of any stock exchange
having jurisdiction over EXCO and ESAS or (ii) to Governmental Authorities or any Third Party holding rights of consent or other rights that may be applicable to the transactions contemplated by this Agreement, as reasonably necessary to
provide notices, seek waivers, amendments or terminations of such rights, or seek such consents. EXCO and ESAS shall each be liable for the compliance of their respective Affiliates with the terms of this Section 5.5. 

  
 -23- 

 Section 5.6 Regulatory Filings. EXCO and ESAS shall, and shall cause their
respective Affiliates to (a) make or cause to be made the filings required of such Party or any of its Affiliates under any Laws with respect to the transactions contemplated by this Agreement and to pay any fees due by such Party in connection with
such filings, as promptly as is reasonably practicable, and in any event within ten (10) Business Days after the Execution Date (other than (1) the Proxy Statement, which EXCO shall use its commercially reasonable efforts to file as
promptly as practicable after execution of this Agreement and in any event not more than thirty (30) days after the Execution Date in accordance with Section 5.9 or (2) under the HSR Act, which the Parties shall use
commercially reasonable efforts to file as and when required under the HSR Act), (b) cooperate with the other Parties and furnish all information in such Party’s possession that is necessary in connection with such other Party’s
filings, (c) use commercially reasonable efforts to cause the expiration or termination of the notice or waiting periods under the HSR Act and, if applicable, any other Laws with respect to the transactions contemplated by this Agreement as
promptly as is reasonably practicable, (d) promptly inform the other Party of (and, at the other Party’s reasonable request, supply to such other Party) any communication (or other correspondence or memoranda) from or to, and any proposed
understanding or agreement with, any Governmental Authority in respect of such filings, (e) consult and cooperate with the other Party in connection with any analyses, appearances, presentations, memoranda, briefs, arguments and opinions made
or submitted by or on behalf of any Party in connection with all meetings, actions, discussions and proceedings with Governmental Authorities relating to such filings, including, subject to applicable Law, permitting the other Party to review in
advance any proposed written communication between it and any Governmental Authority, (f) comply, as promptly as is reasonably practicable, with any requests of any Governmental Authority received by such Party or any of its Affiliates under
the HSR Act and any other Laws for additional information, documents or other materials, (g) use commercially reasonable efforts to resolve any objections as may be asserted by any Governmental Authority with respect to the transactions
contemplated by this Agreement, and (h) use commercially reasonable efforts to contest and resist any action or proceeding instituted (or threatened in writing to be instituted) by any Governmental Authority challenging the transactions
contemplated by this Agreement as in violation of any Law. If a Party or any of its Affiliates intends to participate in any meeting or discussion with any Governmental Authority with respect to such filings or the transactions contemplated by this
Agreement (other than any meetings or discussions with the SEC), it will give the other Party reasonable prior notice of, and an opportunity to participate in, such meeting or discussion. Notwithstanding anything to the contrary set forth herein, in
no event shall any Party be required to make any payment, other than filing fees, to such Governmental Authority or concede anything of value, other than such payments or concessions that are de minimis in nature and do not exceed $100,000 in
value, in the aggregate, to obtain any such consent, approval or waiver; provided, however, that if any Party is required to make a payment or concession in excess of the forgoing, the other Party may, to the extent possible, elect to
make a substitute payment or concession on the first Party’s behalf. No Party shall voluntarily extend any waiting period under the HSR Act or any competition/investment Law or enter into any agreement with any Governmental Authority to delay
or not to consummate the transactions contemplated by this Agreement, except with the prior written consent of the other Parties (such consent not to be unreasonably withheld, conditioned or delayed). 

  
 -24- 

 Section 5.7 Non-Solicitation. For a period beginning on the Execution Date and
ending on the one (1) year anniversary of the earlier to occur of (a) the Termination Date or (b) the expiration of the obligations of ESAS under Section 5.18, each of EXCO, on the one hand, and ESAS, on the other hand,
shall not, without the other Party’s prior written consent, directly or indirectly solicit, encourage or otherwise induce any of the other Party’s or its Affiliates’ employees to leave their respective employment or become the
employee or contractor of the soliciting Party or its Affiliates. Notwithstanding the foregoing, nothing contained in this Section 5.7 shall prohibit the hiring or contracting for the services of any employee who has terminated his or
her employment relationship without any direct or indirect solicitation or inducement by the soliciting Party or its Affiliates. A general advertisement for employment that is not targeted at any such employee shall not constitute a breach of any
Party’s obligations under this Section 5.7. It is further understood and agreed that monetary damages would not be a sufficient remedy for any breach of this Section 5.7. Accordingly, it is agreed by each of EXCO, on the
one hand, and ESAS, on the other hand, that the other Party shall be entitled to an injunction or injunctions (without the posting of any bond and without proof of actual damages) to prevent breaches or threatened breaches of this
Section 5.7 and/or to specific performance of this Section 5.7, and that neither a Party nor any of its Affiliates may oppose the granting of such relief, provided, however, that such Party and its Affiliates
are entitled to dispute whether or not any violation of this Section 5.7 has occurred. Each Party agrees that equitable relief is not exclusive of other remedies to which the other Party may be entitled at Law or in equity for a breach
of this Section 5.7. 
 Section 5.8 Listing. EXCO shall use its commercially reasonable efforts to include all of
the Initial Shares and, when issued, the Warrant Shares for listing on the NYSE if the Common Stock is then listed on the NYSE or, if the Common Stock is not then listed on the NYSE, on the primary national securities exchange or automated quotation
system on which the Common Stock is then listed or authorized for quotation. 
 Section 5.9 Proxy Statement. 

(a) As promptly as practicable after execution of this Agreement and in any event not more than thirty (30) days after the
Execution Date, EXCO shall, in consultation with ESAS, prepare, and EXCO shall file with the SEC, preliminary proxy materials in compliance with Section 14 of the Exchange Act (the “Proxy Statement”). As promptly as practicable
after comments, if any, are received from the SEC thereon and after the furnishing by EXCO and ESAS of all information required to be contained therein, EXCO shall, in consultation with ESAS, prepare and EXCO shall file any required amendments, if
any, with the SEC. EXCO shall notify ESAS promptly of the receipt of any comments from the SEC or its staff and of any request by the SEC or its staff for amendments or supplements to the Proxy Statement or for additional information and shall
consult with ESAS regarding, and supply ESAS with copies of, all correspondence between EXCO or any of its Representatives, on the one hand, and the SEC or its staff, on the other hand, with respect to the Proxy Statement. Prior to filing or mailing
any proposed amendment of or supplement to the Proxy Statement, EXCO shall 

  
 -25- 

 
provide ESAS a reasonable opportunity to review and comment on such document. EXCO shall use its commercially reasonable efforts to have the Proxy Statement cleared by the SEC and shall
thereafter mail to the shareholders of Common Stock as promptly as possible the Proxy Statement and all other proxy materials for the Shareholder Meeting. 

(b) ESAS shall use its commercially reasonable efforts to furnish EXCO any information required to be included in the Proxy
Statement and reasonably requested from ESAS by EXCO; provided that no information that ESAS or its Affiliates has furnished, or will furnish, to EXCO shall be included in the Proxy Statement unless ESAS shall have expressly consented in
writing to such information being included in the Proxy Statement. Any information relating to ESAS furnished to EXCO in writing by ESAS expressly for use in the Proxy Statement will not contain an untrue statement of a material fact or omit to
state a 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. 

(c) EXCO hereby covenants and agrees that (i) the Proxy Statement will, when filed, comply as to form in all material
respects with the applicable requirements of the Exchange Act and (ii) none of the information included or incorporated by reference in the Proxy Statement will, at the date it is first mailed to the shareholders of Common Stock or at the time
of the Shareholder Meeting or at the time of any amendment or supplement thereof, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they are made, not misleading. 
 Section 5.10 Shareholder Approval; Meeting of
Shareholders. EXCO shall take, in accordance with applicable Law and the EXCO Organizational Documents, all action necessary to convene the Shareholder Meeting as promptly as practicable, but no later than sixty (60) days after
clearance of the proxy statement by the SEC, to submit for approval by the requisite vote of the shareholders of EXCO the Shareholder Proposals. In connection with each meeting of shareholders at which either of the Shareholder Proposals is
submitted for a vote of the shareholders of EXCO, to the fullest extent permitted by applicable Law, (i) the Board of Directors shall recommend that its shareholders vote in favor of the Shareholder Proposals, and (ii) neither the Board of
Directors nor any committee thereof shall withdraw or modify, or propose or resolve to withdraw or modify in a manner materially adverse to ESAS, the recommendation of the Board of Directors that the shareholders of EXCO vote in favor of the
Shareholder Proposals; provided that, at any time prior to obtaining such shareholder approval, the Board of Directors may withdraw such recommendation if such Board of Directors determines in good faith (after consultation with outside
counsel) that failure to take such action violates its fiduciary duties under applicable Law. EXCO shall take all lawful action to solicit from the shareholders proxies in favor of the Shareholder Proposals and take all other action necessary or
advisable to secure the vote or consent of the EXCO shareholders that are required by the rules of the NYSE and applicable Law, including, if necessary or appropriate, adjourning the Shareholder Meeting to solicit additional proxies. 

  
 -26- 

 Section 5.11 Registration Rights Agreement. Prior to the Initial Shares Closing
Date, EXCO shall take all action to obtain any and all consents required under the 2005 Registration Rights Agreement and the 2007 Registration Rights Agreement such that no Person shall have any Registration Rights that conflict with or violate the
rights granted to ESAS under the Registration Rights Agreement. Concurrently with the Initial Shares Closing, ESAS and each ESAS Initial Warrantholder and EXCO shall execute and deliver the Registration Rights Agreement. 

Section 5.12 Blue Sky. EXCO shall, prior to the Closing Date, take all action to obtain an exemption for or to qualify the
Securities to be issued to ESAS pursuant to this Agreement under applicable securities or “blue sky” Laws of the states of the United States (or to obtain an exemption from such qualification). EXCO shall make all filings and reports
relating to the offer and sale of the Securities required under applicable securities or “blue sky” Laws of the states of the United States following the Closing Date. 

Section 5.13 Designation of Director. Concurrently with the Closing, the Board of Directors of EXCO shall, if there is not a
vacancy on the Board of Directors at that time, take action to increase the size of the Board of Directors by one, and shall elect Wilder as a member of the Board of Directors; provided that Wilder is living and physically and mentally
capable of performing the duties that accompany the office of Director. 
 Section 5.14 Reservation of Shares. After the
Closing, so long as any of the Warrants remain outstanding, EXCO shall use its commercially reasonable efforts to take all action necessary to at all times have authorized, and reserved for the purpose of issuance, no less than one hundred percent
(100%) of the maximum number of shares of Common Stock issuable upon exercise of all the Warrants (without regard to any limitations on the exercise of the Warrants set forth therein). 

Section 5.15 Warrant Exercise Procedures. The form of Notice of Exercise included in the form of certificate attached hereto as
Exhibit B sets forth the totality of the procedures required of the holder of the Warrants in order to exercise the Warrants. No additional legal opinion, other information or instructions shall be required of the holder of the Warrants to
exercise their Warrants. EXCO shall honor exercises of the Warrants and shall deliver the Warrant Shares in accordance with the terms, conditions and time periods set forth in the Warrants. 

Section 5.16 Beneficial Ownership Limitation. From the Closing Date until the second anniversary of the Closing Date, ESAS, for
itself and on behalf of the other members of the ESAS Group, acknowledges and agrees that, unless otherwise approved in advance in writing by the Board of Directors, ESAS shall not, and shall cause Wilder and the members of the ESAS Group not to, in
any manner, directly or indirectly, whether acting alone or in concert with others, acquire (or propose or agree to acquire), by purchase or otherwise, record ownership or beneficial ownership of any Capital Stock of EXCO or rights, options or other
convertible securities to acquire interests in any of EXCO’s Capital Stock except that the members of the ESAS Group, in the aggregate, may beneficially own up to fifty percent (50%) of EXCO’s outstanding Capital Stock and may
beneficially own an amount in excess of such percentage solely to the extent resulting exclusively from actions or omissions taken by EXCO or under the terms of any agreements, contracts or instruments that no member of the ESAS Group is party. 

  
 -27- 

 Section 5.17 Indemnity for Certain Liabilities. EXCO and their respective
successors and assigns shall be responsible for, perform, pay and shall indemnify, defend and hold harmless the ESAS Group from and against all obligations, liabilities, claims, causes of action, and Damages caused by, arising out of, attributable
to or resulting from any claims by Third Parties relating to this Agreement, the Transaction Documents (other than the Registration Rights Agreement) or the Proxy Statement, the use of proceeds from the purchase and sale of EXCO securities hereunder
or any claim, litigation, investigation or proceeding relating to the foregoing, to the extent any member of the ESAS Group is or is threatened to be made a party thereto, in each case except to the extent resulting from (a) the breach of any
of ESAS’s representations, warranties or covenants set forth in this Agreement or (b) information provided by ESAS in the Proxy Statement. 

Section 5.18 Strategic Advisory Services. From and after the Execution Date until the earlier of the Termination Date or the
four (4) year anniversary of the Execution Date: 
 (a) ESAS shall develop an EXCO performance oversight and improvement
program (the “Business Plan”), which shall be based upon: 
 (i) maximizing value for all EXCO shareholders;

 (ii) developing an execution team and disciplined operating system for EXCO and its Subsidiaries; 

(iii) instituting a capital and risk allocation process based on risk/return analysis and designing EXCO’s risk management
and hedging strategy and execution; 
 (iv) restructuring commercial contracts and joint-venture arrangements; and 

(v) instituting fixed costs reduction programs towards the goal of long term costs competiveness. 

(b) Wilder shall direct all of ESAS’s activities with respect to the development and implementation of the Business Plan
as he deems appropriate in the exercise of his reasonable discretion. 
 (c) ESAS shall use commercially reasonable efforts,
and shall cause Wilder to use commercially reasonable efforts, to assist EXCO in the implementation of the Business Plan as ESAS and Wilder deem appropriate in each of their reasonable discretion. 

(d) In return for the Services, EXCO shall pay ESAS: 

(i) subject to Section 5.18(e), for each month the Services are provided under this Agreement, the Monthly Fee by
the 15th of the next month; and 

  
 -28- 

 (ii) subject to Section 5.18(e), for each full year after the Closing
Date occurring prior to the termination of this Agreement, the Incentive Payment by the 45th day following the end of such year, which payment shall be adjusted as follows: 

(A) If EXCO’s Percentile Rank based on the one-year period preceding such anniversary is less than 50, the Incentive
Payment shall be equal to zero. 
 (B) If EXCO’s Percentile Rank based on the one-year period preceding such
anniversary is greater than or equal to 50 and less than 75, the Incentive Payment amount shall be the amount established by the following formula: 
  

 
 (C) If EXCO’s Percentile Rank based on the one-year period preceding such anniversary
is greater than or equal to 75, ESAS shall receive the maximum Incentive Payment. 
 (D) For the avoidance of doubt,
(x) no Incentive Payment paid in exchange for one year of the Services shall ever exceed $2.4 million and (y) if this Agreement is terminated prior to any anniversary of the Closing Date, no Incentive Payment shall be due or payable for
such partial year of Services. 
 (e) Monthly Fee and Incentive Payment Holdback. 

(i) Notwithstanding the foregoing, from the Execution Date until the earlier to occur of the date fifteen (15) Business
Days after the Investment Obligation Test Date and the Termination Date, all Monthly Fees and Incentive Payments attributable to any periods prior to such earlier date that are payable by EXCO under this Section 5.18 shall, in lieu of
payment to ESAS, be deposited into the Escrow Account as and when due and payable under the terms of this Section 5.18. 

(ii) In the event that after the Closing Date and on or prior to the date fifteen (15) Business Days after the Investment
Obligation Test Date (A) EXCO has elected to terminate this Agreement as a result of any ESAS Forfeiture Event occurring at or prior to the Investment Obligation Test Date or (B) ESAS has elected to terminate this Agreement as a result of
any reason other than an EXCO Forfeiture Event, then (1) EXCO shall be entitled to receive for its own account the entirety of the Monthly Fees and Incentive Payments (including all interest and earnings accruing thereon) held in the Escrow
Account 

  
 -29- 

 
and the Warrants shall be forfeited to the extent set forth in the Warrants and (2) EXCO’s right to terminate this Agreement, the retention of such amounts in the Escrow Account and the
forfeiture of the Warrants shall constitute liquidated damages hereunder, which remedy shall be the sole and exclusive remedy available to EXCO for any such ESAS Forfeiture Event, termination or failure. Each Party acknowledges and agrees that
(A) EXCO’s actual damages upon the event of such ESAS Forfeiture Event, termination or failure are difficult to ascertain with any certainty, (B) the amounts in the Escrow Account is a fair and reasonable estimate by the Parties of
such aggregate actual damages of EXCO and (C) such liquidated damages do not constitute a penalty. 
 (iii) In the event
that the Closing has occurred, on the date sixteen (16) Business Days after the Investment Obligation Test Date, if EXCO is not entitled under Section 5.18(e)(ii) to receive Monthly Fees and Incentive Payments (including all
interest and earnings accruing thereon) held in the Escrow Account, then ESAS shall be entitled to receive for its own account the entirety of the Monthly Fees and Incentive Payments (including all interest and earnings accruing thereon) held in the
Escrow Account. 
 (iv) All amounts due and payable from and after the Investment Obligation Test Date that are payable by
EXCO under this Section 5.18 shall be paid to ESAS as and when due and payable under the terms of this Section 5.18. 

(f) Subject to the terms of Section 5.4 and Section 5.7, EXCO, at EXCO’s sole cost, risk, and
expense, shall provide reasonable access during normal business hours to any records, data, material, properties, officers, managers, employees, personnel, consultants, advisors, counsel and lenders of EXCO and its Affiliates to the extent
reasonably requested by ESAS in order for ESAS to perform and provide the Services and comply with the obligations of ESAS under this Section 5.18. 

(g) In the performance of any Services by ESAS for EXCO, ESAS, its Affiliates, their employees or officers and Wilder (other
than solely in his capacity as a director or as Executive Chairman of EXCO, as applicable) shall be each deemed an independent contractor, free and clear of any dominion or control by EXCO in the manner in which said services are to be performed or
the establishment of hours of labor, and as such ESAS, its Affiliates, their employees or officers and Wilder (other than solely in his capacity as a director or as Executive Chairman of EXCO, as applicable) shall not be, and shall not represent
themselves as, an agent or employee of EXCO or its Affiliates, including for tax purposes. Notwithstanding anything herein to the contrary, ESAS retains the authority and right to direct and control all the details of ESAS’s performance of the
Services. EXCO shall have no right or authority to supervise or give directions or instructions to the employees, agents, or representatives of ESAS, its Affiliates or Wilder (other than solely in his capacity as a director or as Executive Chairman
of EXCO, as applicable), and ESAS, its Affiliates and their employees, agents or representatives shall at all times be under the direct and sole supervision and control of ESAS. It is the understanding and intention of the Parties that no
relationship of master and servant or principal and agent shall exist between EXCO and ESAS, its Affiliates, the employees, agents or representatives of ESAS and its Affiliates or Wilder (other than solely in his capacity as a director or as
Executive Chairman of EXCO, as applicable). No member of 

  
 -30- 

 
the ESAS Group owes any duty, fiduciary or otherwise, to any member of the EXCO Group except for fiduciary duties (other than such duties that are waived in the Articles of Incorporation of EXCO)
of Wilder in connection with and to the extent of his duties as Executive Chairman of EXCO during his period of service in such position. 

(h) ESAS warrants for a period of one (1) year after the date of the performance of any specific Services provided under
this Section 5.18, such Services shall have been performed (i) in good faith in a diligent manner and (ii) in accordance with all applicable Laws. Except as expressly provided in this Section 5.18(h), (A) NO
MEMBER OF THE ESAS GROUP MAKES ANY, AND EACH OF THE ESAS GROUP EXPRESSLY DISCLAIMS, AND EXCO WAIVES AND REPRESENTS AND WARRANTS THAT EXCO HAS NOT RELIED UPON, ANY REPRESENTATION OR WARRANTY OR GUARANTY, EXPRESS OR IMPLIED, IN THIS OR ANY OTHER
TRANSACTION DOCUMENT OR CONTRACT DELIVERED HEREUNDER OR IN CONNECTION WITH THE SERVICES, INCLUDING ANY REPRESENTATION OR WARRANTY OR GUARANTY, EXPRESS OR IMPLIED AS TO (I) THE SERVICES PERFORMED BY ANY MEMBER OF THE ESAS GROUP OR ANY OTHER
PERSON (II) ANY RESULTS, EFFECTS OR PERFORMANCE OF ANY OF THE SERVICES, OR (III) ANY OTHER, PROPOSALS, RECOMMENDATIONS, COURSES OF ACTION, RECORDS, FILES OR MATERIALS OR INFORMATION (INCLUDING AS TO THE ACCURACY, COMPLETENESS OR CONTENTS
OF THE RECORDS) THAT MAY BE MADE AVAILABLE OR COMMUNICATED AFTER THE EXECUTION DATE TO EXCO OR ITS AFFILIATES, OR ITS OR THEIR EMPLOYEES, AGENTS, CONSULTANTS, REPRESENTATIVES OR ADVISORS IN CONNECTION WITH THE PREPARATIONS OR PERFORMANCE OF THE
SERVICES (B) EACH MEMBER OF THE ESAS GROUP FURTHER DISCLAIMS, AND EXCO WAIVES, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR CONFORMITY TO MODELS OR SAMPLES OF MATERIALS OF ANY
SERVICES. 
 Section 5.19 Director Nomination Rights and Wilder’s Service to the Board of Directors. Pursuant to a
nomination letter agreement, the form of which is attached hereto as Exhibit D (the “Nomination Letter Agreement”), ESAS shall have the right to nominate for election to the Board of Directors of EXCO one director subject to
the provisions contained in such Nomination Letter Agreement. The failure of Wilder to receive the votes necessary to be elected to serve on the Board or to serve as Executive Chairman, despite ESAS’s compliance with the obligations set forth
in the second sentence of this Section 5.19, shall not be deemed to be a breach of this Section 5.19. Wilder shall receive customary compensation, benefits and protections, as the other members of the Board of Directors.
Wilder shall have no additional legal duties or obligations associated with the role of Executive Chairman. 

  
 -31- 

 Section 5.20 Agreement to Invest. Subject to applicable Law, from the period after
the Closing Date through the first anniversary of the Closing Date, the ESAS Group shall purchase shares of Common Stock of EXCO through open market purchases from unaffiliated Third Parties such that (when including all or any portion of the
Initial Investment held by the ESAS Group on the Investment Obligation Test Date) shall own, directly or indirectly, beneficially or of record, as of the first anniversary of the Closing Date, shares of Common Stock of EXCO with an aggregate cost
basis (net of the aggregate cost basis of all shares of Common Stock sold by the ESAS Group during the same period) of at least fifty million dollars ($50,000,000) (such purchases, excluding the Initial Investment, the “Remaining
Investment”); provided, however, (a) ESAS, at its sole option to be exercised by the delivery of written notice to EXCO on or before the first anniversary of the Closing Date, may extend such deadline by up to three
(3) months from the first anniversary of the Closing Date (such deadline, as validly extended in accordance with this Section 5.20, the “Investment Obligation Test Date”) in the event that the ESAS Group is unable
to purchase and own such shares of Common Stock due to blackout dates (other than normal quarterly blackouts that do not exceed seventy-five (75) days with respect to the last fiscal quarter and forty-five (45) days with respect to the
first, second and third fiscal quarters) or other restrictions under applicable Laws or this Agreement, (b) ESAS shall not be required to comply with its obligations under this Section 5.20 to the extent that such compliance would
be reasonably likely to result in any breach of ESAS’s obligations under Section 5.16 and (c) the obligations under this Section 5.20 shall be null and void ab initio upon the earlier to occur of the
Termination Date or an Investment Obligation Termination Event prior to the deadline set forth in this Section 5.20). The Remaining Investment shall be conducted in accordance with a Rule 10b5-1 Plan and, in making the Remaining
Investment, ESAS shall use commercially reasonable efforts to comply with the limitations and restrictions set forth in Rule 10b-18(b) promulgated under the Exchange Act. Within three (3) Business Days after the Investment Obligation Test Date,
ESAS shall submit a certificate stating compliance together with reasonable documentation supporting such compliance. ESAS may make open market purchases or sales of any other EXCO securities at its own discretion. 

Section 5.21 Limitation on Losses. EXCO and ESAS shall, and shall cause their respective Affiliates to, cooperate in good faith
to determine whether any transactions contemplated by this Agreement, including a Remaining Investment pursuant to Section 5.20 or the vesting, forfeiture or exercise of any Warrants pursuant to the terms of the applicable Form of
Warrant, would, or reasonably would be expected to, cause an ownership change of EXCO under Section 382 of the Code or any comparable provision of any state or local Law, limiting or restricting the utilization of net operating losses of EXCO
(collectively, an “Ownership Change”). If EXCO and ESAS agree that any such transactions would, or reasonably would be expected to cause an Ownership Change, the Parties shall use commercially reasonable efforts to negotiate a
modification mutually acceptable to EXCO and ESAS to avoid such Ownership Change. 
 Section 5.22 Standstill. From the
Execution Date until the earlier to occur of (a) the Termination Date and (b) the Closing Date, unless approved in advance in writing by the Board of Directors and except in connection with the Shareholder Proposals or as otherwise
contemplated by this Agreement, ESAS shall not, and shall cause Wilder and each other member of the ESAS Group acting on behalf of, or in concert with, ESAS not to, and ESAS shall cause any other Person in which Wilder owns, directly or indirectly,
beneficially or of record, more than fifty (50%) of the voting or equity interests not to, in any manner, directly or indirectly, whether alone or in concert with others, (i) make any statement or proposal to the Board of Directors or the
board of directors of any of EXCO’s Affiliates or Subsidiaries or to any of 

  
 -32- 

 
EXCO’s stockholders regarding, or make any public announcement, proposal or offer (including any “solicitation” of “proxies” as such terms are defined or used in the
Exchange Act and the rules promulgated thereunder) with respect to, or otherwise solicit, seek or offer to effect (including, for the avoidance of doubt, indirectly by means of communication with the press or media) (A) any business
combination, merger, tender offer, exchange offer, restructuring, recapitalization, liquidation, dissolution, divestiture, break-up, spin-off or other extraordinary transaction involving EXCO or any of its Affiliates or Subsidiaries or any of their
respective assets or 
 securities, (B) any proposal to seek representation on the Board of Directors or otherwise to seek to control or influence the
management, Board of Directors or policies of EXCO or its Affiliates or Subsidiaries or to request, call or seek to call a meeting of the stockholders of EXCO, (C) any acquisition of any of EXCO’s or any of its Affiliates’ or
Subsidiaries’ respective loans, debt securities, equity securities or assets, or rights or options to acquire interests in any of EXCO’s or any of its Affiliates’ or Subsidiaries’ loans, debt securities, equity securities or
assets, (D) any request or proposal to waive, terminate or amend the provisions of this Section 5.22 or (E) any proposal, arrangement or other statement that is inconsistent with the terms of this Agreement, including this
Section 5.22; (ii) instigate, join, encourage, or assist any Third Party (including forming a “group” (as such term is defined or used in the Exchange Act and the rules promulgated thereunder) with any such Third Party) to
do, or enter into any discussions or agreements with any Third Party with respect to, any of the actions set forth in clause (i) above; (iii) take any action that reasonably would be expected to require any member of the EXCO Group to make
a public announcement regarding any of the actions set forth in clause (i) above; or (iv) acquire (or propose or agree to acquire), in any manner, directly or indirectly, of record or beneficially, whether alone or in concert with others,
any loans, debt securities, equity securities or assets of EXCO or any of its Affiliates or Subsidiaries, or rights or options or other convertible securities to acquire interests in any of EXCO’s or its Affiliates’ or Subsidiaries’
loans, debt securities, equity securities or assets. 
 Section 5.23 EXCO Credit Agreement. EXCO shall, prior to the Closing
Date, take commercially reasonable action to obtain any and all consents required in connection with the actions contemplated by this Agreement under the EXCO Credit Agreement. 

Section 5.24 Purchase Restrictions Prior to Anniversary Dates. Prior to termination of the Agreement in accordance with
Article 9, during the twenty (20) Trading Days prior to the first, second, third and fourth anniversaries of the Execution Date, ESAS shall not, and shall cause Wilder and each other member of the ESAS Group acting on behalf of, or in
concert with, ESAS not to, and ESAS shall cause any other Person in which Wilder owns, directly or indirectly, beneficially or of record, more than fifty percent (50%) of the voting or equity interests not to, in any manner, directly or
indirectly, whether alone or in concert with others, acquire (or propose or agree to acquire), in any manner, directly or indirectly, of record or beneficially, whether alone or in concert with others, any equity securities of EXCO or rights or
options or other convertible securities to acquire interests in any of EXCO’s equity securities, in each case other than the Warrant Shares. 

Section 5.25 Further Assurances. After Closing, ESAS and EXCO each agree to take such further actions and to execute,
acknowledge and deliver, and to cause each of its Subsidiaries to take such further actions and to execute, acknowledge and deliver, all such further documents as are reasonably requested by the other for carrying out the purposes of this Agreement
or of any document delivered pursuant to the Transaction Documents. 

  
 -33- 

 ARTICLE 6 

INITIAL SHARES CLOSING 

Section 6.1 Conditions of ESAS to Initial Shares Closing. The obligations of ESAS to consummate the Initial Shares Closing
(except for the obligations of ESAS to be performed prior to the Initial Shares Closing and obligations that survive termination of this Agreement), are subject, at the option of ESAS, to the satisfaction on or prior to the Initial Shares Closing of
each of the conditions set forth in this Section 6.1, unless waived in writing by ESAS: 
 (a)
Representations. The representations and warranties of EXCO set forth in Article 4 (in each case, disregarding all qualifications and exceptions contained therein relating to materiality, EXCO Material Adverse Effect or other similar
qualifications) shall be true and correct in all respects, in each case, as of the Execution Date and as of the Initial Shares Closing Date after giving effect to the transactions contemplated in Section 2.2(a) with the same effect as if
made on and as of the Initial Shares Closing Date (except for representations and warranties made as of a specified date, which shall be true and correct only as of such specified date), except to the extent the failure of any such representation or
warranty to be true and correct as of the Execution Date or as of the Initial Shares Closing Date does not result in an EXCO Material Adverse Effect. 

(b) Performance. EXCO shall have performed and observed in all material respects all covenants and agreements contained
in this Agreement required to be performed or complied with on or prior to the Initial Shares Closing Date. 
 (c)
NYSE. The Initial Shares shall have been approved for listing on the NYSE, subject to official notice of issuance. 

(d) No Action. On the Initial Shares Closing Date, no Order restraining, enjoining or otherwise prohibiting the
consummation of the Initial Shares Closing, or granting substantial damages in connection therewith, shall have been issued and remain in force, and no suit, action, or other proceeding (excluding any such matter initiated by ESAS or any Affiliate
of ESAS) shall be pending before any Governmental Authority or body of competent jurisdiction that is reasonably expected to (i) prohibit the consummation of the transactions contemplated by this Agreement or (ii) result in the recovery of
substantial damages from ESAS or EXCO. 
 (e) Governmental Consents. All material consents, clearances and approvals
of and notices to any Governmental Authority (including any under the HSR Act) required to be obtained by EXCO for the issuance by EXCO of the Initial Shares as contemplated under this Agreement shall have been granted (or delivered in the case of
notices) and the applicable waiting period (including any under the HSR Act) shall have expired, or early termination of the waiting period shall have been granted. 

(f) EXCO Material Adverse Effect. Since the Execution Date, no EXCO Material Adverse Effect shall have occurred. 

  
 -34- 

 (g) Closing Deliverables. EXCO shall (i) have delivered or caused to
be delivered to ESAS the officer’s certificate described in Section 6.5(e), and (ii) be ready, willing and able to deliver or cause to be delivered to ESAS or the other applicable Parties at the Initial Shares Closing the other
documents and items required to be delivered by EXCO under Section 6.5. 
 (h) Registration Rights
Consent. EXCO shall have obtained any and all consents required under the 2005 Registration Rights Agreement and the 2007 Registration Rights Agreement such that no Person shall have any Registration Rights that conflict with or violate the
rights granted to ESAS under the Registration Rights Agreement. 
 (i) Registration. A registration statement
registering the Initial Shares for resale shall have been filed with the SEC and the Registration Rights Agreement shall have been executed and delivered. 

Section 6.2 Conditions of EXCO to Initial Shares Closing. The obligations of EXCO to consummate the Initial Shares Closing
(except for the obligations of EXCO to be performed prior to the Initial Shares Closing and obligations that survive termination of this Agreement), are subject, at the option of EXCO, to the satisfaction on or prior to the Initial Shares Closing of
each of the conditions set forth in this Section 6.2, unless waived in writing by EXCO: 
 (a)
Representations. The representations and warranties of ESAS set forth in Article 3 (disregarding all qualifications and exceptions contained therein relating to materiality, ESAS Material Adverse Effect or other similar qualifications)
shall be true and correct in all respects, in each case, as of the Execution Date and as of the Initial Shares Closing Date after giving effect to the transactions contemplated Section 2.2(a) with the same effect as if made on and as of
the Initial Shares Closing Date (except for representations and warranties made as of a specified date, which shall be true and correct only as of such specified date), except to the extent the failure of any such representation or warranty to be
true and correct as of the Execution Date or as of the Initial Shares Closing Date does not result in an ESAS Material Adverse Effect. 

(b) Performance. ESAS shall have materially performed and observed, in all material respects, each covenant and
agreement to be performed or observed by ESAS under this Agreement prior to or on the Initial Shares Closing Date. 
 (c)
NYSE. The Initial Shares shall have been approved for listing on the NYSE, subject to official notice of issuance. 

(d) No Action. On the Initial Shares Closing Date, no Order restraining, enjoining or otherwise prohibiting the Initial
Shares Closing, or granting substantial damages in connection therewith, shall have been issued and remain in force, and no suit, action, or other proceeding (excluding any such matter initiated by EXCO or any Affiliate of EXCO) shall be pending
before any Governmental Authority or body of competent jurisdiction that is reasonably expected to (i) prohibit the consummation of the transactions contemplated by this Agreement or (ii) result in the recovery of substantial damages from
ESAS or EXCO. 

  
 -35- 

 (e) Governmental Consents. All material consents, clearances and approvals
of and notices to any Governmental Authority (including any under the HSR Act) required to be obtained by ESAS for the issuance by EXCO of the Initial Shares as contemplated under this Agreement shall have been granted (or delivered in the case of
notices), and the applicable waiting period (including any under the HSR Act) shall have expired, or early termination of the waiting period shall have been granted. 

(f) ESAS Material Adverse Effect. Since the Execution Date, no ESAS Material Adverse Effect shall have occurred. 

(g) Closing Deliverables. (i) ESAS shall have delivered or caused to be delivered to EXCO the officer’s
certificate described in Section 6.4(c), and (ii) ESAS shall be ready, willing and able to deliver or cause to be delivered to EXCO at the Initial Shares Closing the other documents and items required to be delivered by ESAS under
Section 6.4. 
 (h) Registration Rights Consent. EXCO shall have obtained any and all consents required
under the 2005 Registration Rights Agreement and the 2007 Registration Rights Agreement such that no Person shall have any Registration Rights that conflict with or violate the rights granted to ESAS under the Registration Rights Agreement. 

(i) Registration. A registration statement registering the Initial Shares for resale shall have been filed with the SEC
and the Registration Rights Agreement shall have been executed and delivered. 
 Section 6.3 Time and Place of Initial Shares
Closing. Subject to the provisions of this Article 6, the consummation of the Initial Shares Closing shall, unless otherwise agreed to in writing by EXCO and ESAS, take place at the offices of Akin Gump Strauss Hauer & Feld
LLP located at 1700 Pacific Avenue, Suite 4100, Dallas, Texas at 9:00 a.m., Dallas time, on a date to be specified by the Parties, which shall be no later than the fifth Business Day after the satisfaction or waiver (to the extent permitted by
applicable Law) of the conditions set forth in this Article 6 (other than conditions that by their nature are to be satisfied at the Initial Shares Closing, but subject to the satisfaction or waiver of those conditions), or at such other
place, date and time as the Parties may agree. All actions to be taken and all documents and instruments to be executed and delivered at the Initial Shares Closing shall be deemed to have been taken, executed and delivered simultaneously and, except
as permitted hereunder, no actions shall be deemed taken nor any document and instruments executed or delivered until all actions have been taken and all documents and instruments have been executed and delivered. 

Section 6.4 Obligations of ESAS at Initial Shares Closing. At the Initial Shares Closing, upon the terms and subject to the
conditions of this Agreement, and subject to the simultaneous performance by EXCO of its obligations pursuant to Section 6.5, ESAS shall deliver or cause to be delivered to EXCO, among other things, the following: 

  
 -36- 

 (a) Written instructions to the Escrow Agent, duly executed by ESAS, instructing
the Escrow Agent to disburse (i) the Initial Investment to EXCO and (ii) all amounts held in the Escrow Account attributable to any interest accrued upon the Initial Investment to ESAS; 

(b) Registration Rights Agreement, duly executed by ESAS; 

(c) A certificate duly executed by an authorized officer of ESAS, dated as of the Initial Shares Closing, certifying on behalf
of ESAS that the conditions set forth in Section 6.1 have been fulfilled; and 
 (d) All other documents and
instruments requested by EXCO from ESAS that are reasonably necessary to consummate the transfer of the Initial Shares. 
 Section 6.5
Obligations of EXCO at Initial Shares Closing. At the Initial Shares Closing, upon the terms and subject to the conditions of this Agreement, and subject to the simultaneous performance by ESAS of its obligations pursuant to
Section 6.4, EXCO shall deliver, or cause to be delivered, to ESAS or the other applicable Persons, among other things, the following: 

(a) A certificate representing the Initial Shares or certificated through book-entry form; 

(b) Written instructions to the Escrow Agent, duly executed by EXCO, instructing the Escrow Agent to disburse (i) the
Initial Investment to EXCO and (ii) all amounts held in the Escrow Account attributable to any interest accrued upon the Initial Investment to ESAS; 

(c) Registration Rights Agreement, duly executed by EXCO; 

(d) A certificate evidencing the formation and good standing of EXCO in its jurisdiction of formation issued by the Secretary
of State (or comparable office) of such jurisdiction of formation as of a date within ten (10) days of the Closing Date; 

(e) A certificate, duly executed by an authorized officer of EXCO, dated as of the Initial Shares Closing, certifying on behalf
of EXCO that the conditions set forth in Section 6.2 have been fulfilled; and 
 (f) All other documents and
instruments requested by ESAS from EXCO that are reasonably necessary to consummate the transfer of the Initial Shares. 

  
 -37- 

 ARTICLE 7 

CONDITIONS TO CLOSING 

Section 7.1 Conditions of ESAS to Closing. The obligations of ESAS to consummate the transactions contemplated by this Agreement
(except for the obligations of ESAS to be performed prior to the Closing and obligations that survive termination of this Agreement), including the obligations of ESAS to consummate the Closing, are subject, at the option of ESAS, to the
satisfaction on or prior to Closing of each of the conditions set forth in this Section 7.1, unless waived in writing by ESAS: 

(a) Representations. The representations and warranties of EXCO set forth in Article 4 (in each case,
disregarding all qualifications and exceptions contained therein relating to materiality, EXCO Material Adverse Effect or other similar qualifications) shall be true and correct in all respects, in each case, as of the Execution Date and as of the
Closing Date after giving effect to the transactions contemplated hereby with the same effect as if made on and as of the Closing Date (except for representations and warranties made as of a specified date, which shall be true and correct only as of
such specified date), except to the extent the failure of any such representation or warranty to be true and correct as of the Execution Date or as of the Closing Date does not result in an EXCO Material Adverse Effect. 

(b) Performance. EXCO shall have performed and observed in all material respects all covenants and agreements contained
in this Agreement required to be performed or complied with on or prior to the Closing Date. 
 (c) NYSE. The Warrant
Shares shall have been approved for listing on the NYSE, subject to official notice of issuance. 
 (d) No Action. On
the Closing Date, no Order restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated by this Agreement, or granting substantial damages in connection therewith, shall have been issued and remain in force, and
no suit, action, or other proceeding (excluding any such matter initiated by ESAS or any Affiliate of ESAS) shall be pending before any Governmental Authority or body of competent jurisdiction that is reasonably expected to (i) prohibit the
consummation of the transactions contemplated by this Agreement or (ii) result in the recovery of substantial damages from ESAS or EXCO. 

(e) Governmental Consents. All material consents, clearances and approvals of and notices to any Governmental Authority
(including any under the HSR Act) required to be obtained by EXCO for the issuance by EXCO of the Initial Shares and Warrants as contemplated under this Agreement shall have been granted (or delivered in the case of notices) and the applicable
waiting period (including any under the HSR Act) shall have expired, or early termination of the waiting period shall have been granted. 

(f) EXCO Material Adverse Effect. Since the Execution Date, no EXCO Material Adverse Effect shall have occurred. 

(g) Receipt of Required Shareholder Approval. The Required Shareholder Approval shall have been received from the
shareholders of EXCO. 
 (h) Filing of Certificate of Amendment. The secretary of state of the State of Texas shall
have accepted the Certificate of Amendment filed with it by EXCO. 

  
 -38- 

 (i) Closing Deliverables. EXCO shall (i) have delivered or caused to
be delivered to ESAS the officer’s certificate described in Section 8.3(e), and (ii) be ready, willing and able to deliver or cause to be delivered to ESAS or the other applicable Parties at the Closing the other documents and
items required to be delivered by EXCO under Section 8.3. 
 (j) Wilder. Wilder shall be alive and possess
sufficient mental and physical capacities to perform his obligations at Closing as Executive Chairman of EXCO and to enable ESAS to perform its obligations contained in Section 5.13 and Section 5.18 of this Agreement. 

(k) Net Operating Loss. On the Closing Date, no state or federal net operating loss of EXCO as of the Closing Date would
be subject to material limitation, restriction or impairment on its use pursuant to Section 382 of the Code or any comparable provision of any state or local Law, assuming that the Investment is made entirely on the Closing Date at $2 per
share. 
 (l) EXCO Credit Agreement Consent. EXCO shall have obtained any and all consents required in connection with
the actions contemplated by this Agreement under the EXCO Credit Agreement. 
 (m) Bylaws. The Board of Directors of
EXCO shall have amended EXCO’s Second Amended and Restated Bylaws to establish the position of Executive Chairman of the Board of Directors of EXCO as a non-officer position and to include a description of the position of Executive Chairman in
accordance with the language as set forth on Exhibit E. 
 (n) Initial Shares Closing. The Initial Shares
Closing has occurred prior to, or will close simultaneously with, the Closing. 
 Section 7.2 Conditions of EXCO to Closing.
The obligations of EXCO to consummate the transactions contemplated by this Agreement (except for the obligations of EXCO to be performed prior to the Closing and obligations that survive termination of this Agreement), including the obligations of
EXCO to consummate the Closing, are subject, at the option of EXCO, to the satisfaction on or prior to Closing of each of the conditions set forth in this Section 7.2, unless waived in writing by EXCO: 

(a) Representations. The representations and warranties of ESAS set forth in Article 3 (disregarding all
qualifications and exceptions contained therein relating to materiality, ESAS Material Adverse Effect or other similar qualifications) shall be true and correct in all respects, in each case, as of the Execution Date and as of the Closing Date after
giving effect to the transactions contemplated hereby with the same effect as if made on and as of the Closing Date (except for representations and warranties made as of a specified date, which shall be true and correct only as of such specified
date), except to the extent the failure of any such representation or warranty to be true and correct as of the Execution Date or as of the Closing Date does not result in an ESAS Material Adverse Effect. 

  
 -39- 

 (b) Performance. ESAS shall have materially performed and observed, in all
material respects, each covenant and agreement to be performed or observed by ESAS under this Agreement prior to or on the Closing Date. 

(c) NYSE. The Warrant Shares shall have been approved for listing on the NYSE, subject to official notice of issuance.

 (d) No Action. On the Closing Date, no Order restraining, enjoining or otherwise prohibiting the consummation of
the transactions contemplated by this Agreement, or granting substantial damages in connection therewith, shall have been issued and remain in force, and no suit, action, or other proceeding (excluding any such matter initiated by EXCO or any
Affiliate of EXCO) shall be pending before any Governmental Authority or body of competent jurisdiction that is reasonably expected to (i) prohibit the consummation of the transactions contemplated by this Agreement or (ii) result in the
recovery of substantial damages from ESAS or EXCO. 
 (e) Governmental Consents. All material consents, clearances and
approvals of and notices to any Governmental Authority (including any under the HSR Act) required to be obtained by ESAS for the issuance by EXCO of the Initial Shares and the Warrants as contemplated under this Agreement shall have been granted (or
delivered in the case of notices), and the applicable waiting period (including any under the HSR Act) shall have expired, or early termination of the waiting period shall have been granted. 

(f) ESAS Material Adverse Effect. Since the Execution Date, no ESAS Material Adverse Effect shall have occurred. 

(g) Receipt of Required Shareholder Approval. The Required Shareholder Approval shall have been received from the
shareholders of EXCO. 
 (h) Filing of Certificate of Amendment. The secretary of state of the State of Texas shall
have accepted the Certificate of Amendment filed with it by EXCO. 
 (i) Closing Deliverables. (i) ESAS shall
have delivered or caused to be delivered to EXCO the officer’s certificate described in Section 8.2(c), and (ii) ESAS shall be ready, willing and able to deliver or cause to be delivered to EXCO at the Closing the other
documents and items required to be delivered by ESAS under Section 8.2. 
 (j) Wilder. Wilder shall be
alive and possess sufficient mental and physical capacities to perform his obligations at Closing as Executive Chairman of EXCO and to enable ESAS to perform its obligations contained in Section 5.13 and Section 5.18 of this
Agreement. 
 (k) Net Operating Loss. On the Closing Date, no state or federal net operating loss of EXCO as of the
Closing Date would be subject to material limitation, restriction or impairment on its use pursuant to Section 382 of the Code or any comparable provision of any state or local Law, assuming that the Investment is made entirely on the Closing
Date at $2 per share. 

  
 -40- 

 (l) EXCO Credit Agreement Consent. EXCO shall have obtained any and all
consents required in connection with the actions contemplated by this Agreement under the EXCO Credit Agreement. 
 (m)
Initial Shares Closing. The Initial Shares Closing has occurred prior to, or will close simultaneously with, the Closing. 

ARTICLE 8 
 CLOSING

 Section 8.1 Time and Place of Closing. Subject to the provisions of Article 7, the consummation of the
transactions contemplated by this Agreement (the “Closing”) shall, unless otherwise agreed to in writing by EXCO and ESAS, take place at the offices of Akin Gump Strauss Hauer & Feld LLP located at 1700 Pacific Avenue,
Suite 4100, Dallas, Texas at 9:00 a.m., Dallas time, on a date to be specified by the Parties, which shall be no later than the fifth Business Day after the satisfaction or waiver (to the extent permitted by applicable Law) of the conditions set
forth in Article 7 (other than conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of those conditions), or at such other place, date and time as the Parties may agree. The date on
which the Closing occurs is referred to herein as the “Closing Date”. All actions to be taken and all documents and instruments to be executed and delivered at Closing shall be deemed to have been taken, executed and delivered
simultaneously and, except as permitted hereunder, no actions shall be deemed taken nor any document and instruments executed or delivered until all actions have been taken and all documents and instruments have been executed and delivered. 

Section 8.2 Obligations of ESAS at Closing. At the Closing, upon the terms and subject to the conditions of this Agreement, and
subject to the simultaneous performance by EXCO of its obligations pursuant to Section 8.3, ESAS shall deliver or cause to be delivered to EXCO, among other things, the following: 

(a) Nomination Letter Agreement, duly executed by ESAS; 

(b) A certificate evidencing the formation and good standing of ESAS in each such entity’s jurisdiction of formation
issued by the Secretary of State (or comparable office) of such jurisdiction of formation as of a date within ten (10) days of the Closing Date; 

(c) A certificate duly executed by an authorized officer of ESAS, dated as of the Closing, certifying on behalf of ESAS that
the conditions set forth in Section 7.2(a) and Section 7.2(b) have been fulfilled; and 
 (d) All
other documents and instruments requested by EXCO from ESAS that are reasonably necessary to transfer the consummate the transactions contemplated hereunder. 

  
 -41- 

 Section 8.3 Obligations of EXCO at Closing. At the Closing, upon the terms and
subject to the conditions of this Agreement, and subject to the simultaneous performance by ESAS of its obligations pursuant to Section 8.2, EXCO shall deliver, or cause to be delivered, to ESAS or the other applicable Persons, among
other things, the following: 
 (a) Closing Warrants, duly executed by EXCO (if not issued on an earlier date pursuant to
Section 2.1(b)); 
 (b) Nomination Letter Agreement, duly executed by EXCO; 

(c) Approval of the Board of Directors, if there is not a vacancy on the Board of Directors at that time, to increase the size
of the Board of Directors by one seat and appoint Wilder to the vacancy created thereby, effective immediately after the Closing; provided that Wilder is living and physically and mentally capable of performing the duties that accompany the
office of Director; 
 (d) A certificate evidencing the formation and good standing of EXCO in its jurisdiction of formation
issued by the Secretary of State (or comparable office) of such jurisdiction of formation as of a date within ten (10) days of the Closing Date; 

(e) A certificate, duly executed by an authorized officer of EXCO, dated as of the Closing, certifying on behalf of EXCO that
the conditions set forth in Section 7.1(a) and Section 7.1(b) have been fulfilled; and 
 (f) All
other documents and instruments requested by ESAS from EXCO that are reasonably necessary to transfer the consummate the transactions contemplated hereunder. 

ARTICLE 9 
 TERMINATION

 Section 9.1 Term. Subject to Section 9.2, this Agreement shall commence on the Execution Date and shall
continue until the fourth anniversary of the Closing Date unless (a) terminated prior to Closing pursuant to Section 9.2(a), (b) terminated after the Closing pursuant to Section 9.2(b), or (c) extended by the
prior mutual written consent of EXCO and ESAS. 
 Section 9.2 Early Termination. 

(a) This Agreement may be terminated and the transactions contemplated hereby abandoned, including any obligation to issue the
Closing Warrants and the Warrant Shares pursuant to Article 2, at any time prior to Closing: 
 (i) by the mutual
prior written consent of ESAS and EXCO; or 
 (ii) by ESAS or EXCO: 

(A) upon delivering written notice if the Closing shall not have been consummated on or before November 30, 2015,
provided that the Party delivering such notice is not in material breach of such Party’s representations, warranties, covenants or agreements set forth herein; or 

  
 -42- 

 (B) if the Shareholder Meeting shall have concluded and the Required Shareholder
Approval shall not have been obtained; or 
 (iii) by ESAS in the event of any breach by EXCO of Section 5.9.

 (b) This Agreement may be terminated at any time after Closing: 

(i) by the mutual prior written consent of ESAS and EXCO; 

(ii) by ESAS or EXCO, at any time after the Closing for any or no reason upon thirty (30) days prior written notice; 

(iii) by ESAS, at any time after the Closing in the event that any event of EXCO Forfeiture Event has occurred; 

(iv) by EXCO, at any time after the Closing in the event that any event of ESAS Forfeiture Event has occurred; or 

(v) in the event of Wilder’s resignation from the Board of Directors. 

(c) The date of any permitted termination of this Agreement under this Article 9, the “Termination
Date”). 
 Section 9.3 Effect of Termination. 

(a) Generally. If this Agreement is terminated pursuant to Section 9.2, this Agreement shall become void and
of no further force or effect (except for the provisions of Article 1, Section 5.4, Section 5.5, this Article 9, Article 10 and Section 11.1 through Section 11.14, all of which
shall survive and continue in full force and effect indefinitely unless expressly provided otherwise). The Confidentiality Agreement shall survive any termination of this Agreement in accordance with their terms. 

(b) Termination Prior to Closing. 

(i) In the event that (A) this Agreement is terminated by ESAS under Section 9.2(a)(ii), (B) all
conditions precedent to the obligations of ESAS set forth in Section 7.1 have been satisfied or waived by ESAS and (C) the Closing has not occurred as a result of the willful or intentional material breach or failure of any of
EXCO’s representations, warranties or covenants hereunder, including, if and when required, any of EXCO’s obligations to consummate the transactions contemplated hereunder at Closing, then ESAS shall be entitled to recover all Damages
incurred by the ESAS Group that are available under all remedies available at Law or in equity (expressly including specific performance). 

  
 -43- 

 (ii) In the event that (A) this Agreement is terminated by EXCO under
Section 9.2(a)(ii), (B) all conditions precedent to the obligations of EXCO set forth in Section 7.2 have been satisfied or waived by EXCO and (C) the Closing has not occurred as a result of the willful or
intentional material breach or failure of any of ESAS’s representations, warranties or covenants hereunder, including, if and when required, any of ESAS’s obligations to consummate the transactions contemplated hereunder at Closing, then
EXCO shall be entitled to recover all Damages incurred by EXCO Group that are available under all remedies available at Law or in equity (expressly including specific performance and the right to recover any such Damages from amounts held in the
Escrow Account). 
 (iii) Except to the extent EXCO is entitled under Section 5.18(e) and
Section 9.3(b)(ii) to receive any amounts held in Escrow Account, ESAS shall be entitled to receive for its own account the entirety of all amounts held in the Escrow Account. 

(c) Termination After the Closing Date. In the event that after Closing this Agreement is terminated by either Party in
accordance with Section 9.2(b), then the terminating Party shall have no liability hereunder for such early termination of this Agreement; provided, however, (i) each Party shall be entitled to recover all Damages to
the extent expressly available under, and subject to, the terms of Article 10 with respect to (A) any breaches of representations or warranties (B) any breaches of any covenants that were required to be performed prior to the
Termination Date and (C) any covenants that expressly survive termination under Section 9.3(c) that are required to be performed after the Termination Date, (ii) in such event each of the Warrants shall be subject to such
vesting, exercisability testing, and forfeiture thereof (if any) in accordance with the terms of such Warrants and (iii) except to the extent EXCO is entitled under Section 5.18(e) to receive any amounts held in Escrow Account, ESAS
shall be entitled to receive for its own account the entirety of all amounts held in the Escrow Account. 
 (d) Promptly, but
in no event later than three (3) Business Days after the Termination Date, the Parties shall execute and deliver to the Escrow Agent written instructions instructing the Escrow Agent to disburse via wire transfer of immediately available funds
the entirety of the amounts then held in the Escrow Account to the applicable Parties entitled to receive all or any portion of such amounts as provided in Section 5.18(e) or this Section 9.3. 

ARTICLE 10 

INDEMNIFICATION 
 Section
10.1 ESAS’s Indemnification Rights. Subject to the terms hereof, from and after Closing EXCO agrees to be responsible for, perform, pay and shall indemnify, defend and hold harmless each member of the ESAS Group from and against
all obligations, liabilities, claims, causes of action, and Damages caused by, arising out of, attributable to or resulting from: 

(a) the failure or breach of EXCO’s covenants or agreements contained in this Agreement; or 

  
 -44- 

 (b) any breach of any representation or warranty made by EXCO contained in
Article 4 of this Agreement or in the certificate delivered by EXCO at Closing pursuant to Section 8.3(e). 
 Section
10.2 EXCO’s Indemnification Rights. Subject to the terms hereof, from and after Closing ESAS agrees to be responsible for, perform, pay and shall indemnify, defend and hold harmless each member of the EXCO Group and against all
obligations, liabilities, claims, causes of action, and Damages caused by, arising out of, attributable to or resulting from: 

(a) the failure or breach of ESAS’s covenants or agreements contained in this Agreement; or 

(b) any failure or breach of any representation or warranty made by ESAS contained in Article 3 of this Agreement, in
the certificate delivered by ESAS at Closing pursuant to Section 8.2(c). 
 Section 10.3 Survival; Limitation on
Actions. 
 (a) Subject to Section 10.3(b) and Section 10.3(c), the indemnity rights and
obligations of each Party under Section 10.1 and Section 10.2 with respect to: 
 (i) the Fundamental
Representations of ESAS and EXCO shall survive the Closing indefinitely; 
 (ii) all representations and warranties of ESAS
and EXCO that do not constitute Fundamental Representations shall each survive the Closing and terminate on the date eighteen (18) months after the Closing Date; 

(iii) the covenants and agreements of ESAS and EXCO set forth herein that are required to be performed on or prior to Closing
shall each survive the Closing and terminate on the date eighteen (18) months after the Closing Date; 
 (iv) the
covenants and agreements of ESAS and EXCO set forth herein that are required to be performed after Closing but prior to the applicable Termination Date shall survive the Closing and terminate on the date eighteen (18) months after the date such
covenants and agreements are required to be performed; 
 (v) the covenants and agreements of ESAS and EXCO set forth herein
that are to be performed after Closing that expressly survive the Termination Date shall survive the Termination Date and terminate on the date sixty (60) days after the expiration of such express performance period of such covenants and
agreements; 
 (vi) representations, warranties, covenants and agreements set forth in this Agreement and any other
Transaction Document or other document delivered hereunder shall be of no further force and effect, and no Party shall have any rights or obligations hereunder with respect thereto, after the applicable date of their expiration, provided that
there shall be no termination of any bona fide claim validly asserted pursuant to a valid Claim Notice pursuant to this Agreement with respect to such a representation, warranty, covenant or agreement prior to the expiration or termination date
thereof. 

  
 -45- 

 (b) Notwithstanding anything set forth in Section 10.3(a), all rights
of each member of the ESAS Group under Section 10.1 and the EXCO Group under Section 10.2 shall terminate as of the termination date of each respective representation, warranty, covenant or agreement that is subject to
indemnification, except in each case as to matters for which a specific written Claim Notice has been validly delivered to the applicable Indemnifying Party on or before the earlier of such termination date or the date otherwise required to be
delivered hereunder. 
 (c) Notwithstanding anything herein or in any other Transaction Document to the contrary, EXCO’s
express rights to terminate this Agreement under Article 9, the retention of any amounts in the Escrow Account permitted under Section 5.18(e)(ii) and the forfeiture of the Warrants pursuant to the terms thereof shall constitute
the sole and exclusive remedy available to EXCO for any failure of ESAS’s to purchase, hold or satisfy all or any portion the Investment or to comply with the terms of Section 5.20, ESAS’s termination of this Agreement in
accordance with Article 9 for any reason or any breach or failure of ESAS to perform its obligations under Section 5.18. Each Party acknowledges and agrees that (A) EXCO’s actual damages upon the event of such ESAS
Forfeiture Event, termination or failure are difficult to ascertain with any certainty, (B) the amounts in the Escrow Account is a fair and reasonable estimate by the Parties of such aggregate actual damages of EXCO and (C) such liquidated
damages do not constitute a penalty. 
 (d) Subject to Section 11.12, Section 10.3(c) and
Section 5.18(e)(ii), the liability of EXCO pursuant to Section 10.1 and ESAS pursuant to Section 10.2 shall be without limit. 

Section 10.4 Exclusive Remedy and Certain Limitations. 

(a) Notwithstanding anything to the contrary contained in this Agreement and the other Transaction Documents, from and after
Closing, each Party’s sole exclusive remedy against the other Party with respect to any breach of the representations, warranties, covenants and agreements of the other Party contained herein are the rights set forth in this Article 10
and the rights to enforce specific performance of the terms of this Agreement and the other Transaction Documents, as limited by the terms of this Article 10 and the terms of each applicable Transaction Document. 

(b) “Damages” shall mean the amount of any loss, cost, costs of settlement (but only to the extent the
Indemnified Person complied with the terms of Section 10.5), damage, diminution in value, expense, claim, award or judgment incurred or suffered by any Indemnified Person arising out of or resulting from the indemnified matter, whether
attributable to personal injury or death, property damage, contract claims, torts or otherwise, including reasonable fees and expenses of attorneys, consultants, accountants 

  
 -46- 

 
or other agents and experts reasonably incident to matters indemnified against, and the costs of prosecution, defense, preparations for defense, investigation and/or monitoring of such matters,
and the costs of enforcement of the indemnity; provided, however, that “Damages” shall not include (i) any adjustment for Taxes that may be assessed on payments under this Article 10 or for Tax benefits received
by the Indemnified Person as a consequence of any Damages, (ii) to the extent provided in Section 11.12, any loss of profits, whether actual or consequential, or other consequential damages suffered by the Party (whether on its own
behalf or on behalf of any member of the ESAS Group or EXCO Group, as applicable) claiming indemnification, or any punitive damages, or (iii) any diminution in value or increase in liability, loss, cost, expense, claim, award or judgment to the
extent such diminution or increase is caused by the actions or omissions of the Indemnified Person after the Closing Date. 

(c) Any claim for indemnity under this Article 10 by (i) any member of the ESAS Group must be brought and
administered by ESAS and (ii) any member of the EXCO Group must be brought and administered by EXCO. No Indemnified Person other than ESAS and EXCO shall have any rights against either ESAS or EXCO under the terms of this Article 10
except as may be exercised on its behalf by EXCO or ESAS, as applicable, pursuant to this Article 10. ESAS may elect to exercise or not exercise indemnification rights under this Section 10.4 on behalf of the ESAS Group in
ESAS’s sole discretion and shall have no liability to any such other member of the ESAS Group for any action or inaction under this Section 10.4. EXCO may elect to exercise or not exercise indemnification rights under this
Section 10.4 on behalf of the EXCO Group in EXCO’s sole discretion and shall have no liability to any such other member of the EXCO Group for any action or inaction under this Section 10.4. 

Section 10.5 Indemnification Actions. All claims for indemnification under Article 10 shall be asserted and resolved as
follows: 
 (a) For purposes of this Article 10, the term “Indemnifying Party” when used in
connection with particular Damages shall mean the Person(s) having an obligation to indemnify another Person(s) with respect to such Damages pursuant to this Article 10, and the term “Indemnified Person” when used in
connection with particular Damages shall mean a Person(s) having the right to be indemnified with respect to such Damages pursuant to this Article 10. 

(b) To make claim for indemnification, defense or reimbursement under this Article 10, EXCO or ESAS, as applicable,
shall notify the Indemnifying Party of its claim, including the specific details (including supporting documentation of the alleged Damages and such Indemnified Party’s good faith estimate of the applicable claim) of and specific basis under
this Agreement for its claim (the “Claim Notice”). 
 (c) In the event that any claim for indemnification
set forth in any Claim Notice is based upon a claim by a Third Party against the Indemnified Person (a “Third Party Claim”), EXCO or ESAS, as applicable, shall provide its Claim Notice promptly after EXCO or ESAS, as applicable, has
actual knowledge of the Third Party Claim and shall enclose a copy of all papers (if any) served with respect to the Third Party Claim; 

  
 -47- 

 
provided that the failure of any Indemnified Person to give notice of an Third Party Claim as provided in this Section 10.5 shall not relieve the Indemnifying Party of its
obligations under this Article 10 except to the extent such failure results in insufficient time being available to permit the Indemnifying Party to effectively defend against the Third Party Claim or otherwise prejudices the Indemnifying
Party’s ability to defend against the Third Party Claim. In the event that the claim for indemnification is based upon an alleged inaccuracy or breach of a representation, warranty, covenant or agreement, the Claim Notice shall specify the
representation, warranty, covenant or agreement that was allegedly inaccurate or breached. 
 (d) In the case of a claim for
indemnification based upon an Third Party Claim, the Indemnifying Party shall have thirty (30) days from its receipt of the Claim Notice to notify the Indemnified Person whether it admits or denies its obligation to defend the Indemnified
Person against such Third Party Claim under this Article 10. The Indemnified Person is authorized, prior to and during such thirty (30) day period, to file any motion, answer or other pleading that it shall deem necessary or appropriate
to protect its interests or those of the Indemnifying Party and that is not prejudicial to the Indemnifying Party. If the Indemnifying Party fails to notify the Indemnified Person within such thirty (30) day period regarding whether the
Indemnifying Party admits or denies its obligation to defend the Indemnified Person, then until such date as the Indemnifying Party admits or it is finally determined by an non-appealable judgment that such obligation exists, the Indemnified Person
may file any motion, answer or other pleading, settle any Third Party Claim or take any other action that the Indemnified Person deems necessary or appropriate to protect its interest, regardless of whether the Indemnifying Party is prejudiced or
adversely impacted by any such actions. 
 (e) If the Indemnifying Party admits its indemnity obligations under this
Article 10 with respect to any Third Party Claim, then such Indemnifying Party shall have (i) the right and obligation to diligently prosecute and control the defense, at its sole cost and expense, the Third Party Claim and
(ii) have full control of such defense and proceedings, including any compromise or settlement thereof unless the compromise or settlement includes the payment of any amount (not indemnified by the Indemnifying Party) by, the performance of any
obligation by, or the limitation of any right or benefit of, the Indemnified Person, in which event such settlement or compromise shall not be effective without the consent of the Indemnified Person, which shall not be unreasonably withheld or
delayed. If requested by the Indemnifying Party, the Indemnified Person agrees at the cost and expense of the Indemnifying Party to cooperate in contesting any Third Party Claim which the Indemnifying Party elects to contest; provided,
however, that the Indemnified Person shall not be required to bring any counterclaim or cross-complaint against any Person. The Indemnified Person may participate in, but not control, any defense or settlement of any Third Party Claim
controlled by the Indemnifying Party pursuant to this Section 10.5(e); provided that the Indemnified Person may file initial pleadings as described in the last sentence of paragraph (c) above if required by court or
procedural rules to do so within the thirty (30) day period in paragraph (c) above. An Indemnifying Party shall not, without the written consent of the Indemnified Person, settle any Third Party Claim or consent to the entry of any
judgment with respect thereto that (A) does not result in a final resolution of the Indemnified 

  
 -48- 

 
Person’s liability with respect to the Third Party Claim (including, in the case of a settlement, an unconditional written release of the Indemnified Person from all further liability in
respect of such Third Party Claim) or (B) may materially and adversely affect the Indemnified Person (other than as a result of money damages covered by the indemnity). 

(f) If the Indemnifying Party does not admit its obligation or admits its obligation but fails to diligently defend or settle
the Third Party Claim, then the Indemnified Person shall have the right, but not the obligation, to defend and control the defense against the Third Party Claim (at the sole cost and expense of the Indemnifying Party, if the Indemnified Person is
entitled to indemnification hereunder), with counsel of the Indemnified Person’s choosing, subject to the right of the Indemnifying Party to admit its obligation to indemnify the Indemnified Person and assume the defense of the Third Party
Claim at any time prior to settlement or final determination thereof. If the Indemnifying Party has not yet admitted its obligation to indemnify the Indemnified Person, the Indemnified Person shall send written notice to the Indemnifying Party of
any proposed settlement and the Indemnifying Party shall have the option for ten (10) days following receipt of such notice to (i) admit in writing its obligation for indemnification with respect to such Third Party Claim and (ii) if
its obligation is so admitted, assume the defense of the Third Party Claim, including the power to reject the proposed settlement. If the Indemnified Person settles any Third Party Claim over the objection of the Indemnifying Party after the
Indemnifying Party has timely admitted its obligation for indemnification in writing and assumed the defense of the Third Party Claim, the Indemnified Person shall be deemed to have waived any right to indemnity with respect to the Third Party
Claim. If the Indemnifying Party does not timely object to the proposed settlement, then the Indemnified Person may accept such settlement and continue to pursue indemnity for all Damages, including such settlement, from the Indemnifying Party. 

(g) In the case of a claim for indemnification not based upon a Third Party Claim, (a “Direct Claim”) shall be
asserted by giving the Indemnifying Party reasonably prompt Claim Notice thereof, but in any event not later than thirty (30) days after the Indemnified Person becomes aware of the events that gave rise to such Direct Claim. Such Claim Notice
by the Indemnified Party shall describe the Direct Claim in reasonable detail, shall include copies of all available material written evidence thereof and shall indicate the estimated amount, if reasonably practicable, of Damages that have been or
may be sustained by the Indemnified Person. The Indemnifying Party shall have sixty (60) days from its receipt of the Claim Notice to (i) cure the Damages complained of, (ii) admit its obligation to provide indemnification with
respect to such Damages or (iii) dispute the claim for such Damages. If the Indemnifying Party does not notify the Indemnified Person within such sixty (60) day period that it has cured the Damages or that it disputes the claim for such
Damages, the Indemnifying Party shall be conclusively deemed obligated to provide indemnification hereunder with respect to such Direct Claim. 

  
 -49- 

 ARTICLE 11 

MISCELLANEOUS 
 Section
11.1 Notices. Any notice, request, instruction, correspondence or other document to be given hereunder by any Party to another (herein collectively called “Notice”) shall be in writing and delivered in person or by
courier service requiring acknowledgement of receipt or mailed by certified mail, postage prepaid and return receipt requested, or by e-mail, as follows: 

 

					
			To ESAS:		 Energy Strategic Advisory Services LLC
 200
Crescent Court, Suite 200
 Dallas, Texas 75201
 Attention:
Jonathan Siegler, Executive Vice President, CFO
 Telephone: (469) 398-2205

Facsimile: (682) 626-1335
 E-mail:
jasiegler@bluescapegroup.com

			
			with a copy (that shall not constitute Notice) to:		 Bracewell & Giuliani LLP
 711 Louisiana
Street, Suite 2300
 Houston, Texas 77002
 Attn: Bryan E.
Loocke
 Telephone: (713) 221-1522
 Facsimile: (713)
437-5355
 E-mail: bryan.loocke@bgllp.com

			
			To EXCO:		 EXCO Resources, Inc.
 12377 Merit Drive

Suite 1700
 Dallas, Texas 75251

Attention: William L. Boeing
 Telephone: (214) 368-2084

Facsimile: (214) 706-3409
 E-mail:
lboeing@excoresources.com

			
			with a copy (that shall not constitute Notice) to:		 Akin Gump Strauss Hauer & Feld LLP
 One
Bryant Park
 Bank of America Tower
 New York, NY 10036-6745

Attention: Steven M. Pesner, Esq.
 Telephone: (212)
872-1070
 Facsimile: (212) 872-1002
 E-mail:
spesner@akingump.com

 Notice given by personal delivery or courier shall be effective upon actual receipt. Notice given by mail shall be effective
upon actual receipt or, if not actually received, the fifth Business Day following deposit with the U.S. Post Office. Notice given by email shall be effective upon actual receipt if received during the recipient’s normal business hours, or at
the beginning of the 

  
 -50- 

 
recipient’s next Business Day after receipt if not received during the recipient’s normal business hours. In the event a Party provides notice by email, then, no later than two
(2) Business Days following such email notice, the notifying Party shall deliver a hard copy of such notice to each other Party by personal delivery or courier or by mail. If a date specified herein for giving any notice or taking any action is
not a Business Day (or if the period during which any notice is required to be given or any action taken expires on a date which is not a Business Day), then the date for giving such notice or taking such action (and the expiration date of such
period during which notice is required to be given or action taken) shall be the next day which is a Business Day. Any Party may change any address to which Notice is to be given to it by giving Notice as provided above of such change of address.

 Section 11.2 Governing Law. This Agreement and the documents delivered pursuant hereto and the legal relations between the
Parties shall be governed by, construed and enforced in accordance with the Laws of the State of Texas, without regard to principles of conflicts of Laws that would direct the application of the Laws of another jurisdiction. 

Section 11.3 Forum Selection; Waiver of Jury Trial. 

(a) Each Party to this Agreement agrees that, except as provided in and subject to Section 11.4 or as necessary to
(i) obtain provisional injunctive, ancillary or other equitable relief if such action is necessary to avoid irreparable harm or to preserve the status quo pending the resolution of the Dispute in accordance with the provisions of
Section 11.4 or (ii) enter and enforce any judgment on the award rendered by the Arbitration Panel in accordance with applicable Laws, (A), each Party hereby irrevocably consents to the exclusive jurisdiction of the courts of the
State of Texas in and for Dallas County or the United States District Court for the Northern District of Texas in connection with any Dispute, litigation or proceeding arising out of this Agreement or any of the transactions contemplated thereby,
(B) all Disputes among any the Parties to this Agreement and the transactions contemplated hereby shall have exclusive jurisdiction and venue only in the courts of the State of Texas in and for Dallas County or the United States District Court
for the Northern District of Texas, and (C) each Party waives any objection which it may have pertaining to improper venue or forum non-conveniens to the conduct of any litigation or proceeding in the foregoing courts. Each Party agrees that
any and all process directed to it in any such proceeding or litigation may be served upon it outside of the State of Texas in and for Dallas County or the United States District Court for the Northern District of Texas with the same force and
effect as if such service had been made within State of Texas in and for Dallas County or the United States District Court for the Northern District of Texas. 

(b) EACH OF THE PARTIES HEREBY VOLUNTARILY AND IRREVOCABLY WAIVES TRIAL BY JURY IN ANY LITIGATION, ACTION OR OTHER PROCEEDING
BROUGHT IN CONNECTION WITH THIS AGREEMENT. 

  
 -51- 

 Section 11.4 Dispute Resolution. 

(a) Each Party to this Agreement agrees that any dispute, controversy, matter or claim between the Parties (each, subject to
such exceptions, a “Dispute”), that cannot be resolved among the Parties shall be resolved in accordance with procedures specified herein, which shall constitute the sole and exclusive procedures for the resolution of Disputes.
Excepting the right of a Party to seek the relief described under Section 11.4(d) below, all Disputes, whether sounding in tort, contract or otherwise, shall be resolved by binding, self-administered arbitration pursuant to the
Commercial Arbitration Rules of the American Arbitration Association (the “AAA”), and all such proceedings shall be subject to the Federal Arbitration Act; provided, however, arbitrators shall be appointed in
accordance with the provisions of this Section 11.4(a). There shall be three (3) arbitrators (“Arbitration Panel”). EXCO shall designate one arbitrator and ESAS shall designate one arbitrator, neither of whom need
be neutral but both of whom must have expertise or experience in the U.S. oil and gas industry, within thirty (30) days of the notification of a Party’s intent to proceed with arbitration hereunder. The two (2) arbitrators so
designated shall elect a third arbitrator, which shall be neutral and have experience or expertise in the U.S. oil and gas industry. If either Party fails to designate an arbitrator within the time specified or the two Parties’ arbitrators fail
to designate the neutral third arbitrator within thirty (30) days of their appointment, the remaining arbitrator(s) shall be appointed by the AAA using the listing ranking and striking method. 

(b) Each Party shall cooperate in reasonable, prompt discovery prior to presenting the case to the arbitrators. Within thirty
(30) calendar days of the appointment of the arbitrators, they shall establish (i) the scope of discovery and (ii) a limited discovery schedule. All discovery activities shall be conducted under the rules of the AAA. The award of the
Arbitration Panel shall (A) be based on the decision of a majority of the members of the Arbitration Panel, (B) be final and binding upon the Parties, (C) be issued within ninety (90) days after the submittal of the Dispute to
the AAA or as otherwise determined by the Arbitration Panel or the Parties, (D) be in writing, and (E) set forth the factual and legal bases for such award. EXCO shall pay for the expenses incurred by its designated arbitrator, and ESAS
shall pay for the expenses incurred by their designated arbitrator. The costs of the third, neutral arbitrator shall be borne as to one half by EXCO and as to the other half by ESAS. Each Party shall bear its own attorneys’ fees, subject to the
right of the Arbitration Panel to award attorneys’ fees and costs of the arbitration to any Party. As between the Parties, only damages allowed pursuant to this Agreement may be awarded and, without limiting the foregoing, arbitrators shall
have no authority to award any damages that are excluded under any express provision of the Agreement. Each Party hereby undertakes without delay to implement, perform, or comply with the provisions of any arbitral award or decision. 

(c) The site of any arbitration brought pursuant to this Section 11.4 shall be Dallas, Texas, U.S.A. 

(d) The Parties hereby agree to continue to perform their respective obligations under the Agreement while any Dispute is
pending. Notwithstanding anything to the contrary herein, any Party may proceed to any court of competent jurisdiction to (i) obtain provisional injunctive, ancillary or other equitable relief if such action is necessary to avoid irreparable
harm or to preserve the status quo pending the resolution of the Dispute in accordance with the provisions of this Section 11.4 or (ii) enter and enforce any judgment on the award rendered by the Arbitration Panel in accordance with
applicable Laws. Notwithstanding the foregoing, the arbitration of the underlying Dispute shall proceed in accordance with the terms hereof during the pendency of the proceeding to obtain such provisional injunctive, ancillary or other equitable
relief. 

  
 -52- 

 (e) EACH OF THE PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY CONSENTS TO THE
SUBMISSION OF ANY DISPUTE FOR SETTLEMENT BY FINAL AND BINDING ARBITRATION IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION 11.4, AND HEREBY WAIVES THE RIGHT TO PROCEED TO COURT OR ANY OTHER FORUM THAT MAY APPLY TO IT BY REASON OF ITS
PRESENT OR FUTURE DOMICILE, OR FOR ANY OTHER REASON EXCEPT RECOURSE TO COURTS FOR ENFORCEMENT OF ARBITRAL AWARDS OR OTHER ORDER OF THE ARBITRATORS ISSUED IN AN ARBITRATION PURSUANT TO THIS SECTION 11.4 OR SEEKING ANY INTERIM OR
CONSERVATORY MEASURES OF THE RULES OF ARBITRATION OF THE AAA OR DESCRIBED IN THIS SECTION 11.4. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY PARTY TO BRING ANY SUIT, ACTION OR PROCEEDING SEEKING TO ENFORCE ANY ARBITRAL AWARD OR OTHER
ORDER OF THE ARBITRATORS ISSUED IN AN ARBITRATION PURSUANT TO THIS SECTION 11.4 OR SEEKING ANY INTERIM OR CONSERVATORY MEASURES PURSUANT TO THE RULES OF ARBITRATION OF THE AAA AGAINST ANY PARTY IN ANY OTHER JURISDICTION PERMITTED BY LAW.

 Section 11.5 Headings and Construction. The headings and captions herein are inserted for convenience of reference only and
are not intended to govern, limit or aid in the construction of any term or provision hereof. The rights and obligations of each Party shall be determined pursuant to this Agreement. ESAS and EXCO have had the opportunity to exercise business
discretion in relation to the negotiation of the details and terms of the transaction contemplated hereby. This Agreement is the result of arm’s length negotiations from equal bargaining positions. It is the intention of the Parties that every
covenant, term and provision of this Agreement shall be construed simply according to its fair meaning and not strictly for or against any Party (notwithstanding any rule of law requiring an agreement to be strictly construed against the drafting
Party) and no consideration shall be given or presumption made, on the basis of who drafted this Agreement or any particular provision thereof, it being understood that the Parties to this Agreement are sophisticated and have had adequate
opportunity and means to exercise business discretion in relation to the negotiation of the details of the transaction contemplated hereby and retain counsel to represent their interests and to otherwise negotiate the provisions of this Agreement.

 Section 11.6 Waivers. Any failure by any Party to comply with any of its obligations, agreements or conditions herein
contained may be waived by the Party to whom such compliance is owed by the application of the express terms hereof of by an instrument signed by the Party to whom compliance is owed and expressly identified as a waiver, but not in any other manner.
Except as otherwise expressly provided herein, no waiver of, or consent to a change in or modification of, any of the provisions of this Agreement shall be deemed or shall constitute a waiver of, or consent to a change in or modification, other
provisions hereof (whether or not similar), nor shall such waiver constitute a continuing waiver unless otherwise expressly provided herein. 

  
 -53- 

 Section 11.7 Severability. It is the intent of the Parties that the provisions
contained in this Agreement shall be severable. Should any provisions, in whole or in part, be held invalid as a matter of Law, such holding shall not affect the other portions of this Agreement, and such portions that are not invalid shall be given
effect without the invalid portion. 
 Section 11.8 Assignment. No Party shall assign or otherwise transfer all or any part of
this Agreement, nor shall any Party delegate any of its rights or duties hereunder, without the prior written consent of the other Party and any assignment, transfer or delegation made without such consent shall be null and void; provided
that ESAS may assign its rights and duties under this Agreement to any of its Affiliates upon written request by ESAS, and written consent of EXCO, such consent not to be unreasonably withheld; provided further, that ESAS shall not assign or
transfer its rights under the Warrants except for as provided in the terms of the Warrants. To the extent there are ESAS Initial Warrantholders other than ESAS, each such ESAS Initial Warrantholder shall be deemed to make each of the representation,
warranties and agreements in Article 3, mutatis mutandis, as of the Execution Date or Closing Date, as applicable, substituting the respective ESAS Initial Warrantholder’s legal name for ESAS. Unless expressly agreed to in writing
by the Parties, no permitted assignment of any Party’s rights or duties hereunder shall relieve or release any Party from the performance of such Party’s rights or obligations hereunder and the assigning Party shall be fully liable to the
other Parties for the performance of all such rights and duties. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective permitted successors and assigns. 

Section 11.9 Entire Agreement. This Agreement, the Confidentiality Agreement, Transaction Documents and the other documents to
be executed and delivered hereunder hereto constitute the entire agreement among the Parties pertaining to the subject matter hereof, and supersede all prior agreements, understandings, negotiations and discussions, whether oral or written, of the
Parties pertaining to the subject matter hereof. 
 Section 11.10 Amendment. The provisions of this Agreement may not be
amended, modified or supplemented, except by the prior written consent of (a) ESAS and (b) EXCO. Any ESAS Initial Warrantholder that is a holder of record of Warrants 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 11.10 as it relates to ownership and transfer of the Securities, whether or not any notice, writing
or marking indicating such amendment, modification, supplement, waiver or consent appears on the Securities or is delivered to such holder. Any amendment, supplement or modification of or to any provision of this Agreement, any waiver or 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. 

Section 11.11 No Third-Person Beneficiaries. Nothing in this Agreement shall entitle any Person other than EXCO or ESAS to any
claim, cause of action, remedy or right of any kind. Notwithstanding the foregoing: (a) the Parties reserve the right to amend, modify, terminate, 

  
 -54- 

 
supplement, or waive any provision of this Agreement or this entire Agreement without the consent or approval of any other Person (including the other members of the ESAS Group or the other
members of the EXCO Group or the ESAS Initial Warrantholders (other than ESAS)); and (b) no Party hereunder shall have any direct liability to any permitted Third Party beneficiary, nor shall any permitted Third Party beneficiary have any right
to exercise any rights hereunder for such third-party beneficiary’s benefit. 
 Section 11.12 Limitation on Damages.
Notwithstanding anything to the contrary contained herein, NO PERSON SHALL BE ENTITLED TO LOST PROFITS, INDIRECT, CONSEQUENTIAL, SPECIAL OR PUNITIVE DAMAGES IN CONNECTION WITH THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY AND EACH OF
EXCO AND ESAS, FOR ITSELF AND ON BEHALF OF THEIR RESPECTIVE MEMBERS OF THE EXCO GROUP AND ESAS GROUP, RESPECTIVELY, HEREBY EXPRESSLY WAIVES ANY RIGHT TO LOST PROFITS, INDIRECT, CONSEQUENTIAL, SPECIAL OR PUNITIVE DAMAGES IN CONNECTION WITH THIS
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY; provided, however, (a) that if an Indemnified Person is held liable to a Third Party based on any final judgment of a court of competent jurisdiction for any lost profits,
indirect, consequential, special or punitive damages and the applicable Indemnifying Party is obligated to indemnify such Indemnified Person for the matter that gave rise to such Damages, then such Indemnifying Party shall be liable for, and
obligated to reimburse such Indemnified Person for such Damages, (b) the waiver and limitations set forth in this Section 11.12 shall not limit or apply to any Damages that a Party is entitled to recover at law or equity under
Article 9 and (c) the waiver and limitations set forth in this Section 11.12 shall not limit or apply to any Damages that ESAS or any of its permitted successors or assigns are entitled to recover at law or equity in
connection with any breach by EXCO of any of its covenants or obligations under the Warrants or the Registration Rights Agreement. 

Section 11.13 Time of the Essence; Calculation of Time. Time is of the essence in this Agreement. If the date specified in this
Agreement for giving any notice or taking any action is not a Business Day (or if the period during which any notice is required to be given or any action taken expires on a date that is not a Business Day), then the date for giving such notice or
taking such action (and the expiration date of such period during which notice is required to be given or action taken) shall be the next day that is a Business Day. 

Section 11.14 Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument. Facsimile, .pdf or other electronic transmission of copies of signatures shall constitute original signatures for all purposes of this Agreement and any enforcement hereof. 

[Remainder of Page Intentionally Left Blank. Signature Pages to Follow] 

  
 -55- 

 IN WITNESS WHEREOF, this Agreement has been entered into by each of the Parties as of the
Execution Date. 
  

					
			ENERGY STRATEGIC ADVISORY SERVICES LLC
			
			Name:		 /s/ C. John Wilder

			By:		C. John Wilder
			Title:		Executive Chairman

 Signature Page to Services and Investment Agreement 

 
			
	EXCO RESOURCES, INC.
		
	Name:		 /s/ Harold L. Hickey

	By:		Harold L. Hickey
	Title:		President and Chief Executive Officer

 Signature Page to Services and Investment Agreement

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00243-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00243-of-00352.parquet"}]]