Document:

Exhibit
10.5

Execution
Version

 

SECOND AMENDED AND
RESTATED CREDIT AGREEMENT

 

dated as of

May 2, 2007

 

among

 

 

EXCO RESOURCES, INC.,

as Borrower

 

CERTAIN SUBSIDIARIES OF
BORROWER,

as Guarantors

 

The Lenders Party Hereto

 

JPMORGAN CHASE BANK,
N.A.,

as Administrative Agent

 

J.P. MORGAN SECURITIES
INC.,

as Sole Bookrunner and Lead Arranger

 

$1,000,000,000 Senior
Secured Credit Facility

 

 

TABLE OF CONTENTS

	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE I

  	
  DEFINITIONS

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 1.01.

  	
   

  	
  Defined Terms

  	
   

  	
  1

  
	
  Section 1.02.

  	
   

  	
  Classification of Loans and Borrowings

  	
   

  	
  27

  
	
  Section 1.03.

  	
   

  	
  Terms Generally

  	
   

  	
  27

  
	
  Section 1.04.

  	
   

  	
  Accounting Terms; GAAP

  	
   

  	
  27

  
	
  Section 1.05.

  	
   

  	
  Oil and Gas Definitions

  	
   

  	
  28

  
	
  Section 1.06.

  	
   

  	
  Time of Day

  	
   

  	
  28

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
  THE CREDITS

  	
   

  	
  28

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 2.01.

  	
   

  	
  Commitments

  	
   

  	
  28

  
	
  Section 2.02.

  	
   

  	
  Termination and Reduction of the Aggregate
  Commitment

  	
   

  	
  28

  
	
  Section 2.03.

  	
   

  	
  Reserved

  	
   

  	
  29

  
	
  Section 2.04.

  	
   

  	
  Loans and Borrowings

  	
   

  	
  29

  
	
  Section 2.05.

  	
   

  	
  Requests for Revolving Borrowings

  	
   

  	
  29

  
	
  Section 2.06.

  	
   

  	
  Swingline Loans

  	
   

  	
  30

  
	
  Section 2.07.

  	
   

  	
  Letters of Credit

  	
   

  	
  31

  
	
  Section 2.08.

  	
   

  	
  Funding of Borrowings

  	
   

  	
  35

  
	
  Section 2.09.

  	
   

  	
  Interest Elections

  	
   

  	
  36

  
	
  Section 2.10.

  	
   

  	
  Repayment of Loans; Evidence of Debt

  	
   

  	
  37

  
	
  Section 2.11.

  	
   

  	
  Optional Prepayment of Loans

  	
   

  	
  38

  
	
  Section 2.12.

  	
   

  	
  Mandatory Prepayment of Loans

  	
   

  	
  39

  
	
  Section 2.13.

  	
   

  	
  Fees

  	
   

  	
  40

  
	
  Section 2.14.

  	
   

  	
  Interest

  	
   

  	
  41

  
	
  Section 2.15.

  	
   

  	
  Alternate Rate of Interest

  	
   

  	
  41

  
	
  Section 2.16.

  	
   

  	
  Increased Costs

  	
   

  	
  42

  
	
  Section 2.17.

  	
   

  	
  Break Funding Payments

  	
   

  	
  43

  
	
  Section 2.18.

  	
   

  	
  Taxes

  	
   

  	
  44

  
	
  Section 2.19.

  	
   

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

  	
   

  	
  45

  
	
  Section 2.20.

  	
   

  	
  Mitigation Obligations; Replacement of Lenders

  	
   

  	
  47

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
  BORROWING BASE

  	
   

  	
  48

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 3.01.

  	
   

  	
  Reserve Report; Proposed Borrowing Base

  	
   

  	
  48

  
	
  Section 3.02.

  	
   

  	
  Scheduled Redeterminations of the Borrowing Base;
  Procedures and Standards

  	
   

  	
  48

  
	
  Section 3.03.

  	
   

  	
  Special Redeterminations

  	
   

  	
  49

  
	
  Section 3.04.

  	
   

  	
  Notice of Redetermination

  	
   

  	
  50

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
  REPRESENTATIONS AND WARRANTIES

  	
   

  	
  50

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 4.01.

  	
   

  	
  Organization; Powers

  	
   

  	
  50

  
	
  Section 4.02.

  	
   

  	
  Authorization; Enforceability

  	
   

  	
  50

  
	
  Section 4.03.

  	
   

  	
  Governmental Approvals; No Conflicts

  	
   

  	
  50

  
										

 

 i
 

 

	
  Section 4.04.

  	
   

  	
  Financial Condition; No Material Adverse Change

  	
   

  	
  51

  
	
  Section 4.05.

  	
   

  	
  Properties

  	
   

  	
  51

  
	
  Section 4.06.

  	
   

  	
  Litigation and Environmental Matters

  	
   

  	
  51

  
	
  Section 4.07.

  	
   

  	
  Compliance with Laws and Agreements

  	
   

  	
  52

  
	
  Section 4.08.

  	
   

  	
  Investment Company Status

  	
   

  	
  52

  
	
  Section 4.09.

  	
   

  	
  Taxes

  	
   

  	
  52

  
	
  Section 4.10.

  	
   

  	
  ERISA

  	
   

  	
  52

  
	
  Section 4.11.

  	
   

  	
  Disclosure

  	
   

  	
  52

  
	
  Section 4.12.

  	
   

  	
  Labor Matters

  	
   

  	
  53

  
	
  Section 4.13.

  	
   

  	
  Capitalization and Credit Party Information

  	
   

  	
  53

  
	
  Section 4.14.

  	
   

  	
  Margin Stock

  	
   

  	
  53

  
	
  Section 4.15.

  	
   

  	
  Oil and Gas Interests

  	
   

  	
  53

  
	
  Section 4.16.

  	
   

  	
  Insurance

  	
   

  	
  54

  
	
  Section 4.17.

  	
   

  	
  Solvency

  	
   

  	
  54

  
	
  Section 4.18.

  	
   

  	
  Deposit Accounts

  	
   

  	
  54

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
  CONDITIONS

  	
   

  	
  55

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 5.01.

  	
   

  	
  Effective Date

  	
   

  	
  55

  
	
  Section 5.02.

  	
   

  	
  Each Credit Event

  	
   

  	
  58

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
  AFFIRMATIVE COVENANTS

  	
   

  	
  59

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 6.01.

  	
   

  	
  Financial Statements; Other Information

  	
   

  	
  59

  
	
  Section 6.02.

  	
   

  	
  Notices of Material Events

  	
   

  	
  61

  
	
  Section 6.03.

  	
   

  	
  Existence; Conduct of Business

  	
   

  	
  62

  
	
  Section 6.04.

  	
   

  	
  Payment of Obligations

  	
   

  	
  62

  
	
  Section 6.05.

  	
   

  	
  Maintenance of Properties; Insurance

  	
   

  	
  62

  
	
  Section 6.06.

  	
   

  	
  Books and Records; Inspection Rights

  	
   

  	
  63

  
	
  Section 6.07.

  	
   

  	
  Compliance with Laws

  	
   

  	
  63

  
	
  Section 6.08.

  	
   

  	
  Use of Proceeds and Letters of Credit

  	
   

  	
  63

  
	
  Section 6.09.

  	
   

  	
  Mortgages

  	
   

  	
  63

  
	
  Section 6.10.

  	
   

  	
  Title Data

  	
   

  	
  63

  
	
  Section 6.11.

  	
   

  	
  Swap Agreements

  	
   

  	
  64

  
	
  Section 6.12.

  	
   

  	
  Operation of Oil and Gas Interests

  	
   

  	
  64

  
	
  Section 6.13.

  	
   

  	
  Restricted Subsidiaries

  	
   

  	
  64

  
	
  Section 6.14.

  	
   

  	
  Pledged Equity Interests

  	
   

  	
  65

  
	
  Section 6.15.

  	
   

  	
  Production Proceeds and Bank Accounts

  	
   

  	
  65

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
  NEGATIVE COVENANTS

  	
   

  	
  65

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 7.01.

  	
   

  	
  Indebtedness

  	
   

  	
  66

  
	
  Section 7.02.

  	
   

  	
  Liens

  	
   

  	
  67

  
	
  Section 7.03.

  	
   

  	
  Fundamental Changes

  	
   

  	
  67

  
	
  Section 7.04.

  	
   

  	
  Investments, Loans, Advances, Guarantees and
  Acquisitions

  	
   

  	
  68

  
	
  Section 7.05.

  	
   

  	
  Swap Agreements

  	
   

  	
  69

  
	
  Section 7.06.

  	
   

  	
  Restricted Payments

  	
   

  	
  70

  
	
  Section 7.07.

  	
   

  	
  Transactions with Affiliates

  	
   

  	
  70

  
	
  Section 7.08.

  	
   

  	
  Restrictive Agreements

  	
   

  	
  70

  
							

 

 ii
 

 

	
  Section 7.09.

  	
   

  	
  Disqualified Stock and Fiscal Year

  	
   

  	
  71

  
	
  Section 7.10.

  	
   

  	
  Amendments of Organizational Documents; Certain
  Agreements and Senior Notes

  	
   

  	
  71

  
	
  Section 7.11.

  	
   

  	
  Financial Covenants

  	
   

  	
  71

  
	
  Section 7.12.

  	
   

  	
  Sale and Leaseback Transactions and other
  Off-Balance Sheet Liabilities

  	
   

  	
  72

  
	
  Section 7.13.

  	
   

  	
  Interestholder Subsidiaries

  	
   

  	
  72

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
  GUARANTEE OF OBLIGATIONS

  	
   

  	
  73

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 8.01.

  	
   

  	
  Guarantee of Payment

  	
   

  	
  73

  
	
  Section 8.02.

  	
   

  	
  Guarantee Absolute

  	
   

  	
  73

  
	
  Section 8.03.

  	
   

  	
  Guarantee Irrevocable

  	
   

  	
  74

  
	
  Section 8.04.

  	
   

  	
  Reinstatement

  	
   

  	
  74

  
	
  Section 8.05.

  	
   

  	
  Subrogation

  	
   

  	
  74

  
	
  Section 8.06.

  	
   

  	
  Subordination

  	
   

  	
  74

  
	
  Section 8.07.

  	
   

  	
  Payments Generally

  	
   

  	
  75

  
	
  Section 8.08.

  	
   

  	
  Setoff

  	
   

  	
  75

  
	
  Section 8.09.

  	
   

  	
  Formalities

  	
   

  	
  75

  
	
  Section 8.10.

  	
   

  	
  Limitations on Guarantee

  	
   

  	
  75

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX

  	
  EVENTS OF DEFAULT

  	
   

  	
  76

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X

  	
  THE ADMINISTRATIVE AGENT

  	
   

  	
  78

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XI

  	
  MISCELLANEOUS

  	
   

  	
  80

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 11.01.

  	
   

  	
  Notices

  	
   

  	
  80

  
	
  Section 11.02.

  	
   

  	
  Waivers; Amendments

  	
   

  	
  81

  
	
  Section 11.03.

  	
   

  	
  Expenses; Indemnity; Damage Waiver

  	
   

  	
  82

  
	
  Section 11.04.

  	
   

  	
  Successors and Assigns

  	
   

  	
  84

  
	
  Section 11.05.

  	
   

  	
  Survival

  	
   

  	
  87

  
	
  Section 11.06.

  	
   

  	
  Counterparts; Integration; Effectiveness

  	
   

  	
  87

  
	
  Section 11.07.

  	
   

  	
  Severability

  	
   

  	
  88

  
	
  Section 11.08.

  	
   

  	
  Right of Setoff

  	
   

  	
  88

  
	
  Section 11.09.

  	
   

  	
  GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF
  PROCESS

  	
   

  	
  88

  
	
  Section 11.10.

  	
   

  	
  WAIVER OF JURY TRIAL

  	
   

  	
  89

  
	
  Section 11.11.

  	
   

  	
  Headings

  	
   

  	
  89

  
	
  Section 11.12.

  	
   

  	
  Confidentiality

  	
   

  	
  89

  
	
  Section 11.13.

  	
   

  	
  Interest Rate Limitation

  	
   

  	
  90

  
	
  Section 11.14.

  	
   

  	
  USA PATRIOT Act

  	
   

  	
  90

  
	
  Section 11.15.

  	
   

  	
  Original Credit Agreement

  	
   

  	
  90

  
	
  Section 11.16.

  	
   

  	
  Reaffirmation and Grant of Security Interest

  	
   

  	
  91

  
	
  Section 11.17.

  	
   

  	
  Reallocation of Aggregate Commitment

  	
   

  	
  91

  
								

 

 iii

SCHEDULES:

	
  Schedule 2.01

  	
  –

  	
  Applicable Percentages and Initial Commitments

  
	
  Schedule 4.06

  	
  –

  	
  Disclosed Matters

  
	
  Schedule 4.13

  	
  –

  	
  Capitalization and Credit Party Information

  
	
  Schedule 4.18

  	
  –

  	
  Deposit and Investment Accounts

  
	
  Schedule 7.01

  	
  –

  	
  Existing Indebtedness

  
	
  Schedule 7.02

  	
  –

  	
  Existing Liens

  
	
  Schedule 7.07

  	
  –

  	
  Transactions with Affiliates

  
	
  Schedule 7.08

  	
  –

  	
  Existing Restrictions

  

 

EXHIBITS:

 

	
  Exhibit A

  	
  –

  	
  Form of Assignment and Assumption

  
	
  Exhibit B

  	
  –

  	
  Form of Opinion of Borrower’s Counsel

  
	
  Exhibit C

  	
  –

  	
  Form of Counterpart Agreement

  
	
  Exhibit D

  	
  –

  	
  Form of Solvency Certificate

  
	
  Exhibit E

  	
  –

  	
  Form of Note

  

 

 i

SECOND AMENDED AND RESTATED CREDIT AGREEMENT dated as
of May 2, 2007, among EXCO RESOURCES, INC., as Borrower, CERTAIN SUBSIDIARIES
OF BORROWER, as Guarantors, the LENDERS party hereto, and JPMORGAN CHASE BANK,
N.A., as Administrative Agent.

The parties hereto agree as follows:

Article I

Definitions

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

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

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

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

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

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

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

 1
 

thereof
or of a percentage or share of such production; provided that  inclusion
of the standard “take or pay” provision in any gas sales or purchase contract
or any other similar contract shall not, in and of itself, constitute such
contract as an Advance Payment Contract for the purposes hereof.

“Affiliate” means, with respect to a specified
Person, another Person that directly, or indirectly through one or more
intermediaries, Controls or is Controlled by or is under common Control with
the Person specified.

“Aggregate Applicable Percentage” means, with
respect to each Lender at any time, the sum of such Lender’s Credit Exposure
and Unused Commitment at such time divided by the sum of the Aggregate Credit
Exposure and all Unused Commitments at such time, unless the Aggregate
Commitment has been terminated in which case it shall be the aggregate amount
of such Lender’s outstanding Loans, LC Exposure and Swingline Exposure at such
time divided by the aggregate outstanding amount of all Loans, LC Exposure and
Swingline Loans at such time.

“Aggregate Commitment” means the amount equal
to the lesser of (i) the Maximum Facility Amount and (ii) the
Borrowing Base; as such Aggregate Commitment may be reduced or increased
pursuant to Section 2.02 and Article III.

“Aggregate Credit Exposure” means, as of any
date of determination, the sum of the Credit Exposure of all of the Lenders as
of such date.

“Agreement” means this Second Amended and
Restated Credit Agreement, dated as of May 2, 2007 as it may be amended,
supplemented or otherwise modified from time to time.

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

“APC” means Anadarko Petroleum Corporation, a
Delaware corporation, and its successors and assigns.

“Appalachia Properties” means, at any time, the
Mortgaged Properties owned by North Coast, North Coast Eastern or any of their
respective Subsidiaries and located in Ohio, Pennsylvania, West Virginia or any
other state specified by the Borrower and acceptable to the Administrative
Agent at such time.

“Applicable Percentage” means, with respect to
any Lender at any time, the percentage of the Aggregate Commitment represented
by such Lender’s Commitment at such time. 
The initial amount of each Lender’s Applicable Percentage is as set
forth on Schedule 2.01.  If the Aggregate
Commitment has terminated or expired, the Applicable

 2
 

Percentages shall be
determined based upon the Aggregate Commitment most recently in effect, giving
effect to any subsequent assignments.

“Applicable Rate” means, for any day, with
respect to any Eurodollar Loan or ABR Loan, or with respect to the Unused
Commitment Fees payable hereunder, as the case may be, the applicable rate per
annum set forth below under the caption “Eurodollar Spread”, “ABR Spread” or “Unused
Commitment Fee Rate”, as the case may be, based upon the Borrowing Base Usage
applicable on such date:

	
  Borrowing Base

  Usage

  	
   

  	
  Eurodollar

  Spread

  	
   

  	
  ABR Spread

  	
   

  	
  Unused

  Commitment

  Fee Rate

  	
   

  
	
  >
  90%

  	
   

  	
  175
  b.p.

  	
   

  	
  75
  b.p.

  	
   

  	
  37.5
  b.p.

  	
   

  
	
  >
  75% and < 90%

  	
   

  	
  150
  b.p.

  	
   

  	
  50
  b.p.

  	
   

  	
  37.5
  b.p.

  	
   

  
	
  >
  50% and < 75%

  	
   

  	
  125
  b.p.

  	
   

  	
  25
  b.p.

  	
   

  	
  30
  b.p.

  	
   

  
	
  < 50%

  	
   

  	
  100
  b.p.

  	
   

  	
  0
  b.p.

  	
   

  	
  25
  b.p.

  	
   

  

 

Each change in the Applicable Rate shall apply during the period
commencing on the effective date of such change and ending on the date immediately
preceding the effective date of the next change.

“Approved Counterparty” means, at any time and
from time to time, (i) any Person engaged in the business of writing Swap
Agreements for commodity, interest rate or currency risk that is acceptable to
the Administrative Agent and has (or the credit support provider of such Person
has), at the time Borrower or any Restricted Subsidiary enters into a Swap
Agreement with such Person, a long term senior unsecured debt credit rating of
BBB+ or better from S&P or Baa1 or better from Moody’s and (ii) any Lender
Counterparty.

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

“Approved Investor” means (a) a BP Investor and
(b) any Person other than the Persons described in clause (a) of the definition
of “Control Group” to whom Equity Interests of the Borrower are transferred or
assigned with the prior written consent of the Majority Lenders, which consent
shall not be unreasonably withheld, conditioned or delayed.  For the avoidance of doubt, any assignment or
transfer of Equity Interests of the Borrower by any Person to any Person other
than a BP Investor or the Persons described in clause (a) of the definition of “Control
Group” is subject to the foregoing, including any transferee or assignee of
such Person.

“Approved Petroleum Engineer” means Lee Keeling
& Associates or any other reputable firm of independent petroleum engineers
selected by the Borrower and approved by the Administrative Agent and the
Required Lenders which approval shall not be unreasonably withheld.

 3
 

“Arranger” means J.P. Morgan Securities Inc. in
its capacity as sole bookrunner and lead arranger.

“Assignment and Assumption” means an assignment
and assumption entered into by a Lender and an Eligible Assignee, and accepted by
the Administrative Agent, in the form of Exhibit A or any other form
approved by the Administrative Agent.

“Availability Period” means the period from and
including the Effective Date to but excluding the earlier of the Maturity Date
and the date of termination of the Aggregate Commitment.

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

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

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

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

“Borrowing” means (a) Revolving Loans of the
same Type, made, converted or continued on the same date and, in the case of
Eurodollar Loans, as to which a single Interest Period is in effect or (b) a
Swingline Loan.

“Borrowing
Base” means, at any
time an amount equal to the amount determined in accordance with Section 3.01,
as the same may be redetermined, adjusted or reduced from time to time pursuant
to Section 3.02 and Section 3.03.

“Borrowing
Base Deficiency”
means, as of any date, the amount, if any, by which Aggregate Credit Exposure
on such date exceeds the Borrowing Base in effect on such date; provided, that, for purposes of determining the existence and amount of
any Borrowing Base Deficiency, obligations under any Letter of Credit will not
be deemed to be outstanding to the extent such obligations are secured by cash
in the manner contemplated by Section 2.07(j).

“Borrowing Base
Properties” means all Oil and Gas Interests of the Borrower and the
Restricted Subsidiaries evaluated by the Lenders for purposes of establishing
the Borrowing Base.

 4
 

“Borrowing Base Usage” means, as of any date
and for all purposes, the quotient, expressed as a percentage, of (i) the
Aggregate Credit Exposure as of such date, divided by (ii) the
Borrowing Base as of such date.

“Borrowing Request” means a request by the
Borrower for a Revolving Borrowing in accordance with Section 2.05.

“BP Investor” means, collectively, (a) BP EXCO
Holdings LP, a Texas limited partnership and any other investment fund managed
by BP Capital Management LP, and (b) Boone Pickens, any Affiliate of Boone
Pickens, any spouse or lineal descendant of Boone Pickens (whether natural or
adopted), the estate of Boone Pickens, and any trust solely for the benefit of
Boone Pickens and/or his spouse and/or lineal descendants

“Business Day” means any day that is not a
Saturday, Sunday or other day on which commercial banks in New York, New York
or Dallas, Texas are authorized or required by law to remain closed; provided
that, when used in connection with a Eurodollar Loan, the term “Business Day”
shall also exclude any day on which banks are not open for dealings in dollar
deposits in the London interbank market.

“Capital Lease Obligations” of any Person means
the obligations of such Person to pay rent or other amounts under any lease of
(or other arrangement conveying the right to use) real or personal property, or
a combination thereof, which obligations are required to be classified and accounted
for as capital leases on a balance sheet of such Person under GAAP, and the
amount of such obligations shall be the capitalized amount thereof determined
in accordance with GAAP.

“Cash Management Obligations” means, with
respect to any Credit Party, any obligations of such Credit Party owed to
JPMorgan Chase Bank, N.A. (or any of its affiliates) in respect of treasury
management arrangements, depositary or other cash management services.

“Change in Law” means (a) the adoption of any
law, rule or regulation after the date of this Agreement, (b) any change in any
law, rule or regulation or in the interpretation or application thereof by any
Governmental Authority after the date of this Agreement or (c) compliance by
any Lender or the Issuing Bank (or, for purposes of Section 2.16(b), by any
lending office of such Lender or by such Lender’s or the Issuing Bank’s holding
company, if any) with any request, guideline or directive (whether or not
having the force of law) of any Governmental Authority made or issued after the
date of this Agreement.

“Change of Control” means (i) the acquisition
of ownership, directly or indirectly, beneficially or of record, by any Person
or group (within the meaning of the Securities Exchange Act of 1934 and the
rules of the Securities and Exchange Commission thereunder as in effect on the
Effective Date) other than the Control Group, of Equity Interests representing
more than thirty percent (30%) of the aggregate ordinary voting power
represented by the issued and outstanding Equity Interests of Borrower; or (ii)
occupation of a majority of the seats (other than vacant seats) on the board of
directors of

 5
 

Borrower by persons who
were neither (1) nominated by the board of directors of Borrower nor (2)
appointed by directors so nominated; (iii) the acquisition of direct or
indirect Control of Borrower by any Person or group other than the Control
Group; (iv) the occurrence of a “Change of Control” as such term is defined in
the Indenture and (v) the occurrence of a “Change of Control” as such term is
defined in the Preferred Stock Documents.

“Charges” has the meaning assigned to such term
in Section 11.13.

“Class” where used in reference to any Loan or
Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing,
are Revolving Loans or Swingline Loans.

“Code” means the Internal Revenue Code of 1986,
as amended from time to time.

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

“Commitment” means, with respect to each
Lender, the commitment of such Lender to make Loans and to acquire
participations in Letters of Credit and Swingline Loans hereunder, expressed as
an amount representing the maximum aggregate amount of such Lender’s Credit
Exposure hereunder, as such commitment may be (a) reduced from time to time
pursuant to Section 2.02, (b) reduced or increased from time to time as a
result of changes in the Borrowing Base pursuant to Article III and (c) reduced
or increased from time to time pursuant to assignments by or to such Lender
pursuant to Section 11.04.  The initial
amount of each Lender’s Commitment (which amount is such Lender’s Applicable
Percentage of the initial Aggregate Commitment) is set forth in
Schedule 2.01, or in the Assignment and Assumption pursuant to which such
Lender shall have assumed its Commitment, as applicable.

“Consolidated Current Assets” means, as of any
date of determination, the total of (i) the consolidated current assets of the
Borrower and the Restricted Subsidiaries determined in accordance with GAAP as
of such date and calculated on a combined basis, plus, all Unused
Commitments as of such date, (ii) less any non-cash assets required to
be included in consolidated current assets of the Borrower and the Restricted
Subsidiaries as a result of the application of FASB Statement 133 as of such
date.

“Consolidated Current Liabilities” means, as of
any date of determination, the total of (i) consolidated current liabilities of
the Borrower and the Restricted Subsidiaries, as determined in accordance with
GAAP as of such date, (ii) less current maturities of the Loans, (iii) less
any non-cash obligations required to be included in consolidated current
liabilities of the Borrower and the Restricted Subsidiaries as a result of the
application of FASB Statement 133 as of such date.

“Consolidated Current Ratio” means, as of any
date of determination, the ratio of Consolidated Current Assets to Consolidated
Current Liabilities as of such date.

 6
 

“Consolidated
EBITDAX” means, with respect to the Borrower and its Restricted
Subsidiaries for any period, Consolidated Net Income for such period; plus,
without duplication and to the extent deducted in the calculation of
Consolidated Net Income for such period, the sum of (a) income or
franchise Taxes paid or accrued; (b) Consolidated Interest Expense;
(c) amortization, depletion and depreciation expense; (d) any
non-cash losses or charges on any Swap Agreement resulting from the
requirements of FASB Statement 133 for that period; (e) oil and gas exploration
expenses (including all drilling, completion, geological and geophysical costs)
for such period; (f) losses from sales or other dispositions of assets
(other than Hydrocarbons produced in the ordinary course of business) and other
extraordinary or non-recurring losses; (g) workover expenses for such period;
(h) cash payments made during such period as a result of the early termination
of any Swap Agreement (giving effect to any netting agreements); and
(i) other non-cash charges (excluding accruals for cash expenses made in
the ordinary course of business); minus, to the extent included in the
calculation of Consolidated Net Income for such period; (j) the sum of
(1) any non-cash gains on any Swap Agreements resulting from the
requirements of FASB Statement 133 for that period; (2) extraordinary or
non-recurring gains; and (3) gains from sales or other dispositions of
assets (other than Hydrocarbons produced in the ordinary course of business); provided
that, with respect to the determination of Borrower’s compliance with the
leverage ratio set forth in Section 7.11(b) for any period, Consolidated
EBITDAX shall be adjusted to give effect, on a pro forma basis, to any
Acquisitions made during such period as if such Acquisitions were made at the
beginning of such period.

“Consolidated Funded Indebtedness” means, as of
any date and without duplication, Indebtedness of the Borrower and the
Restricted Subsidiaries of the type described in clauses (a), (b), (c), (d),
(e), (f), (g) or (h) of the definition of Indebtedness, minus Surplus
Cash.

“Consolidated Interest Expense” means for any
period, without duplication, the aggregate of all interest paid or accrued by
the Borrower and its Restricted Subsidiaries, on a consolidated basis, in
respect of Indebtedness of any such Person, on a consolidated basis, including
all interest, fees and costs payable with respect to the obligations related to
such Indebtedness (other than fees and costs which may be capitalized as
transaction costs in accordance with GAAP) and the interest component of
Capitalized Lease Obligations, all as determined in accordance with GAAP. For
the avoidance of doubt, dividends on Preferred Stock shall not be included in
Consolidated Interest Expense.

“Consolidated Net Income” means for any period,
the consolidated net income (or loss) of the Borrower and its Consolidated
Subsidiaries, as applicable, determined on a consolidated basis in accordance
with GAAP; provided that there shall be excluded (a) the income (or deficit) of
any Person accrued prior to the date it becomes a Consolidated Subsidiary of
the Borrower, or is merged into or consolidated with the Borrower or any of its
Consolidated Subsidiaries, as applicable, (b) the income (or deficit) of any
Person in which any other Person (other than the Borrower or any of its
Restricted Subsidiaries) has an Equity Interest, except to the extent of the
amount of dividends or other distributions actually paid to the Borrower or any
of its Restricted Subsidiaries during such period and (c) the undistributed
earnings of any Consolidated Subsidiary of the

 7
 

Borrower, to the extent
that the declaration or payment of dividends or similar distributions by such
Consolidated Subsidiary is not at the time permitted by the terms of any
contractual obligation (other than under any Loan Document or the Indenture) or
by any law applicable to such Consolidated Subsidiary.

“Consolidated
Subsidiaries” means, for any Person, any Subsidiary or other entity
the accounts of which would be consolidated with those of such Person in its
consolidated financial statements in accordance with GAAP.

“Control” means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of a Person, whether through the ability to exercise voting power, by
contract or otherwise.  “Controlling”
and “Controlled” have meanings correlative thereto.

“Control Group” means (a) Douglas H. Miller,
Stephen F. Smith, any Affiliate Controlled by any such Person and any spouse or
lineal descendants (whether natural or adopted) of any such Person and any
trust solely for the benefit of such Person and/or such Person’s spouse and/or
lineal descendants and (b) any Approved Investor.

“Counterpart Agreement” means a Counterpart
Agreement substantially in the form of Exhibit C delivered by a Guarantor
pursuant to Section 6.13.

“Credit Exposure” means, with respect to any
Lender at any time, the sum of the outstanding principal amount of such Lender’s
Loans and its LC Exposure and its Swingline Exposure at such time.

“Credit Parties” means collectively, Borrower,
and each Guarantor and each individually, a “Credit Party”.

“Crude Oil” means all crude oil and condensate.

“Default” means any event or condition which
constitutes an Event of Default or which upon notice, lapse of time or both
would, unless cured or waived, become an Event of Default.

“Defaulting Lender” means any Lender that (a)
has failed to fund any portion of the Loans, participations in LC Disbursements
or participations in Swingline Loans required to be funded by it hereunder
within one Business Day of the date required to be funded by it hereunder, (b)
has otherwise failed to pay over to the Administrative Agent or any other
Lender any other amount required to be paid by it hereunder within one Business
Day of the date when due, unless the subject of a good faith dispute, or (c)
has been deemed insolvent or become the subject of a bankruptcy or insolvency
proceeding.

“Disclosed Matters” means the actions, suits
and proceedings and the environmental matters disclosed in Schedule 4.06.

“Disqualified Stock” means any Equity Interest
(other than the Preferred Stock), which, by its terms (or by the terms of any
security into which it is convertible or for

 8
 

which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is
redeemable at the sole option of the holder thereof (other than solely as a
result of a change of control or asset sale), in whole or in part, on or prior
to the Maturity Date.

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

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

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

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

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

“Engineered Value” means, the value attributed
to the Borrowing Base Properties for purposes of the most recent Redetermination
of the Borrowing Base pursuant to Article III (or for purposes of determining
the Initial Borrowing Base in the event no such Redetermination has occurred),
based upon the discounted present value of the estimated net cash flow to be
realized from the production of Hydrocarbons from the Borrowing Base Properties
as set forth in the Reserve Report.

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

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

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

 9
 

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

“ERISA Affiliate” means any trade or business
(whether or not incorporated) that, together with any Credit Party, is treated
as a single employer under Section 414(b) or (c) of the Code or, solely
for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as
a single employer under Section 414 of the Code.

“ERISA Event” means (a) any “reportable
event”, as defined in Section 4043 of ERISA or the regulations issued thereunder
with respect to a Plan (other than an event for which the 30-day notice
period is waived); (b) the existence with respect to any Plan of an “accumulated
funding deficiency” (as defined in Section 412 of the Code or
Section 302 of ERISA), whether or not waived; (c) the filing pursuant
to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by any Credit Party or any of its ERISA
Affiliates of any liability under Title IV of ERISA with respect to the
termination of any Plan; (e) the receipt by any Credit Party or any ERISA
Affiliate from the PBGC or a plan administrator of any notice relating to an
intention to terminate any Plan or Plans or to appoint a trustee to administer
any Plan; (f) the incurrence by any Credit Party or any of its ERISA Affiliates
of any liability with respect to the withdrawal or partial withdrawal from any
Plan or Multiemployer Plan; or (g) the receipt by any Credit Party or any
ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from
any Credit Party or any ERISA Affiliate of any notice, concerning the
imposition of Withdrawal Liability or a determination that a Multiemployer Plan
is, or is expected to be, insolvent or in reorganization, within the meaning of
Title IV of ERISA.

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

“Event of Default” has the meaning assigned to
such term in Article IX.

“Excluded Taxes” means, with respect to the
Administrative Agent, any Lender, the Issuing Bank or any other recipient of
any payment to be made by or on account of any obligation of the Borrower
hereunder, (a) income or franchise taxes imposed on (or measured by) its net
income by the United States of America, or by the jurisdiction under the laws
of which such recipient is organized or in which its principal office is
located or, in the case of any Lender, in which its applicable lending office
is located, (b) any branch profits taxes imposed by the United States of
America or any similar tax imposed by any other jurisdiction in which the
Borrower is located and (c) in the case of a Foreign Lender (other than an
assignee pursuant to a request by the Borrower under Section 2.20(b)), any
withholding tax that is imposed on amounts payable to such Foreign Lender at
the time such Foreign Lender becomes a party to this Agreement (or designates a
new lending office) or is attributable to such Foreign Lender’s failure to
comply with Section 2.18(e), except to the extent that such Foreign Lender (or
its assignor, if any) was entitled, at the time of designation of a new lending
office (or

 10
 

assignment), to receive
additional amounts from the Borrower with respect to such withholding tax
pursuant to Section 2.18(a).

“Existing Swap Agreements” means, collectively,
(i) any Swap Agreement entered into between any Credit Party and any
Lender Counterparty (including Lender Counterparty under and as defined in the
Original Credit Agreement) prior to the Effective Date and in effect on the
Effective Date and (ii) any of the Southern Gas Hedges assigned to any Credit
Party on the Effective Date and to which any Lender Counterparty is a party.

“FASB” means Financial Accounting Standards
Board.

“Federal Funds Effective Rate” means, for any
day, the weighted average (rounded upwards, if necessary, to the next 1/100 of
1%) of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published on the
next succeeding Business Day by the Federal Reserve Bank of New York, or,
if such rate is not so published for any day that is a Business Day, the
average (rounded upwards, if necessary, to the next 1/100 of 1%) of the
quotations for such day for such transactions received by the Administrative
Agent from three Federal funds brokers of recognized standing selected by it.

“Foreign Lender” means any Lender that is
organized under the laws of a jurisdiction other than that in which any Credit
Party is located.  For purposes of this
definition, the United States of America, each State thereof and the District
of Columbia shall be deemed to constitute a single jurisdiction.

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

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

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

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

 11
 

thereof, (b) to
purchase or lease property, securities or services for the purpose of assuring
the owner of such Indebtedness or other obligation of the payment thereof,
(c) to maintain working capital, equity capital or any other financial
statement condition or liquidity of the primary obligor so as to enable the
primary obligor to pay such Indebtedness or other obligation or (d) as an
account party in respect of any letter of credit or letter of guaranty issued
to support such Indebtedness or obligation; provided, that the term Guarantee
shall not include endorsements for collection or deposit in the ordinary course
of business.

“Guaranteed Liabilities” has the meaning
assigned to such term in Section 8.01.

“Guarantor” means each Restricted Subsidiary
that is a party hereto or hereafter executes and delivers to the Administrative
Agent and the Lenders, a Counterpart Agreement pursuant to Section 6.13 or
otherwise.

“Hazardous Materials”  means all explosive or radioactive substances
or wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.

“Hydrocarbons” means all Crude Oil and Natural
Gas produced from or attributable to the Oil and Gas Interests of the Credit
Parties.

“Indebtedness” of any Person means, without
duplication, (a) all obligations of such Person for borrowed money or with
respect to deposits or advances of any kind, (b) all obligations of such
Person evidenced by bonds, debentures, notes or similar instruments,
(c) all obligations of such Person upon which interest charges are paid,
(d) all obligations of such Person under conditional sale or other title
retention agreements relating to property acquired by such Person, (e) all
obligations of such Person in respect of the deferred purchase price of
property or services (excluding current accounts payable incurred in the
ordinary course of business), (f) all Indebtedness of others secured by
(or for which the holder of such Indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien on property owned or acquired by such
Person, whether or not the Indebtedness secured thereby has been assumed,
(g) all Guarantees by such Person of Indebtedness of others, (h) all
Capital Lease Obligations of such Person, (i) all obligations, contingent
or otherwise, of such Person as an account party in respect of letters of
credit and letters of guaranty and (j) all obligations, contingent or
otherwise, of such Person in respect of bankers’ acceptances.  The Indebtedness of any Person shall include
the Indebtedness of any other entity (including any partnership in which such
Person is a general partner) to the extent such Person is liable therefor as a
result of such Person’s ownership interest in or other relationship with such
entity, except to the extent the terms of such Indebtedness provide that such
Person is not liable therefor.

“Indemnified Taxes” means Taxes other than
Excluded Taxes.

 12
 

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

“Indenture” means
that certain Indenture dated as of January 20, 2004, by and among the Borrower,
certain Subsidiaries of the Borrower and the Trustee, as in effect on the date
hereof and as amended, modified, supplemented or restated from time to time
thereafter as permitted under this Agreement.

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

“Initial Borrowing Base” has the meaning
assigned to such term in Section 3.01.

“Interest Election Request” means a request by
the Borrower to convert or continue a Borrowing in accordance with Section
2.09.

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

“Interest Period” means with respect to any
Eurodollar Borrowing, the period commencing on the date of such Borrowing and
ending on the numerically corresponding day in the calendar month that is one,
two, three or six months thereafter, as the Borrower may elect; provided,
that (i) if any Interest Period would end on a day other than a Business Day,
such Interest Period shall be extended to the next succeeding Business Day
unless such next succeeding Business Day would fall in the next calendar month,
in which case such Interest Period shall end on the next preceding Business Day
and (ii) any Interest Period that commences on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the last calendar month of such Interest Period) shall end on the last
Business Day of the last calendar month of such Interest Period.  For purposes hereof, the date of a Borrowing
initially shall be the date on which such Borrowing is made and, in the case of
a Revolving Borrowing, thereafter shall be the effective date of the most
recent conversion or continuation of such Borrowing.

“Interestholder Subsidiary” means any
Subsidiary that owns or holds MLP Interests or any other Equity Interests of
the MLP.

“Issuing Bank” means JPMorgan Chase Bank, in
its capacity as the issuer of Letters of Credit hereunder, and its successors
in such capacity as provided in Section 2.07(i).  The Issuing Bank may, in its discretion,
arrange for one or more Letters of Credit to be issued by Affiliates of the
Issuing Bank, in which case the term “Issuing Bank” shall include any such
Affiliate with respect to Letters of Credit issued by such Affiliate.

“JPMorgan Chase Bank” and “JPMorgan Chase
Bank, N.A.” means JPMorgan Chase Bank, N.A. (successor by merger to Bank
One, N.A. Illinois) and its successors.

 13
 

“LC Disbursement” means a payment made by the
Issuing Bank pursuant to a Letter of Credit.

“LC Exposure” means, at any time, the sum of
(a) the aggregate undrawn amount of all outstanding Letters of Credit at such
time plus (b) the aggregate amount of all LC Disbursements that have not yet
been reimbursed by or on behalf of the Borrower at such time.  The LC Exposure of any Lender at any time
shall be its Applicable Percentage of the total LC Exposure at such time.

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

“Lenders” means the Persons listed on Schedule 2.01
and any other Person that shall have become a party hereto pursuant to an
Assignment and Assumption, other than any such Person that ceases to be a party
hereto pursuant to an Assignment and Assumption. 
Unless the context otherwise requires, the term “Lenders” includes the
Swingline Lender.

“Letter of Credit” means any letter of credit
issued pursuant to this Agreement and, to the extent outstanding on the
Effective Date, any letter of credit issued under the Original Credit Agreement
and any renewals thereof after the Effective Date.

“LIBO Rate” means, with respect to any
Eurodollar Borrowing for any Interest Period, the rate appearing on Page 3750
of the Moneyline Telerate Service (or on any successor or substitute page of
such Service, or any successor to or substitute for such Service, providing
rate quotations comparable to those currently provided on such page of such
Service, as determined by the Administrative Agent from time to time for
purposes of providing quotations of interest rates applicable to dollar
deposits in the London interbank market) at approximately 11:00 a.m., London
time, two (2) Business Days prior to the commencement of such Interest Period,
as the rate for dollar deposits with a maturity comparable to such Interest
Period.  In the event that such rate is
not available at such time for any reason, then the “LIBO Rate” with
respect to such Eurodollar Borrowing for such Interest Period shall be the rate
at which dollar deposits of $5,000,000 and for a maturity comparable to such
Interest Period are offered by the principal London office of the
Administrative Agent in immediately available funds in the London interbank
market at approximately 11:00 a.m., London time, two (2) Business Days
prior to the commencement of such Interest Period.

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

 14
 

“Loan Documents” means this Agreement, any
promissory notes executed in connection herewith, Security Instruments, the
Letters of Credit (and any applications therefore and reimbursement agreements
related thereto), the Fee Letter and any other agreements executed in
connection with this Agreement.

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

“Majority Lenders” means, at any time, Lenders
having Credit Exposures and Unused Commitments representing more than fifty
percent (50%) of the sum of the Aggregate Credit Exposure and all Unused
Commitments at such time or, if the Aggregate Commitment has been terminated,
Lenders having Credit Exposures representing more than fifty percent (50%) of
the Aggregate Credit Exposure at such time; provided that the Unused Commitment
and the Credit Exposures held or deemed held by any Defaulting Lender shall be
excluded for purposes of making a determination of the Majority Lenders.

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

“Material Domestic Subsidiary” means any
Domestic Subsidiary (other than the MLP Subsidiaries) that owns or holds
assets, properties or interests (including Oil and Gas Interests but excluding
Equity Interests in the MLP, whether owned directly or indirectly) with an
aggregate fair market value, on a consolidated basis, greater than five percent
(5%) of the aggregate fair market value of all of the assets, properties and
interests (including Oil and Gas Interests but excluding Equity Interests in
the MLP, whether owned directly or indirectly) of the Borrower and the
Restricted Subsidiaries, on a consolidated basis.

“Material Gas Imbalance”
means, with respect to all Gas Balancing Agreements to which Borrower or any
Restricted Subsidiary is a party or by which any Oil and Gas Interests owned by
Borrower or a Restricted Subsidiary is bound, a net overproduced gas imbalance
to Borrower and the Restricted Subsidiaries, taken as a whole, in excess of
$10,000,000.

“Material Indebtedness” means Indebtedness
under the Senior Notes and any other Indebtedness (other than the Loans and
Letters of Credit), or obligations in respect of one or more Swap Agreements,
of the Borrower or any one or more of the Restricted Subsidiaries in an
aggregate principal amount exceeding $10,000,000.  For purposes
of determining Material Indebtedness, the “principal amount” of the obligations
of the

 15
 

Borrower or any Guarantor
in respect of any Swap Agreement at any time shall be the maximum aggregate
amount (giving effect to any netting agreements) that the Borrower or such
Guarantor would be required to pay if such Swap Agreement were terminated at
such time.

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

“Maturity Date” means March 30, 2012.

“Maximum Facility Amount” means $1,000,000,000.

“Maximum Liability” has the meaning assigned to
such term in Section 8.10.

“Maximum Rate” has the meaning assigned to such
term in Section 11.13.

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

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

“MLP General Partner” means EXCO GP Partners,
LP, a Delaware limited partnership and its successors and permitted assigns
that are admitted to the MLP as general partner of the MLP.

“MLP Interests” means the limited partnership
interest in the MLP.

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

“MLP Rights” means the rights to purchase MLP
Interests issued to Borrower by the MLP in connection with the transfer of
certain Subsidiaries and certain Oil and Gas Interests to the MLP Subsidiaries
on or about October 2, 2006.

“MLP Subsidiaries” means, collectively, the MLP
and its Subsidiaries.

 16
 

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

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

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

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

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

“Net Cash Proceeds” means, with respect to any
sale, transfer, assignment or disposition of any Borrowing Base Properties by
the Borrower or any Restricted Subsidiary, the excess, if any, of (a) the sum
of cash and cash equivalents received in connection with such sale, but only as
and when so received, over (b) the sum of (i) the principal amount of any
Indebtedness that is secured by such asset and that is required to be repaid in
connection with the sale thereof (other than the Loans), (ii) the out-of-pocket
expenses incurred by the Borrower or such Restricted Subsidiary in connection
with such sale, (iii) all legal, title and recording tax expense and all
federal, state, provincial, foreign and local taxes required to be accrued as a
liability under GAAP as a consequence of such sale, (iv) all distributions and
other payments required to be made to minority interest holders in Restricted
Subsidiaries as a result of such sale, (v) the deduction of appropriate amounts
provided by the seller as a reserve, in accordance with GAAP, against any
liabilities associated with the property or other assets disposed of in such
sale and retained by the Borrower or any Restricted Subsidiary after such sale,
(vi) cash payments made to satisfy obligations resulting from early
terminations of Swap Agreements in connection with or as a result of any such
sale or other disposition of Borrowing Base Properties, and (vii) any
portion of the purchase price from such sale placed in escrow, whether as a
reserve for adjustment of the purchase price, for satisfaction of indemnities
in respect of such sale or otherwise in connection with such sale; provided
however, that upon the termination of that escrow, Net Cash Proceeds
will be increased by any portion of funds in the escrow that are released to
the Borrower or any Restricted Subsidiary.

 17
 

“Net Working Capital” means, on any date of
determination, the sum of (a) Consolidated Current Assets as of such date
(calculated without including Unused Commitments as of such date) minus (b)
Consolidated Current Liabilities as of such date.

“Non-Consenting Lender” has the meaning
assigned to such term in Section 2.20(c).

“Obligations” means any and all obligations of
every nature, contingent or otherwise, whether now existing or hereafter
arising, of any Credit Party from time to time owed to the Administrative
Agent, the Issuing Bank, the Lenders or any of them or any Lender Counterparty
arising under or in connection with any Loan Document or Swap Agreement
(including, any and all Cash Management Obligations and any and all
obligations, contingent or otherwise, whether now existing or hereafter
arising, of any Credit Party under any Existing Swap Agreement and any and all
obligations, contingent or otherwise, whether now existing or hereafter
arising, of any Credit Party with respect to any transactions under any Swap
Agreement with any Person that was a Lender Counterparty at the time such
Credit Party entered into such transactions regardless of whether such Person
is no longer a Lender Counterparty), whether for principal, interest,
reimbursement of amounts drawn under any Letter of Credit, payments for early termination
of Swap Agreements, funding indemnification amounts, fees, expenses,
indemnification or otherwise.

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

“Oil and Gas Interest(s)” means: (a) direct and
indirect interests in and rights with respect to oil, gas, mineral and related
properties and assets of any kind and nature, direct or indirect, including,
without limitation, working, royalty and overriding royalty interests, mineral
interests, leasehold interests, production payments, operating rights, net
profits interests, other non-working interests, contractual interests,
non-operating interests and rights in any pooled, unitized or communitized
acreage by virtue of such interest being a part thereof; (b) interests in and
rights with respect to Hydrocarbons other minerals or revenues therefrom and
contracts and agreements in connection therewith and claims and rights thereto
(including oil and gas leases, operating agreements, unitization,
communitization and pooling agreements and orders, division orders, transfer
orders, mineral deeds, royalty deeds, oil and gas sales, exchange and
processing contracts and agreements and, in each case, interests thereunder),
and surface interests, fee interests, reversionary interests, reservations and
concessions related to any of the foregoing; (c) easements, rights-of-way,
licenses, permits, leases, and other interests associated with, appurtenant to,
or necessary for the operation of any of the foregoing; (d) interests in oil,

 18
 

gas, water, disposal and
injection wells, equipment and machinery (including well equipment and
machinery), oil and gas production, gathering, transmission, compression,
treating, processing and storage facilities (including tanks, tank batteries,
pipelines and gathering systems), pumps, water plants, electric plants, gasoline
and gas processing plants, refineries and other tangible or intangible, movable
or immovable, real or personal property and fixtures located on, associated
with, appurtenant to, or necessary for the operation of any of the foregoing;
and (e) all seismic, geological, geophysical and engineering records, data,
information, maps, licenses and interpretations.

“Organizational Documents” means (a) with
respect to any corporation, its certificate or articles of incorporation or
organization, as amended, and its by-laws, as amended, (b) with respect
to any limited partnership, its certificate of limited partnership, as amended,
and its partnership agreement, as amended, (c) with respect to any general
partnership, its partnership agreement, as amended, and (d) with respect to any
limited liability company, its certificate of formation or articles of
organization, as amended, and its limited liability company agreement or
operating agreement, as amended.

“Original Credit Agreement” means that certain
Amended and Restated Credit Agreement, dated as of March 17, 2006, among
Borrower, certain Subsidiaries of Borrower, the lenders party thereto, JPMorgan
Chase Bank, N.A. as Administrative Agent, as amended, supplemented and
otherwise modified from time to time prior to the Effective Date.

“Original Loans” means the loans and other
extensions of credit outstanding under the Original Credit Agreement as of the
Effective Date.

“Other Taxes” means any and all present or
future stamp or documentary taxes or any other excise or property taxes,
charges or similar levies arising from any payment made hereunder or from the
execution, delivery or enforcement of, or otherwise with respect to, this
Agreement.

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

“Payment Currency” has the meaning assigned to
such term in Section 8.07.

“PBGC” means the Pension Benefit Guaranty
Corporation referred to and defined in ERISA and any successor entity
performing similar functions.

“Permitted Encumbrances” means:

(a)           Liens
imposed by law for Taxes that are not yet due or are being contested in
compliance with Section 6.04;

(b)           carriers’,
warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like Liens
imposed by law, and contractual Liens granted to operators and non-operators
under oil and gas operating agreements, in each case, arising in the ordinary
course of business or incident to the exploration, development, operation and

 19
 

maintenance of Oil and
Gas Interests and securing obligations that are not overdue by more than thirty
(30) days or are being contested in compliance with Section 6.04;

(c)           pledges
and deposits made in the ordinary course of business in compliance with workers’
compensation, unemployment insurance and other social security laws or regulations;

(d)           deposits
to secure the performance of bids, trade contracts, leases, statutory
obligations, surety and appeal bonds, performance bonds and other obligations
of a like nature, in each case in the ordinary course of business;

(e)           judgment
liens in respect of judgments that do not constitute an Event of Default under
clause (k) of Article IX;

(f)            easements,
zoning restrictions, rights-of-way, servitudes, permits, surface leases, and
similar encumbrances on real property imposed by law or arising in the ordinary
course of business that do not secure any monetary obligations and do not
materially detract from the value of the affected property or interfere with
the ordinary conduct of business of any Credit Party;

(g)           royalties,
overriding royalties, reversionary interests and similar burdens with respect
to the Oil and Gas Interests owned by the Borrower or such Restricted
Subsidiary, as the case may be, if the net cumulative effect of such burdens
does not operate to deprive the Borrower or any Restricted Subsidiary of any
material right in respect of its assets or properties (except for rights
customarily granted with respect to such interests);

(h)           Liens
arising from Uniform Commercial Code financing statement filings regarding
operating leases entered into by the Borrower or any Restricted Subsidiary in
the ordinary course of business covering the property under the lease; and

(i)            preferential
rights to purchase, and provisions requiring a third party’s consent prior to
assignment and similar restraints on alienation, in each case, granted pursuant
to an oil and gas operating agreement and arising in the ordinary course of
business or incident to the exploration, development, operation and maintenance
of Oil and Gas Interests; provided such right, requirement or restraint does
not material affect the value of such Oil and Gas Interests;

provided that the term “Permitted
Encumbrances” shall not include any Lien securing Indebtedness (other than
contractual Liens described in the foregoing clause (b) granted to operators
and non-operators under oil and gas operating agreements to the extent the
obligations secured by such Liens constitute Indebtedness).

“Permitted Investments” means:

(a)           U.S.
Government Securities;

 20

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

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

(d)           repurchase
obligations with a term of not more than thirty (30) days for underlying
securities of the types described in clause (a) above entered into with a bank
meeting the qualifications described in clause (b) above;

(e)           investments
in commercial paper, maturing not more than ninety (90) days after the date of
acquisition, issued by a corporation (other than an Affiliate of the Borrower)
organized and in existence under the laws of the United States of America or
any foreign country recognized by the United States of America with a rating at
the time as of which any investment therein is made of “P-1” (or higher)
according to Moody’s or “A-l” (or higher) according to S&P;

(f)            investments
in securities with maturities of six months or less from the date of
acquisition issued or fully guaranteed by any state, commonwealth or territory
of the United States of America, or by any political subdivision or taxing
authority thereof, and rated at least “A” by S&P or “A” by Moody’s; and

(g)           investments
in money market funds that invest substantially all their assets in securities
of the types described in clauses (a) through (f) above

“Person” means any natural person, corporation,
limited liability company, trust, joint venture, association, company,
partnership, Governmental Authority or other entity.

“Plan” means any employee pension benefit plan
(other than a Multiemployer Plan) subject to the provisions of Title IV of
ERISA or Section 412 of the Code or Section 302 of ERISA, and in
respect of which any Credit Party or any ERISA Affiliate is (or, if such plan
were terminated, would under Section 4069 of ERISA be deemed to be) an “employer”
as defined in Section 3(5) of ERISA.

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

 21
 

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

“Preferred Stock” means collectively, (i) the
Series A-1 7.0% Cumulative Convertible Perpetual Preferred Stock of the
Borrower, par value $0.001 per share, (ii) the Series A-2 7.0% Cumulative
Convertible Perpetual Preferred Stock of the Borrower, par value $0.001 per
share, (iii) the Series B 7.0% Cumulative Convertible Perpetual Preferred
Stock of the Borrower, par value $0.001 per share, (iv) the Series C 7.0%
Cumulative Convertible Perpetual Preferred Stock of the Borrower, par value
$0.001 per share, (v) the Series A-1 Hybrid Preferred Stock of the
Borrower, par value $0.001 per share, and (vi) the Series A-2 Hybrid
Preferred Stock of the Borrower, par value $0.001 per share.

“Preferred Stock Documents” means that certain Preferred Stock Purchase Agreement, dated on or
about March 29, 2007, by and among the Borrower and the purchasers named
therein, and the related Certificates of Designation described therein filed on
or before the Effective Date and any certificates and other agreements
(including side letter agreements) executed in connection with the issuance of
the Preferred Stock, as the same may be amended, modified, supplemented or
restated from time to time to the extent permitted under this Agreement.

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

“Projections” means the Borrower’s forecasted
(a) balance sheets, (b) profit and loss statements, and (c) cash flow
statements, all prepared on a basis consistent with the historical financial
statements described in Section 4.04, the historical financial information
provided pursuant to or in connection with the Southern Gas Acquisition and
after giving effect to the Transactions, together with appropriate supporting
details and a statement of underlying assumptions, in each case in form and
substance satisfactory to the Lenders and for the period from the Effective
Date through December 31, 2011.

“Public Lender” has the meaning assigned to
such term in Section 6.01.

“Redetermination” means any Scheduled
Redetermination or Special Redetermination.

“Redetermination Date” means (a) with respect
to any Scheduled Redetermination, each April 1 and October 1 of each
year, commencing October 1, 2007, and (b) with respect to any Special
Redetermination, the first day of the first month which

 22
 

is not less than twenty
(20) Business Days following the date of a request for a Special
Redetermination.

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

“Related Parties” means, with respect to any
specified Person, such Person’s Affiliates and the respective directors,
officers, employees, agents and advisors of such Person and such Person’s
Affiliates.

“Required Lenders” means, at any time, Lenders
having Credit Exposures and Unused Commitments representing at least sixty-six
and two-thirds percent (66-2/3%) (or if there are less than four Lenders, at
least seventy-five percent (75%)) of the sum of the Aggregate Credit Exposure
and all Unused Commitments of all Lenders at such time or, if the Aggregate
Commitment has been terminated, Lenders having Credit Exposures representing at
least sixty-six and two-thirds percent (66-2/3%) (or if there are less
than four Lenders, at least seventy-fiver percent (75%)) of the Aggregate
Credit Exposure of all Lenders at such time; provided that the Unused
Commitment of and the Credit Exposures held or deemed held by any Defaulting
Lender shall be excluded for purposes of making a determination of the Required
Lenders.

“Reserve Report” means an unsuperseded
engineering analysis of the Borrowing Base Properties, in form and substance
reasonably acceptable to the Administrative Agent, prepared in accordance with
customary and prudent practices in the petroleum engineering industry.

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

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

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

“Revolving Loan” means a Loan made pursuant to
Section 2.05.

“S&P” means Standard & Poor’s Ratings
Group, a division of The McGraw Hill Corporation.

 23
 

“Sale and Leaseback Transaction” means any sale
or other transfer of any property by any Person with the intent to lease such
property as lessee.

“Scheduled Redetermination” means any
redetermination of the Borrowing Base pursuant to Section 3.02.

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

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

“Sellers” means, collectively, APC, Anadarko
E&P Company LP, a Delaware limited partnership, Howell Petroleum
Corporation, a Delaware corporation, and Kerr-McGee Oil & Gas Onshore
LP, a Delaware limited partnership, and their respective successors and
assigns.

“Senior Note Documents” means the Senior Notes,
the Indenture, the Senior Notes Guaranty, collectively, or each of such
documents singularly, and any documents or instruments contemplated by or
executed in connection with any of them.

“Senior Notes” means the 7 1⁄4% Senior Notes due
2011 of the Borrower issued pursuant to the Indenture, as amended, modified or
supplemented from time to time in accordance with the terms hereof.

“Senior Notes Guaranty” means a supplemental
indenture, in a form satisfactory to the Agent, pursuant to which a Subsidiary
guarantees the Borrower’s obligations with respect to the Senior Notes on the
terms provided for in the Indenture.

“Southern Gas Acquisition” means the
acquisition of certain assets of Sellers by Borrower pursuant to the Southern
Gas Purchase Agreement including the assignment of the Southern Gas Hedges to
one or more Credit Parties on terms and conditions reasonably acceptable to the
Administrative Agent.

“Southern Gas Hedges” means the hedging
transactions set forth on Schedule 7.15 of the Southern Gas Purchase
Agreement and otherwise on terms and conditions reasonably acceptable to the
Administrative Agent and in notional amounts covering at least eighty percent
(80%) of the forecasted production from proved producing reserves included in
the Oil and Gas Interests acquired in the Southern Gas Acquisition (other than
natural gas liquids) through December 31, 2009.

 24
 

“Southern Gas Purchase Agreement” means that
certain Purchase and Sale Agreement by and among Sellers, as Seller, and
Borrower, as Purchaser, executed on February 1, 2007.

“Southern Gas Purchase Documents” means the
Southern Gas Purchase Agreement and all other certificates and other documents
and instruments now or hereafter executed and delivered by, between or among
any one or more of the Sellers and Borrower pursuant to the Southern Gas
Purchase Agreement or in connection with the Southern Gas Acquisition.

“Special Redetermination” means any
redetermination of the Borrowing Base made pursuant to Section 3.03.

“Statutory Reserve Rate” means a fraction
(expressed as a decimal), the numerator of which is the number one and the
denominator of which is the number one minus the aggregate of the maximum
reserve percentages (including any marginal, special, emergency or supplemental
reserves) expressed as a decimal established by the Board to which the
Administrative Agent is subject for eurocurrency funding (currently referred to
as “Eurocurrency Liabilities” in Regulation D of the Board).  Such reserve percentages shall include those
imposed pursuant to such Regulation D. 
Eurodollar Loans shall be deemed to constitute eurocurrency funding and
to be subject to such reserve requirements without benefit of or credit for
proration, exemptions or offsets that may be available from time to time to any
Lender under such Regulation D or any comparable regulation.  The Statutory Reserve Rate shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.

“Subsidiary” means, with respect to any Person
(the “parent”) at any date, any corporation, limited liability company,
partnership, association or other entity the accounts of which would be
consolidated with those of the parent in the parent’s consolidated financial
statements if such financial statements were prepared in accordance with GAAP
as of such date, as well as any other corporation, limited liability company,
partnership, association or other entity (a) of which securities or other
ownership interests representing more than fifty percent (50%) of the equity or
more than fifty percent (50%) of the ordinary voting power or, in the case of a
partnership, more than fifty percent (50%) of the general partnership interests
are, as of such date, owned, controlled or held, or (b) that is, as of
such date, otherwise Controlled, by the parent or one or more subsidiaries of
the parent or by the parent and one or more subsidiaries of the parent. Unless
the context otherwise clearly requires, references herein to a “Subsidiary”
refer to a Subsidiary of the Borrower.

“Surplus Cash” means the lesser of (i) cash and
cash equivalents of the Borrower and its Restricted Subsidiaries, on a
consolidated basis, that constitute Permitted Investments and (ii) the amount
by which Net Working Capital exceeds zero ($0.00).

“Swap Agreement” means any agreement with respect to any swap, forward, future or
derivative transaction or option or similar agreement involving, or settled by
reference to, one or more rates, currencies, commodities, equity or debt
instruments or

 25
 

securities,
or economic, financial or pricing indices or measures of economic, financial or
pricing risk or value or any similar transaction or any combination of these
transactions; provided that no phantom stock or similar plan
providing for payments only on account of services provided by current or
former directors, officers, employees or consultants of the Credit Parties
shall be a Swap Agreement.

“Swingline Exposure” means, at any time, the
aggregate principal amount of all Swingline Loans outstanding at such
time.  The Swingline Exposure of any
Lender at any time shall be its Applicable Percentage of the total Swingline
Exposure at such time.

“Swingline Lender” means JPMorgan Chase Bank,
in its capacity as lender of Swingline Loans hereunder.

“Swingline Loan” means a Loan made pursuant to
Section 2.06.

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

“Transactions” means (i) the execution,
delivery and performance by the Credit Parties of this Agreement and the Loan
Documents, (ii) the borrowing of Loans, (iii) the use of the proceeds
thereof, and (iv) the issuance of Letters of Credit hereunder,
(v) the execution, delivery and performance of the Preferred Stock
Documents and the sale and issuance of the Preferred Stock, (vi) the
consummation of the Southern Gas Acquisition, and (vii) the assignment of
the Southern Gas Hedges to one or more Credit Parties on terms and conditions
reasonably satisfactory to the Administrative Agent.

“Trustee” means Wilmington Trust Company, in its
capacity as trustee under the Indenture and its permitted successors under the
Indenture.

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

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

“Unused Commitment” means, with respect to each
Lender at any time, such Lender’s Commitment at such time minus such Lender’s
Credit Exposure (other than such Lender’s Swingline Exposure) at such time.

“Unused Commitment Fee” has the meaning
assigned to such term in Section 2.13(a).

 26
 

“U.S. Government Securities” means direct
obligations of, or obligations the principal of and interest on which are
unconditionally guaranteed by, the United States of America (or by any agency
thereof to the extent such obligations are backed by the full faith and credit
of the United States of America), in each case maturing within one year from
the date of acquisition thereof.

“Withdrawal Liability” means liability to a
Multiemployer Plan as a result of a complete or partial withdrawal from such
Multiemployer Plan, as such terms are defined in Part I of Subtitle E
of Title IV of ERISA.

Section 1.02. 
Classification of Loans and Borrowings. 
For purposes of this Agreement, Loans may be classified and referred to
by Class (e.g., a “Revolving Loan”) or by Type (e.g., a “Eurodollar
Loan”) or by Class and Type (e.g., a “Eurodollar Revolving Loan”).  Borrowings also may be classified and
referred to by Class (e.g., a “Revolving Borrowing” or an “ABR Borrowing”)
or by Type (e.g., a “Eurodollar Borrowing”) or by Class and Type (e.g.,
a “Eurodollar Revolving Borrowing”).

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

Section 1.04. 
Accounting Terms; GAAP. 
Except as otherwise expressly provided herein, all terms of an
accounting or financial nature shall be construed in accordance with GAAP, as
in effect from time to time; provided that, if the Borrower notifies the
Administrative Agent that the Borrower request an amendment to any provision
hereof to eliminate the effect of any change occurring after the date hereof in
GAAP or in the application thereof on the operation of such provision (or if
the Administrative Agent notifies the Borrower that the Majority Lenders
request an amendment to any provision hereof for such purpose), regardless of
whether any such notice is given before or after such change in GAAP or in the
application thereof, then such provision shall be interpreted on the basis of
GAAP as in effect and applied immediately before such change shall have become
effective until such notice shall have been withdrawn or such provision amended
in accordance herewith.

 27
 

Section 1.05. 
Oil and Gas Definitions. 
For purposes of this Agreement, the terms “proved [or] proven reserves,”
“proved developed reserves,” “proved [or] proven undeveloped reserves,” “proved
[or] proven developed nonproducing reserves” and “proved [or] proven developed
producing reserves,” have the meaning given such terms from time to time and at
the time in question by the Society of Petroleum Engineers of the American
Institute of Mining Engineers.

Section 1.06. 
Time of Day.  Unless
otherwise specified, all references to times of day shall be references to
Central time (daylight or standard, as applicable).

Article II

The Credits

Section 2.01.  Commitments.  Subject to the terms and conditions
set forth herein, each Lender that was a Lender under and as defined in the
Original Credit Agreement agrees to continue the Original Loans and each Lender
agrees to make Loans to the Borrower from time to time during the Availability
Period in an aggregate principal amount that will not result in (a) such
Lender’s Credit Exposure exceeding such Lender’s Commitment or (b) the
Aggregate Credit Exposure exceeding the Aggregate Commitment.  Within the foregoing limits and subject to
the terms and conditions set forth herein, the Borrower may borrow, prepay and
reborrow Loans.

Section 2.02. 
Termination and Reduction of the Aggregate Commitment.

(a)           Unless
previously terminated, the Aggregate Commitment shall terminate on the Maturity
Date.

(b)           The
Borrower may at any time terminate, or from time to time reduce, the Aggregate
Commitment; provided that (i) each reduction of the Aggregate Commitment
shall be in an amount that is an integral multiple of $5,000,000 and not less
than $10,000,000 and (ii) the Borrower shall not terminate or reduce the
Aggregate Commitment if, after giving effect to any concurrent prepayment of
the Loans in accordance with Section 2.11 and Section 2.12, the Aggregate
Credit Exposure would exceed the Aggregate Commitment.

(c)           The
Borrower shall notify the Administrative Agent of any election to terminate or
reduce the Aggregate Commitment under paragraph (b) of this Section at
least three Business Days prior to the effective date of such termination or
reduction, specifying such election and the effective date thereof.  Promptly following receipt of any notice, the
Administrative Agent shall advise the Lenders of the contents thereof.  Each notice delivered by the Borrower
pursuant to this Section shall be irrevocable; provided that a notice of
termination of the Aggregate Commitment delivered by the Borrower may state
that such notice is conditioned upon the effectiveness of other credit
facilities, in which case such notice may be revoked by the Borrower (by notice
to the Administrative Agent on or prior to the specified effective date) if
such condition is not satisfied.  Any
termination of the Aggregate Commitment shall be permanent.  Each reduction of the Aggregate Commitment
shall be made ratably among the Lenders in accordance with their respective
Commitment.

 28
 

(d)           With
respect to any sale, transfer or disposition of Borrowing Base Properties
(other than sales, transfers or dispositions permitted under Section
7.03(a)(vi)), the Borrowing Base shall be automatically reduced by an amount
equal to the value assigned to such Borrowing Base Properties by the
Administrative Agent in connection with the most recent Redetermination of the
Borrowing Base preceding the date of such sale (or in connection with the
determination of the Initial Borrowing Base with respect to any sale occurring
prior to the first Redetermination of the Borrowing Base).

Section 2.03.  Reserved.

Section 2.04.  Loans and Borrowings.

(a)           Each
Loan shall be made as part of a Borrowing consisting of Loans made by the
Lenders ratably in accordance with their respective Commitments.  The failure of any Lender to make any Loan
required to be made by it shall not relieve any other Lender of its obligations
hereunder; provided that the Commitments of the Lenders are several and
no Lender shall be responsible for any other Lender’s failure to make Loans as
required.

(b)           Subject
to Section 2.15, each Revolving Borrowing shall be comprised entirely of ABR
Loans or Eurodollar Loans as the Borrower may request in accordance
herewith.  Each Swingline Loan shall be
an ABR Loan.  Each Lender at its option
may make any Eurodollar Loan by causing any domestic or foreign branch or
Affiliate of such Lender to make such Loan; provided that any exercise
of such option shall not affect the obligation of the Borrower to repay such
Loan in accordance with the terms of this Agreement.

(c)           At
the commencement of each Interest Period for any Eurodollar Revolving
Borrowing, such Borrowing shall be in an aggregate amount that is an integral
multiple of $1,000,000 and not less than $1,000,000.  At the time that each ABR Revolving Borrowing
is made, such Borrowing shall be in an aggregate amount that is an integral
multiple of $1,000,000 and not less than $1,000,000; provided that an
ABR Revolving Borrowing may be in an aggregate amount that is equal to the
entire unused balance of the Aggregate Commitment or that is required to
finance the reimbursement of an LC Disbursement as contemplated by Section
2.07(e).  Each Swingline Loan shall be in
an amount that is not less than $500,000. 
Borrowings of more than one Type may be outstanding at the same time; provided
that there shall not at any time be more than a total of four (4) Eurodollar
Revolving Borrowings outstanding.

(d)           Notwithstanding
any other provision of this Agreement, the Borrower shall not be entitled to
request, or to elect to convert or continue, any Eurodollar Borrowing if the
Interest Period requested with respect thereto would end after the Maturity
Date.

Section 2.05. 
Requests for Revolving Borrowings.  To request a Revolving Borrowing, the
Borrower shall notify the Administrative Agent of such request by telephone (a)
in the case of a Eurodollar Borrowing, not later than 11:00 a.m., three
Business Days before the date of the proposed Eurodollar Borrowing or (b) in
the case of an ABR Revolving Borrowing, not later than 11:00 a.m., one Business
Day before the date of the proposed Borrowing; provided that any such
notice of an ABR Revolving Borrowing to finance the reimbursement of an LC
Disbursement as contemplated by Section 2.07(e) may be given not later than
10:00 a.m., on the

 29
 

date of the proposed
Borrowing.  Each such telephonic
Borrowing Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Administrative Agent of a written Borrowing Request
in a form approved by the Administrative Agent and signed by the Borrower.  Each such telephonic and written Borrowing
Request shall specify the following information in compliance with Section
2.04:

(i)            the aggregate
amount of the requested Borrowing;

(ii)           the date of such
Borrowing, which shall be a Business Day;

(iii)          whether such
Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;

(iv)          in the case of a
Eurodollar Revolving Borrowing, the initial Interest Period to be applicable
thereto, which shall be a period contemplated by the definition of the term “Interest
Period”; and

(v)           the location and
number of the Borrower’s account to which funds are to be disbursed, which
shall comply with the requirements of Section 2.08.

If no election as to the Type of Revolving Borrowing
is specified, then the requested Revolving Borrowing shall be an ABR
Borrowing.  If no Interest Period is
specified with respect to any requested Eurodollar Revolving Borrowing, then
the Borrower shall be deemed to have selected an Interest Period of one month’s
duration.  Promptly following receipt of
a Borrowing Request in accordance with this Section, the Administrative Agent
shall advise each Lender of the details thereof and of the amount of such Lender’s
Loan to be made as part of the requested Borrowing.

Section 2.06.  Swingline Loans.

(a)           Subject to the terms and conditions set forth herein, the
Swingline Lender agrees to make Swingline Loans to the Borrower from time to
time during the Availability Period, in an aggregate principal amount at any
time outstanding that will not result in (i) the aggregate principal amount of
outstanding Swingline Loans exceeding $10,000,000 or (ii) the Aggregate Credit
Exposure exceeding the Aggregate Commitment, provided that the Swingline Lender
shall not be required to make a Swingline Loan to refinance an outstanding
Swingline Loan.  Within the foregoing
limits and subject to the terms and conditions set forth herein, the Borrower
may borrow, prepay and reborrow Swingline Loans.

(b)           To request a Swingline Loan, the Borrower shall notify the
Administrative Agent of such request by telephone (confirmed by telecopy), not
later than 11:00 a.m., on the day of a proposed Swingline Loan.  Each such notice shall be irrevocable and
shall specify the requested date (which shall be a Business Day) and amount of
the requested Swingline Loan.  The
Administrative Agent will promptly advise the Swingline Lender of any such
notice received from the Borrower.  The
Swingline Lender shall make each Swingline Loan available to the Borrower by
means of a credit to the general deposit account of the Borrower with the
Swingline Lender (or, in the case of a Swingline Loan made to finance the
reimbursement of an LC Disbursement as provided in Section 2.07(e), by remittance to the Issuing Bank) by
3:00 p.m., on the requested date of such Swingline Loan.

 30
 

(c)           The
Swingline Lender may by written notice given to the Administrative Agent not
later than 10:00 a.m., on any Business Day require the Lenders to acquire
participations on such Business Day in all or a portion of the Swingline Loans
outstanding.  Such notice shall specify
the aggregate amount of Swingline Loans in which Lenders will participate.  Promptly upon receipt of such notice, the Administrative
Agent will give notice thereof to each Lender, specifying in such notice such
Lender’s Applicable Percentage of such Swingline Loan or Loans.  Each Lender hereby absolutely and
unconditionally agrees, upon receipt of notice as provided above, to pay to the
Administrative Agent, for the account of the Swingline Lender, such Lender’s
Applicable Percentage of such Swingline Loan or Loans.  Each Lender acknowledges and agrees that its
obligation to acquire participations in Swingline Loans pursuant to this
paragraph is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including the occurrence and continuance of a Default
or reduction or termination of the Commitments, and that each such payment
shall be made without any offset, abatement, withholding or reduction
whatsoever.  Each Lender shall comply
with its obligation under this paragraph by wire transfer of immediately
available funds, in the same manner as provided in Section 2.08 with respect to
Loans made by such Lender (and Section 2.08 shall apply, mutatis mutandis, to
the payment obligations of the Lenders), and the Administrative Agent shall
promptly pay to the Swingline Lender the amounts so received by it from the
Lenders.  The Administrative Agent shall
notify the Borrower of any participations in any Swingline Loan acquired
pursuant to this paragraph, and thereafter payments in respect of such
Swingline Loan shall be made to the Administrative Agent and not to the
Swingline Lender.  Any amounts received
by the Swingline Lender from the Borrower (or other party on behalf of the
Borrower) in respect of a Swingline Loan after receipt by the Swingline Lender
of the proceeds of a sale of participations therein shall be promptly remitted
to the Administrative Agent; any such amounts received by the Administrative
Agent shall be promptly remitted by the Administrative Agent to the Lenders
that shall have made their payments pursuant to this paragraph and to the
Swingline Lender, as their interests may appear; provided that any such payment
so remitted shall be repaid to the Swingline Lender or to the Administrative
Agent, as applicable, if and to the extent such payment is required to be
refunded to the Borrower for any reason. 
The purchase of participations in a Swingline Loan pursuant to this
paragraph shall not relieve the Borrower of any default in the payment thereof.

Section 2.07. 
Letters of Credit.

(a)           General.  Subject to the terms and conditions set forth
herein, the Borrower may request the issuance of Letters of Credit for its own
or the account of any Restricted Subsidiary in a form reasonably acceptable to
the Administrative Agent and the Issuing Bank, at any time and from time to
time during the Availability Period.  In
the event of any inconsistency between the terms and conditions of this
Agreement and the terms and conditions of any form of letter of credit
application or other agreement submitted by the Borrower to, or entered into by
the Borrower with, the Issuing Bank relating to any Letter of Credit, the terms
and conditions of this Agreement shall control.

(b)           Notice
of Issuance, Amendment, Renewal, Extension; Certain Conditions.  To request the issuance of a Letter of Credit
(or the amendment, renewal or extension of an outstanding Letter of Credit),
the Borrower shall hand deliver or telecopy (or transmit by electronic
communication, if arrangements for doing so have been approved by the Issuing

 31
 

Bank) to the Issuing Bank and the Administrative Agent (reasonably in
advance of the requested date of issuance, amendment, renewal or extension) a
notice requesting the issuance of a Letter of Credit, or identifying the Letter
of Credit to be amended, renewed or extended, and specifying the date of
issuance, amendment, renewal or extension (which shall be a Business Day), the
date on which such Letter of Credit is to expire (which shall comply with
paragraph (c) of this Section), the amount of such Letter of Credit, the
name and address of the beneficiary thereof and such other information as shall
be necessary to prepare, amend, renew or extend such Letter of Credit.  If requested by the Issuing Bank, the
Borrower also shall submit a letter of credit application on the Issuing Bank’s
standard form in connection with any request for a Letter of Credit.  A Letter of Credit shall be issued, amended,
renewed or extended only if (and upon issuance, amendment, renewal or extension
of each Letter of Credit the Borrower shall be deemed to represent and warrant
that), after giving effect to such issuance, amendment, renewal or extension
(i) the LC Exposure shall not exceed $50,000,000 and (ii) the Aggregate
Credit Exposure shall not exceed the Aggregate Commitment.

(c)           Expiration
Date.  Each Letter of Credit shall
expire at or prior to the close of business on the earlier of (i) the date
one year after the date of the issuance of such Letter of Credit (or, in the
case of any renewal or extension thereof, one year after such renewal or
extension) and (ii) the date that is five (5) Business Days prior to the
Maturity Date.

(d)           Participations.  By the issuance of a Letter of Credit (or an
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of the Issuing Bank or the Lenders, the Issuing Bank
hereby grants to each Lender, and each Lender hereby acquires from the Issuing
Bank, a participation in such Letter of Credit equal to such Lender’s
Applicable Percentage of the aggregate amount available to be drawn under such
Letter of Credit.  In consideration and
in furtherance of the foregoing, each Lender hereby absolutely and
unconditionally agrees to pay to the Administrative Agent, for the account of
the Issuing Bank, such Lender’s Applicable Percentage of each LC Disbursement
made by the Issuing Bank and not reimbursed by the Borrower on the date due as
provided in paragraph (e) of this Section, or of any reimbursement payment
required to be refunded to the Borrower for any reason.  Each Lender acknowledges and agrees that its
obligation to acquire participations pursuant to this paragraph in respect of
Letters of Credit is absolute and unconditional and shall not be affected by
any circumstance whatsoever, including any amendment, renewal or extension of
any Letter of Credit or the occurrence and continuance of a Default or
reduction or termination of the Aggregate Commitment, and that each such
payment shall be made without any offset, abatement, withholding or reduction
whatsoever.

(e)           Reimbursement.  If the Issuing Bank shall make any LC
Disbursement in respect of a Letter of Credit, the Borrower shall reimburse
such LC Disbursement by paying to the Administrative Agent an amount equal to
such LC Disbursement not later than 12:00 noon on the date that such LC
Disbursement is made, if the Borrower shall have received notice of such LC
Disbursement prior to 10:00 a.m. on such date, or, if such notice has not been
received by the Borrower prior to such time on such date, then not later than
12:00 noon on (i) the Business Day that the Borrower receives such notice, if
such notice is received prior to 10:00 a.m. on the day of receipt, or (ii) the
Business Day immediately following the day that the Borrower receives such
notice, if such notice is not received prior to such time on the day of
receipt; provided that the Borrower may, subject to the conditions to
borrowing set forth herein, request in accordance

 32
 

with Section 2.05 that such payment be financed with an ABR Revolving
Borrowing or Swingline Loan in an equivalent amount and, to the extent so
financed, the Borrower’s obligation to make such payment shall be discharged
and replaced by the resulting ABR Revolving Borrowing or Swingline Loan.  If the Borrower fails to make such payment
when due, the Administrative Agent shall notify each Lender of the applicable
LC Disbursement, the payment then due from the Borrower in respect thereof and
such Lender’s Applicable Percentage thereof. 
Promptly following receipt of such notice, each Lender shall pay to the
Administrative Agent its Applicable Percentage of the payment then due from the
Borrower, in the same manner as provided in Section 2.08 with respect to Loans
made by such Lender (and Section 2.08 shall apply, mutatis  mutandis,
to the payment obligations of the Lenders), and the Administrative Agent shall
promptly pay to the Issuing Bank the amounts so received by it from the
Lenders.  Promptly following receipt by
the Administrative Agent of any payment from the Borrower pursuant to this
paragraph, the Administrative Agent shall distribute such payment to the
Issuing Bank or, to the extent that Lenders have made payments pursuant to this
paragraph to reimburse the Issuing Bank, then to such Lenders and the Issuing
Bank as their interests may appear.  Any
payment made by a Lender pursuant to this paragraph to reimburse the Issuing
Bank for any LC Disbursement (other than the funding of ABR Loans or Swingline
Loans as contemplated above) shall not constitute a Loan and shall not relieve
the Borrower of its obligation to reimburse such LC Disbursement.

(f)            Obligations
Absolute.  The Borrower’s obligation
to reimburse LC Disbursements as provided in paragraph (e) of this Section
shall be absolute, unconditional and irrevocable, and shall be performed
strictly in accordance with the terms of this Agreement under any and all
circumstances whatsoever and irrespective of (i) any lack of validity or
enforceability of any Letter of Credit or this Agreement, or any term or
provision therein, (ii) any draft or other document presented under a Letter of
Credit proving to be forged, fraudulent or invalid in any respect or any
statement therein being untrue or inaccurate in any respect, (iii) payment by
the Issuing Bank under a Letter of Credit against presentation of a draft or
other document that does not comply with the terms of such Letter of Credit, or
(iv) any other event or circumstance whatsoever, whether or not similar to any
of the foregoing, that might, but for the provisions of this Section,
constitute a legal or equitable discharge of, or provide a right of setoff
against, the Borrower’s obligations hereunder. 
Neither the Administrative Agent, the Lenders nor the Issuing Bank, nor
any of their Related Parties, shall have any liability or responsibility by
reason of or in connection with the issuance or transfer of any Letter of Credit
or any payment or failure to make any payment thereunder (irrespective of any
of the circumstances referred to in the preceding sentence), or any error,
omission, interruption, loss or delay in transmission or delivery of any draft,
notice or other communication under or relating to any Letter of Credit
(including any document required to make a drawing thereunder), any error in
interpretation of technical terms or any consequence arising from causes beyond
the control of the Issuing Bank; provided that the foregoing shall not
be construed to excuse the Issuing Bank from liability to the Borrower to the
extent of any direct damages (as opposed to consequential damages, claims in
respect of which are hereby waived by the Borrower to the extent permitted by
applicable law) suffered by the Borrower that are caused by the Issuing Bank’s
failure to exercise care when determining whether drafts and other documents
presented under a Letter of Credit comply with the terms thereof.  The parties hereto expressly agree that, in
the absence of gross negligence or willful misconduct on the part of the
Issuing Bank (as finally determined by a court of competent jurisdiction), the
Issuing Bank shall be deemed to have exercised care in each such

 33
 

determination.  In furtherance of
the foregoing and without limiting the generality thereof, the parties agree
that, with respect to documents presented which appear on their face to be in
substantial compliance with the terms of a Letter of Credit, the Issuing Bank
may, in its sole discretion, either accept and make payment upon such documents
without responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of such
Letter of Credit.

(g)           Disbursement
Procedures.  The Issuing Bank shall,
promptly following its receipt thereof, examine all documents purporting to
represent a demand for payment under a Letter of Credit.  The Issuing Bank shall promptly notify the
Administrative Agent and the Borrower by telephone (confirmed by telecopy) of
such demand for payment and whether the Issuing Bank has made or will make an
LC Disbursement thereunder; provided that any failure to give or delay
in giving such notice shall not relieve the Borrower of its obligation to
reimburse the Issuing Bank and the Lenders with respect to any such LC
Disbursement.

(h)           Interim
Interest.  If the Issuing Bank shall
make any LC Disbursement, then, unless the Borrower shall reimburse such LC
Disbursement in full on the date such LC Disbursement is made, the unpaid
amount thereof shall bear interest, for each day from and including the date
such LC Disbursement is made to but excluding the date that the Borrower
reimburses such LC Disbursement, at the rate per annum then applicable to ABR
Loans; provided that, if the Borrower fails to reimburse such LC
Disbursement when due pursuant to paragraph (e) of this Section, then
Section 2.14(c) shall apply.  Interest accrued
pursuant to this paragraph shall be for the account of the Issuing Bank, except
that interest accrued on and after the date of payment by any Lender pursuant
to paragraph (e) of this Section to reimburse the Issuing Bank shall be for the
account of such Lender to the extent of such payment.

(i)            Replacement
of the Issuing Bank.  The Issuing
Bank may be replaced at any time by written agreement among the Borrower, the
Administrative Agent, the replaced Issuing Bank and the successor Issuing
Bank.  The Administrative Agent shall
notify the Lenders of any such replacement of the Issuing Bank.  At the time any such replacement shall become
effective, the Borrower shall pay all unpaid fees accrued for the account of the
replaced Issuing Bank pursuant to Section 2.13(b).  From and after the effective date of any such
replacement, (i) the successor Issuing Bank shall have all the rights and
obligations of the Issuing Bank under this Agreement with respect to Letters of
Credit to be issued thereafter and (ii) references herein to the term “Issuing
Bank” shall be deemed to refer to such successor or to any previous Issuing
Bank, or to such successor and all previous Issuing Banks, as the context shall
require.  After the replacement of an
Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto
and shall continue to have all the rights and obligations of an Issuing Bank
under this Agreement with respect to Letters of Credit issued by it prior to
such replacement, but shall not be required to issue additional Letters of
Credit.

(j)            Cash
Collateralization.  If any Event of
Default shall occur and be continuing, on the Business Day that the Borrower
receives notice from the Administrative Agent or the Required Lenders (or, if
the maturity of the Loans has been accelerated, Lenders with LC Exposure
representing greater than sixty-six and two-thirds percent (66-2/3%) of the
total LC Exposure) demanding the deposit of cash collateral pursuant to this
paragraph, the Borrower

 34
 

shall deposit in an account with the Administrative Agent, in the name
of the Administrative Agent and for the benefit of the Lenders, an amount in
cash equal to the LC Exposure as of such date plus any accrued and unpaid
interest thereon; provided that the obligation to deposit such cash
collateral shall become effective immediately, and such deposit shall become
immediately due and payable, without demand or other notice of any kind, upon
the occurrence of any Event of Default with respect to the Borrower described
in clause (h) or (i) of Article IX. 
Such deposit shall be held by the Administrative Agent as collateral for
the payment and performance of the obligations of the Borrower under this
Agreement.  The Administrative Agent
shall have exclusive dominion and control, including the exclusive right of
withdrawal, over such account.  Other
than any interest earned on the investment of such deposits and interest at the
rate per annum in effect for accounts of the same type maintained with the
Administrative Agent at such time, which investments shall be made at the
option and sole discretion of the Administrative Agent and at the Borrower’s
risk and expense, such deposits shall not bear interest.  Interest or profits, if any, on such
investments shall accumulate in such account.  Moneys in such account shall be applied by the
Administrative Agent to reimburse the Issuing Bank for LC Disbursements for
which it has not been reimbursed and, to the extent not so applied, shall be
held for the satisfaction of the reimbursement obligations of the Borrower for
the LC Exposure at such time or, if the maturity of the Loans has been
accelerated (but subject to the consent of Lenders with LC Exposure
representing sixty-six and two thirds percent (66-2/3%) or more of the total LC
Exposure), be applied to satisfy other obligations of the Borrower under this
Agreement and Borrower hereby grants a security interest in such cash and each
deposit account into which such cash is deposited to secure the
Obligations.  If the Borrower is required
to provide an amount of cash collateral hereunder as a result of the occurrence
of an Event of Default, such amount (to the extent not applied as aforesaid)
shall be returned to the Borrower within three (3) Business Days after all
Events of Default have been cured or waived.

Section 2.08. 
Funding of Borrowings.

(a)           Each
Lender shall make each Loan to be made by it hereunder on the proposed date
thereof by wire transfer of immediately available funds by 12:00 noon to the
account of the Administrative Agent most recently designated by it for such
purpose by notice to the Lenders; provided that Swingline Loans shall be made
as provided in Section 2.06.  The
Administrative Agent will make such Loans available to the Borrower by promptly
crediting the amounts so received, in like funds, to an Eligible Account of the
Borrower designated by the Borrower in the applicable Borrowing Request; provided
that ABR Revolving Loans made to finance the reimbursement of an LC
Disbursement as provided in Section 2.07(e) shall be remitted by the
Administrative Agent to the Issuing Bank.

(b)           Unless
the Administrative Agent shall have received notice from a Lender prior to the
proposed date of any Borrowing that such Lender will not make available to the
Administrative Agent such Lender’s share of such Borrowing, the Administrative
Agent may assume that such Lender has made such share available on such date in
accordance with paragraph (a) of this Section and may, in reliance upon such
assumption, make available to the Borrower a corresponding amount.  In such event, if a Lender has not in fact
made its share of the applicable Borrowing available to the Administrative
Agent, then the applicable Lender and the Borrower severally agree to pay to
the Administrative Agent forthwith on demand such corresponding amount with
interest thereon, for each day from and including the date such

 35
 

amount is made available to the Borrower to but excluding the date of
payment to the Administrative Agent, at (i) in the case of such Lender, the
greater of the Federal Funds Effective Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on interbank
compensation or (ii) in the case of the Borrower, the interest rate applicable
to ABR Loans.  If such Lender pays such amount
to the Administrative Agent, then such amount shall constitute such Lender’s
Loan included in such Borrowing.

Section 2.09. 
Interest Elections.

(a)           Each
Revolving Borrowing initially shall be of the Type specified in the applicable
Borrowing Request and, in the case of a Eurodollar Revolving Borrowing, shall
have an initial Interest Period as specified in such Borrowing Request;
provided that all Revolving Borrowings on the Effective Date shall be ABR
Borrowings.  Thereafter, the Borrower may
elect to convert such Borrowing to a different Type or to continue such
Borrowing and, in the case of a Eurodollar Revolving Borrowing, may elect
Interest Periods therefor, all as provided in this Section.  The Borrower may elect different options with
respect to different portions of the affected Borrowing, in which case each
such portion shall be allocated ratably among the Lenders holding the Loans
comprising such Borrowing, and the Loans comprising each such portion shall be
considered a separate Revolving Borrowing. 
This Section shall not apply to Swingline Borrowings, which may not be
converted or continued.

(b)           To
make an election pursuant to this Section, the Borrower shall notify the
Administrative Agent of such election by telephone by the time that a Borrowing
Request would be required under Section 2.05 if the Borrower were requesting a
Borrowing of the Type resulting from such election to be made on the effective
date of such election.  Each such
telephonic Interest Election Request shall be irrevocable and shall be
confirmed promptly by hand delivery or telecopy to the Administrative Agent of
a written Interest Election Request in a form approved by the Administrative
Agent and signed by the Borrower.

(c)           Each
telephonic and written Interest Election Request shall specify the following
information in compliance with Section 2.04:

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

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

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

(iv)          if the resulting
Borrowing is a Eurodollar Borrowing, the Interest Period to be applicable
thereto after giving effect to such election, which shall be a period
contemplated by the definition of the term “Interest Period”.

 36
 

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

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

(e)           If
the Borrower fails to deliver a timely Interest Election Request with respect
to a Eurodollar Revolving Borrowing prior to the end of the Interest Period
applicable thereto, then, unless such Borrowing is repaid as provided herein,
at the end of such Interest Period such Borrowing shall be converted to an ABR
Borrowing.  Notwithstanding any contrary
provision hereof, if an Event of Default has occurred and is continuing and the
Administrative Agent, at the request of the Majority Lenders, so notifies the
Borrower, then, so long as an Event of Default is continuing (i) no
outstanding Borrowing may be converted to or continued as a Eurodollar
Revolving Borrowing and (ii) unless repaid, each Eurodollar Revolving
Borrowing shall be converted to an ABR Borrowing at the end of the Interest
Period applicable thereto.

Section 2.10. 
Repayment of Loans; Evidence of Debt.

(a)           The
Borrower hereby unconditionally promises to pay (i) to the Administrative Agent
for the account of each Lender the then unpaid principal amount of each
Revolving Loan on the Maturity Date and (ii) to the Swingline Lender the then
unpaid principal amount of each Swingline Loan on the earlier of the Maturity
Date and the first date after such Swingline Loan is made that is the fifteenth
(15th) or last day of any calendar month and is at
least two (2) Business Days after such Swingline Loan is made; provided that
each date that a Revolving Borrowing is made, the Borrower shall repay all
Swingline Loans then outstanding.

(b)           Borrower
and each surety, endorser, guarantor and other party ever liable for payment of
any sums of money payable under this Agreement, jointly and severally waive
presentment and demand for payment, notice of intention to accelerate the
maturity, protest, notice of protest and nonpayment, as to the payments due
under this Agreement or any other Loan Document and as to each and all
installments hereunder and thereunder, and agree that their liability under
this Agreement or any other Loan Document shall not be affected by any renewal
or extension in the time of payment hereof, or in any indulgences, or by any
release or change in any security for the payment of the Obligations, and
hereby consent to any and all such renewals, extensions, indulgences, releases
or changes.

(c)           Each
Lender shall maintain in accordance with its usual practice an account or
accounts evidencing the indebtedness of the Borrower to such Lender resulting
from each Loan made by such Lender, including the amounts of principal and
interest payable and paid to such Lender from time to time hereunder.

(d)           The
Administrative Agent shall maintain accounts in which it shall record
(i) the amount of each Loan made hereunder, the Class and Type thereof and
the Interest Period applicable thereto, (ii) the amount of any principal
or interest due and payable or to become due and payable from the Borrower to
each Lender hereunder and (iii) the amount of any sum

 37
 

received by the Administrative Agent hereunder for the account of the
Lenders and each Lender’s share thereof.

(e)           The
entries made in the accounts maintained pursuant to paragraph (d)
or (e) of this Section shall be prima  facie evidence of the
existence and amounts of the obligations recorded therein; provided that
the failure of any Lender or the Administrative Agent to maintain such accounts
or any error therein shall not in any manner affect the obligation of the
Borrower to repay the Loans in accordance with the terms of this Agreement.

(f)            Any
Lender or Participant may request that Loans made by it be evidenced by a
promissory note.  In such event, the
Borrower shall prepare, execute and deliver to such Lender or Participant a
promissory note payable to the order of such Lender or Participant (or, if
requested by such Lender or Participant, to such Lender or Participant and its
registered assigns) and in the form attached hereto as Exhibit E.  Thereafter, the Loans evidenced by such
promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 11.04) be represented by one or more promissory
notes in such form payable to the order of the payee named therein (or, if such
promissory note is a registered note, to such payee and its registered
assigns).

Section 2.11. 
Optional Prepayment of Loans.

(a)           The
Borrower shall have the right at any time and from time to time to prepay any
Borrowing in whole and or in part, subject to prior notice in accordance with
paragraph (b) of this Section; provided that any prepayment made at any time a
Borrowing Base Deficiency exists shall be applied ratably to the prepayment of
Revolving Borrowings to the extent required to eliminate such Borrowing Base
Deficiency.

(b)           The
Borrower shall notify the Administrative Agent (and, in the case of prepayment
of a Swingline Loan, the Swingline Lender) by telephone (confirmed by telecopy)
of any prepayment hereunder (i) in the case of prepayment of a Eurodollar
Borrowing, not later than 11:00 a.m. three (3) Business Days before the date of
prepayment, (ii) in the case of prepayment of an ABR Borrowing, not later than
11:00 a.m. one (1) Business Day before the date of prepayment or (iii) in the
case of prepayment of a Swingline Lender, not later than 12:00 noon on the date
of prepayment.  Each such notice shall be
irrevocable and shall specify the prepayment date and the principal amount of
each Borrowing or portion thereof to be prepaid; provided that, if a
notice of prepayment is given in connection with a conditional notice of
termination or reduction of the Aggregate Commitment as contemplated by Section
2.02, then such notice of prepayment may be revoked if such notice of
termination or reduction is revoked in accordance with Section 2.02.  Promptly following receipt of any such notice
relating to a Revolving Borrowing, the Administrative Agent shall advise the
Lenders of the contents thereof.  Each
partial prepayment of any Borrowing shall be in an amount that would be
permitted in the case of an advance of a Borrowing of the same Type as provided
in Section 2.04.  Each prepayment of a
Revolving Borrowing shall be applied ratably to the Revolving Loans included in
the prepaid Borrowing.  Prepayments shall
be accompanied by accrued interest to the extent required by Section 2.14.

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Section 2.12. 
Mandatory Prepayment of Loans.

(a)           Except as otherwise provided in Section 2.12(b), in the
event a Borrowing Base Deficiency exists, the Borrower shall either (a) within
fifteen (15) days after written notice from the Administrative Agent to the
Borrower of such Borrowing Base Deficiency, by instruments satisfactory in form
and substance to the Required Lenders, provide the Lenders with additional
security consisting of Oil and Gas Interests with value and quality
satisfactory to the Required Lenders in their sole discretion to eliminate such
Borrowing Base Deficiency, or prepay, without premium or penalty, the principal
amount of the Loans in an amount sufficient to eliminate such Borrowing Base
Deficiency (or by a combination of such additional security and such prepayment
eliminate such Borrowing Base Deficiency), or (b) within fifteen (15) days
after written notice from the Administrative Agent to the Borrower of such
Borrowing Base Deficiency, elect to prepay, subject to the payment of any
funding indemnification amounts required by Section 2.17 but without premium or
penalty, the principal amount of such Borrowing Base Deficiency in not more
than six (6) equal monthly installments plus accrued interest thereon with the
first such monthly payment being due upon the 30th day after the Borrower’s
receipt of notice of such Borrowing Base Deficiency.  In the event Aggregate Credit Exposure
exceeds the Aggregate Commitment at any time, the Borrower shall, subject to
the payment of any funding indemnification amounts required by Section 2.17 but
without premium or penalty, immediately prepay the principal amount of the
Loans in an amount sufficient to eliminate such excess.

(b)           If the Borrower or any Restricted Subsidiary sells,
transfers or otherwise disposes of any Borrowing Base Properties at any time,
the Borrower shall prepay the Revolving Borrowings to the extent necessary to
eliminate any Borrowing Base Deficiency that may exist or that may have
occurred as a result of such sale, transfer or other disposition on the date it
or any Restricted Subsidiary receives the Net Cash Proceeds from such sale,
transfer or other disposition and any Net Cash Proceeds in excess of the amount
necessary to eliminate any such Borrowing Base Deficiency shall be used within
one hundred eighty (180) days after such disposition (i) to acquire
property, plant and equipment or any business entity used or useful in carrying
on the business of the Borrower and its Restricted Subsidiaries and having a
fair market value at least equal to the fair market value of the properties sold
or otherwise disposed of or to improve or replace any existing property of the
Borrower and its Restricted Subsidiaries used or useful in carrying on the
business of the Borrower and its Restricted Subsidiaries or (ii) prepay
the Loans in accordance with the instructions of the Borrower (unless an Event
of Default exists in which event any amounts prepaid shall be applied to the
Loans at the discretion of the Administrative Agent).

(c)           Amounts applied to the prepayment of Borrowings pursuant
to this Section shall be first applied to Swingline Borrowings then outstanding
and upon payment in full of all outstanding Swingline Borrowings, second,
ratably to ABR Borrowings then outstanding and, upon payment in full of all
outstanding ABR Borrowings, third, to Eurodollar Borrowings then outstanding,
and if more than one Eurodollar Borrowing is then outstanding, to each such
Eurodollar Borrowing beginning with the Eurodollar Borrowing with the least
number of days remaining in the Interest Period applicable thereto and ending
with the Eurodollar Borrowing with the most number of days remaining in the
Interest Period applicable thereto, subject to the payment of any funding
indemnification amounts required by Section 2.17 but without penalty or

 39
 

premium. Amounts applied to the payment of
Revolving Borrowings pursuant to this Section may be reborrowed subject to and
in accordance with the terms of this Agreement.

Section 2.13. 
Fees.

(a)           The
Borrower agrees to pay to the Administrative Agent, for the account of each
Lender, an unused commitment fee (the “Unused Commitment Fee”)
equivalent to the Applicable Rate times the daily average of the total Unused
Commitments.  Such Unused Commitment Fee
shall be calculated on the basis of a year consisting of 360 days.  The Unused Commitment Fee shall be payable in
arrears on the last day of March, June, September and December of each year,
commencing with the first such date to occur after the Effective Date, and on
the Maturity Date for any period then ending for which the Unused Commitment
Fee shall not have been theretofore paid. 
In the event the Aggregate Commitment terminates on any date other than
the last day of March, June, September or December of any year, the Borrower
agrees to pay to the Administrative Agent, for the account of each Lender, on
the date of such termination, the total Unused Commitment Fee due for the
period from the last day of the immediately preceding March, June, September or
December, as the case may be, to the date such termination occurs.

(b)           The
Borrower agrees to pay (i) to the Administrative Agent for the account of each
Lender a participation fee with respect to its participations in Letters of
Credit, which shall accrue at the same Applicable Rate used to determine the
interest rate applicable to Eurodollar Loans on the average daily amount of
such Lender’s LC Exposure (excluding any portion thereof attributable to
unreimbursed LC Disbursements) during the period from and including the
Effective Date to but excluding the later of the date on which such Lender’s
Commitment terminates and the date on which such Lender ceases to have any LC
Exposure, and (ii) to the Issuing Bank a fronting fee, which shall accrue at
the rate or rates per annum separately agreed upon between the Borrower and the
Issuing Bank on the average daily amount of the LC Exposure (excluding any
portion thereof attributable to unreimbursed LC Disbursements) during the
period from and including the Effective Date to but excluding the later of the
date of termination of the Aggregate Commitment and the date on which there
ceases to be any LC Exposure, as well as the Issuing Bank’s standard fees with
respect to the issuance, amendment, renewal or extension of any Letter of
Credit or processing of drawings thereunder. 
Participation fees and fronting fees accrued through and including the
last day of March, June, September and December of each year shall be payable
on the third Business Day following such last day, commencing on the first such
date to occur after the Effective Date; provided that all such fees
shall be payable on the date on which the Aggregate Commitment terminates and
any such fees accruing after the date on which the Aggregate Commitment
terminates shall be payable on demand. 
Any other fees payable to the Issuing Bank pursuant to this paragraph
shall be payable within ten (10) days after demand.  All participation fees and fronting fees
shall be computed on the basis of a year of 360 days and shall be payable for
the actual number of days elapsed (including the first day but excluding the
last day).

(c)           Borrower
agrees to pay to the Administrative Agent, for its own account, fees payable in
the amounts and at the times separately agreed upon between the Borrower and
the Administrative Agent.

 40

(d)           All
fees payable hereunder shall be paid on the dates due, in immediately available
funds, to the Administrative Agent (or to the Issuing Bank, in the case of fees
payable to it) for distribution, in the case of Unused Commitment Fees and
participation fees, to the Lenders. 
Subject to Section 11.13, fees paid shall not be refundable under any
circumstances.

Section 2.14. 
Interest.

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

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

(c)           Notwithstanding
the foregoing, if any principal of or interest on any Loan or any fee or other
amount payable by the Borrower hereunder is not paid when due, whether at
stated maturity, upon acceleration or otherwise, such overdue amount shall bear
interest, after as well as before judgment, at a rate per annum equal to (i) in
the case of overdue principal of any Loan, two percent (2%) plus the rate
otherwise applicable to such Loan as provided in the preceding paragraphs of
this Section or (ii) in the case of any other amount, two percent (2%) plus the
rate applicable to ABR Loans as provided in paragraph (a) of this Section.

(d)           Accrued
interest on each Loan shall be payable in arrears on each Interest Payment Date
for such Loan and upon termination of the Aggregate Commitment and on the
Maturity Date; provided that (i) interest accrued pursuant to paragraph
(c) of this Section shall be payable on demand, (ii) in the event of any
repayment or prepayment of any Loan (other than a prepayment of an ABR Loan
prior to the end of the Availability Period at a time when no Borrowing Base
Deficiency exists), accrued interest on the principal amount repaid or prepaid
shall be payable on the date of such repayment or prepayment and (iii) in the
event of any conversion of any Eurodollar Loan prior to the end of the current
Interest Period therefor, accrued interest on such Loan shall be payable on the
effective date of such conversion.

(e)           All
interest hereunder shall be computed on the basis of a year of 360 days, except
that interest computed by reference to the Alternate Base Rate at times when
the Alternate Base Rate is based on the Prime Rate shall be computed on the
basis of a year of 365 days (or 366 days in a leap year), and in each case
shall be payable for the actual number of days elapsed (including the first day
but excluding the last day).  The
applicable Alternate Base Rate, Adjusted LIBO Rate or LIBO Rate shall be
determined by the Administrative Agent, and such determination shall be
conclusive absent manifest error.

Section 2.15. 
Alternate Rate of Interest. 
If prior to the commencement of any Interest Period for a Eurodollar
Borrowing:

(a)           the
Administrative Agent determines (which determination shall be conclusive absent
manifest error) that adequate and reasonable means do not exist for
ascertaining the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such
Interest Period; or

 41
 

(b)           the
Administrative Agent is advised by the Majority Lenders that the Adjusted LIBO
Rate or the LIBO Rate, as applicable, for such Interest Period will not
adequately and fairly reflect the cost to such Lenders (or Lender) of making or
maintaining their Loans (or its Loan) included in such Borrowing for such
Interest Period;

then the Administrative Agent shall give notice
thereof to the Borrower and the Lenders by telephone or telecopy as promptly as
practicable thereafter and, until the Administrative Agent notifies the
Borrower and the Lenders that the circumstances giving rise to such notice no
longer exist, (i) any Interest Election Request that requests the conversion of
any Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing
shall be ineffective, and (ii) if any Borrowing Request requests a Eurodollar
Borrowing, such Borrowing shall be made as an ABR Borrowing.

Section 2.16. 
Increased Costs.

(a)           If
any Change in Law shall:

(i)            impose, modify or
deem applicable any reserve, special deposit or similar requirement against
assets of, deposits with or for the account of, or credit extended by, any
Lender (except any such reserve requirement reflected in the Adjusted LIBO
Rate) or the Issuing Bank; or

(ii)           impose on any
Lender or the Issuing Bank or the London interbank market any other condition
affecting this Agreement or Eurodollar Loans made by such Lender or any Letter
of Credit or participation therein;

and the result of any of the foregoing shall be to increase the cost to
such Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to increase the cost to such Lender or the
Issuing Bank of participating in, issuing or maintaining any Letter of Credit
or to reduce the amount of any sum received or receivable by such Lender or the
Issuing Bank hereunder (whether of principal, interest or otherwise), then the Borrower will pay
to such Lender or the Issuing Bank, as the case may be, such additional amount
or amounts as will compensate such Lender or the Issuing Bank, as the case may
be, for such additional costs incurred or reduction suffered.

(b)           If any Lender or the Issuing Bank
determines that any Change in Law regarding capital requirements has or would
have the effect of reducing the rate of return on such Lender’s or the Issuing
Bank’s capital or on the capital of such Lender’s or the Issuing Bank’s holding
company, if any, as a consequence of this Agreement or the Loans made by, or
participations in Letters of Credit held by, such Lender, or the Letters of
Credit issued by the Issuing Bank, to a level below that which such Lender or
the Issuing Bank or such Lender’s or the Issuing Bank’s holding company could
have achieved but for such Change in Law (taking into consideration such Lender’s
or the Issuing Bank’s policies and the policies of such Lender’s or the Issuing
Bank’s holding company with respect to capital adequacy), then from time to
time the Borrower will pay to such Lender or the Issuing Bank, as the case may
be, such additional amount or

 42
 

amounts as will compensate
such Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s holding
company for any such reduction suffered.

(c)           A
certificate of a Lender or the Issuing Bank setting forth (i) the amount or
amounts reasonably necessary to compensate such Lender or the Issuing Bank or
its holding company, as the case may be, as specified in paragraph (a) or
(b) of this Section, (ii)  the factual
basis for such compensation and (iii) the manner in which such amount or
amounts were calculated shall be delivered to the Borrower.  Such certificate shall be conclusive absent
manifest error.  The Borrower shall pay
such Lender or the Issuing Bank, as the case may be, the amount shown as due on
any such certificate within 10 days after receipt thereof.

(d)           Failure
or delay on the part of any Lender or the Issuing Bank to demand compensation
pursuant to this Section shall not constitute a waiver of such Lender’s or the
Issuing Bank’s right to demand such compensation; provided that the
Borrower shall not be required to compensate a Lender or the Issuing Bank
pursuant to this Section for any increased costs or reductions incurred more
than one hundred eighty (180) days prior to the date that such Lender or the
Issuing Bank, as the case may be, notifies the Borrower of the Change in Law
giving rise to such increased costs or reductions and of such Lender’s or the
Issuing Bank’s intention to claim compensation therefor; provided  further
that, if the Change in Law giving rise to such increased costs or reductions is
retroactive, then the 180-day period referred to above shall be extended to
include the period of retroactive effect thereof.

Section 2.17. 
Break Funding Payments.  In
the event of (a) the payment of any principal of any Eurodollar Loan other than
on the last day of an Interest Period applicable thereto (including as a result
of an Event of Default), (b) the conversion of any Eurodollar Loan other than
on the last day of the Interest Period applicable thereto, (c) the failure to
borrow, convert, continue or prepay any Eurodollar Loan on the date specified
in any notice delivered pursuant hereto (regardless of whether such notice may be
revoked under Section 2.11(b) and is revoked in accordance therewith),
(d) the assignment of any Eurodollar Loan other than on the last day of
the Interest Period applicable thereto as a result of a request by the Borrower
pursuant to Section 2.20, then, in any such event, the Borrower shall
compensate each Lender for the loss, cost and expense attributable to such
event.  In the case of a Eurodollar Loan,
such loss, cost or expense to any Lender shall be deemed to include an amount
determined by such Lender to be the excess, if any, of (i) the amount of
interest which would have accrued on the principal amount of such Loan had such
event not occurred, at the Adjusted LIBO Rate that would have been applicable
to such Loan, for the period from the date of such event to the last day of the
then current Interest Period therefor (or, in the case of a failure to borrow,
convert or continue, for the period that would have been the Interest Period
for such Loan), over (ii) the amount of interest which would accrue on such
principal amount for such period at the interest rate which such Lender would
bid were it to bid, at the commencement of such period, for dollar deposits of
a comparable amount and period from other banks in the eurodollar market.  A certificate of any Lender setting forth any
amount or amounts that such Lender is entitled to receive pursuant to this
Section shall be delivered to the Borrower and shall be conclusive absent
manifest error.  The Borrower shall pay
such Lender the amount shown as due on any such certificate within ten (10)
days after receipt thereof.

 43
 

Section 2.18. 
Taxes.

(a)           Any
and all payments by or on account of any obligation of the Borrower hereunder
shall be made free and clear of and without deduction for any Indemnified Taxes
or Other Taxes; provided that if the Borrower shall be required to
deduct any Indemnified Taxes or Other Taxes from such payments, then
(i) the sum payable shall be increased as necessary so that after making
all required deductions (including deductions applicable to additional sums
payable under this Section) the Administrative Agent, Lender or Issuing Bank
(as the case may be) receives an amount equal to the sum it would have received
had no such deductions been made, (ii) the Borrower shall make such deductions
and (iii) the Borrower shall pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.

(b)           In
addition, the Borrower shall pay any Other Taxes to the relevant Governmental
Authority in accordance with applicable law.

(c)           The
Borrower shall indemnify the Administrative Agent, each Lender and the Issuing
Bank, within 10 days after written demand therefor, for the full amount of any
Indemnified Taxes or Other Taxes paid by the Administrative Agent, such Lender
or the Issuing Bank, as the case may be, on or with respect to any payment by
or on account of any obligation of the Borrower hereunder (including
Indemnified Taxes or Other Taxes imposed or asserted on or attributable to
amounts payable under this Section) and any penalties, interest and reasonable
expenses arising therefrom or with respect thereto, whether or not such
Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted
by the relevant Governmental Authority. 
A certificate delivered to the Borrower by a Lender or the Issuing Bank,
or by the Administrative Agent on its own behalf or on behalf of a Lender or
the Issuing Bank, setting forth (i) the amount of such payment or liability
reasonably necessary to compensate the Administrative Agent, such Lender or the
Issuing Bank, as the case may be, (ii) the factual basis for such compensation
and (iii) the manner in which such amount or amounts were calculated, shall be
conclusive absent manifest error.

(d)           As
soon as practicable after any payment of Indemnified Taxes or Other Taxes by
the Borrower to a Governmental Authority, the Borrower shall deliver to the
Administrative Agent the original or a certified copy of a receipt issued by
such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.

(e)           Any
Foreign Lender that is entitled to an exemption from or reduction of
withholding tax under the law of the jurisdiction in which the Borrower is
located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to the Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law, such
properly completed and executed documentation prescribed by applicable law or
reasonably requested by the Borrower as will permit such payments to be made
without withholding or at a reduced rate.

(f)            If
the Administrative Agent or a Lender determines, in its sole discretion, that
it has received a refund of any Taxes or Other Taxes as to which it has been
indemnified by the Borrower or with respect to which the Borrower have paid
additional amounts pursuant to this

 44
 

Section 2.18, it shall pay over such refund to
the Borrower (but only to the extent of indemnity payments made, or additional
amounts paid, by the Borrower under this Section 2.18 with respect to the Taxes
or Other Taxes giving rise to such refund), net of all out-of-pocket expenses
of the Administrative Agent or such Lender and without interest (other than any
interest paid by the relevant Governmental Authority with respect to such
refund); provided, that the Borrower, upon the request of the Administrative
Agent, the Swingline Lender or such Lender, agrees to repay the amount paid
over to the Borrower (plus any penalties, interest or other charges imposed by
the relevant Governmental Authority) to the Administrative Agent or such Lender
in the event the Administrative Agent or such Lender is required to repay such
refund to such Governmental Authority. This Section shall not be construed to
require the Administrative Agent or any Lender to make available its tax
returns (or any other information relating to its taxes which it deems
confidential) to the Borrower or any other Person.

Section 2.19. 
Payments Generally; Pro Rata Treatment; Sharing of Set-offs.

(a)           The
Borrower shall make each payment required to be made by it hereunder (whether
of principal, interest, fees or reimbursement of LC Disbursements, or of
amounts payable under Section 2.16, Section 2.17 or Section 2.18, or otherwise)
prior to 12:00 noon on the date when due, in immediately available funds,
without set-off or counterclaim. 
Any amounts received after such time on any date may, in the discretion
of the Administrative Agent, be deemed to have been received on the next
succeeding Business Day for purposes of calculating interest thereon.  All such payments shall be made to the
Administrative Agent at its offices at JPMorgan Loan Services, 21 South Clark
St., 19th Floor, Chicago, Illinois 60603-2003, except payments to be made
directly to the Issuing Bank or Swingline
Lender as expressly provided herein and except that payments pursuant to
Section 2.16, Section 2.17, Section 2.18 and Section 11.03 shall be made
directly to the Persons entitled thereto. 
The Administrative Agent shall distribute any such payments received by
it for the account of any other Person to the appropriate recipient promptly
following receipt thereof.  If any
payment hereunder shall be due on a day that is not a Business Day, the date
for payment shall be extended to the next succeeding Business Day, and, in the
case of any payment accruing interest, interest thereon shall be payable for
the period of such extension.  All
payments hereunder shall be made in Dollars.

(b)           If
at any time insufficient funds are received by and available to the
Administrative Agent to pay fully all amounts of principal, unreimbursed LC
Disbursements, interest, fees and other Obligations then due hereunder, such
funds shall be applied (i) first, towards payment of interest and fees then due
hereunder, ratably among the parties entitled thereto in accordance with the
amounts of interest and fees then due to such parties, and (ii) second, towards
payment of principal and unreimbursed LC Disbursements then due hereunder,
ratably among the parties entitled thereto in accordance with the amounts of
principal and unreimbursed LC Disbursements then due to such parties;
provided that in the event such funds are received by and available to the
Administrative Agent as a result of the exercise of any rights and remedies
with respect to any collateral under the Security Instruments, the parties
entitled to a ratable share of such funds pursuant to the foregoing clause (ii)
and the determination of each parties’ ratable share shall include, on a pari passu basis, the Lender Counterparties and the actual
aggregate amounts then due and owing to each Lender Counterparty by the
Borrower or

 45
 

any Guarantor as a result of the early
termination of any transactions under any Swap Agreements included in the
Obligations (after giving effect to any netting agreements).

(c)           If
any Lender shall, by exercising any right of set-off or counterclaim or
otherwise (including any right of set-off exercised with respect to a
Swap Agreement), obtain payment in respect of any principal of or interest on
any of its Loans, participations in LC Disbursements or Swingline Loans resulting in such Lender receiving payment of a
greater proportion of the aggregate amount of its Loans and participations in
LC Disbursements or Swingline Loans and
accrued interest thereon than the proportion received by any other Lender, then
the Lender receiving such greater proportion shall purchase (for cash at face
value) participations in the Loans and participations in LC Disbursements and Swingline Loans of other Lenders to the
extent necessary so that the benefit of all such payments shall be shared by
the Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Loans and participations in LC
Disbursements and Swingline Loans; provided
that (i) if any such participations are purchased and all or any portion of the
payment giving rise thereto is recovered, 
such participations shall be rescinded and the purchase price restored
to the extent of such recovery, without interest, and (ii) the provisions of
this paragraph shall not be construed to apply to any payment made by the Borrower
pursuant to and in accordance with the express terms of this Agreement or any
payment obtained by a Lender as consideration for the assignment of or sale of
a participation in any of its Loans or participations in LC Disbursements to
any assignee or participant, other than to the Borrower or any Subsidiary or
Affiliate thereof (as to which the provisions of this paragraph shall
apply).  The Borrower consents to the
foregoing and agrees, to the extent it may effectively do so under applicable
law, that any Lender acquiring a participation pursuant to the foregoing
arrangements may exercise against the Borrower rights of set-off and
counterclaim with respect to such participation as fully as if such Lender were
a direct creditor of the Borrower in the amount of such participation.

(d)           Unless
the Administrative Agent shall have received notice from the Borrower prior to
the date on which any payment is due to the Administrative Agent for the
account of the Lenders or the Issuing Bank hereunder that the Borrower will not
make such payment, the Administrative Agent may assume that the Borrower has
made such payment on such date in accordance herewith and may, in reliance upon
such assumption, distribute to the Lenders or the Issuing Bank, as the case may
be, the amount due.  In such event, if
the Borrower have not in fact made such payment, then each of the Lenders or
the Issuing Bank, as the case may be, severally agrees to repay to the
Administrative Agent forthwith on demand the amount so distributed to such
Lender or Issuing Bank with interest thereon, for each day from and including
the date such amount is distributed to it to but excluding the date of payment
to the Administrative Agent, at the greater of the Federal Funds Effective Rate
and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation.

(e)           If
any Lender shall fail to make any payment required to be made by it pursuant to
Section 2.07(d) or Section 2.07(e), Section 2.08(b), Section 2.19(d) or Section
11.03(c), then the Administrative Agent may, in its discretion (notwithstanding
any contrary provision hereof), apply any amounts thereafter received by the
Administrative Agent for the account of such Lender to satisfy such Lender’s
obligations under such Sections until all such unsatisfied obligations are
fully paid.

 46
 

Section 2.20. 
Mitigation Obligations; Replacement of Lenders.

(a)           If
any Lender requests compensation under Section 2.16, or if the Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.18, then such
Lender shall use reasonable efforts to designate a different lending office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or Affiliates, if, in the
judgment of such Lender, such designation or assignment (i) would eliminate or
reduce amounts payable pursuant to Section 2.16 or Section 2.18, as the case
may be, in the future and (ii) would not subject such Lender to any
unreimbursed cost or expense and would not otherwise be disadvantageous to such
Lender.  The Borrower hereby agrees to
pay all reasonable costs and expenses incurred by any Lender in connection with
any such designation or assignment.

(b)           If
any Lender requests compensation under Section 2.16, or if the Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.18, or if any
Lender defaults in its obligation to fund Loans hereunder, then the Borrower
may, at its sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 11.04), all its interests, rights and obligations under this Agreement
to an assignee that shall assume such obligations (which assignee may be
another Lender, if a Lender accepts such assignment); provided that (i)
the Borrower shall have received the prior written consent of the
Administrative Agent (and if a Commitment is being assigned, the Issuing Bank),
which consent shall not unreasonably be withheld, (ii) such Lender shall have
received payment of an amount equal to the outstanding principal of its Loans,
participations in LC Disbursements and Swingline
Loans, accrued interest thereon, accrued fees and all other amounts
payable to it hereunder, from the assignee (to the extent of such outstanding
principal and accrued interest and fees) or the Borrower (in the case of all
other amounts) and (iii) in the case of any such assignment resulting from
a claim for compensation under Section 2.16 or payments required to be made
pursuant to Section 2.18, such assignment will result in a reduction in such
compensation or payments.  A Lender shall
not be required to make any such assignment and delegation if, prior thereto,
as a result of a waiver by such Lender or otherwise, the circumstances entitling
the Borrower to require such assignment and delegation cease to apply.

(c)           If in connection with any proposed
amendment, modification, termination, waiver or consent with respect to any of
the provisions of this Agreement or any other Loan Document as contemplated by
Section 11.02, the consent of Majority Lenders or Required Lenders, as the case
may be, shall have been obtained but the consent of one or more of such other
Lenders (each a “Non-Consenting Lender”) whose consent is required has
not been obtained or if Lender is a Defaulting Lender; then, the Borrower may
elect to replace such Non-Consenting Lender or Defaulting Lender, as the case
may be, as a Lender party to this Agreement in accordance with and subject to
the restrictions contained in, and consents required by Section 11.04; provided
that (i) the Borrower shall have received the prior written consent of the
Administrative Agent (and if a Commitment is being assigned, the Issuing Bank),
which consent shall not unreasonably be withheld, (ii) such Lender shall have
received payment of an amount equal to the outstanding principal of its Loans
and participations in LC Disbursements, accrued interest thereon, accrued fees
and all other amounts payable to it hereunder, from the assignee (to the extent
of such

 47
 

outstanding principal and accrued interest and fees) or the Borrower
(in the case of all other amounts) and (iii) in the case of any such
assignment resulting from a claim for compensation under Section 2.16 or
payments required to be made pursuant to Section 2.18, such assignment will
result in a reduction in such compensation or payments.  A Lender shall not be required to make any
such assignment and delegation if, prior thereto, as a result of a waiver by
such Lender or otherwise, the circumstances entitling the Borrower to require
such assignment and delegation cease to apply or, in the case of a Defaulting
Lender, such Lender is no longer a Defaulting Lender.

Article III

Borrowing Base

Section 3.01.  Reserve Report; Proposed Borrowing Base.  During the period from the Effective Date
until the first Redetermination after the Effective Date, the Borrowing Base
shall be $1,000,000,000 (the “Initial Borrowing Base”).  As soon as available and in any event by
March 1 and September 1 of each year, beginning September 1,
2007, the Borrower shall deliver to the Administrative Agent and each Lender a
Reserve Report, prepared as of the immediately preceding December 31 and June
30, respectively, in form and substance reasonably satisfactory to the Administrative
Agent and prepared by an Approved Petroleum Engineer (or, in the case of the
Reserve Report due on September 1 of each year, by petroleum engineers
employed by the Borrower), said Reserve Report to utilize economic and pricing
parameters established from time to time by the Administrative Agent, together
with such other information, reports and data concerning the value of the
Borrowing Base Properties as the Administrative Agent shall deem reasonably
necessary to determine the value of such Borrowing Base Properties.  Simultaneously with the delivery to the
Administrative Agent and the Lenders of each Reserve Report, the Borrower shall
submit to the Administrative Agent and each Lender the Borrower’s requested
amount of the Borrowing Base as of the next Redetermination Date.  Promptly after the receipt by the
Administrative Agent of such Reserve Report and Borrower’s requested amount for
the Borrowing Base, the Administrative Agent shall submit to the Lenders a
recommended amount of the Borrowing Base to become effective for the period
commencing on the next Redetermination Date.

Section 3.02.  Scheduled
Redeterminations of the Borrowing Base; Procedures and Standards.  Based in part on the Reserve Reports made
available to the Administrative Agent and the Lenders pursuant to Section 3.01,
the Lenders shall redetermine the Borrowing Base on or prior to the next
Redetermination Date (or such date promptly thereafter as reasonably possible
based on the engineering and other information available to the Lenders).  Any Borrowing Base which becomes effective as
a result of any Redetermination shall be subject to the following restrictions:
(a) such Borrowing Base shall not exceed the Maximum Facility Amount, (b) to the
extent such Borrowing Base represents an increase in the Borrowing Base in
effect prior to such Redetermination, such Borrowing Base must be approved by
all Lenders, and (c) to the extent such Borrowing Base represents a decrease in
the Borrowing Base in effect prior to such Redetermination or a reaffirmation
of such prior Borrowing Base, such Borrowing Base must be approved by the
Administrative Agent and Required Lenders. 
If a redetermined Borrowing Base is not approved by the Administrative
Agent and Required Lenders within twenty (20) days after the submission to the
Lenders by the Administrative Agent of its recommended Borrowing Base

 48
 

pursuant to Section 3.01, or by all Lenders
within such twenty (20) day period in the case of any increase in the
Borrowing Base, the Administrative Agent shall notify each Lender that the
recommended Borrowing Base, as the case may be, has not been approved and
request that each Lender submit to the Administrative Agent within ten (10)
days thereafter its proposed Borrowing Base. 
Promptly following the 10th day after the Administrative Agent’s request
for each Lender’s proposed Borrowing Base, the Administrative Agent shall
determine the Borrowing Base for such Redetermination by calculating the
highest Borrowing Base then acceptable to the Administrative Agent and a number
of Lenders sufficient to constitute Required Lenders (or all Lenders in the
case of an increase in the Borrowing Base). 
Each Redetermination shall be made by the Lenders in their sole
discretion, but based on the Administrative Agent’s and such Lender’s usual and
customary procedures for evaluating Oil and Gas Interests as such exist at the
time of such Redetermination, and including adjustments to reflect the effect
of any Swap Agreements of the Borrower and the Restricted Subsidiaries as such
exist at the time of such Redetermination. 
The Borrower acknowledges and agrees that each Redetermination shall be
based upon the loan collateral value which the Administrative Agent and each
Lender in its sole discretion (using such methodology, assumptions and discount
rates as the Administrative Agent and such Lender customarily uses in assigning
collateral value to Oil and Gas Interests) assigns to the Borrowing Base
Properties at the time in question and based upon such other credit factors consistently
applied (including, without limitation, the assets, liabilities, cash flow,
business, properties, prospects, management and ownership of the Credit
Parties) as the Administrative Agent and such Lender customarily considers in
evaluating similar oil and gas credits. 
It is expressly understood that the Administrative Agent and Lenders
have no obligation to designate the Borrowing Base at any particular amounts,
except in the exercise of their discretion, whether in relation to the
Aggregate Commitment or otherwise.  If
the Borrower does not furnish all information, reports and data required to be
delivered by any date specified in this Article III, unless such failure is not
the fault of the Borrower, the Administrative Agent and Lenders may nonetheless
designate the Borrowing Base at any amounts which the Administrative Agent and
all Lenders or Required Lenders, as the case may be, in their reasonable
discretion determine and may redesignate the Borrowing Base from time to time
thereafter until the Administrative Agent and the Lenders receive all such
information, reports and data, whereupon the Administrative Agent and all
Lenders or Required Lenders, as the case may be, shall designate a new
Borrowing Base, as described above.

Section 3.03.  Special
Redeterminations.  In addition to
Scheduled Redeterminations, the Borrower shall be permitted to request a
Special Redetermination of the Borrowing Base once between each Scheduled
Redetermination and the Required Lenders shall be permitted to request a
Special Redetermination at any time.  Any
request by Borrower pursuant to this Section 3.03 shall be submitted to the
Administrative Agent and each Lender and at the time of such request (or within
twenty (20) days thereafter in the case of the Reserve Report) Borrower shall
(1) deliver to the Administrative Agent and each Lender a Reserve Report
prepared as of a date prior to the date of such request that is reasonably
acceptable to the Administrative Agent and such other information which the
Administrative Agent shall reasonably request, and (2) notify the
Administrative Agent and each Lender of the Borrowing Base requested by
Borrower in connection with such Special Redetermination.  Any request by Required Lenders for a Special
Redetermination pursuant to this Section 3.03 shall be submitted to the
Administrative Agent and the Borrower. Any Special Redetermination shall be
made by the Administrative Agent and Lenders in accordance with the procedures
and standards set forth in Section 3.02; provided that

 49
 

no Reserve Report is required to be delivered
to the Administrative Agent or the Lenders in connection with any Special
Redetermination requested by the Required Lenders pursuant to this Section
3.03.

Section 3.04.  Notice
of Redetermination.  Promptly following
any Redetermination of the Borrowing Base, the Administrative Agent shall
notify the Borrower of the amount of the redetermined Borrowing Base, which
Borrowing Base shall be effective as of the date specified in such notice, and
such Borrowing Base shall remain in effect for all purposes of this Agreement
until the next Redetermination.

Article IV

Representations and Warranties

Each Credit Party represents and warrants to the
Lenders that (it being understood and agreed that with respect to the Effective
Date such representations and warranties are deemed to be made concurrently
with and after giving effect to the consummation of the Transactions):

Section 4.01. 
Organization; Powers.  Each
Credit Party is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, has all requisite power and
authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business
in, and is in good standing in, every jurisdiction where such qualification is
required.

Section 4.02. 
Authorization; Enforceability. 
The Transactions are within each Credit Party’s corporate, limited
liability company or partnership powers and have been duly authorized by all
necessary corporate, limited liability company or partnership and, if required,
stockholder action.  This Agreement has
been duly executed and delivered by each Credit Party and constitutes a legal,
valid and binding obligation of each Credit Party, enforceable in accordance
with its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors’ rights generally and subject to
general principles of equity, regardless of whether considered in a proceeding
in equity or at law.

Section
4.03.  Governmental Approvals; No
Conflicts.  The Transactions (a) do
not require any consent or approval of, registration or filing with, or any
other action by, any Governmental Authority, except such as have been obtained
or made and are in full force and effect and, after the Effective Date,
the filing of this Agreement and related Loan Documents by the Borrower with,
and other required disclosures required by, the Securities and Exchange
Commission pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, (b) will not violate
any applicable law or regulation or the charter, by-laws or other
Organizational Documents of the Borrower or any Restricted Subsidiary or any
order of any Governmental Authority, (c) will not violate or result in a
default under any indenture, agreement or other instrument evidencing Material
Indebtedness or a Material Sales Contract binding upon the Borrower or any
Restricted Subsidiary or any of their respective assets, or give rise to a
right thereunder to require any payment to be made by the Borrower or any
Restricted Subsidiary, and

 50
 

(d) will not result in the creation or imposition of any Lien on any
asset of the Borrower or any Restricted Subsidiary not otherwise permitted
under Section 7.02.

Section 4.04. 
Financial Condition; No Material Adverse Change.

(a)           The
Borrower has heretofore furnished to the Lenders the consolidated balance sheet
and related statements of income and cash flows of the Borrower and its
Consolidated Subsidiaries (i) as of and for each of the fiscal years ended
December 31, 2005, reported on by PricewaterhouseCoopers LLP, and
December 31, 2006, reported on by KPMG LLP, independent public
accountants, and (ii) as of and for the fiscal quarter and portion of the
fiscal year ended March 31, 2007, setting forth in comparative form the
figures for the corresponding period of (or, in the case of the balance sheet,
as of the end of) the previous fiscal year, all certified by a Responsible
Officer.  Such financial statements
present fairly, in all material respects, the financial position and results of
operations and cash flows of the Borrower and its Consolidated Subsidiaries as
of such dates and for such periods in accordance with GAAP, subject to year-end
audit adjustments and the absences of footnotes, in the case of the statements
referred to in clause (ii).

(b)           Since
December 31, 2006, there has been no material adverse change in the
business, assets, operations, prospects or condition, financial or otherwise,
of the Borrower and its Restricted Subsidiaries, taken as a whole (it being
understood that none of (i) the issuance of the Preferred Stock, (ii) the
Southern Gas Acquisition, nor (iii) changes in commodity prices for
Hydrocarbons affecting the oil and gas industry as a whole does not constitute
a material adverse change).

Section 4.05. 
Properties.

(a)           Except
as otherwise provided in Section 4.15 with respect to Oil and Gas Interests,
the Borrower and each Restricted Subsidiary has good title to, or valid
leasehold interests in, all such real and personal property material to its
business, except for minor defects in title that do not interfere with its
ability to conduct its business as currently conducted or to utilize such
properties for their intended purposes.

(b)           The
Borrower and each Restricted Subsidiary owns, or is licensed to use, all
trademarks, tradenames, copyrights, patents and other intellectual property
material to its business, and the use thereof by the Borrower and such
Restricted Subsidiaries, as the case may be, does not infringe upon the rights
of any other Person, except for any such infringements that, individually or in
the aggregate, could not reasonably be expected to result in a Material Adverse
Effect.

Section 4.06. 
Litigation and Environmental Matters.

(a)           There
are no actions, suits, investigations or proceedings by or before any
arbitrator or Governmental Authority pending against or, to the knowledge of
the Borrower, threatened against or affecting the Borrower or any Restricted
Subsidiary, (i) as to which there is a reasonable possibility of an
adverse determination and that, if adversely determined, could reasonably be
expected, individually or in the aggregate, to result in a Material Adverse
Effect (other than the Disclosed Matters) or (ii) that involve this
Agreement or the Transactions.

 51
 

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

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

Section 4.07. 
Compliance with Laws and Agreements.  The Borrower and each Restricted Subsidiary
is in compliance with all laws, regulations and orders of any Governmental
Authority applicable to it or its property and all indentures, agreements and
other instruments binding upon it or its property, except where the failure to
do so, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect.  No
Default has occurred and is continuing.

Section 4.08. 
Investment Company Status. 
Neither the Borrower nor any Restricted Subsidiary is an “investment
company” as defined in, or subject to regulation under, the Investment Company
Act of 1940.

Section 4.09. 
Taxes.  The Borrower and
each Restricted Subsidiary has timely filed or caused to be filed all Tax
returns and reports required to have been filed and has paid or caused to be
paid all Taxes required to have been paid by it, except (a) Taxes that are
being contested in good faith by appropriate proceedings and for which the
Borrower or such Restricted Subsidiary, as applicable, has set aside on its
books adequate reserves or (b) to the extent that the failure to do so
could not reasonably be expected to result in a Material Adverse Effect.

Section 4.10. 
ERISA.  No ERISA Event has
occurred or is reasonably expected to occur that, when taken together with all
other such ERISA Events for which liability is reasonably expected to occur,
could reasonably be expected to result in a Material Adverse Effect.  The present value of all accumulated benefit
obligations under each Plan (based on the assumptions used for purposes of FASB
Statement 87) did not, as of the date of the most recent financial
statements reflecting such amounts, exceed by more than $5,000,000 the fair
market value of the assets of such Plan, and the present value of all
accumulated benefit obligations of all underfunded Plans (based on the
assumptions used for purposes of FASB Statement 87) did not, as of the
date of the most recent financial statements reflecting such amounts, exceed by
more than $5,000,000 the fair market value of the assets of all such
underfunded Plans.

Section
4.11.  Disclosure.  The Borrower has disclosed to the Lenders all
agreements, instruments and corporate or other restrictions to which it or any
Restricted Subsidiary is subject, and all other matters known to it, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect.  None of the other
reports, financial statements, certificates or other information furnished by
or on behalf of the Borrower or any Restricted Subsidiary to the Administrative
Agent or any Lender in connection with the negotiation of this

 52
 

Agreement or delivered hereunder (as modified or supplemented by other
information so furnished) contains any material misstatement of fact or omits
to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading; provided
that, with respect to the Projections, the Borrower represents only that such
information was prepared in good faith based on assumptions believed to be
reasonable at the time.

Section 4.12. 
Labor Matters.  There are
no strikes, lockouts or slowdowns against the Borrower or any of its Restricted
Subsidiaries pending or, to the knowledge of the Borrower, threatened that
could reasonably be expected to have a Material Adverse Effect.  The hours worked by and payments made to
employees of the Borrower and its Restricted Subsidiaries have not been in
violation of the Fair Labor Standards Act or any other Law dealing with such
matters to the extent that such violation could reasonably be expected to have
a Material Adverse Effect.

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

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

Section
4.15.  Oil and Gas Interests.  Each Credit Party has good and defensible
title to all proved reserves included in the Oil and Gas Interests (for
purposes of this Section 4.15, “proved Oil and Gas Interests”) described in the
most recent Reserve Report provided to the Administrative Agent, free and clear
of all Liens except Liens permitted pursuant to Section 7.02.  All such proved Oil and Gas Interests are
valid, subsisting, and in full force and effect, and all rentals, royalties,
and other amounts due and payable in respect thereof have been duly paid.  Without regard to any consent or non-consent
provisions of any joint operating agreement covering any Credit Party’s proved
Oil and Gas Interests, such Credit Party’s share of (a) the costs for each
proved Oil and Gas Interest described in the Reserve Report is not materially
greater than the decimal fraction set forth in the Reserve Report, before and
after payout, as the case may be, and described therein by the respective
designations “working interests,” “WI,” “gross working interest,” “GWI,” or
similar terms (except in such cases where there is a corresponding increase in
the net revenue interest), and (b) production from, allocated to, or
attributed to each such proved Oil and Gas Interest is not materially less than
the decimal fraction set forth in the Reserve Report, before and after payout,
as the case may be, and described therein by the designations “net revenue
interest,” “NRI,” or similar terms.  Each
well drilled in respect of proved producing Oil and Gas Interests described in
the Reserve Report (1) is capable of, and is presently, either producing
Hydrocarbons in commercially profitable quantities or in the process of being
worked over or enhanced, and the Credit Party that owns

 53
 

such proved producing Oil and Gas Interests is currently receiving
payments for its share of production, with no funds in respect of any thereof
being presently held in suspense, other than any such funds being held in
suspense pending delivery of appropriate division orders, and (2) has been
drilled, bottomed, completed, and operated in compliance with all applicable
laws, in the case of clauses (1) and (2), except where any failure to satisfy
clause (1) or to comply with clause (2) would not have a Material Adverse
Effect, and no such well which is currently producing Hydrocarbons is subject
to any penalty in production by reason of such well having produced in excess
of its allowable production.

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

Section 4.17. 
Solvency.

(a)           Immediately
after the consummation of the Transactions and immediately following the making
of the initial Borrowing made on the Effective Date and after giving effect to
the application of the proceeds thereof, (1) the fair value of the assets of
the Credit Parties on a consolidated basis, at a fair valuation, will exceed
the debts and liabilities, subordinated, contingent or otherwise, of the Credit
Parties on a consolidated basis; (2) the present fair saleable value of the
real and personal property of the Credit Parties on a consolidated basis will
be greater than the amount that will be required to pay the probable liability
of the Credit Parties on a consolidated basis on their debts and other
liabilities, subordinated, contingent or otherwise, as such debts and other
liabilities become absolute and matured; (3) the Credit Parties on a
consolidated basis will be able to pay their debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become
absolute and matured; and (4) the Credit Parties on a consolidated basis will
not have unreasonably small capital with which to conduct the businesses in
which they are engaged as such businesses are now conducted and are proposed to
be conducted after the date hereof.

(b)           The
Credit Parties do not intend to, and do not believe that they will, incur debts
beyond their ability to pay such debts as they mature, taking into account the
timing of and amounts of cash to be received by it and the timing of the
amounts of cash to be payable on or in respect of its Indebtedness.

Section 4.18.  Deposit
Accounts.  Except as set forth on
Schedule 4.18 and other deposit accounts maintained at financial institutions
other than the Administrative Agent (the aggregate balance of which does not
exceed $250,000 at any time for all such other deposit accounts taken as a
whole), no Credit Party has any deposit or investment accounts and no Affiliate
of any Credit Party has any deposit or investment account into which proceeds
of Hydrocarbon production from the Oil and Gas Interests included in the
Borrowing Base Properties are deposited. 
All proceeds of Hydrocarbon production from the Oil and Gas Interests
included in the Borrowing Base Properties and all distributions and dividends
on any Equity Interests owned

 54
 

by any Credit Party are deposited and
maintained, from the date of receipt by any Credit Party, in an Eligible Account.

Article V

Conditions

Section 5.01. 
Effective Date.  The
obligations of the Lenders and the Lender Counterparties to continue the
Original Loans and the Existing Swap Agreements and the obligations of the
Lenders to make Loans and of the Issuing Bank to issue Letters of Credit
hereunder shall not become effective until the date on which each of the
following conditions is satisfied (or waived in accordance with Section 11.02):

(a)           The
Administrative Agent (or its counsel) shall have received from each party
hereto either (i) a counterpart of this Agreement signed on behalf of such
party or (ii) written evidence satisfactory to the Administrative Agent (which
may include telecopy transmission of a signed signature page of this Agreement)
that such party has signed a counterpart of this Agreement.

(b)           The
Administrative Agent shall have received a favorable written opinion (addressed
to the Administrative Agent and the Lenders and dated the Effective Date) of
Haynes and Boone, L.L.P., counsel for the Credit Parties, substantially in the
form of Exhibit B, and covering such other matters relating to the Credit
Parties, and this Agreement as the Majority Lenders shall reasonably request
and (ii) if agreed by opining counsel, opinions delivered in connection
with the Southern Gas Purchase Agreement, if any, addressed to the Lenders or
accompanied by reliance letters in favor of the Lenders stating that the
Lenders may rely on such opinions as though they were addressed to them.  The Credit Parties hereby request such
counsel to deliver such opinion.

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

(d)           The
Administrative Agent shall have received a certificate, dated the Effective
Date and signed by a Responsible Officer of the Borrower, confirming that the
Credit Parties have (i) complied with the conditions set forth in
paragraphs (a) and (b) of Section 5.02, (ii) complied with the
covenants set forth in Section 6.05 (and demonstrating such compliance by the
attachment of an insurance summary and insurance certificates evidencing the
coverage described in such summary) (iii) complied with the requirements
of Section 6.09 and Section 6.10, and (iv) simultaneously with the initial
Borrowing under this Agreement and in accordance with applicable law,
consummated (or caused one or more of the Restricted Subsidiaries to
consummate) the Southern Gas Acquisition without waiver or amendment of any
material term or condition of the Southern Gas Purchase Agreement (not
otherwise consented to by the Administrative Agent).

 55
 

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

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

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

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

(i)            On
or prior to the Effective Date, the Administrative Agent shall have received a
Borrowing Request acceptable to the Administrative Agent setting forth the
Loans requested by the Borrower on the Effective Date, the Type and amount of
each Loan and the accounts to which such Loans are to be funded; provided that
all Borrowings on the Effective Date shall be ABR Borrowings.

(j)            If the initial Borrowing includes the issuance of a
Letter of Credit, the Administrative Agent shall have received a written
request in accordance with Section 2.07 of this Agreement.

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

 56
 

(l)            The Administrative Agent shall have received reasonably
satisfactory evidence that after giving effect to the Transactions, Aggregate
Credit Exposure on the Effective Date shall not exceed $760,000,000.

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

(n)           The
Lenders shall have received from the Borrower (i) a pro forma consolidated
balance sheet of the Borrower and its Consolidated Subsidiaries as of the
Effective Date, and reflecting the consummation of the Transactions, the
related financings and other transactions contemplated by the Loan Documents to
occur on or prior to the Effective Date, which pro forma balance sheet shall be
prepared consistent in all respects with the information previously provided by
the Borrower to the Administrative Agent and the Lenders and in form and
substance satisfactory to the Administrative Agent, (ii) a pro forma
statement of operations of the Borrower and its Consolidated Subsidiaries for
the twelve month period ending as of the date of the pro forma balance sheet
described in the immediately preceding clause (i), and (iii) the
Projections.

(o)           Each
Credit Party shall have obtained all approvals required from any
Governmental Authority and all consents of other Persons, in each case that are
necessary or advisable in connection with the Transactions and each of the
foregoing shall be in full force and effect and in form and substance
reasonably satisfactory to the Administrative Agent.  All applicable waiting periods shall have
expired without any action being taken or threatened by any competent authority
which would restrain, prevent or otherwise impose adverse conditions on the
transactions contemplated by the Loan Documents, the Preferred Stock Documents,
the Southern Gas Purchase Documents or the financing thereof and no action,
request for stay, petition for review or rehearing, reconsideration, or appeal
with respect to any of the foregoing shall be pending, and the time for any
applicable agency to take action to set aside its consent on its own motion
shall have expired.

(p)           There
shall not exist any action, suit, investigation, litigation or proceeding or
other legal or regulatory developments, pending or threatened in any court or
before any arbitrator or Governmental Authority that, in the reasonable opinion
of Administrative Agent, singly or in the aggregate, materially impairs the
Transactions, the financing thereof or any of the other transactions
contemplated by the Loan Documents, the Preferred Stock Documents or the
Southern Gas Purchase Documents or that could have a Material Adverse Effect.

(q)           All partnership, corporate and other proceedings taken or
to be taken in connection with the Transactions and all documents incidental
thereto shall be reasonably satisfactory in form and substance to
Administrative Agent and its counsel, and Administrative Agent and such counsel
shall have received all such counterpart originals or certified copies of such
documents as Administrative Agent may reasonably request.

(r)            The Administrative Agent shall have received reasonably
satisfactory evidence that the Southern Gas Hedges assigned to one or more of
the Credit Parties on the Effective Date are in notional amounts covering at
least eighty percent (80%) of the forecasted production from

 57
 

proved producing reserves, included in the
Southern Gas Assets (other than natural gas liquids) through December 31, 2009.

(s)           The Administrative Agent shall have received reasonably
satisfactory evidence that the Borrower has received at least $2,000,000,000 as
gross cash proceeds from the issuance of the Preferred Stock pursuant to the
Preferred Stock Documents and otherwise on terms and conditions reasonably
satisfactory to the Administrative Agent and that after giving effect to any
permitted contributions to or investments in the MLP Subsidiaries on or after
the date such Preferred Stock was issued, the Borrower retained not less than
$330,000,000 of such proceeds minus all Taxes and customary fees and
(including legal fees, accounting fees and advisory fees), commissions,
discounts, costs and other expenses incurred in connection therewith.

(t)            The Administrative Agent and the Lenders shall have
received the audited financial statements described in Section 4.04(a).

(u)           The Borrower shall have delivered to the Administrative
Agent a description of the sources and uses of funding for the Transactions
that is consistent with the terms of the Loan Documents, the Preferred Stock
Documents and the Southern Gas Purchase Documents and otherwise satisfactory to
the Administrative Agent and the Arranger and the capitalization, structure and
equity ownership of the Borrower after the Transactions shall be satisfactory
to the Lenders in all respects.

The Administrative Agent shall notify the Borrower and
the Lenders of the Effective Date, and such notice shall be conclusive and
binding.  Notwithstanding the foregoing,
the obligations of the Lenders to make Loans and of the Issuing Bank to issue
Letters of Credit hereunder shall not become effective unless each of the
foregoing conditions is satisfied (or waived pursuant to Section 11.02) at or
prior to 3:00 p.m. on May 31, 2007 (and, in the event such conditions are
not so satisfied or waived, the Aggregate Commitment shall terminate at such
time).

Section 5.02. 
Each Credit Event.  The
obligation of each Lender to make a Loan on the occasion of any Borrowing, and
of the Issuing Bank to issue, amend, renew or extend any Letter of Credit, is
subject to the satisfaction of the following conditions:

(a)           The
representations and warranties of each Credit Party set forth in the Loan
Documents shall be true and correct in all material respects on and as of the
date of such Borrowing or the date of issuance, amendment, renewal or extension
of such Letter of Credit, as applicable except to the extent that such
representations and warranties specifically refer to an earlier date, in which
case they shall be true and correct as of such earlier date.

(b)           At
the time of and immediately after giving effect to such Borrowing or the
issuance, amendment, renewal or extension of such Letter of Credit, as applicable,
no Default shall have occurred and be continuing.

(c)           At
the time of and immediately after giving effect to such Borrowing or the
issuance, amendment, renewal or extension of such Letter of Credit, as
applicable, no Borrowing Base Deficiency exists or would be caused thereby.

 58
 

Each Borrowing and each issuance, amendment, renewal
or extension of a Letter of Credit shall be deemed to constitute a
representation and warranty by the Borrower on the date thereof as to the
matters specified in paragraphs (a), (b) and (c) of this Section.

Article VI

Affirmative Covenants

Until the Aggregate Commitment has expired or been
terminated and the principal of and interest on each Loan and all fees payable
hereunder shall have been paid in full and all Letters of Credit shall have
expired or terminated and all LC Disbursements shall have been reimbursed, each
Credit Party covenants and agrees with the Lenders that:

Section 6.01. 
Financial Statements; Other Information.  The Borrower will furnish to the
Administrative Agent and each Lender:

(a)           within
ninety (90) days after the end of each fiscal year of the Borrower, the audited
consolidated (and unaudited consolidating) balance sheet and related
consolidated (and with respect to statements of operations, consolidating)
statements of operations, stockholders’ equity and cash flows of the Borrower
and its Consolidated Subsidiaries as of the end of and for such year, setting
forth in each case in comparative form the figures for the previous fiscal
year, all reported on by a firm of independent public accountants reasonably
acceptable to Administrative Agent (without a “going concern” or like
qualification or exception and without any qualification or exception as to the
scope of such audit) to the effect that such consolidated and consolidating
financial statements present fairly in all material respects the financial
condition and results of operations of the Borrower and its Consolidated
Subsidiaries on a consolidated and consolidating basis in accordance with GAAP
consistently applied;

(b)           within
forty-five (45) days after the end of each fiscal quarter of the Borrower, the
consolidated (and unaudited consolidating) balance sheet and related
consolidated (and with respect to statements of operations, consolidating)
statements of operations and cash flows of the Borrower and its Consolidated
Subsidiaries as of the end of and for such fiscal quarter and the then elapsed
portion of the fiscal year, setting forth in each case in comparative form the
figures for the corresponding period or periods of (or, in the case of the
balance sheet, as of the end of) the previous fiscal year, all certified by a
Responsible Officer as presenting fairly in all material respects the financial
condition and results of operations of the Borrower and its Consolidated
Subsidiaries on a consolidated and consolidating basis in accordance with GAAP
consistently applied, subject to normal year-end audit adjustments and the
absence of footnotes;

(c)           concurrently
with any delivery of financial statements under clause (a) or (b) above, a
certificate in a form reasonably acceptable to Administrative Agent signed by a
Responsible Officer of
the Borrower (i) certifying as to whether a Default has occurred and, if a
Default has occurred, specifying the details thereof and any action taken or
proposed to be taken with respect thereto, and (ii) setting forth
reasonably detailed calculations demonstrating compliance with Section 7.11;

 59
 

(d)           promptly
after the same become publicly available, copies of all periodic and other
reports, proxy statements and other materials filed by the Borrower or any
Subsidiary with the Securities and Exchange Commission, or any Governmental
Authority succeeding to any or all of the functions of said Commission, or with
any national securities exchange, or distributed by the Borrower to its
shareholders generally, as the case may be;

(e)           as
soon as available, and in any event no later than March 1 and
September 1 of each year, the Reserve Reports required on such dates
pursuant to Section 3.01 together with a certificate in a form
reasonably acceptable to Administrative Agent signed by a Responsible Officer
of the Borrower certifying as to whether a Default has occurred and, if a
Default has occurred, specifying the details thereof and any action taken or
proposed to be taken with respect thereto;

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

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

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

Documents required to be delivered pursuant to Section
6.01(a) or Section 6.01(b) or Section 6.01(d) may be delivered electronically
and if so delivered, shall be deemed to have been delivered on the date (i) on
which the Borrower posts such documents, or provides a link thereto on the
Borrower’s website on the Internet at the website address identified in Section
11.01 on which such documents are posted on the Borrower’s behalf on an
Internet or intranet website, if any, to which each Lender and the
Administrative Agent have access (whether a commercial, third-party website or
whether sponsored by the Administrative Agent); provided that:
(i) the Borrower shall deliver paper copies of such documents to the
Administrative Agent or any Lender that requests the Borrower to deliver such
paper copies until a written request to cease delivering paper copies is given
by the Administrative Agent or such Lender and (ii) the Borrower shall
notify the Administrative Agent and each Lender (by telecopier or electronic
mail) of the posting of any such documents and provide to the Administrative
Agent by electronic mail electronic versions (i.e., soft copies) of such
documents.  Notwithstanding anything
contained herein, in every instance the Borrower shall be required to provide
paper copies of the Compliance Certificates required by Section 6.01(c) to the
Administrative Agent.

 60

Except for such Compliance Certificates, the
Administrative Agent shall have no obligation to request the delivery or to
maintain copies of the documents referred to above, and in any event shall have
no responsibility to monitor compliance by the Borrower with any such request
for delivery, and each Lender shall be solely responsible for requesting
delivery to it or maintaining its copies of such documents.

The Borrower hereby acknowledges that (a) the
Administrative Agent and/or the Arrangers will make available to the Lenders
and the Issuing Bank materials and/or information provided by or on behalf of
the Borrower hereunder (collectively, “Borrower Materials”) by posting
the Borrower Materials on IntraLinks or another similar electronic system (the “Platform”)
and (b) certain of the Lenders may be “public-side” Lenders (i.e., Lenders that do not wish to receive material
non-public information with respect to the Borrower or its securities) (each, a
“Public Lender”).  The Borrower
hereby agrees that (w) all Borrower Materials that are to be made available to
Public Lenders shall be clearly and conspicuously marked “PUBLIC” which, at a
minimum, shall mean that the word “PUBLIC” shall appear prominently on the
first page thereof; (x) by marking Borrower Materials “PUBLIC,” the Borrower
shall be deemed to have authorized the Administrative Agent, the Arrangers, the
Issuing Bank and the Lenders to treat such Borrower Materials as either
publicly available information or not material information (although it may be
sensitive and proprietary) with respect to the Borrower or its securities for
purposes of United States Federal and state securities laws; (y) all Borrower
Materials marked “PUBLIC” are permitted to be made available through a portion
of the Platform designated “Public Investor;” and (z) the Administrative Agent
and the Arrangers shall be entitled to treat Borrower’s Materials that are not
marked “PUBLIC” as being suitable only for posting on a portion of the Platform
not designated “Public Investor.”

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

(a)           the
occurrence of any Default;

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

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

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

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

 61
 

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

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

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

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

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

Section 6.03. 
Existence; Conduct of Business. 
The Borrower will, and will cause each Restricted Subsidiary to, do or
cause to be done all things necessary to preserve, renew and keep in full force
and effect its legal existence and the rights, licenses, permits, privileges
and franchises material to the conduct of its business; provided that
the foregoing shall not prohibit any merger, consolidation, liquidation or
dissolution permitted under Section 7.03.

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

Section 6.05. 
Maintenance of Properties; Insurance.  The Borrower will, and will cause each
Restricted Subsidiary and use commercially reasonable efforts to cause each
operator of Borrowing Base Properties to, (a) keep and maintain all
property material to the conduct of its business in good working order and
condition, ordinary wear and tear excepted, and (b) maintain, with
financially sound and reputable insurance companies, insurance in such amounts
and against such risks as are customarily maintained by companies engaged in
the same or similar businesses operating in the same or similar locations.  On or prior to the Effective Date and
thereafter, upon request of the Administrative Agent, the Borrower will furnish
or cause to be furnished to the Administrative Agent from time to time a
summary of the respective insurance coverage of the Borrower and its Restricted
Subsidiaries in form and substance reasonably satisfactory to the
Administrative Agent, and, if requested, will furnish the Administrative Agent
copies of the applicable policies.  Upon
demand by Administrative Agent, the Borrower will cause any insurance policies
covering any such property to be endorsed (a) to provide that such policies may
not be cancelled, reduced or affected in any manner for any

 62
 

reason without fifteen (15) days prior notice to Administrative Agent,
and (b) to provide for such other matters as the Lenders may reasonably
require.

Section 6.06. 
Books and Records; Inspection Rights.  The Borrower will, and will cause each
Restricted Subsidiary to, keep proper books of record and account in which
full, true and correct entries are made of all dealings and transactions in
relation to its business and activities. 
The Borrower will, and will cause each Restricted Subsidiary to, permit
any representatives designated by the Administrative Agent or any Lender, upon
reasonable prior notice, to visit and inspect its properties, to examine and
make extracts from its books and records, and to discuss its affairs, finances
and condition with its officers and, provided an officer of the Borrower has
the reasonable opportunity to participate, its independent accountants, all at
such reasonable times and as often as reasonably requested.

Section 6.07. 
Compliance with Laws.  The
Borrower will, and will cause each Restricted Subsidiary to, comply with all
laws, rules, regulations and orders of any Governmental Authority applicable to
it or its property, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.

Section 6.08. 
Use of Proceeds and Letters of Credit.  The proceeds of the Loans will be used only
to (a) finance the Southern Gas Acquisition, (b) repay amounts
outstanding under the Original Credit Agreement, (c) pay the fees,
expenses and transaction costs of the Transactions, (d) satisfy reimbursement
obligations with respect to Letters of Credit, (e) make Restricted
Payments permitted under Section 7.06, and (f) finance the working capital
needs of the Borrower, including capital expenditures, and for general
corporate purposes of the Borrower and the Guarantors, in the ordinary course
of business, including the exploration, acquisition and development of Oil and
Gas Interests.  No part of the proceeds
of any Loan will be used, whether directly or indirectly, to purchase or carry
any margin stock (as defined in Regulation U issued by the Board).  Letters of Credit will be issued only to
support general corporate purposes of the Borrower and the Restricted
Subsidiaries.

Section 6.09. 
Mortgages.  Each
Borrower will, and will cause each Guarantor to, execute and deliver to the
Administrative Agent, for the benefit of the Secured Parties, Mortgages in form
and substance acceptable to the Administrative Agent together with such other
assignments, conveyances, amendments, agreements and other writings, including,
without limitation, UCC-1 financing statements (each duly authorized and
executed, as applicable) as the Administrative Agent shall deem necessary or
appropriate to grant, evidence, perfect and maintain Liens in not less than
eighty percent (80%) of the Engineered Value of the Borrowing Base Properties.

Section 6.10. 
Title Data.  The Borrower
will, and will cause each Guarantor to, deliver to the Administrative Agent
such opinions of counsel or other evidence of title as the Administrative Agent
shall deem reasonably necessary or appropriate to verify (a) at all times
from and after the Effective Date, not less than (i) ninety percent (90%)
of the Engineered Value of the Mortgaged Properties of the Borrower and the
Guarantors taken as a whole (other than Mortgaged Properties that are
Appalachia Properties) and (ii) forty-five percent (45%) of the Engineered
Value of the Mortgaged Properties that are Appalachia Properties, and
(b) the

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validity, perfection and priority of the Liens created by such
Mortgages and such other matters regarding such Mortgages as Administrative
Agent shall reasonably request.

Section 6.11.  Swap Agreements.  The Borrower will, and will cause each
Restricted Subsidiary to, maintain the Existing Swap Agreements and none of the
Existing Swap Agreements may be amended, modified or cancelled without the
prior written consent of the Majority Lenders. 
Upon the request of the Majority Lenders, the Borrower and each
Restricted Subsidiary shall use their commercially reasonable efforts to cause
each Swap Agreement to which the Borrower or any Restricted Subsidiary is a
party to (a) be collaterally assigned to the Administrative Agent, for the
benefit of the Secured Parties and (b) upon the occurrence of any default
or event of default under such agreement or contract, (i) to permit the Lenders
to cure such default or event of default and assume the obligations of such
Credit Party under such agreement or contract and (ii) to prohibit the
termination of such agreement or contract by the counterparty thereto if the
Lenders assume the obligations of such Credit Party under such agreement or
contract and the Lenders take the actions required under the foregoing
clause (i).  Upon the request of the
Administrative Agent, the Borrower shall, within thirty (30) days of such
request, provide to the Administrative Agent and each Lender copies of all
agreements, documents and instruments evidencing the Swap Agreements not
previously delivered to the Administrative Agent and Lenders, certified as true
and correct by a Responsible Officer of the Borrower, and such other
information regarding such Swap Agreements as the Administrative Agent and
Lenders may reasonably request.

Section 6.12. 
Operation of Oil and Gas Interests.

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

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

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

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

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

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

Article VII

Negative Covenants

Until the Aggregate Commitment has expired or
terminated and the principal of and interest on each Loan and all fees payable
hereunder have been paid in full and all Letters of Credit have expired or
terminated and all LC Disbursements shall have been reimbursed, each Credit
Party covenants and agrees with the Lenders that:

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Section 7.01. 
Indebtedness.  The Borrower
will not, nor will it permit any of its Restricted Subsidiaries to, create,
incur, assume or permit to exist any Indebtedness, except:

(a)           The
Obligations;

(b)           Indebtedness
existing on the date hereof and set forth in Schedule 7.01 and extensions,
renewals and replacements of any such Indebtedness that do not increase the
outstanding principal amount thereof;

(c)           Indebtedness
of the Borrower to any Guarantor and of any Guarantor to the Borrower or any
other Guarantor; provided, that (i) all such Indebtedness shall be
unsecured and subordinated in right of payment to the payment in full of all of
the Obligations as provided in Section 8.06 and (ii) all such Indebtedness is
evidenced by promissory notes in form and substance reasonably satisfactory to
the Administrative Agent, and such promissory notes are subject to a security
interest in favor of the Administrative Agent for the benefit of the Secured
Parties on terms and conditions reasonably satisfactory to the Administrative
Agent prior and superior in right to any other Person;

(d)           Guarantees
of the Obligations;

(e)           Indebtedness
of the Borrower and the Restricted Subsidiaries incurred to finance the
acquisition, construction or improvement of any fixed or capital assets,
including Capital Lease Obligations and any Indebtedness assumed in connection
with the acquisition of any such assets or secured by a Lien on any such assets
prior to the acquisition thereof, and extensions, renewals and replacements of
any such Indebtedness that do not increase the outstanding principal amount
thereof; provided that (i) such Indebtedness is incurred prior to or
within 90 days after such acquisition or the completion of such construction or
improvement and (ii) the aggregate principal amount of Indebtedness permitted
by this clause (e) shall not exceed $10,000,000 at any time outstanding;

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

(g)           Indebtedness
of any Borrower or any Restricted Subsidiary under Swap Agreements to the
extent permitted under Section 7.05;

(h)           Indebtedness
under the Senior Notes in an aggregate principal amount not exceeding
$450,000,000 at any time outstanding; and

(i)            Other unsecured Indebtedness of the Credit Parties in an
aggregate principal amount not exceeding $25,000,000 at any time outstanding.

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

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

(b)           Permitted
Encumbrances;

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

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

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

Section 7.03. 
Fundamental Changes.

(a)           The
Borrower will not, nor will it permit any of its Restricted Subsidiaries to,
merge into or consolidate with any other Person, or permit any other Person to
merge into or consolidate with it, or sell, transfer, lease or otherwise
dispose of (in one transaction or in a series of transactions) all or any
substantial part of its assets, or any of its Borrowing Base Properties or any
of the Equity Interests of any Restricted Subsidiary (in each case, whether now
owned or hereafter acquired), or liquidate or dissolve, except that, the
Borrower or any Restricted Subsidiary may sell Hydrocarbons produced from its
Oil and Gas Interests in the ordinary course of business, and if at the time thereof and immediately
after giving effect thereto no Default shall have occurred and be continuing,
(i) any Restricted Subsidiary may merge into the Borrower in a transaction
in which the Borrower is the surviving entity, (ii) any Restricted
Subsidiary may

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merge into any other Restricted Subsidiary in a transaction in which
the surviving entity is a Restricted Subsidiary, (iii) any Restricted
Subsidiary may sell, transfer, lease or otherwise dispose of its assets to the
Borrower or to another Restricted Subsidiary, (iv) any Restricted Subsidiary
may liquidate or dissolve if the Borrower determines in good faith that such
liquidation or dissolution is in the best interests of the Borrower and is not
materially disadvantageous to the Lenders, (v) the Borrower or any Restricted Subsidiary may
sell, transfer, lease or otherwise dispose of equipment and related items in
the ordinary course of business, that are obsolete or no longer necessary in
the business of the Borrower or any of its Restricted Subsidiaries or that is
being replaced by equipment of comparable value and utility, (vi) subject
to Section 2.12(b), the Borrower or any Restricted Subsidiary may sell,
transfer, lease, exchange, abandon or otherwise dispose of Borrowing Base
Properties with a value not exceeding, in the aggregate for the Borrower and
its Restricted Subsidiaries taken as a whole, five percent (5%) of the
Borrowing Base between Scheduled Redeterminations and (vii) with the prior
written consent of Required Lenders and subject to Section 2.02(d) and Section
2.12(b), the Borrower or any Restricted Subsidiary may sell, transfer, lease,
exchange, abandon or otherwise dispose of Borrowing Base Properties not
otherwise permitted pursuant to the foregoing clause (vi). For purposes of the
foregoing clause (vi), the value of any Oil and Gas Interests included in the
Borrowing Base Properties shall be the Engineered Value of such Oil and Gas
Interests and the value of all other Oil and Gas Interests shall be the value
which would be assigned to such Oil and Gas Interests using the same
methodology, assumptions and discount rates used to determine the Engineered
Value of the Borrowing Base Properties as of the most recent
Redetermination.  In addition, for
purposes of determining compliance with clause (vi) of this Section with
respect to any exchange of Oil and Gas Interests, the value of such exchange
shall be the net reduction, if any, in Engineered Value realized or resulting
from such exchange.

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

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

(a)           Permitted
Investments;

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

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

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(d)           Guarantees
constituting Indebtedness permitted by Section 7.01;

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

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

(g)           other investments by the Borrower and the Restricted
Subsidiaries; provided that, on the date any such other investment is
made, the amount of such investment, together with all other investments made
pursuant to this clause (g) of Section 7.04 (in each case determined based on
the cost of such investment) since the Effective Date, does not exceed in the aggregate,
$10,000,000.

Section 7.05.  Swap Agreements.  The Borrower will not, nor will it permit any
of its Restricted Subsidiaries to, enter into or maintain any Swap Agreement,
except the Existing Swap Agreements, and Swap Agreements entered into in the ordinary
course of business with Approved Counterparties and not for speculative
purposes to (a) hedge or mitigate Crude Oil and Natural Gas price risks to
which the Borrower or any Restricted Subsidiary has actual exposure, and (b)
effectively cap, collar or exchange interest rates (from fixed to floating
rates, from one floating rate to another floating rate or otherwise) with
respect to any interest-bearing liability or investment of any Credit Party; provided
that such Swap Agreements (at the time each transaction under such Swap
Agreement is entered into) would not cause the aggregate notional amount of
Hydrocarbons under all Swap Agreements then in effect (including the Existing
Swap Agreements) to exceed at any time (i) eighty percent (80%) of the “forecasted
production from total proved reserves” (as defined below) of the Borrower and
the Restricted Subsidiaries for each of the first two years of the forthcoming
five year period and (ii) seventy percent (70%) of the forecasted production
from total proved reserves of the Borrower and the Restricted Subsidiaries for
each of the third, fourth and fifth years of the forthcoming five year
period.  As used in this Section, “forecasted
production from total proved reserves” means the forecasted production of Crude
Oil and Natural Gas as reflected in the most recent Reserve Report delivered to
the Administrative Agent pursuant to Section 6.01, after giving effect to any
pro forma adjustments for the consummation of any acquisitions or dispositions
since the effective date of such Reserve Report.  Once the Borrower or any Restricted
Subsidiaries enters into a Swap Agreement or any hedge transaction pursuant to
any Swap Agreement, the terms and conditions of such Swap Agreement and such
hedge transaction may not be amended or modified, nor may such Swap Agreement
or hedge transaction be cancelled without the prior written consent of Majority
Lenders.  Each Credit Party and each
Lender agrees and acknowledges that (i) the Existing Swap Agreements are Swap
Agreements permitted under this Section 7.05, (ii) as of the Effective Date,
the counterparty to each Existing Swap Agreement is a Lender Counterparty, and
(iii) the obligations of the Credit Parties under the Existing Swap Agreements
are included in the defined term “Obligations” and such obligations are
entitled to the benefits of, and are secured by the Liens granted under, the
Security Instruments.

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Section 7.06.  Restricted Payments.  The Borrower will not, nor will it permit any
of its Restricted Subsidiaries to, declare or make, or agree to pay or make,
directly or indirectly, any Restricted Payment, except that (a) the Borrower
may declare and make Restricted Payments with respect to its Equity Interests
payable solely in its Equity Interests (other than Disqualified Stock), (b) the
Borrower may make Restricted Payments pursuant to and in accordance with stock
option plans or other benefit plans for management or employees of the Borrower
and its Restricted Subsidiaries in an aggregate amount not to exceed $2,000,000
in any fiscal year, (c) so long as no Default has occurred and is continuing,
the Borrower may declare and make distributions of the MLP Rights, (d) any
Restricted Subsidiary may make Restricted Payments to the Borrower or any
Guarantor; provided that no Default has occurred and is continuing or would
result from the making of such Restricted Payment, (e) the Borrower may declare
and pay dividends with respect to its Preferred Stock in additional shares of
Preferred Stock, and (f) the Borrower may pay cash dividends on the Preferred
Stock; provided that on the date of any such payment, (i) no Default has
occurred and is continuing or would result from such payment, (ii) the amount
of such cash dividends in any fiscal year shall not exceed the lesser of (x)
$200,000,000 and (y) the amount of cash dividends accrued on the Preferred
Stock in such fiscal year, and (iii) after giving effect to such Restricted
Payment, the Aggregate Commitment exceeds Aggregate Credit Exposure by an
amount equal to or greater than ten percent (10%) of the Borrowing Base.

Section 7.07. 
Transactions with Affiliates.  The Borrower will not, nor will it permit any
of its Restricted Subsidiaries to, sell, lease or otherwise transfer any
property or assets to, or purchase, lease or otherwise acquire any property or
assets from, or otherwise engage in any other transactions with, any of its
Affiliates, except (a) in the ordinary course of business at prices and on
terms and conditions not less favorable to the Borrower or such Restricted
Subsidiary than could be obtained on an arm’s-length basis from unrelated third
parties, (b) transactions between or among the Borrower and its Restricted
Subsidiaries not involving any other Affiliate, (c) transactions described on
Schedule 7.07, (d) any Restricted Payment permitted by Section 7.06, (e) the
investments permitted under Section 7.04 and (f) the transactions contemplated
by the MLP Agreements.

Section 7.08. 
Restrictive Agreements. 
The Borrower will not, nor will it permit any of its Restricted
Subsidiaries to, directly or
indirectly, enter into, incur or permit to exist any agreement or other
arrangement that prohibits, restricts or imposes any condition upon (a) the
ability of the Borrower or any Restricted Subsidiary to create, incur or permit
to exist any Lien upon any of its property or assets, or (b) the ability of any
Restricted Subsidiary to pay dividends or other distributions with respect to
any of its Equity Interests or to make or repay loans or advances to the
Borrower or any Restricted Subsidiary or to Guarantee Indebtedness of the
Borrower or any Restricted Subsidiary; provided that (i) the foregoing
shall not apply to restrictions and conditions imposed by law or by this
Agreement, (ii) the foregoing shall not apply to restrictions and conditions
set forth in the Indenture, (iii) the foregoing shall not apply to restrictions
and conditions existing on the date hereof identified on Schedule 7.08 (but
shall apply to any extension or renewal of, or any amendment or modification
expanding the scope of, any such restriction or condition), (iv) clause (a) of
the foregoing shall not apply to restrictions or conditions imposed by any
agreement relating to secured Indebtedness permitted by this Agreement if such
restrictions or conditions apply only to the property or assets securing such

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Indebtedness and (v) clause (a) of the foregoing shall not apply to
customary provisions in leases and other contracts restricting the assignment
thereof.

Section 7.09. 
Disqualified Stock and Fiscal Year.  Except for the Preferred Stock, the Borrower
will not, nor will it permit any of its Restricted Subsidiaries to, issue any Disqualified Stock nor will it
change its fiscal year.

Section 7.10.  Amendments
of Organizational Documents; Certain Agreements and Senior Notes.  The Borrower will not, nor will it permit any
of its Restricted Subsidiaries to, enter into or permit any material
modification or amendment of, or waive any material right or obligation of any
Person under its Organizational Documents, or the MLP Agreements.  The Borrower will not enter into or permit
any modification or amendment of, or waive any right or obligation of any
Person under the Preferred Stock Documents. 
The Borrower will not, nor will it permit any of its Restricted Subsidiaries
to, directly or indirectly, prepay, redeem, defease, or purchase in any manner
any Senior Notes, except that the Borrower may prepay, redeem, defease or
purchase Senior Notes, so long as (i) no Default has occurred and is continuing
or would result from such prepayment, redemption, defeasance or purchase, (ii)
after giving effect to any such prepayment, redemption, defeasance or purchase,
the Aggregate Commitment exceeds Aggregate Credit Exposure by an amount equal
to or greater than ten percent (10%) of the Borrowing Base.  The Borrower will not, nor will it permit any
of its Restricted Subsidiaries to, enter into or permit any modification or
amendment of the Senior Note Documents the effect of which is to (a) increase
the maximum principal amount of the Senior Notes or the rate of interest on any
of the Senior Notes (other than as a result of the imposition of a default rate
of interest in accordance with the terms of the Senior Note Documents), (b)
change or add any event of default or any covenant with respect to the Senior
Note Documents if the effect of such change or addition is to cause any one or
more of the Senior Note Documents to be more restrictive on the Borrower or any
of its Subsidiaries than such Senior Note Documents were prior to such change
or addition, (c) change the dates upon which payments of principal or interest
on the Senior Notes are due, (d) change any redemption or prepayment provisions
of the Senior Notes, (e) alter the subordination provisions, if any, with
respect to any of the Senior Note Documents, (f) change any of Sections
4.07(a), 10.06, 10.07 or 12.03 of the Indenture or the penultimate paragraphs
of each of Sections 9.01 or 9.02 of the Indenture, (g) grant any Liens in any
assets of the Borrower or any of its Subsidiaries, or (h) permit any Subsidiary
to Guarantee the Senior Notes unless such Subsidiary is (or concurrently with
any such Guarantee becomes) a Guarantor.

Section 7.11. 
Financial Covenants.

(a)           Consolidated
Current Ratio.  The Borrower will not
permit the Consolidated Current Ratio as of the end of any fiscal quarter
ending on or after September 30, 2007 to be less than 1.00 to 1.00.

(b)           Leverage
Ratio.

(i)            The
Borrower will not permit the ratio, determined as of the end of the fiscal
quarter ending September 30, 2007, of (A) Consolidated Funded Indebtedness
as of the end of such fiscal quarter, to (B) Consolidated EBITDAX for such
fiscal quarter multiplied by four (4) to be greater than 3.50 to 1.00.

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(ii)           The
Borrower will not permit the ratio, determined as of the end of any fiscal
quarter ending after September 30, 2007 and on or before March 31,
2008, of (A) Consolidated Funded Indebtedness as of the end of such fiscal
quarter, to (B) Consolidated EBITDAX for the period from July 1, 2007
to the end of such fiscal quarter multiplied by a fraction, the numerator of
which is four (4) and the denominator of which is the number of fiscal quarters
ended since July 1, 2007, including the then ending fiscal quarter, to be
greater than 3.50 to 1.00.

(iii)          The
Borrower will not permit the ratio, determined as of the end of the fiscal
quarter ending on or after June 30, 2008, of (A) Consolidated Funded
Indebtedness as of the end of such fiscal quarter to (B) Consolidated EBITDAX
for the trailing four fiscal quarter period ending on such date, to be greater
than 3.50 to 1.00.

(c)           Interest Coverage Ratio.

(i)            The
Borrower will not permit the ratio, determined as of September 30, 2007,
of (A) Consolidated EBITDAX for such fiscal quarter multiplied by four (4)
to (B) Consolidated Interest Expense for such fiscal quarter multiplied by
four (4) to be less than 2.50 to 1.00.

(ii)           The
Borrower will not permit the ratio, determined as of the end of any fiscal
quarter ending after September 30, 2007 and on or before March 31,
2008, of (A) Consolidated EBITDAX for the period from July 1, 2007 to
the end of such fiscal quarter multiplied by a fraction, the numerator of which
is four (4) and the denominator of which is the number of fiscal quarters ended
since July 1, 2007, including the then ending fiscal quarter, to (B)
Consolidated Interest Expense for the period from July 1, 2007 to the end
of such fiscal quarter multiplied by a fraction, the numerator of which is four
(4) and the denominator of which is the number of fiscal quarters ended since
July 1, 2007, including the then ending fiscal quarter, to be less than
2.50 to 1.00.

(iii)          The
Borrower will not permit the ratio, determined as of the end of the fiscal
quarter ending on or after June 30, 2008, of (A) Consolidated EBITDAX for
the trailing four fiscal quarter period ending on such date, to (B)
Consolidated Interest Expense for such four fiscal quarter period to be less
than 2.50 to 1.00.

Section 7.12.  Sale and Leaseback Transactions and other
Off-Balance Sheet Liabilities.  The
Borrower will not, nor will it permit any Restricted Subsidiary to, enter into
or suffer to exist any (i) Sale and Leaseback Transaction or (ii) any other
transaction pursuant to which it incurs or has incurred Off-Balance Sheet
Liabilities, except for Swap Agreements permitted under the terms of Section
7.05 and Advance Payment Contracts; provided, that the aggregate
amount of all Advance Payments received by any Credit Party that have not been
satisfied by delivery of production at any time does not exceed, in the
aggregate $5,000,000.

Section 7.13.  Interestholder Subsidiaries.  At all times prior to the consummation of the
MLP Public Offering, the Borrower will not, nor will it permit any
Interestholder Subsidiary to, directly or indirectly, enter into, incur or
permit to exist any agreement or other arrangement that prohibits, restricts or
imposes any condition upon (a) the ability of the Borrower or any

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Interestholder Subsidiary to create, incur or
permit to exist any Lien upon any of its property or assets, or (b) the ability
of any Interestholder Subsidiary to pay dividends or other distributions with
respect to any of its Equity Interests or to make or repay loans or advances to
the Borrower, any Restricted Subsidiary or any Interestholder Subsidiary or to
Guarantee Indebtedness of the Borrower, any Restricted Subsidiary or any
Interestholder Subsidiary; provided that the foregoing shall not apply
to restrictions and conditions imposed by law, the Indenture or by this
Agreement.  At all times prior to the
consummation of the MLP Public Offering, 
the Borrower will not permit any Interestholder Subsidiary to, directly
or indirectly, (i) create, incur, assume or permit to exist any Indebtedness or
(ii) create, incur, assume or permit to exist any Lien on any property or asset
now owned or hereafter acquired by any Interestholder Subsidiary, or assign or
sell any income or revenues (including accounts receivable) or rights in
respect of any thereof.  At all times
prior to the consummation of the MLP Public Offering, the Interestholder
Subsidiaries shall own and hold 100% of the issued and outstanding Equity
Interests of the MLP.

Article VIII

Guarantee of Obligations

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

Section 8.02. 
Guarantee Absolute.  Each
Guarantor guarantees that the Guaranteed Liabilities shall be paid strictly in
accordance with the terms of this Agreement and the Swap Agreements to which
any Secured Party is a party.  The
liability of each Guarantor hereunder is absolute and unconditional
irrespective of:  (a) any change in the
time, manner or place of payment of, or in any other term of, all or any of the
Loan Documents or the Guaranteed Liabilities, or any other amendment or waiver of
or any consent to departure from any of the terms of any Loan Document or
Guaranteed Liability, including any increase or decrease in the rate of
interest thereon; (b) any release or amendment or waiver of, or consent to
departure from, any other guaranty or support document, or any exchange,
release or non-perfection of any collateral, for all or any of the Loan
Documents or Guaranteed Liabilities; (c) any present or

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future law, regulation or order of any jurisdiction (whether of right
or in fact) or of any agency thereof purporting to reduce, amend, restructure
or otherwise affect any term of any Loan Document or Guaranteed Liability; (d)
without being limited by the foregoing, any lack of validity or enforceability
of any Loan Document or Guaranteed Liability; and (e) any other setoff, defense
or counterclaim whatsoever (in any case, whether based on contract, tort or any
other theory) with respect to the Loan Documents or the transactions
contemplated thereby which might constitute a legal or equitable defense
available to, or discharge of, the Borrower or a Guarantor.

Section 8.03. 
Guarantee Irrevocable. 
This Guarantee is a continuing guaranty of the payment of all Guaranteed
Liabilities now or hereafter existing under this Agreement and such Swap
Agreements to which any Secured Party is a party and shall remain in full force
and effect until payment in full of all Guaranteed Liabilities and other
amounts payable hereunder and until this Agreement and the Swap Agreements are
no longer in effect or, if earlier, when the Guarantor has given the
Administrative Agent written notice that this Guarantee has been revoked; provided
that any notice under this Section shall not release the revoking Guarantor
from any Guaranteed Liability, absolute or contingent, existing prior to the
Administrative Agent’s actual receipt of the notice at its branches or
departments responsible for this Agreement and such Swap Agreements and
reasonable opportunity to act upon such notice.

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

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

Section 8.06. 
Subordination.  Without
limiting the rights of the Administrative Agent, the Lenders and the Lender
Counterparties under any other agreement, any liabilities owed by the Borrower
to any Guarantor in connection with any extension of credit or financial
accommodation by any Guarantor to or for the account of the Borrower, including
but not

 74
 

limited to interest accruing at the agreed contract rate after the
commencement of a bankruptcy or similar proceeding, are hereby subordinated to
the Guaranteed Liabilities, and such liabilities of the Borrower to such
Guarantor, if the Administrative Agent so requests, shall be collected,
enforced and received by any Guarantor as trustee for the Administrative Agent
and shall be paid over to the Administrative Agent on account of the Guaranteed
Liabilities but without reducing or affecting in any manner the liability of
the Guarantor under the other provisions of this Guarantee.

Section 8.07. 
Payments Generally.  All
payments by the Guarantors shall be made in the manner, at the place and in the
currency (the “Payment Currency”) required by the Loan Documents and the
Swap Agreement to which any Lender Counterparty is a party, as the case may be;
provided, however, that (if the Payment Currency is other than
Dollars) any Guarantor may, at its option (or, if for any reason whatsoever any
Guarantor is unable to effect payments in the foregoing manner, such Guarantor
shall be obligated to) pay to the Administrative Agent at its principal office
the equivalent amount in Dollars computed at the selling rate of the
Administrative Agent or a selling rate chosen by the Administrative Agent, most
recently in effect on or prior to the date the Guaranteed Liability becomes
due, for cable transfers of the Payment Currency to the place where the
Guaranteed Liability is payable.  In any
case in which any Guarantor makes or is obligated to make payment in Dollars,
the Guarantor shall hold the Administrative Agent, the Lenders and the Lender
Counterparties harmless from any loss incurred by the Administrative Agent, any
Lender or any Lender Counterparty arising from any change in the value of
Dollars in relation to the Payment Currency between the date the Guaranteed
Liability becomes due and the date the Administrative Agent, such Lender or
such Lender Counterparty is actually able, following the conversion of the
Dollars paid by such Guarantor into the Payment Currency and remittance of such
Payment Currency to the place where such Guaranteed Liability is payable, to
apply such Payment Currency to such Guaranteed Liability.

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

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

Section 8.10.  Limitations on Guarantee.  The provisions of the Guarantee under this
Article VIII are severable, and in any action or proceeding involving any state
corporate law, or any state, federal or foreign bankruptcy, insolvency,
reorganization or other law affecting the

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rights of creditors generally, if the
obligations of any Guarantor under this Guarantee would otherwise be held or
determined to be avoidable, invalid or unenforceable on account of the amount
of such Guarantor’s liability under this Guarantee, then, notwithstanding any
other provision of this Guarantee to the contrary, the amount of such liability
shall, without any further action by the Guarantors, the Administrative Agent,
any Lender or any Lender Counterparty, be automatically limited and reduced to the
highest amount that is valid and enforceable as determined in such action or
proceeding (such highest amount determined hereunder being the relevant
Guarantor’s “Maximum Liability”). This Section 8.10, with respect to the
Maximum Liability of the Guarantors, is intended solely to preserve the rights
of the Administrative Agent, Lenders and Lender Counterparties hereunder to the
maximum extent not subject to avoidance under applicable law, and no Guarantor
nor any other Person shall have any right or claim under this Section 8.10 with
respect to the Maximum Liability, except to the extent necessary so that none
of the obligations of any Guarantor hereunder shall be rendered voidable under
applicable law.

Article IX

Events of Default

If any of the following events (“Events of Default”)
shall occur:

(a)           the
Borrower shall fail to pay any principal of any Loan (including any payments
required under Section 2.12) or any reimbursement obligation in respect of any
LC Disbursement when and as the same shall become due and payable, whether at
the due date thereof or at a date fixed for prepayment thereof or otherwise;

(b)           the
Borrower shall fail to pay any interest on any Loan or any fee or any other
amount (other than an amount referred to in clause (a) of this Article)
payable under this Agreement, when and as the same shall become due and
payable, and such failure shall continue unremedied for a period of three days;

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

(d)           the
Borrower or any Restricted Subsidiary shall fail to observe or perform any
covenant, condition or agreement contained in Section 2.12, Section 6.01, Section 6.02, Section 6.03 (with respect
to the Borrower or any Restricted Subsidiary’s existence), Section 6.05 (with
respect to insurance), Section 6.08, or in Article VII;

(e)           the
Borrower or any Restricted Subsidiary shall fail to observe or perform any
covenant, condition or agreement contained in this Agreement (other than those
specified in

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clause (a), (b) or (d) of this Article) or any Loan Document, and such
failure shall continue unremedied for a period of thirty (30) days after
notice thereof from the Administrative Agent to the Borrower (which notice will
be given at the request of any Lender);

(f)            the
Borrower or any Restricted Subsidiary shall fail to make any payment
(whether of principal or interest and regardless of amount) in respect of any
Material Indebtedness, when and as the same shall become due and payable;

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

(h)           an
involuntary proceeding shall be commenced or an involuntary petition shall be
filed seeking (i) liquidation, reorganization or other relief in respect
of the Borrower or any Restricted Subsidiary or its debts, or of a substantial
part of its assets, under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect or (ii) the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Borrower or any Restricted Subsidiary or for a
substantial part of its assets, and, in any such case, such proceeding or
petition shall continue undismissed for sixty (60) days or an order or decree
approving or ordering any of the foregoing shall be entered;

(i)            the
Borrower or any Restricted Subsidiary shall (i) voluntarily commence any
proceeding or file any petition seeking liquidation, reorganization or other
relief under any Federal, state or foreign bankruptcy, insolvency, receivership
or similar law now or hereafter in effect, (ii) consent to the institution
of, or fail to contest in a timely and appropriate manner, any proceeding or
petition described in clause (h) of this Article, (iii) apply for or
consent to the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Borrower or any Restricted Subsidiary
or for a substantial part of its assets, (iv) file an answer admitting the
material allegations of a petition filed against it in any such proceeding,
(v) make a general assignment for the benefit of creditors or
(vi) take any action for the purpose of effecting any of the foregoing;

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

(k)           one
or more judgments for the payment of money in an aggregate amount in excess of
$5,000,000 shall be rendered against the Borrower or any Restricted Subsidiary
or any combination thereof and the same shall remain undischarged for a period
of thirty (30) consecutive days during which execution shall not be
effectively stayed, or any action shall be legally taken by a judgment creditor
to attach or levy upon any assets of the Borrower or any Restricted Subsidiary
to enforce any such judgment;

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(l)            an
ERISA Event shall have occurred that, in the opinion of the Majority Lenders,
when taken together with all other ERISA Events that have occurred, could
reasonably be expected to result in a Material Adverse Effect;

(m)          the
delivery by any Guarantor to the Administrative Agent of written notice that
its Guarantee under Article VIII has been revoked or is otherwise declared
invalid or unenforceable;

(n)           a
Change of Control shall occur;

then, and in every such event (other than an event
with respect to the Borrower or any Restricted Subsidiary described in clause
(h) or (i) of this Article), and at any time thereafter during the continuance
of such event, the Administrative Agent may, and at the request of the Majority
Lenders shall, by notice to the Borrower, take either or both of the following
actions, at the same or different times:  (i) terminate the
Aggregate Commitment, and thereupon the Aggregate Commitment shall terminate
immediately, and (ii) declare the Loans then outstanding to be due and
payable in whole (or in part, in which case any principal not so declared to be
due and payable may thereafter be declared to be due and payable), and
thereupon the principal of the Loans so declared to be due and payable,
together with accrued interest thereon and all fees and other obligations of
the Borrower accrued hereunder, shall become due and payable immediately,
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by the Borrower; and in case of any event with respect to the
Borrower described in clause (h) or (i) of this Article, the Aggregate
Commitment shall automatically terminate and the principal of the Loans then
outstanding, together with accrued interest thereon and all fees and other
obligations of the Borrower accrued hereunder, shall automatically become due
and payable, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrower.

Article X

The Administrative Agent

Each of the Lenders and the Issuing Bank hereby
irrevocably appoints the Administrative Agent as its agent and authorizes the
Administrative Agent to take such actions on its behalf and to exercise such
powers as are delegated to the Administrative Agent by the terms hereof,
together with such actions and powers as are reasonably incidental thereto.

The bank serving as the Administrative Agent hereunder
shall have the same rights and powers in its capacity as a Lender as any other
Lender and may exercise the same as though it were not the Administrative
Agent, and such bank and its Affiliates may accept deposits from, lend money to
and generally engage in any kind of business with any Credit Party or other
Affiliate thereof as if it were not the Administrative Agent hereunder.

The Administrative Agent shall not have any duties or
obligations except those expressly set forth herein.  Without limiting the generality of the
foregoing, (a) the Administrative Agent shall not be subject to any
fiduciary or other implied duties, regardless of whether a Default has occurred
and is continuing, (b) the Administrative Agent shall not have any duty to
take any

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discretionary action or exercise any discretionary
powers, except discretionary rights and powers expressly contemplated hereby
that the Administrative Agent is required to exercise in writing as directed by
the Majority Lenders or the Required Lenders (or such other number or
percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 11.02), and (c) except as expressly set forth herein, the
Administrative Agent shall not have any duty to disclose, and shall not be
liable for the failure to disclose, any information relating to any Credit
Party that is communicated to or obtained by the bank serving as Administrative
Agent or any of its Affiliates in any capacity. 
The Administrative Agent shall not be liable for any action taken or not
taken by it with the consent or at the request of the Majority Lenders or the
Required Lenders (or such other number or percentage of the Lenders as shall be
necessary under the circumstances as provided in Section 11.02) or in the
absence of its own gross negligence or willful misconduct.  The Administrative Agent shall be deemed not
to have knowledge of any Default unless and until written notice thereof is
given to the Administrative Agent by the Borrower or a Lender, and the
Administrative Agent shall not be responsible for or have any duty to ascertain
or inquire into (i) any statement, warranty or representation made in or
in connection with this Agreement, (ii) the contents of any certificate,
report or other document delivered hereunder or in connection herewith,
(iii) the performance or observance of any of the covenants, agreements or
other terms or conditions set forth herein, (iv) the validity,
enforceability, effectiveness or genuineness of this Agreement or any other
agreement, instrument or document, or (v) the satisfaction of any condition
set forth in Article V or elsewhere herein, other than to confirm receipt of
items expressly required to be delivered to the Administrative Agent.  None of the Syndication Agents, Documentation
Agents or Managing Agents shall have any responsibility or liabilities as an
agent hereunder.

The Administrative Agent shall be entitled to rely
upon, and shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing believed
by it to be genuine and to have been signed or sent by the proper Person.  The Administrative Agent also may rely upon
any statement made to it orally or by telephone and believed by it to be made
by the proper Person, and shall not incur any liability for relying thereon.  The Administrative Agent may consult with
legal counsel (who may be counsel for the Borrower), independent accountants
and other experts selected by it, and shall not be liable for any action taken
or not taken by it in accordance with the advice of any such counsel,
accountants or experts.

The Administrative Agent may perform any and all its
duties and exercise its rights and powers by or through any one or more
sub-agents appointed by the Administrative Agent.  The Administrative Agent and any such sub-agent
may perform any and all its duties and exercise its rights and powers through
their respective Related Parties.  The
exculpatory provisions of the preceding paragraphs shall apply to any such
sub-agent and to the Related Parties of the Administrative Agent and any such
sub-agent, and shall apply to their respective activities in connection with
the syndication of the credit facilities provided for herein as well as
activities as Administrative Agent.

Subject to the appointment and acceptance of a successor
Administrative Agent as provided in this paragraph, the Administrative Agent
may resign at any time by notifying the Lenders, the Issuing Bank and the
Borrower.  Upon any such resignation, the
Majority Lenders shall have the right, in consultation with the Borrower, to
appoint a successor.  If no successor

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shall have been so appointed by the Majority Lenders
and shall have accepted such appointment within 30 days after the retiring
Administrative Agent gives notice of its resignation, then the retiring
Administrative Agent may, on behalf of the Lenders and the Issuing Bank,
appoint a successor Administrative Agent which shall be a bank with an office
in Chicago, Illinois or New York, New York, or an Affiliate of any such bank.  Upon the acceptance of its appointment as
Administrative Agent hereunder by a successor, such successor shall succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Administrative Agent, and the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder.  The fees payable by the Borrower to a
successor Administrative Agent shall be the same as those payable to its
predecessor unless otherwise agreed between the Borrower and such
successor.  After the Administrative
Agent’s resignation hereunder, the provisions of this Article and Section 11.03
shall continue in effect for the benefit of such retiring Administrative Agent,
its sub-agents and their respective Related Parties in respect of any
actions taken or omitted to be taken by any of them while it was acting as
Administrative Agent.

Each Lender acknowledges that it has, independently
and without reliance upon the Administrative Agent or any other Lender and
based on such documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement.  Each Lender also acknowledges that it will,
independently and without reliance upon the Administrative Agent or any other Lender
and based on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement, any related agreement or any document
furnished hereunder or thereunder.

Article XI

Miscellaneous

Section 11.01.  Notices.

(a)           Except
in the case of notices and other communications expressly permitted to be given
by telephone (and subject to paragraph (b) below), all notices and other
communications provided for herein shall be in writing and shall be delivered
by hand or overnight courier service, mailed by certified or registered mail or
sent by telecopy, as follows:

(i)            if to the Borrower,
to EXCO Resources, Inc., 12377 Merit Drive, Suite 1700, Dallas, Texas 75251,
Attention:  Douglas H. Miller, Chief
Executive Officer and Attention:  J.
Douglas Ramsey, Chief Financial Officer, Telecopy No. (214) 368-2087.  For purposes of delivering the documents
pursuant to Section 6.01(a), Section 6.01(b) and Section 6.01(d), the website
address is www.excoresources.com;

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

 80

(iii)          if to the
Swingline Lender, JPMorgan Chase Bank, N.A., JPMorgan Loan Services, 21 South
Clark St., 19th Floor, Chicago, Illinois 60603-2003, Telecopy No.: (312)
385-7096, Attention:  Claudia Kech, with a copy to JPMorgan
Chase Bank, N.A., 1717 Main Street, Mail Code TX1-2448, Dallas, Texas 75201,
Telecopy No. (214) 290-2332, Attention: 
Wm. Mark Cranmer, Senior Vice President; and

(iv)          if to any other
Lender, to it at its address (or telecopy number) set forth in its
Administrative Questionnaire.

(b)           Notices
and other communications to the Lenders hereunder may be delivered or furnished
by electronic communications pursuant to procedures approved by the
Administrative Agent; provided that the foregoing shall not apply to notices
pursuant to Article II unless otherwise agreed by the Administrative Agent and
the applicable Lender.  The
Administrative Agent or the Borrower may, in their discretion, agree to accept
notices and other communications to it hereunder by electronic communications
pursuant to procedures approved by it; provided that approval of such
procedures may be limited to particular notices or communications.

(c)           Any
party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto.  All notices and other communications given to
any party hereto in accordance with the provisions of this Agreement shall be
deemed to have been given on the date of receipt.

Section 11.02.  Waivers; Amendments.

(a)           No
failure or delay by the Administrative Agent, the Issuing Bank or any Lender in
exercising any right or power hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power.  The rights and remedies
of the Administrative Agent, the Issuing Bank and the Lenders hereunder are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have.  No waiver of any
provision of this Agreement or consent to any departure by the Borrower
therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) of this Section, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which
given.  Without limiting the generality
of the foregoing, the making of a Loan or issuance of a Letter of Credit shall
not be construed as a waiver of any Default, regardless of whether the
Administrative Agent, any Lender or the Issuing Bank may have had notice or
knowledge of such Default at the time.

(b)           Neither
this Agreement nor any provision hereof may be waived, amended or modified
except pursuant to an agreement or agreements in writing entered into by the
Credit Parties and the Majority Lenders or by the Credit Parties and the
Administrative Agent with the consent of the Majority Lenders; provided
that no such agreement shall (1) increase the Borrowing Base without the
written consent of each Lender, (2) increase the Commitment of any Lender
without the written consent of such Lender, (3) reduce the principal amount of
any Loan or LC Disbursement or reduce the rate of interest thereon, or reduce
any fees payable hereunder, without the written consent of each Lender affected
thereby, (4) postpone the scheduled date of

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payment of the principal
amount of any Loan or LC Disbursement, or any interest thereon, or any fees
payable hereunder, or reduce the amount of, waive or excuse any such payment,
or postpone the scheduled date of expiration of the Aggregate Commitment,
without the written consent of each Lender affected thereby, (5) change Section
2.19(b) or Section 2.19(c) in a manner that would alter the pro rata sharing of
payments required thereby, without the written consent of each Lender, (6)
except in connection with any sales, transfers, leases or other dispositions
permitted in Section 7.03, release any Credit Party from its obligations under
the Loan Documents or release any of the Collateral without the written consent
of each Lender, or (7) change any of the provisions of this Section or the
definition of “Majority Lenders” or “Required Lenders” or any other provision
hereof specifying the number or percentage of Lenders required to waive, amend
or modify any rights hereunder or make any determination or grant any consent
hereunder, without the written consent of each Lender; provided  further
that no such agreement shall amend, modify or otherwise affect the rights or
duties of the Administrative Agent, the Issuing Bank or the Swingline Lender
hereunder without the prior written consent of the Administrative Agent, the
Issuing Bank or the Swingline Lender, as the case may be.  Notwithstanding anything to the contrary
herein, no Defaulting Lender shall have any right to approve or disapprove any
amendment, waiver or consent hereunder, except that the Commitment of such
Lender may not be increased or extended without the consent of such Lender.

Section 11.03.  Expenses; Indemnity; Damage Waiver.

(a)           The
Borrower shall pay (i) all reasonable out-of-pocket expenses
incurred by the Administrative Agent and its Affiliates, including the
reasonable fees, charges and disbursements of counsel for the Administrative
Agent, in connection with the syndication of the credit facilities provided for
herein, the preparation and administration of this Agreement and the other Loan
Documents or any amendments, modifications or waivers of the provisions hereof (whether
or not the transactions contemplated hereby or thereby shall be consummated),
(ii) all reasonable out-of-pocket expenses incurred by the Issuing Bank in
connection with the issuance, amendment, renewal or extension of any Letter of
Credit or any demand for payment thereunder and (iii) all out-of-pocket
expenses incurred by the Administrative Agent, the Issuing Bank or any Lender,
including the fees, charges and disbursements of any counsel for the
Administrative Agent, the Issuing Bank or any Lender, in connection with the
enforcement or protection of its rights in connection with the Loan Documents,
including its rights under this Section, or in connection with the Loans made
or Letters of Credit issued hereunder, including all such out-of-pocket expenses
incurred during  any workout,
restructuring or negotiations in respect of such Loans or Letters of Credit.

(b)           THE CREDIT PARTIES SHALL INDEMNIFY THE ADMINISTRATIVE
AGENT, THE ISSUING BANK AND EACH LENDER, AND EACH RELATED PARTY OF ANY OF THE
FOREGOING PERSONS (EACH SUCH PERSON BEING CALLED AN “INDEMNITEE”)
AGAINST, AND HOLD EACH INDEMNITEE HARMLESS FROM, ANY AND ALL LOSSES, CLAIMS,
DAMAGES, PENALTIES, LIABILITIES AND RELATED EXPENSES, INCLUDING THE FEES,
CHARGES AND DISBURSEMENTS OF ANY COUNSEL FOR ANY INDEMNITEE, INCURRED BY OR
ASSERTED AGAINST ANY INDEMNITEE ARISING OUT OF, IN CONNECTION WITH, OR AS A
RESULT OF (I) THE EXECUTION OR DELIVERY OF THIS

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AGREEMENT OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED
HEREBY, THE PERFORMANCE BY THE PARTIES HERETO OF THEIR RESPECTIVE OBLIGATIONS
HEREUNDER OR THE CONSUMMATION OF THE TRANSACTIONS OR ANY OTHER TRANSACTIONS
CONTEMPLATED HEREBY, (II) ANY LOAN OR LETTER OF CREDIT OR THE USE OF THE
PROCEEDS THEREFROM (INCLUDING ANY REFUSAL BY THE ISSUING BANK TO HONOR A DEMAND
FOR PAYMENT UNDER A LETTER OF CREDIT IF THE DOCUMENTS PRESENTED IN CONNECTION
WITH SUCH DEMAND DO NOT STRICTLY COMPLY WITH THE TERMS OF SUCH LETTER OF
CREDIT), (III) ANY ACTUAL OR ALLEGED PRESENCE OR RELEASE OF HAZARDOUS
MATERIALS ON OR FROM ANY PROPERTY OWNED OR OPERATED BY THE BORROWER OR ANY
SUBSIDIARY, OR ANY ENVIRONMENTAL LIABILITY RELATED IN ANY WAY TO THE BORROWER
OR ANY SUBSIDIARY, OR (IV) ANY ACTUAL OR PROSPECTIVE CLAIM, LITIGATION,
INVESTIGATION OR PROCEEDING RELATING TO ANY OF THE FOREGOING, WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY AND REGARDLESS OF WHETHER ANY INDEMNITEE IS
A PARTY THERETO; PROVIDED THAT SUCH INDEMNITY SHALL NOT, AS TO ANY
INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH LOSSES, CLAIMS, DAMAGES,
LIABILITIES OR RELATED EXPENSES ARE DETERMINED BY A COURT OF COMPETENT
JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED FROM THE
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNITEE.

(c)           To
the extent that any Credit Party fails to pay any amount required to be paid by
it to the Administrative Agent, the Issuing Bank or the Swingline Lender under
paragraph (a) or (b) of this Section, each Lender severally agrees to pay to
the Administrative Agent, the Issuing Bank or the Swingline Lender, as the case
may be, such Lender’s Applicable Percentage of such unpaid amount with
respect to the amounts to be paid to the Issuing Bank or the Swingline Lender
and such Lender’s Aggregate Applicable Percentage of such unpaid amount with
respect to amounts to be paid to the Administrative Agent (in each case, determined as of the time that
the applicable unreimbursed expense or indemnity payment is sought) of such
unpaid amount; provided that the unreimbursed expense or indemnified
loss, claim, damage, liability or related expense, as the case may be, was
incurred by or asserted against the Administrative Agent, the Issuing Bank or
the Swingline Lender in its capacity as such.

(d)           TO
THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, THE CREDIT PARTIES SHALL NOT
ASSERT, AND HEREBY WAIVE, ANY CLAIM AGAINST ANY INDEMNITEE, ON ANY THEORY OF
LIABILITY, FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES (AS OPPOSED
TO DIRECT OR ACTUAL DAMAGES) ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT
OF, THIS AGREEMENT OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY, THE
TRANSACTIONS, ANY LOAN OR LETTER OF CREDIT OR THE USE OF THE PROCEEDS THEREOF.

(e)           All
amounts due under this Section shall be payable not later than 10 days after
written demand therefor.

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Section 11.04.  Successors and Assigns.

(a)           The
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns permitted hereby
(including any Affiliate of the Issuing Bank that issues any Letter of Credit),
except that (i) no Credit Party may assign or otherwise transfer any of its
rights or obligations hereunder without the prior written consent of each
Lender (and any attempted assignment or transfer by such Credit Party without
such consent shall be null and void) and (ii) no Lender may assign or otherwise
transfer its rights or obligations hereunder except in accordance with this
Section.  Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than
the parties hereto, their respective successors and assigns permitted hereby
(including any Affiliate of the Issuing Bank that issues any Letter of Credit),
Participants (to the extent provided in paragraph (c) of this Section) and, to
the extent expressly contemplated hereby, the Related Parties of each of the
Administrative Agent, the Issuing Bank and the Lenders) any legal or equitable
right, remedy or claim under or by reason of this Agreement.

(b)

(i)            Subject to the
conditions set forth in paragraph (b)(ii) below, any Lender may assign to one
or more assignees all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitment and the Loans at the
time owing to it) with the prior written consent (such consent not to be
unreasonably withheld) of:

(A)          the Borrower, provided
that no consent of the Borrower shall be required for an assignment to a
Lender, an Affiliate of a Lender, a Federal Reserve Bank, an Approved Fund or,
if an Event of Default has occurred and is continuing, any other assignee;

(B)           the Administrative
Agent;

(C)           the Issuing Bank;
and

(D)          the Swingline Lender.

(ii)           Assignments shall
be subject to the following additional conditions:

(A)          except in the case of
an assignment to a Lender, an Affiliate of a Lender, an Approved Fund or an
assignment of the entire remaining amount of the assigning Lender’s Commitment
or Loans, the amount of the Commitment or Loans of the assigning Lender subject
to each such assignment (determined as of the date the Assignment and
Assumption with respect to such assignment is delivered to the Administrative
Agent) shall not be less than $5,000,000, unless each of the Borrower and the
Administrative Agent otherwise consent, provided that no such consent of
the Borrower shall be required if an Event of Default has occurred and is
continuing;

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(B)           each partial
assignment shall be made as an assignment of a proportionate part of all the
assigning Lender’s rights and obligations in respect of such Lender’s
Commitment and such Lender’s Loans under this Agreement;

(C)           the parties to each
assignment shall execute and deliver to the Administrative Agent an Assignment
and Assumption, together with a processing and recordation fee of $3,500; and

(D)          the assignee, if it
shall not be a Lender, shall deliver to the Administrative Agent an
Administrative Questionnaire.

For the purposes of this Section 11.04(b), the term “Approved
Fund” has the following meaning:

“Approved Fund” means any Person (other than a
natural person) that is engaged in making, purchasing, holding or investing in
bank loans and similar extensions of credit in the ordinary course of its
business and that is administered or managed by (a) a Lender, (b) an Affiliate
of a Lender or (c) an entity or an Affiliate of an entity that administers or
manages a Lender.

(iii)          Subject to
acceptance and recording thereof pursuant to paragraph (b)(iv) of this
Section, from and after the effective date specified in each Assignment and
Assumption the assignee thereunder shall be a party hereto and, to the extent
of the interest assigned by such Assignment and Assumption, have the rights and
obligations of a Lender under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Assumption, be released from its obligations under this Agreement (and, in the
case of an Assignment and Assumption covering all of the assigning Lender’s
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto but shall continue to be entitled to the benefits of Section 2.16,
Section 2.17, Section 2.18 and Section 11.03). 
Any assignment or transfer by a Lender of rights or obligations under
this Agreement that does not comply with this Section 11.04 shall be treated
for purposes of this Agreement as a sale by such Lender of a participation in
such rights and obligations in accordance with paragraph (c) of this Section
except that any attempted assignment or transfer by any Lender that does not
comply with clause (C) of Section 11.04(b)(ii) shall be null and void.

(iv)          The Administrative
Agent, acting for this purpose as an agent of the Borrower, shall maintain at
one of its offices a copy of each Assignment and Assumption delivered to it and
a register for the recordation of the names and addresses of the Lenders, and
the Commitment and Applicable Percentage of, and principal amount of the Loans
and LC Disbursements owing to, each Lender pursuant to the terms hereof from
time to time (the “Register”). 
The entries in the Register shall be conclusive, and the Credit Parties,
the Administrative Agent, the Issuing Bank and the Lenders may treat each
Person whose name is recorded in the Register pursuant to the terms hereof as a
Lender hereunder for all purposes of this Agreement, notwithstanding notice to
the contrary.  The Register shall be
available for inspection by the Credit Parties, the Issuing

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Bank
and any Lender, at any reasonable time and from time to time upon reasonable
prior notice.

(v)           Upon its receipt of
a duly completed Assignment and Assumption executed by an assigning Lender and
an assignee, the assignee’s completed Administrative Questionnaire (unless the
assignee shall already be a Lender hereunder), the processing and recordation
fee referred to in paragraph (b) of this Section any written consent to
such assignment required by paragraph (b) of this Section, the Administrative
Agent shall accept such Assignment and Assumption and record the information
contained therein in the Register; provided that if either the assigning
Lender or the assignee shall have failed to make any payment required to be
made by it pursuant to Section 2.07(d) or Section 2.07(e), Section 2.08,
Section 2.19(d) or Section 11.03(c), the Administrative Agent shall have no
obligation to accept such Assignment and Assumption and record the information
therein in the Register unless and until such payment shall have been made in
full, together with all accrued interest thereon.  No assignment shall be effective for purposes
of this Agreement unless it has been recorded in the Register as provided in
this paragraph.

(c)

(i)            Any Lender may,
without the consent of the Borrower, the Administrative Agent or the Issuing
Bank, sell participations to one or more banks or other entities (a “Participant”)
in all or a portion of such Lender’s rights and obligations under this
Agreement (including all or a portion of its Commitment and the Loans owing to
it); provided that (A) such Lender’s obligations under this
Agreement shall remain unchanged, (B) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (C) the Borrower, the Administrative Agent, the Issuing Bank and the
other Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under this Agreement.  Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided that
such agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver
described in the first proviso to Section 11.02(b) that affects such
Participant.  Subject to paragraph
(c)(ii) of this Section, the Borrower agrees that each Participant shall be
entitled to the benefits of Section 2.16, Section 2.17 and Section 2.18 to the
same extent as if it were a Lender and had acquired its interest by assignment
pursuant to paragraph (b) of this Section. 
To the extent permitted by law, each Participant also shall be entitled
to the benefits of Section 11.08 as though it were a Lender, provided such
Participant agrees to be subject to Section 2.19(c) as though it were a Lender.

(ii)           A
Participant shall not be entitled to receive any greater payment under Section
2.16 or Section 2.18 than the applicable Lender would have been entitled to
receive with respect to the participation sold to such Participant, unless the
sale of the participation to such Participant is made with the prior written
consent of the Borrower.  A Participant
that would be a Foreign Lender if it were a Lender shall not be entitled to

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the benefits of Section 2.18 unless the Borrower is notified of the
participation sold to such Participant and such Participant agrees, for the
benefit of the Borrower, to comply with Section 2.18(e) as though it were a
Lender.

(d)           Any
Lender may at any time pledge or assign a security interest in all or any
portion of its rights under this Agreement to secure obligations of such
Lender, including without limitation any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest; provided that no such
pledge or assignment of a security interest shall release a Lender from any of
its obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto.

Section 11.05.  Survival.  All covenants, agreements, representations
and warranties made by the Credit Parties herein and in the certificates or
other instruments delivered in connection with or pursuant to this Agreement shall
be considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement and the making of any
Loans and issuance of any Letters of Credit, regardless of any investigation
made by any such other party or on its behalf and notwithstanding that the
Administrative Agent, the Issuing Bank or any Lender may have had notice or
knowledge of any Default or incorrect representation or warranty at the time
any credit is extended hereunder, and shall continue in full force and effect
as long as the principal of or any accrued interest on any Loan or any fee or
any other amount payable under this Agreement is outstanding and unpaid or any
Letter of Credit is outstanding and so long as the Aggregate Commitment has not
expired or terminated.  The provisions of
Section 2.16, Section 2.17, Section 2.18 and Section 11.03 and Article X shall
survive and remain in full force and effect regardless of the consummation of
the transactions contemplated hereby, the repayment of the Loans, the
expiration or termination of the Letters of Credit and the Aggregate Commitment
or the termination of this Agreement or any provision hereof.

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

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

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

Section 11.09.  GOVERNING LAW; JURISDICTION; CONSENT TO
SERVICE OF PROCESS.

(a)           THIS
AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE
STATE OF NEW YORK.

(b)           EACH
CREDIT PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS
PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW
YORK STATE COURT SITTING IN NEW YORK, NEW YORK IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR FOR RECOGNITION OR ENFORCEMENT
OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR, TO THE EXTENT
PERMITTED BY LAW, IN SUCH FEDERAL COURT. 
EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH
ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY
LAW.  NOTHING IN THIS AGREEMENT SHALL
AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT, THE ISSUING BANK OR ANY LENDER
MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT
AGAINST ANY CREDIT PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

(c)           EACH
CREDIT PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST
EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B)
OF THIS SECTION.  EACH OF THE PARTIES
HERETO HEREBY

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IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE
OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY
SUCH COURT.

(d)           EACH
PARTY TO THIS AGREEMENT IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE
MANNER PROVIDED FOR NOTICES IN Section 11.01. 
NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS
AGREEMENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

Section 11.10.  WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY). 
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO
HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

Section 11.11.  Headings.  Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of
this Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.

Section 11.12.  Confidentiality.  Each of the Administrative Agent, the Issuing
Bank and the Lenders agrees to maintain the confidentiality of the Information
(as defined below), except that Information may be disclosed (a) to its
and its Affiliates’ directors, officers, employees and agents, including
accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority or
any self-regulatory authority or agency possessing investigative powers and the
ability to sanction members for non-compliance, (c) to the extent required
by applicable laws or regulations or by any subpoena or similar legal process,
(d) to any other party to this Agreement, (e) in connection with the exercise
of any remedies hereunder or any suit, action or proceeding relating to this
Agreement or the enforcement of rights hereunder, (f) subject to an agreement
containing provisions substantially the same as, or otherwise consistent with,
those of this Section, to (i) any assignee of or Participant in, or any
prospective assignee of or Participant in, any of its rights or obligations
under this Agreement or (ii) any actual or prospective counterparty (or
its advisors) to any swap or derivative transaction relating to the Credit
Parties and their obligations, (g) with the consent of the Borrower or
(h) to the extent such Information (i) becomes publicly available
other than as a result of a breach of this Section or (ii) becomes
available to the Administrative Agent, the Issuing Bank or any Lender on a
nonconfidential basis from a source other than a Credit Party.  For the purposes of this Section, “Information”
means all information received from any Credit Party relating to any Credit
Party or its business, other than any such information that is available to the
Administrative Agent, the

 89
 

Issuing Bank or any Lender on a nonconfidential basis prior to
disclosure by any Credit Party; provided that, in the case of
information received from any Credit Party after the date hereof, such
information is clearly identified at the time of delivery as confidential.  Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered
to have complied with its obligation to do so if such Person has exercised the
same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.

Section 11.13.  Interest Rate Limitation.  Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Loan, together
with all fees, charges and other amounts which are treated as interest on such
Loan under applicable law (collectively the “Charges”), shall exceed the
maximum lawful rate (the “Maximum Rate”) which may be contracted for,
charged, taken, received or reserved by the Lender holding such Loan in
accordance with applicable law, the rate of interest payable in respect of such
Loan hereunder, together with all Charges payable in respect thereof, shall be
limited to the Maximum Rate and, to the extent lawful, the interest and Charges
that would have been payable in respect of such Loan but were not payable as a
result of the operation of this Section shall be cumulated and the interest and
Charges payable to such Lender in respect of other Loans or periods shall be
increased (but not above the Maximum Rate therefor) until such cumulated
amount, together with interest thereon at the Federal Funds Effective Rate to
the date of repayment, shall have been received by such Lender.  Chapter 346 of the Texas Finance Code (which
regulates certain revolving credit accounts (formerly Tex. Rev. Civ. Stat. Ann.
Art. 5069, Ch. 15)) shall not apply to this Agreement or to any Loan, nor shall
this Agreement or any Loan be governed by or be subject to the provisions of
such Chapter 346 in any manner whatsoever.

Section 11.14.  USA PATRIOT Act.  Each Lender that is subject to the
requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into
law October 26, 2001)) (the “Act”) hereby notifies each Credit Party that
pursuant to the requirements of the Act, it is required to obtain, verify and
record information that identifies each Credit Party, which information
includes the name and address of each Credit Party and other information that
will allow such Lender to identify each Credit Party in accordance with the
Act.  The Borrower shall, upon the
request of the Administrative Agent or any Lender, provide all documentation
and other information that the Administrative Agent or such Lender reasonably
requires to comply with its ongoing obligations under applicable “know your
customer” and anti-money laundering rules and regulations, including the Act.

Section 11.15.  Original Credit Agreement.  Upon the Effective Date, this Agreement shall
supersede and replace in its entirety the Original Credit Agreement; provided,
however, that (a) all loans, letters of credit, and other indebtedness,
obligations and liabilities outstanding under the Original Credit Agreement on
such date shall continue to constitute Loans, Letters of Credit and other
indebtedness, obligations and liabilities under this Agreement, (b) the
execution and delivery of this Agreement or any of the Loan Documents hereunder
shall not constitute a novation, refinancing or any other fundamental change in
the relationship among the parties and (c) the Loans, Letters of Credit, and
other indebtedness, obligations and liabilities outstanding hereunder, to the
extent outstanding under the Original Credit Agreement immediately prior to the
date hereof, shall constitute the same loans, letters of credit, and other
indebtedness, obligations and liabilities as were outstanding under the
Original Credit Agreement.

 90
 

Section 11.16.  Reaffirmation and Grant of
Security Interest.  Each Credit Party
hereby (i) confirms that each Security Instrument (as defined in the Original
Credit Agreement) to which it is a party or is otherwise bound and all
Collateral encumbered thereby, will continue to guarantee or secure, as the
case may be, to the fullest extent possible in accordance with the Loan
Documents, the payment and performance of all Obligations and Guaranteed
Liabilities under this Agreement and the Secured Obligations (as such term is
defined in the Security Instruments) under the Security Instruments, as the
case may be, including without limitation the payment and performance of all
such Obligations and Guaranteed Liabilities under this Agreement and the
Secured Obligations under the Security Instruments, and (ii) reaffirms its
grant to the Administrative Agent for the benefit of the Secured Parties of a
continuing Lien on and security interest in and to such Credit Party’s right,
title and interest in, to and under all Collateral as collateral security for
the prompt payment and performance in full when due of the Obligations and
Guaranteed Liabilities under this Agreement and the Secured Obligations under
the Security Instruments (whether at stated maturity, by acceleration or
otherwise) in accordance with the terms thereof.

Section 11.17.  Reallocation of Aggregate Commitment.  The Lenders (as defined in the Original
Credit Agreement) have agreed among themselves to reallocate the Aggregate
Commitment (as defined in the Original Credit Agreement) as contemplated by
this Agreement and to adjust their interests in the Aggregate Commitment and
the Revolving Loans (as defined in the Original Credit Agreement)
accordingly.  On the Effective Date and
after giving effect to such reallocation and adjustment of such Commitment and
such Loans, the Lenders shall own the Applicable Percentages set forth on
Schedule 2.01.  The outstanding Revolving
Loans (as defined in the Original Credit Agreement) and the funds delivered to
the Administrative Agent on the Effective Date by the Lenders shall be
allocated such that after giving effect to such allocation each of the Lenders
shall own the Applicable Percentages of the Aggregate Commitment and the
Commitments set forth on Schedule 2.01 and such Lenders shall own the Loans
consistent with the Applicable Percentages set forth on Schedule 2.01.  The Borrower shall pay any funding
indemnification amounts required by Section 2.17 of the Original Credit
Agreement in the event the payment of any principal of any Eurodollar Loan or
the conversion of any Eurodollar Loan other than on the last day of an Interest
Period applicable thereto is required in connection with the reallocation
contemplated by this Section 11.17.

 91

IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed by their respective authorized officers as
of the day and year first above written.

	
  

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  EXCO
  RESOURCES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ J. Douglas
  Ramsey

  
	
   

  	
   

  	
  Name:

  	
  J. Douglas
  Ramsey, Ph.D.

  
	
   

  	
   

  	
  Title:

  	
  Vice President
  and Chief Financial

  Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GUARANTORS:

  
	
   

  	
   

  
	
   

  	
  EXCO
  OPERATING, LP

  
	
   

  	
   

  
	
   

  	
  By:

  	
  EXCO Investment
  II, LLC,

  
	
   

  	
   

  	
  its sole general
  partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ J. Douglas
  Ramsey

  
	
   

  	
   

  	
   

  	
  Name:

  	
  J. Douglas
  Ramsey, Ph.D.

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President
  and Chief

  Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  NORTH
  COAST ENERGY, INC.

  
	
   

  	
  NORTH
  COAST ENERGY EASTERN, INC.

  
	
   

  	
  PINESTONE
  RESOURCES, LLC

  
	
   

  	
  POWER
  GAS MARKETING &

  
	
   

  	
  TRANSMISSION,
  INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ J. Douglas
  Ramsey

  
	
   

  	
   

  	
  Name:

  	
  J. Douglas
  Ramsey, Ph.D.

  
	
   

  	
   

  	
  Title:

  	
  Vice President
  and Chief Financial

  
	
   

  	
   

  	
   

  	
  Officer of the
  Credit Parties listed

  above

  
										

 

SIGNATURE PAGE

 

 

	
  

  	
  EXCO
  INVESTMENT I, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  EXCO Resources,
  Inc.,

  
	
   

  	
   

  	
  its sole member

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ J. Douglas Ramsey

  
	
   

  	
   

  	
   

  	
  Name:

  	
  J. Douglas
  Ramsey, Ph.D.

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President
  and Chief

  Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXCO
  INVESTMENT II, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  EXCO Resources,
  Inc.,

  
	
   

  	
   

  	
  its sole member

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ J. Douglas
  Ramsey

  
	
   

  	
   

  	
   

  	
  Name:

  	
  J. Douglas
  Ramsey, Ph.D.

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President
  and Chief

  
	
   

  	
   

  	
   

  	
   

  	
  Financial
  Officer

  

 

SIGNATURE PAGE

 

	
  

  	
  JPMORGAN
  CHASE BANK, N.A., as a Lender

  and as Administrative Agent,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Wm. Mark
  Cranmer

  
	
   

  	
   

  	
  Name:

  	
  Wm. Mark Cranmer

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice
  President

  

 

SIGNATURE PAGE

 

 

	
  

  	
  BNP PARIBAS

  	
   

  
	
   

  	
  as a Lender

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Betsy Jocher

  	
  /s/ Polly Schott

  
	
   

  	
  Name:

  	
  Betsy Jocher

  	
  Polly Schott

  
	
   

  	
  Title:

  	
  Director

  	
  Vice President

  
					

 

 

	
  

  	
  Citibank, N.A.

  	
   

  
	
   

  	
  as a Lender and Syndication Agent

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Angela McCracken

  
	
   

  	
  Name:

  	
  Angela McCracken

  
	
   

  	
  Title:

  	
  Vice President

  
					

 

 

	
  

  	
  Fortis Capital Corp.

  	
   

  
	
   

  	
  as a Lender

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michele Jones

  
	
   

  	
  Name:

  	
  Michele Jones

  	
   

  
	
   

  	
  Title:

  	
  Senior Vice President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Darrell Holley

  
	
   

  	
  Name:

  	
  Darrell Holley

  	
   

  
	
   

  	
  Title:

  	
  Managing Director

  	
   

  
					

 

 

	
  

  	
  Scotiabanc Inc.

  	
   

  
	
   

  	
  as a Lender

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William E. Zarrett

  
	
   

  	
  Name:

  	
  William E. Zarrett

  	
   

  
	
   

  	
  Title:

  	
  Managing Director

  	
   

  
					

 

 

	
  

  	
  Bank of America

  	
   

  
	
   

  	
  as a Lender

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jeffrey H. Rathkamp

  
	
   

  	
  Name:

  	
  Jeffrey H. Rathkamp

  	
   

  
	
   

  	
  Title:

  	
  Managing Director

  	
   

  
					

 

 

	
  

  	
  KeyBank NA

  	
   

  
	
   

  	
  as a Lender

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas Rajan

  
	
   

  	
  Name:

  	
  Thomas Rajan

  	
   

  
	
   

  	
  Title:

  	
  Senior Vice President

  	
   

  
					

 

 

	
  

  	
  CREDIT SUISSE, CAYMAN ISLANDS

  
	
   

  	
  BRANCH,

  	
   

  
	
   

  	
  as a Lender

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Vanessa Gomez

  
	
   

  	
  Name:

  	
  Vanessa Gomez

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Shaheen
  Malik

  	
   

  
	
   

  	
   

  	
  Shaheen Malik

  	
   

  
	
   

  	
   

  	
  Associate

  	
   

  
					

 

 

	
  

  	
  The Royal Bank of Scotland plc

  	
   

  
	
   

  	
  as a Lender

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Scott L. Joyce

  
	
   

  	
  Name:

  	
  Scott L. Joyce

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  
					

 

 

	
  

  	
  BANK OF SCOTLAND

  	
   

  
	
   

  	
  as a Lender

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Karen Weich

  
	
   

  	
  Name:

  	
  Karen Weich

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  
					

 

 

	
  

  	
  BMO Capital Markets Financing, Inc.

  
	
   

  	
  as a Lender

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James V. Ducote

  
	
   

  	
  Name:

  	
  James V. Ducote

  	
   

  
	
   

  	
  Title:

  	
  Director

  	
   

  
					

 

 

	
  

  	
  CALYON NEW YORK BRANCH

  	
   

  
	
   

  	
  as a Lender

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael D. Willis

  
	
   

  	
  Name:

  	
  Michael D. Willis

  	
   

  
	
   

  	
  Title:

  	
  Director

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Tom Byargeon

  
	
   

  	
  Name:

  	
  Tom Byargeon

  	
   

  
	
   

  	
  Title:

  	
  Managing Director

  	
   

  
					

 

 

	
  

  	
  Royal Bank of Canada

  	
   

  
	
   

  	
  as a Lender

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Don J. McKinnerney

  
	
   

  	
  Name:

  	
  Don J. McKinnerney

  	
   

  
	
   

  	
  Title:

  	
  Authorized Signatory

  	
   

  
					

 

 

	
  

  	
  SOCIETE GENERALE,

  	
   

  
	
   

  	
  as a Lender

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Christian Nelly

  
	
   

  	
  Name:

  	
  Christian Nelly

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  
					

 

 

	
  

  	
  Sumitomo Mitsui Banking Corporation

  	
   

  
	
   

  	
  as a Lender

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William M. Ginn

  
	
   

  	
  Name:

  	
  William M. Ginn

  	
   

  
	
   

  	
  Title:

  	
  General Manager

  	
   

  
						

 

 

	
  

  	
  TORONTO DOMINION (TEXAS) LLC

  	
   

  
	
   

  	
  as a Lender

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jackie Barrett

  
	
   

  	
  Name:

  	
  Jackie Barrett

  	
   

  
	
   

  	
  Title:

  	
  Authorized Signatory

  	
   

  
						

 

 

	
  

  	
  Wells Fargo Bank, N.A.

  	
   

  
	
   

  	
  as a Lender

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jason Hicks

  
	
   

  	
  Name:

  	
  Jason Hicks

  	
   

  
	
   

  	
  Title:

  	
  Portfolio Manager

  	
   

  
					

 

 

	
  

  	
  Allied Irish Banks, p.l.c.

  	
   

  
	
   

  	
  as a Lender

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David O’Driscoll

  
	
   

  	
  Name:

  	
  David O’Driscoll

  	
   

  
	
   

  	
  Title:

  	
  Assistant Vice President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Aidan Lanigan

  
	
   

  	
  Name:

  	
  Aidan Lanigan

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  
					

 

 

	
  

  	
  COMERICA BANK

  	
   

  
	
   

  	
  as a Lender

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter L. Sefzik

  
	
   

  	
  Name:

  	
  Peter L. Sefzik

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  
					

 

 

	
  

  	
  WESTLB AG, New York Branch

  	
   

  
	
   

  	
  as a Lender

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Paul Vastola

  
	
   

  	
  Name:

  	
  Paul Vastola

  	
   

  
	
   

  	
  Title:

  	
  Director

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas D. Murray

  
	
   

  	
  Name:

  	
  Thomas D. Murray

  	
   

  
	
   

  	
  Title:

  	
  Managing Director

  	
   

  
					

 

 

	
  

  	
  Natixis,

  	
   

  
	
   

  	
  as a Lender

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Donovan C. Broussard

  
	
   

  	
   

  	
  Donovan C. Broussard

  
	
   

  	
   

  	
  Managing Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Renaud d’Herbes

  
	
   

  	
   

  	
  Renaud d’Herbes

  
	
   

  	
   

  	
  Senior Managing Director

  
					

 

 

	
  

  	
  DEUTSCHE BANK TRUST COMPANY

  
	
   

  	
  AMERICAS

  	
   

  
	
   

  	
  as a Lender

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Evelyn Thierry

  
	
   

  	
  Name:

  	
  Evelyn Thierry

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Marguerite Sutton

  
	
   

  	
  Name:

  	
  Marguerite Sutton

  	
   

  
	
   

  	
  Title:

  	
  Director

  	
   

  
					

 

 

	
  

  	
  SUNTRUST BANK

  	
   

  
	
   

  	
  as a Lender

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Sean Roche

  
	
   

  	
  Name:

  	
  Sean Roche

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  
					

 

 

	
  

  	
  UNION BANK OF CALIFORNIA, N.A.,

  
	
   

  	
  as a Lender

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jarrod Bourgeois

  
	
   

  	
  Name:

  	
  Jarrod Bourgeois

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  
					

 

 

	
  

  	
  WACHOVIA BANK, NATIONAL

  	
   

  
	
   

  	
  ASSOCIATION,

  	
   

  
	
   

  	
  as a Lender

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Chris Hewitt

  
	
   

  	
  Name:

  	
  Chris Hewitt

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  
					

 

 

	
  

  	
  LEHMAN BROTHERS COMMERCIAL BANK

  
	
   

  	
  as a Lender

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brian McNany

  
	
   

  	
  Name:

  	
  Brian McNany

  	
   

  
	
   

  	
  Title:

  	
  Authorized Signatory

  	
   

  
					

 

 

	
  

  	
  UBS Loan Finance LLC

  	
   

  
	
   

  	
  as a Lender

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mary E. Evans

  
	
   

  	
  Name:

  	
  Mary E. Evans

  	
   

  
	
   

  	
  Title:

  	
  Associate Director

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Irja R. Otsa

  
	
   

  	
  Name:

  	
  Irja R. Otsa

  	
   

  
	
   

  	
  Title:

  	
  Associate Director

  	
   

  
					

 

 

	
  

  	
  U.S. Bank National Association

  	
   

  
	
   

  	
  as a Lender

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Daria Mahoney

  
	
   

  	
  Name:

  	
  Daria Mahoney

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  
					

 

 

	
  

  	
  BARCLAYS BANK PLC

  	
   

  
	
   

  	
  as a Lender

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Nicholas Bell

  
	
   

  	
  Name:

  	
  Nicholas Bell

  	
   

  
	
   

  	
  Title:

  	
  Director

  	
   

  
					

 

 

	
  

  	
  DZ BANK AG DEUTSCHE ZENTRAL-

  
	
   

  	
  GENOSSENSCHAFTSBANK, FRANKFURT AM

  
	
   

  	
  MAIN, NEW YORK BRANCH, as a Lender

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard L. Hagemann

  
	
   

  	
  Name:

  	
  Richard L. Hagemann

  	
   

  
	
   

  	
  Title:

  	
  First Vice President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Judson Horn

  
	
   

  	
  Name:

  	
  Judson Horn

  	
   

  
	
   

  	
  Title:

  	
  Assistant Treasurer

  	
   

  
					

 

 

	
  

  	
  GOLDMAN SACHS CREDIT PARTNERS, L.P.

  
	
   

  	
  as a Lender

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark Walton

  
	
   

  	
  Name:

  	
  Mark Walton

  	
   

  
	
   

  	
  Title:

  	
  Authorized Signatory

  	
   

  
					

 

 

	
  

  	
  MORGAN STANLEY SENIOR FUNDING,

  
	
   

  	
  INC.

  	
   

  	
   

  
	
   

  	
  as a Lender

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Daniel Twenge

  
	
   

  	
  Name:

  	
  Daniel Twenge

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  
	
   

  	
   

  	
  Morgan Stanley Senior Funding Inc.

  
					

 

 

	
  

  	
  STERLING BANK

  	
   

  
	
   

  	
  as a Lender

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ryan K. Michael

  
	
   

  	
  Name:

  	
  Ryan K. Michael

  	
   

  
	
   

  	
  Title:

  	
  Assistant Vice President

  	
   

  
					

 

ASSIGNMENT AND ASSUMPTION

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

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

	
  1.

  	
   

  	
   

  	
   

  	
  Assignor:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Assignee:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Borrower(s):

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Administrative
  Agent:

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Credit Agreement:

  	
   

  	
  Second Amended
  and Restated Credit Agreement dated as of                     ,
  2006 among EXCO Resources, Inc., as Borrower, Certain Subsidiaries of
  Borrower, as Guarantors, the Lenders parties thereto, and JPMorgan Chase
  Bank, N.A., as Administrative Agent

  

 

 1
 

 

 

	
  6.

  	
   

  	
  Assigned
  Interest:

  	
   

  	
   

  

 

	
  Facility Assigned

  	
   

  	
  Aggregate

  Commitment/Loans

  for all Lenders

  	
   

  	
  Amount of

  Commitment/Loans

  Assigned

  	
   

  	
  Applicable

  Percentage of

  Commitment/Loans

  	
   

  
	
  Commitment

  	
   

  	
  $

  	
   

  	
  $

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
  $

  	
   

  	
  $

  	
   

  	
   

  	
  %

  
	
    

  	
   

  	
  $

  	
   

  	
  $

  	
   

  	
   

  	
  %

  

 

Effective Date: 
                            
       , 20   

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

	
  

  	
  ASSIGNOR

  
	
   

  	
   

  
	
   

  	
  [NAME OF ASSIGNOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ASSIGNEE

  
	
   

  	
   

  
	
   

  	
  [NAME OF ASSIGNEE]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   Title:

  

 

 2
 

 

	
  [Consented to and] Accepted:

  
	
   

  
	
  JPMORGAN CHASE BANK, N.A.,

  
	
  as Administrative Agent

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   Title:

  	
   

  
	
   

  
	
  [Consented to:]

  
	
   

  
	
  EXCO RESOURCES, INC.

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   Name:

  	
   

  
	
   

  	
   Title:

  	
   

  

 

 3

Second Amended and Restated Credit Agreement dated [                                ],
2006 among EXCO Resources, Inc., as Borrower, Certain Subsidiaries of Borrower,
as Guarantors, the Lenders party thereto, and JPMorgan Chase Bank, N.A., as
Administrative Agent.

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

1.                                       Representations
and Warranties.

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

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

 1
 

2.                                       Payments.
 From and after the Effective Date, the
Administrative Agent shall make all payments in respect of the Assigned
Interest (including payments of principal, interest, fees and other amounts) to
the Assignor for amounts which have accrued to but excluding the Effective Date
and to the Assignee for amounts which have accrued from and after the Effective
Date.

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

 2

OPINION OF COUNSEL FOR THE BORROWER

[Form
consistent with opinion delivered in connection with EPOP credit facility]

COUNTERPART AGREEMENT

This COUNTERPART
AGREEMENT, dated [                           ]
(this “Counterpart Agreement”) is
delivered pursuant to that certain Second Amended and Restated Credit
Agreement, dated as of [                                     ],  2007 (as it may be amended, supplemented or otherwise
modified, the “Credit Agreement”;
the terms defined therein and not otherwise defined herein being used herein as
therein defined), by and among EXCO RESOURCES, INC., as Borrower, CERTAIN SUBSIDIARIES OF BORROWER,
as Guarantors, the LENDERS party thereto,  and JPMORGAN CHASE BANK, N.A. (successor by merger to Bank One,
N.A. (Illinois)),  as
Administrative Agent (the “Administrative
Agent”).

Section 1.  Pursuant to Section 6.13 of the Credit
Agreement, the undersigned hereby:

(a)  agrees that
this Counterpart Agreement may be attached to the Credit Agreement and that by
the execution and delivery hereof, the undersigned becomes a Guarantor under
the Credit Agreement and agrees to be bound by all of the terms thereof;

(b)  represents
and warrants that each of the representations and warranties set forth in the
Credit Agreement and each other Loan Document and applicable to the undersigned
is true and correct both before and after giving effect to this Counterpart
Agreement, except to the extent that any such representation and warranty
relates solely to any earlier date, in which case such representation and
warranty is true and correct as of such earlier date;

(c)  no event
has occurred or is continuing as of the date hereof, or will result from the
transactions contemplated hereby on the date hereof, that would constitute an
Event of Default or a Default;

(d)  agrees to
irrevocably and unconditionally guaranty the due and punctual payment in full
of all Obligations when the same shall become due, whether at stated maturity,
by required prepayment, declaration, acceleration, demand or otherwise
(including amounts that would become due but for the operation of the automatic
stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C.
§ 362(a)) and in accordance with Section 8 of the Credit Agreement;

(e)  the
undersigned hereby (i) agrees that this counterpart may also be attached to the
Pledge Agreement, (ii) agrees that the undersigned will comply with all the terms
and conditions of the Pledge Agreement as if it were an original signatory
thereto, (iii) grants to Secured Party (as such term is defined in the Pledge
Agreement) a security interest in all of the undersigned’s right, title and
interest in and to all “Collateral” (as such term is defined in the Pledge
Agreement) of the undersigned, in each case whether now or hereafter existing
or in which the undersigned now has or hereafter acquires an interest and
wherever the same may be located and (iv) delivers to Agent supplements to all
schedules attached to the Pledge Agreement. 
All such Collateral shall be deemed to be part of the “Collateral” and
hereafter subject to each of the terms and conditions of the Pledge Agreement.

 1
 

Section 2.  The undersigned agrees from time to time,
upon request of Administrative Agent, to take such additional actions and to
execute and deliver such additional documents and instruments as Administrative
Agent may request to effect the transactions contemplated by, and to carry out the
intent of, this Agreement.  Neither this
Agreement nor any term hereof may be changed, waived, discharged or terminated,
except by an instrument in writing signed by the party (including, if
applicable, any party required to evidence its consent to or acceptance of this
Agreement) against whom enforcement of such change, waiver, discharge or
termination is sought.  Any notice or
other communication herein required or permitted to be given shall be given
pursuant to Section 11.01 of the Credit Agreement, and for all purposes
thereof, the notice address of the undersigned shall be the address as set
forth on the signature page hereof.  In
case any provision in or obligation under this Agreement shall be invalid, illegal
or unenforceable in any jurisdiction, the validity, legality and enforceability
of the remaining provisions or obligations, or of such provision or obligation
in any other jurisdiction, shall not in any way be affected or impaired
thereby.

THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF.

 2
 

IN WITNESS WHEREOF,
the undersigned has caused this Counterpart Agreement to be duly executed and
delivered by its duly authorized officer as of the date above first written.

	
  

  	
  [NAME OF SUBSIDIARY]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   Name:

  
	
   

  	
   

  	
   Title:

  
	
   

  
	
   

  
	
  Address for
  Notices:

  
	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attention:

  	
   

  
	
   

  	
  Telecopier:

  	
   

  
	
   

  	
   

  
	
  with a copy to:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attention:

  	
   

  
	
   

  	
  Telecopier:

  	
   

  
	
   

  	
   

  
	
  ACKNOWLEDGED AND
  ACCEPTED,

  as of the date above first written:

  	
   

  
	
   

  	
   

  
	
  JPMORGAN
  CHASE BANK, N.A.,

  as Administrative Agent

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   Name:

  	
   

  
	
   

  	
   Title:

  	
   

  
									

 

 3

CERTIFICATE REGARDING SOLVENCY

The undersigned, as Chief Financial Officer of EXCO
Resources, Inc., a Texas corporation (the “Borrower”), hereby gives this
Certificate Regarding Solvency to induce JPMorgan Chase Bank, N.A., as
Administrative Agent for the Lenders (defined below) (the “Administrative
Agent”) to consummate certain financial accommodations pursuant to the
terms and conditions of that certain Second Amended and Restated Credit
Agreement dated the date hereof (the “Credit Agreement”) among the Borrower,
the lenders signatory thereto (“Lenders”), and Agent.  Capitalized terms used in this certificate
are defined in the Credit Agreement, unless otherwise stated.

The undersigned hereby certifies to the Administrative
Agent that:

1.             The
undersigned is familiar with the business and financial affairs of the
Borrower, including, without limitation, the Transactions and the matters
hereinafter described.

2.             The
undersigned has reviewed the pro-forma balance sheet of the Borrower, as
of the date thereof and after giving effect to the Transactions (the “Pro-Forma
Balance Sheet”), the pro-forma operating statement, as of the date thereof
(the “Pro-Forma Operating Statement” and the Projections, all of which
are attached hereto as Exhibit “A” and Exhibit “B”, and Exhibit
“C”, respectively, and incorporated herein by reference for all
purposes.  The undersigned is familiar
with the process through which the Pro-Forma Balance Sheet, the Pro-Forma
Operating Statement and the Projections were generated.

3.             The
Pro-Forma Balance Sheet fairly presents in all material respects the
financial position of the Borrower as of the date thereof after giving effect
to the Transactions.  The Pro Forma
Operating Statement fairly presents in all material respects the estimated operating
income and expenses of the Borrower and its Subsidiaries for the period covered
thereby.  The Projections are reasonable
projections of the balance sheet, income statement and source and application
of funds for the periods covered thereby, based upon the assumptions set forth
therein.  The Borrower believes that such
assumptions set forth therein are reasonable in light of current business
conditions existing at the time of preparation thereof.  The Projections and the Pro-Forma Operating
Statement represent the Borrower’s good faith estimate as of the date thereof
of the Borrower’s future financial performance, it being recognized by the
Administrative Agent that such financial information as it relates to future
events is not to be viewed as fact and that actual results during the period or
periods covered thereby may differ from the projected results set forth
therein.

4.             Immediately
following the consummation of, and after giving effect to, the Transactions
contemplated by the Loan Documents, the Preferred Stock Documents and the
Southern Gas Purchase Documents and the application of the proceeds from the
fundings being made on the Effective Date, the Borrower is solvent.

5.             The
Borrower does not intend to incur, or believe it will incur, debts beyond its
ability to pay as they mature.

 1
 

 

	
   

  	
  DATED: [                 ],
  2006

  
	
   

  	
   

  
	
   

  	
  EXCO RESOURCES, INC.,

  
	
   

  	
  a Texas corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   J. Douglas Ramsey

  
	
   

  	
   

  	
   Chief Financial Officer

  

 

 2
 

EXHIBIT “A”

Pro-Forma Balance Sheet

(see attached)

 3
 

EXHIBIT “B”

Pro-Forma Operating Statement

(see attached)

 4
 

EXHIBIT “C”

Projections

(see attached)

 5

NOTE

	
  New York, New York

  	
                        ,
          

  

 

FOR VALUE RECEIVED, the undersigned EXCO RESOURCES,
INC., a Texas corporation (“Borrower”) hereby unconditionally promises to pay
to the order of                                          
(the “Lender”) the principal amount of the Loans advanced by Lender and
outstanding at any time or from time to time pursuant to the Credit Agreement
(as hereinafter defined) in lawful money of the United States of America
together with interest from the date hereof until paid at the rates specified
in the Credit Agreement (as hereinafter defined).  All payments of principal and interest due
hereunder are payable at the offices of at the offices of Administrative Agent
under the Credit Agreement, JPMorgan Loan Services, 21 South Clark St., 19th
Floor, Chicago, Illinois 60603-2003, Attention: Claudia Kech, Facsimile:  (312) 385-7096, claudia.kech@jpmchase.com,
with a copy to JPMorgan Chase Bank, N.A., Mail Code TX1-2448, 1717 Main Street,
Dallas, Texas 75201, Attention: Wm. Mark Cranmer, Senior Vice President,
Facsimile: (214) 290-2332, mark.cranmer@chase.com, or at such other place, as
from time to time may be designated by Administrative Agent in accordance with
the Credit Agreement .

The principal and all accrued interest on this Note
shall be due and payable in accordance with the terms and provisions of the
Credit Agreement.

This Note is executed pursuant to that certain Second
Amended and Restated Credit Agreement dated [                 ],
2007 between Borrower, certain Subsidiaries of the Borrower, as Guarantors, the
Administrative Agent and Lenders (as amended, modified, supplemented or
restated from time to time, the “Credit Agreement”), and is one of the Notes
referred to therein.  Reference is made
to the Credit Agreement and the Loan Documents (as that term is defined in the
Credit Agreement) for a statement of prepayment rights and obligations of
Borrower, for a statement of the terms and conditions under which the due date
of this Note may be accelerated and for statements regarding other matters
affecting this Note (including without limitation the obligations of the holder
hereof to advance funds hereunder, principal and interest payment due dates,
voluntary and mandatory prepayments, exercise of rights and remedies, payment
of attorneys’ fees, court costs and other costs of collection and certain
waivers by Borrower and others now or hereafter obligated for payment of any
sums due hereunder).  Upon the occurrence
of an Event of Default (as that term is defined in the Credit Agreement and
Loan Documents) the Administrative Agent may declare forthwith to be entirely
and immediately due and payable the principal balance hereof and the interest
accrued hereon, and the Lender shall have all rights and remedies of the Lender
under the Credit Agreement and Loan Documents. 
This Note may be prepaid in accordance with the terms and provisions of
the Credit Agreement.

Regardless of any provision contained in this Note,
the holder hereof shall never be entitled to receive, collect or apply, as
interest on this Note, any amount in excess of the Maximum Rate (as such term
is defined in the Credit Agreement), and, if the holder hereof ever receives,
collects, or applies as interest, any such amount which would be excessive
interest, it shall be deemed a partial prepayment of principal and treated
hereunder as such; and, if the indebtedness evidenced hereby is paid in full,
any remaining excess shall forthwith be paid to Borrower.  In determining whether or not the interest
paid or payable, under any specific

 1
 

contingency, exceeds the Maximum Rate, Borrower and
the holder hereof shall, to the maximum extent permitted under applicable law
(i) characterize any non-principal payment as an expense, fee or premium
rather than as interest, (ii) exclude voluntary prepayments and the
effects thereof, and (iii) spread the total amount of interest throughout
the entire contemplated term of the obligations evidenced by this Note and/or
referred to in the Credit Agreement so that the interest rate is uniform
throughout the entire term of this Note; provided that, if this Note is paid
and performed in full prior to the end of the full contemplated term thereof;
and if the interest received for the actual period of existence thereof exceeds
the Maximum Rate, the holder hereof shall refund to Borrower the amount of such
excess or credit the amount of such excess against the indebtedness evidenced
hereby, and, in such event, the holder hereof shall not be subject to any
penalties provided by any laws for contracting for, charging, taking, reserving
or receiving interest in excess of the Maximum Rate.

If any payment of principal or interest on this Note
shall become due on a day other than a Business Day (as such term is defined in
the Credit Agreement), such payment shall be made on the next succeeding
Business Day and such extension of time shall in such case be included in
computing interest in connection with such payment.

If this Note is placed in the hands of an attorney for
collection, or if it is collected through any legal proceeding at law or in
equity or in bankruptcy, receivership or other court proceedings, Borrower
agrees to pay all costs of collection, including, but not limited to, court
costs and reasonable attorneys’ fees.

Borrower and each surety, endorser, guarantor and
other party ever liable for payment of any sums of money payable on this Note,
jointly and severally waive presentment and demand for payment, notice of
intention to accelerate the maturity, protest, notice of protest and
nonpayment, as to this Note and as to each and all installments hereof, and
agree that their liability under this Note shall not be affected by any renewal
or extension in the time of payment hereof, or in any indulgences, or by any
release or change in any security for the payment of this Note, and hereby
consent to any and all such renewals, extensions, indulgences, releases or
changes.

This Note shall be governed by and construed in
accordance with the applicable laws of the United States of America and the
laws of the State of New York.

THIS WRITTEN NOTE, THE CREDIT AGREEMENT AND THE OTHER
LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENTS BETWEEN THE PARTIES AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.  THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

 2
 

 

	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  EXCO RESOURCES, INC.,

  
	
   

  	
  a Texas corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   Name:

  
	
   

  	
   

  	
   Title:

  

 

 3Exhibit 10.19

 

Form of
Offer Letter Amendment for Executive Officers

[Date]

[Employee]

RightNow Technologies, Inc.

40 Enterprise Blvd.

Bozeman, MT  59718

 

Dear [Employee]:

In consideration
for your agreement to continue to be employed as [Title] and for other good and
valuable consideration that is hereby acknowledged, this letter amends certain
terms of your offer letter of employment dated [ date ] (the “Original Letter”)
with RightNow Technologies (the “Company”) as follows:

1.               This letter
provides you with certain entitlements in the event that your employment with
the Company ends within twelve months following the date of a Change in Control
of the Company.  Any capitalized terms in
this letter shall have the same meaning as in the attachment to this letter.

2.               You will receive
the benefits referred to in paragraph 3 of this letter if (a) your employment
with the Company (or any successor company or affiliated entity with which you
are then employed) is terminated by the Company or such other employer without
Cause within twelve months following the date of a Change in Control of the
Company; or (b) your employment with the Company (or any successor company or
affiliated entity with which you are then employed) is terminated by you for
Good Reason within twelve months following the date of a Change in Control of
the Company.

3.               The benefits that
you will receive upon the occurrence of the events described in paragraph 2 of
this letter are (i) acceleration of 100% of your then unvested stock options in
connection with stock option awards made after the date of this letter, and
subject to the terms and conditions of each such stock option agreement that is
executed by you and the Company; and (ii) [12 (for CEO)/6 (for non-CEO
executives)] months salary continuation at your then current on target earnings
(OTE) as determined by the Company’s Compensation Committee from time to time.

To the extent of
any inconsistency between the terms of this letter and your Original Letter, this
letter shall control with respect to the subject matter hereof.

Please indicate
your acceptance by signing and dating this letter below.

	
  RIGHTNOW TECHNOLOGIES, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  [Employee]

  
	
   

  	
  Date:

  	
   

  
						

 

ATTACHMENT

DEFINITIONS

“Change in Control” shall mean a change in ownership or control of the
Company effected through any of the following transactions:

1.               merger,
consolidation or other reorganization unless securities representing more than
50% of the total combined voting power of the voting securities of the
successor corporation are immediately thereafter beneficially owned, directly
or indirectly and in substantially the same proportion, by the persons who
beneficially owned the Company’s outstanding voting securities immediately
prior to such transaction;

2.               the sale, transfer
or other disposition of all or substantially all of the Company’s assets;

3.               the acquisition,
directly or indirectly by any person or related group of persons (other than
the Company or a person that directly or indirectly controls, is controlled by,
or is under common control with, the Company), of beneficial ownership (within
the meaning of Rule 13d-3 of the Exchange Act) of securities possessing more
than 50% of the total combined voting power of the Company’s outstanding securities
pursuant to a tender or exchange offer made directly to the Company’s
stockholders; or

4.               a change in the
composition of the Board of Directors over a period of 36 consecutive months or
less such that a majority of the directors ceases, by reason of one or more
contested elections for directorship, to be comprised of individuals who either
(i) have been directors continuously since the beginning of such period or (ii)
have been elected or nominated for election as directors during such period by
at least a majority of the directors described in clause (i) who were still in
office at the time the Board of Directors approved such election or nomination.

Following a Change
in Control, “Company” shall refer to the successor corporation in the
transaction.

Termination of employment for “Cause” shall mean termination by the
Company of your employment based upon (i) the willful and continued failure by
you substantially to perform your duties and obligations (other than any such
failure resulting from your incapacity due to physical or mental illness or any
such actual or anticipated failure resulting from your termination for “Good
Reason” as defined below), (ii) your conviction or plea bargain in connection
with the commission or alleged commission of any felony or gross misdemeanor
involving moral turpitude, fraud or misappropriation of funds, or (iii) your
willful engaging in misconduct which causes substantial injury to the Company,
its other employees or its clients, whether monetarily or otherwise.  For purposes of this paragraph, no action or
failure to act on your part shall be considered “willful” unless done, or
omitted to be done, by you in bad faith and without reasonable belief that your
action or omission was in the best interests of the Company.

“Good Reason” shall mean the occurrence of any of the following events
following a Change in Control, except for the occurrence of such an event in
connection with the termination of your employment by the Company (or any
successor company or affiliated entity then employing you) for Cause,
Disability or death:

1.               the assignment to
you of employment duties or responsibilities which are not substantially
comparable in responsibility and status to the employment duties and
responsibilities you held immediately prior to the Change in Control;

2.               a reduction in your
base salary as in effect immediately prior to the Change in Control or as the
same may be increased from time to time during the term of this Agreement; or

3.               requiring you to
work in a location more than 50 miles from your office location immediately
prior to the Change in Control, except for requirements of temporary travel on
the Company’s business to an extent substantially consistent with your business
travel obligations immediately prior to the Change in Control.

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