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Exhibit 4.3    
    

71/4% Senior Note Due 2011  

UNLESS
THIS CERTIFICATE IS PRESENTED BY A REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. 

TRANSFERS
OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS
GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF. 

 
 

Form of Global Exchange Security    
    

	No.	 	$                  

71/4% Senior Notes Due 2011  

EXCO
Resources, Inc., a Texas corporation, promises to pay to Cede & Co., or registered assigns, the principal sum
of                        Dollars on January 15, 2011. 

Interest
Payment Dates: January 15 and July 15.

Record Dates: January 1 and July 1. 

Additional
provisions of this Security are set forth on the other side of this Security. 

Dated: 

	 	 	EXCO RESOURCES, INC.
	

 	
 	

By:	

 
	 	 	 	
 Name: T.W. Eubank

Title: President

[SEAL]

	 	 	EXCO RESOURCES, INC.
	

 	
 	

By:	

 
	 	 	 	
 Name: J. Douglas Ramsey

Title: Chief Financial Officer

	TRUSTEE'S CERTIFICATE OF

AUTHENTICATION
	

WILMINGTON TRUST COMPANY

as Trustee, certifies that this is one of

the Securities referred to in the Indenture.
	

By:	
 	

Authorized Signatory	
 	

 

	1.
	Interest

        EXCO
Resources, Inc., a Texas corporation (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein called the "Company"),
promises to pay interest on the principal amount of this Security at the rate per annum shown above; provided, however, that if a Registration Default (as defined in the Registration Rights Agreement)
occurs, additional interest will accrue on this Security at a rate of 0.50% per annum (increasing by an additional 0.50% per annum after each consecutive 90-day period that occurs after
the date on which such Registration Default occurs up to a maximum additional interest rate of 1.5%) from and including the date on which any such Registration Default shall occur to but excluding the
date on which all Registration Defaults have been cured. The Company will pay interest (including any Additional Interest pursuant to the Registration Rights Agreement) semiannually in arrears on
January 15 and July 15 of each year, commencing July 15, 2004. Interest on the Securities will accrue from the most recent date to which interest has been paid or, if no interest
has been paid, from January 20, 2004. Interest will be computed on the basis of a 360-day year of twelve 30-day months. The Company will pay interest on overdue
principal at the rate borne by this Security plus 1.0% per annum, and it will pay interest on overdue installments of interest at the same rate to the extent lawful. 

	2.
	Method of Payment

        The
Company will pay interest on the Securities (except defaulted interest) to the Persons who are registered holders of Securities at the close of business on the January 1 or
July 1 next preceding the interest payment date even if Securities are canceled after the record date and on or before the interest payment date. Holders must surrender Securities to a Paying
Agent to collect principal payments. The Company will pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts.
Payments in respect of the Securities represented by a Global Security (including principal, premium and interest) will be made by wire transfer of immediately available funds to the accounts
specified by The Depository Trust Company. The Company will make all payments in respect of a certificated Security (including principal, premium and interest) by mailing a check to the registered
address of each Holder thereof; provided, however, that payments on a certificated Security will be made by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United
States if such Holder elects payment by wire transfer by giving written notice to the Trustee or the Paying Agent to such effect designating such account no later than 30 days immediately
preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion). 

	3.
	Paying Agent and Registrar

        Initially,
Wilmington Trust Company, a Delaware banking corporation (the "Trustee"), will act as Paying Agent and Registrar. The Company may appoint and change any Paying Agent,
Registrar or co-registrar without notice. The Company or any of its domestically incorporated Wholly Owned Subsidiaries may act as Paying Agent, Registrar or co-registrar. 

	4.
	Indenture

        The
Company issued the Securities under an Indenture dated as of January 20, 2004 ("Indenture"), among the Company, the Subsidiary Guarantors and the Trustee. The terms of the
Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb) as
in effect on the date of the Indenture (the "Act"). Terms defined in the Indenture and not defined herein have the meanings ascribed thereto in the Indenture. The Securities are subject to all such
terms, and Securityholders are referred to the Indenture and the Act for a statement of those terms. 

        The
Securities are senior obligations of the Company. The Company shall be entitled, subject to its compliance with Section 4.04 of the Indenture, to issue Additional Securities
pursuant to Section 2.13 of the Indenture. The Initial Securities issued on the Issue Date, any Additional Securities and all Exchange Securities or Private Exchange Securities issued in
exchange therefore will be treated as a single class for all purposes under the Indenture. The Indenture contains covenants that limit the 

ability
of the Company and its subsidiaries to incur additional indebtedness; pay dividends or distributions on, or redeem or repurchase capital stock; make investments; engage in transactions with
affiliates; create liens on assets; transfer or sell assets; guarantee indebtedness; restrict dividends or other payments of subsidiaries; consolidate, merge or transfer all or substantially all of
its assets and the assets of its subsidiaries; and engage in sale/leaseback transactions. These covenants are subject to important exceptions and qualifications. 

	5.
	Optional Redemption

        Except
as set forth below and in paragraph 6, the Company shall not be entitled to redeem the Securities. 

        Prior
to January 15, 2007, the Company shall be entitled at its option to redeem all, but not less than all, of the Securities at a redemption price equal to 100% of the principal
amount of the Securities plus the Applicable Premium as of, and accrued and unpaid interest to, the redemption date (subject to the right of Holders on the relevant record date to receive interest due
on the relevant interest payment date). The Company shall cause notice of such redemption to be mailed by first-class mail to each Holder's registered address, not less than 30 nor more than
60 days prior to the redemption date. 

        On
or after January 15, 2007, the Company shall be entitled at its option to redeem all or a portion of the Securities upon not less than 30 nor more than 60 days' notice,
at the redemption prices (expressed in percentages of principal amount on the redemption date), plus accrued interest to the redemption date (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date), if redeemed during the 12-month period commencing on January 15 of the years set forth below: 

	Period
	 	Redemption Price
	 
	2007	 	105.438	%
	2008	 	103.625	%
	2009	 	101.813	%
	2010 and thereafter	 	100.000	%

        In
addition, prior to January 15, 2007, the Company shall be entitled at its option on one or more occasions to redeem Securities (which includes Additional Securities, if any) in
an aggregate principal amount not to exceed 35% of the aggregate principal amount of the Securities (which includes Additional Securities, if any) originally issued at a redemption price (expressed as
a percentage of principal amount) of 107.25%, plus accrued and unpaid interest to the redemption date, with the net cash proceeds from one or more Public Equity Offerings; provided, however, that if
the Public Equity Offering is an offering by Parent, a portion of the Net Cash Proceeds thereof equal to the amount required to redeem any such notes is contributed to the equity capital of the
Company); provided, however, that (1) at least 65% of such aggregate principal amount of Securities (which includes Additional Securities, if any) remains outstanding immediately after the
occurrence of each such redemption (other than Securities held, directly or indirectly, by the Company or its Affiliates); and (2) each such
redemption occurs within 90 days after the date of the related Public Equity Offering. 

	6.
	Notice of Redemption

        Notice
of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder of Securities to be redeemed at his registered
address. Securities in denominations larger than $1,000 principal amount may be redeemed in part but only in whole multiples of $1,000. If money sufficient to pay the redemption price of and accrued
interest on all Securities (or portions thereof) to be redeemed on the redemption date is deposited with the Paying Agent on or before the redemption date and certain other conditions are satisfied,
on and after such date interest ceases to accrue on such Securities (or such portions thereof) called for redemption. 

	7.
	Put Provisions

        Upon
a Change of Control, any Holder of Securities will have the right to cause the Company to repurchase all or any part of the Securities of such Holder at a repurchase price in cash
equal to 101% of the principal amount of the Securities to be repurchased plus accrued interest to the date of repurchase (subject to the right of holders of record on the relevant record date to
receive interest due on the related interest payment date) as provided in, and subject to the terms of, the Indenture. 

        Upon
consummation of a Permitted MLP Transaction, any Holder of Securities will have the right to cause the Company to repurchase all or any part of the Securities of such Holder as
provided in, and subject to the terms of, the Indenture at a repurchase price equal to (A) if the Permitted MLP Transaction is consummated at any time prior to January 15, 2007, 107.25%
or (B) if the Permitted MLP Transaction is consummated at any time on or after January 15, 2007, the redemption price set forth under the third paragraph of paragraph 5 of this
Security that would be applicable at such time if the Securities were being redeemed on the date of the Permitted MLP Transaction under such paragraph, in each case, such MLP Offer price being
expressed as a percentage of the principal amount of the Securities on the date of purchase, plus accrued and unpaid interest, if any, to the date of purchase (subject to the rights of Holders of
record on the relevant record date to receive interest on the relevant interest payment date). 

	8.
	Guaranty

        The
payment by the Company of the principal of, and premium and interest on, the Securities is fully and unconditionally guaranteed on a joint and several senior basis by each of the
Subsidiary Guarantors (except that the guarantee of Taurus Acquisition is subordinated to the Credit Agreement) to the extent set forth in the Indenture. 

	9.
	Security

        The
Securities will be secured by a second priority security interest (subject to Specified Permitted Liens) on the Collateral. The Collateral consists of 65% of the Capital Stock of
Addison Energy Inc. and 100% of the Capital Stock of Taurus Acquisition, Inc. Notwithstanding the foregoing, at no time will any shares of Capital Stock of such Subsidiaries constitute
Collateral to the extent that at such time Rule 3-16 of Regulation S-X under the Securities Act requires (or is replaced with another rule or regulation or any
other law, rule or regulation is adopted which would
require) the filing with the SEC (or any other governmental agency) of separate financial statements of any Subsidiary of the Company as a result of the fact that such shares of Capital Stock secure
the Securities, but only to the extent and for so long as necessary to not be subject to such requirement. At such times, the Pledge Agreement will be amended or modified, without the consent of any
Holder of Securities, to the extent considered necessary to reflect the operation of the foregoing sentence. 

	10.
	Denominations; Transfer; Exchange

        The
Securities are in registered form without coupons in denominations of $1,000 principal amount and whole multiples of $1,000. A Holder may transfer or exchange Securities in
accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes and fees required by law or
permitted by the Indenture. The Registrar need not register the transfer of or exchange any Securities selected for redemption (except, in the case of a Security to be redeemed in part, the portion of
the Security not to be redeemed) or any Securities for a period of 15 days before a selection of Securities to be redeemed or 15 days before an interest payment date. 

	11.
	Persons Deemed Owners

        The
registered Holder of this Security may be treated as the owner of it for all purposes. 

	12.
	Unclaimed Money

        If
money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent shall pay the money back to the Company at its request unless an abandoned
property 

law
designates another Person. After any such payment to the Company, Holders entitled to the money must look only to the Company and not to the Trustee for payment. 

	13.
	Discharge and Defeasance

        Subject
to certain conditions, the Company at any time shall be entitled to terminate some or all of its obligations under the Securities and the Indenture if the Company deposits with
the Trustee money or U.S. Government Obligations for the payment of principal and interest on the Securities to redemption or maturity, as the case may be. 

	14.
	Amendment, Waiver

        Subject
to certain exceptions set forth in the Indenture, (a) the Indenture, the Pledge Agreement, the Intercreditor Agreement and the Securities may be amended with the written
consent of the Holders of at least a majority in principal amount outstanding of the Securities (including consents obtained in connection with a tender offer or exchange offer for Securities) and
(b) any past default or noncompliance with any provision may be waived with the written consent of the Holders of a majority in principal amount outstanding of the Securities. Subject to
certain exceptions set forth in the Indenture, without the consent of any Securityholder, the Company, the Subsidiary Guarantors and the Trustee shall be entitled to amend the Indenture, the Pledge
Agreement, the Intercreditor Agreement or the Securities to cure any ambiguity, omission, defect or inconsistency, or to comply with Article 5 of the Indenture, or to provide for uncertificated
Securities in addition to or in place of certificated Securities, or to add guarantees with respect to the Securities, including Subsidiary Guaranties, or to further secure the Securities, or to add
additional covenants or surrender rights and powers conferred on the Company or the Subsidiary Guarantors, or to comply with any request of the SEC in connection with qualifying the Indenture under
the Act, or to make any change that does not adversely affect the rights of any Securityholder. Notwithstanding the foregoing, without the consent of any Holder of Securities, any amendment, waiver or
consent agreed to by the Credit Agent or the holders of First Lien Obligations under any provision of the Pledge Agreement granting the first-priority Lien on any Collateral to secure the First Lien
Obligations will automatically apply to the comparable provision of the Pledge Agreement; provided, however, that if any such amendment, waiver or consent could reasonably be expected to be adverse to
the Securityholders or the interest of the Securityholders in the Collateral, such amendment, waiver or consent will not be applicable to the Pledge Agreement as provided above unless First Lien
Obligations (including commitments in respect thereof to the extent that such commitments are subject only to borrowing base requirements or other reasonable and customary funding conditions and are
then available to be funded at the election of the Company) of no less than $20.0 million (after giving effect to all borrowing base calculations) secured by first-priority Liens on the
Collateral are then outstanding. Notwithstanding the foregoing, no such amendment, waiver or consent may have the effect of releasing the Collateral, except to the extent set forth in
Article 12 of the Indenture. 

	15.
	Defaults and Remedies

        Under
the Indenture, Events of Default include (a) default for 30 days in payment of interest on the Securities; (b) default in payment of principal on the
Securities at maturity, upon redemption pursuant to paragraph 5 or 6 of the Securities, upon acceleration or otherwise, or failure by the Company to redeem or purchase Securities when required;
(c) failure by the Company, or any Subsidiary Guarantor to comply with other agreements in the Indenture or the Securities, in certain cases subject to notice and lapse of time;
(d) certain accelerations (including failure to pay within any grace period after final maturity) of other Indebtedness of the Company if the amount accelerated (or so unpaid) exceeds
$5.0 million (e) certain events of bankruptcy or insolvency with respect to the Company and the Significant Subsidiaries; (f) certain judgments or decrees for the payment of money
in excess of $5.0 million; (g) certain defaults with respect to Subsidiary Guaranties; and (h) certain defaults relating to the Collateral under the Pledge Agreement. If an Event
of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the Securities may declare all the Securities to be due and payable immediately. Certain events
of bankruptcy or 

insolvency
are Events of Default which will result in the Securities being due and payable immediately upon the occurrence of such Events of Default. 

        Securityholders
may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee may refuse to enforce the Indenture or the Securities unless it receives
indemnity or security satisfactory to it. Subject to certain limitations, Holders of a majority in principal amount of the Securities may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Securityholders notice of any continuing Default (except a Default in payment of principal or interest) if and so long as it determines that withholding notice is in the
interest of the Holders. 

	16.
	Trustee Dealings with the Company

        Subject
to certain limitations imposed by the Act, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities and may
otherwise deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not
Trustee. 

	17.
	No Recourse Against Others

        A
director, officer, employee, incorporator or stockholder, as such, of the Company or any Subsidiary Guarantor or the Trustee shall not have any liability for any obligations of the
Company under the Securities, any Subsidiary Guaranty, the Pledge Agreement or the Indenture or for any claim based on,
in respect of or by reason of such obligations or their creation. By accepting a Security, each Securityholder waives and releases all such liability. The waiver and release are part of the
consideration for the issue of the Securities. 

	18.
	Authentication

        This
Security shall not be valid until an authorized signatory of the Trustee (or an authenticating agent) manually signs the certificate of authentication on the other side of this
Security. 

	19.
	Abbreviations

        Customary
abbreviations may be used in the name of a Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants
with rights of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act). 

	20.
	CUSIP Numbers

        Pursuant
to a recommendation promulgated by the Committee on Uniform Security Identification Procedures the Company has caused CUSIP numbers to be printed on the Securities and has
directed the Trustee to use CUSIP numbers in notices of redemption as a convenience to Securityholders. No representation is made as to the accuracy of such numbers either as printed on the Securities
or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. 

	21.
	Holders' Compliance with Registration Rights Agreement

        Each
Holder of a Security, by acceptance hereof, acknowledges and agrees to the provisions of the Registration Rights Agreement, including the obligations of the Holders with respect to
a registration and the indemnification of the Company to the extent provided therein. 

	22.
	Governing Law

        THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF
CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

        The
Company will furnish to any Securityholder upon written request and without charge to the Security holder a copy of the Indenture which has in it the text of this Security in larger
type. Requests may be made to: 

EXCO
Resources, Inc.

12377 Merit Drive, Suite 1700

Dallas, TX 75251

Attention: General Counsel 

 
 

ASSIGNMENT FORM    
    

To
assign this Security, fill in the form below: 

I
or we assign and transfer this Security to: 

	

 (Print or type Assignee's Name)
	

 (Print or type Assignee's Address including city, state and zip code)
	

 (Print or type Assignee's Social Security or Tax ID Number)

and
irrevocably appoint                        agent to transfer this Security on the books of the Company. The agent may substitute
another to act for him. 

	

Date:	

 	
 	

Your Signature:	

 
	 	
	 	 	
 (Sign exactly as your name appears on the other side of this Security.)

 
 

OPTION OF HOLDER TO ELECT PURCHASE    
    

If
you want to elect to have this Security purchased by the Company pursuant to Section 4.07, 4.10 or 4.11 of the Indenture, check the box: 

o 

If you want to elect to have only part of this Security purchased by the Company pursuant to Section 4.07, 4.10 or 4.11 of the Indenture, state the amount in principal
amount: $             

	

Date:	

 	
 	

Your Signature:	

 
	 	
	 	 	
 (Sign exactly as your name appears on the other side of this Security.)

	Signature Guarantee:	 	 
	 	 	
 (Signature must be guaranteed)

Signatures
must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent
Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities
Exchange Act of 1934, as amended. 

 
 

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY    
    

        The following increases or decreases in this Global Security have been made: 

	Date of Exchange
 
	 	Amount of decrease in

Principal amount of this

Global Security
	 	Amount of increase in

Principal amount of this

Global Security
	 	Principal amount of the

Global Security following

such decrease or increase
	 	Signature of authorized

officer of Trustee or

Securities Custodian

	 	 	 	 	 	 	 	 	 

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Exhibit 4.3

Form of Global Exchange Security

ASSIGNMENT FORM

OPTION OF HOLDER TO ELECT PURCHASE

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITYQuickLinks
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Exhibit 4.5  

EXECUTION COPY  

 
 
$100,000,000  

 EXCO RESOURCES, INC.  

 71/4% Senior Notes due 2011  

 REGISTRATION RIGHTS AGREEMENT  

April 1,
2004 

Credit
Suisse First Boston LLC

Bane One Capital Markets, Inc.

As Representatives of the Several Purchasers

c/o Credit Suisse First Boston LLC

     Eleven Madison Avenue

     New York, New York 10010-3629 

Dear
Sirs: 

        EXCO
Resources, Inc., a Texas corporation (the "Issuer"), proposes to issue and sell to Credit Suisse First Boston LLC, Bane One Capital Markets, Inc., BNP Paribas Securities Corp.,
Comerica Securities, Inc., Scotia Capital (USA) Inc. and TD Securities (USA) Inc. (collectively, the "Initial Purchasers"), upon the terms set forth in a purchase agreement of even date herewith (the
"Purchase Agreement"), $100,000,000 aggregate principal amount of its 71/4% Senior Notes due 2011 (the "Initial Securities") to be unconditionally guaranteed (the "Guaranties") by the
Issuer's domestic subsidiaries (collectively, the "Guarantors" and, together with the Issuer, the "Company"). The Initial Securities will be issued as additional securities pursuant to an Indenture,
dated as of January 20, 2004 among the Issuer, the EXCO Guarantors (as defined in the Purchase Agreement) and Wilmington Trust Company (the "Trustee") (the "Original Indenture"), as supplemented by
the First Supplemental Indenture thereto dated as of January 27, 2004 (the "First Supplemental Indenture"). The Original Indenture, as supplemented by the First Supplemental Indenture, is referred to
herein as the "Indenture". As an inducement to the Initial Purchasers, the Company agrees with the Initial Purchasers, for the benefit of the holders of the Initial Securities (including, without
limitation, the Initial Purchasers), the Exchange Securities (as defined below) and the Private Exchange Securities (as defined below) (collectively the "Holders"), as follows: 

        1.    Registered Exchange Offer.    Unless not permitted by applicable law (after the Company has complied with the
last paragraph of this Section 1), the Company shall, at its own cost, prepare and, not later than April 26, 2004, file with the Securities and Exchange Commission (the "Commission") a registration
statement or amend a previously filed registration statement (the "Exchange Offer Registration Statement") on an appropriate form under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to a proposed offer (the "Registered Exchange Offer") to the Holders of Transfer Restricted Securities (as defined in Section 6 hereof), who are not prohibited by any law or policy of the
Commission from participating in the Registered Exchange Offer, to issue and deliver to such Holders, in exchange for the Initial Securities, a like aggregate principal amount of debt securities (the
"Exchange Securities") of the Company issued under the Indenture and identical in all material respects to the Initial Securities (except for the transfer restrictions relating to the Initial
Securities and the provisions relating to the matters described in Section 6 hereof) that would be registered under the Securities Act. The Company shall use commercially reasonable efforts to cause
such Exchange Offer Registration Statement to become effective under the Securities Act on or prior to July 26, 2004 and shall keep the Exchange Offer Registration Statement effective for not less
than 30 days (or longer, if required by applicable law) after the date notice of the Registered Exchange Offer is mailed to the Holders (such period being called the "Exchange Offer Registration
Period"). 

 

        If
the Company effects the Registered Exchange Offer, the Company will be entitled to close the Registered Exchange Offer 30 days after the commencement thereof provided that the Company
has accepted all the Initial Securities theretofore validly tendered in accordance with the terms of the Registered Exchange Offer. 

        Following
the declaration of the effectiveness of the Exchange Offer Registration Statement, the Company shall promptly commence the Registered Exchange Offer, it being the objective of
such Registered Exchange Offer to enable each Holder of Transfer Restricted Securities (as defined in Section 6 hereof) electing to exchange the Initial Securities for Exchange Securities (assuming
that such Holder is not an affiliate of the Company within the meaning of the Securities Act, acquires the Exchange Securities in the ordinary course of such Holder's business and has no arrangements
with any person to participate in the distribution of the Exchange Securities and is not prohibited by any law or policy of the Commission from participating in the Registered Exchange Offer) to trade
such Exchange Securities from and after their receipt without any limitations or restrictions under the Securities Act and without material restrictions under the securities laws of the several states
of the United States. 

        The
Company acknowledges that, pursuant to current interpretations by the Commission's staff of Section 5 of the Securities Act, in the absence of an applicable exemption
therefrom, (i) each Holder which is a broker-dealer electing to exchange Securities, acquired for its own account as a result of market making activities or other trading activities, for
Exchange Securities (an "Exchanging Dealer"), is required to deliver a prospectus containing the information set forth in (a) Annex A hereto on the cover, (b) Annex B
hereto in the "Exchange Offer Procedures" section and the "Purpose of the Exchange Offer" section, and (c) Annex C hereto in the "Plan of Distribution" section of such prospectus in
connection with a sale of any such Exchange Securities received by such Exchanging Dealer pursuant to the Registered Exchange Offer and (ii) an Initial Purchaser that elects to sell Exchange
Securities acquired in exchange for Securities constituting any portion of an unsold allotment is required to deliver a prospectus containing the information required by Items 507 or 508 of
Regulation S-K under the Securities Act, as applicable, in connection with such sale. 

        The
Company shall use commercially reasonable efforts to keep the Exchange Offer Registration Statement effective and to amend and supplement the prospectus contained therein, in order
to permit such prospectus to be lawfully delivered by all persons subject to the prospectus delivery requirements of the Securities Act for such period of time as such persons must comply with such
requirements in order to resell the Exchange Securities; provided, however, that (i) in the case where such prospectus and any amendment or supplement thereto must be delivered by an Exchanging Dealer
or an Initial Purchaser, such period shall be the lesser of 180 days and the date on which all Exchanging Dealers and the Initial Purchasers have sold all Exchange Securities held by them (unless such
period is extended pursuant to Section 3(j) below) and (ii) the Company shall make such prospectus and any amendment or supplement thereto, available to any broker-dealer for use in connection with
any resale of any Exchange Securities for a period of not less than 90 days after the consummation of the Registered Exchange Offer. 

        If,
upon consummation of the Registered Exchange Offer, any Initial Purchaser holds Initial Securities acquired by it as part of its initial distribution, the Company, simultaneously
with the delivery of the Exchange Securities pursuant to the Registered Exchange Offer, shall issue and deliver to such Initial Purchaser upon the written request of such Initial Purchaser, in
exchange (the "Private Exchange") for the Initial Securities held by such Initial Purchaser, a like principal amount of debt securities of the Company issued under the Indenture and identical in all
material respects (including the existence of restrictions on transfer under the Securities Act and the securities laws of the several states of the United States, but excluding provisions relating to
the matters described in Section 6 hereof) to the Initial Securities (the "Private Exchange Securities"). The Initial Securities, the Exchange Securities and the Private Exchange Securities are herein
collectively called the "Securities". 

2

 

        In
connection with the Registered Exchange Offer, the Company shall: 

        (a)   mail
to each Holder a copy of the prospectus forming part of the Exchange Offer Registration Statement, together with an appropriate letter of transmittal and related
documents; 

        (b)   keep
the Registered Exchange Offer open for not less than 30 days (or longer, if required by applicable law) after the date notice thereof is mailed to the Holders; 

        (c)   utilize
the services of a depositary for the Registered Exchange Offer with an address in the Borough of Manhattan, The City of New York, or Wilmington, Delaware, which
may be the Trustee or an affiliate of the Trustee; 

        (d)   permit
Holders to withdraw tendered Securities at any time prior to the close of business, New York time, on the last business day on which the Registered Exchange Offer
shall remain open; and 

        (e)   otherwise
comply with all applicable laws. 

        As
soon as practicable after the close of the Registered Exchange Offer or the Private Exchange, as the case may be, the Company shall: 

        (x)   accept
for exchange all the Securities validly tendered and not withdrawn pursuant to the Registered Exchange Offer and the Private Exchange; 

        (y)   deliver
to the Trustee for cancellation all the Initial Securities so accepted for exchange; and 

        (z)   cause
the Trustee to authenticate and deliver promptly to each Holder of the Initial Securities, Exchange Securities or Private Exchange Securities, as the case may be,
equal in principal amount to the Initial Securities of such Holder so accepted for exchange. 

        The
Indenture will provide that the Exchange Securities will not be subject to the transfer restrictions set forth in the Indenture and that all the Securities will vote and consent
together on all matters as one class and that none of the Securities will have the right to vote or consent as a class separate from one another on any matter. 

        Interest
on each Exchange Security and Private Exchange Security issued pursuant to the Registered Exchange Offer and in the Private Exchange will accrue from the last interest payment
date on which interest was paid on the Initial Securities surrendered in exchange therefor or, if no interest has been paid on the Initial Securities, from the date of original issue of the Initial
Securities. 

        Each
Holder participating in the Registered Exchange Offer shall be required to represent to the Company that at the time of the consummation of the Registered Exchange Offer (i) any
Exchange Securities received by such Holder will be acquired in the ordinary course of business, (ii) such Holder will have no arrangements or understanding with any person to participate in the
distribution of the Securities or the Exchange Securities within the meaning of the Securities Act, (iii) such Holder is not an "affiliate," as defined in Rule 405 of the Securities Act, of the
Company or if it is an affiliate, such Holder will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable, (iv) if such Holder is not a
broker-dealer, that it is not engaged in, and does not intend to engage in, the distribution of the Exchange Securities and (v) if such Holder is a broker-dealer, that it will receive Exchange
Securities for its own account in exchange for Initial Securities that were acquired as a result of market-making activities or other trading activities and that it will be required to acknowledge
that it will deliver a prospectus in connection with any resale of such Exchange Securities. 

        Notwithstanding
any other provisions hereof, the Company will ensure that (i) any Exchange Offer Registration Statement and any amendment thereto and any prospectus forming part thereof
and any 

3

 

supplement
thereto complies in all material respects with the Securities Act and the rules and regulations thereunder, (ii) any Exchange Offer Registration Statement and any amendment thereto does
not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading
and (iii) any prospectus forming part of any Exchange Offer Registration Statement, and any supplement to such prospectus, does not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. 

        2.    Shelf Registration.    If, (i) because of any change in law or in applicable interpretations thereof by the
staff of the Commission, the Company is not permitted to effect a Registered Exchange Offer, as contemplated by Section 1 hereof, (ii) the Registered Exchange Offer is not consummated on or prior to
September 3, 2004, (iii) any Initial Purchaser so requests with respect to the Initial Securities (or the Private Exchange Securities) not eligible to be exchanged for Exchange Securities in the
Registered Exchange Offer and held by it following consummation of the Registered Exchange Offer or (iv) any Holder (other than an Exchanging Dealer) is not eligible to participate in the Registered
Exchange Offer or, in the case of any Holder (other than an Exchanging Dealer) that participates in the Registered Exchange Offer, such Holder does not receive freely tradeable Exchange Securities on
the date of the exchange, the Company shall take the following actions: 

        (a)   The
Company shall, at its cost, as promptly as practicable (but in no event more than 45 days after so required or requested pursuant to this Section 2) file with the
Commission and thereafter shall use its best efforts to cause to be declared effective a registration statement (the "Shelf Registration Statement" and, together with the Exchange Offer Registration
Statement, a "Registration Statement") on an appropriate form under the Securities Act relating to the offer and sale of the Transfer Restricted Securities (as defined in Section 6 hereof) by the
Holders thereof from time to time in accordance with the methods of distribution set forth in the Shelf Registration Statement and Rule 415 under the Securities Act (hereinafter, the "Shelf
Registration"); provided, however, that no Holder (other than an Initial Purchaser) shall be entitled to have the Securities held by it covered by such Shelf Registration Statement unless such Holder
agrees in writing to be bound by all the provisions of this Agreement applicable to such Holder. 

        (b)   The
Company shall use commercially reasonable efforts to keep the Shelf Registration Statement continuously effective in order to permit the prospectus included therein
to be lawfully delivered by the Holders of the relevant Securities, for a period of two years (or for such longer period if extended pursuant to Section 3(j) below) from the date of its effectiveness
or such shorter period that will terminate when all the Securities covered by the Shelf Registration Statement (i) have been sold pursuant thereto or (ii) are no longer restricted securities (as
defined in Rule 144 under the Securities Act, or any successor rule thereof); provided, however, that the Company may notify the Holders of its suspension of any Shelf Registration Statement in the
event that and for a period of time not to exceed an aggregate of 60 days in any twelve-month period if (1) the Board of Directors of the Issuer or the Board of Directors of EXCO Holdings Inc., a
Delaware corporation, determines, in good faith, that the disclosure of an event, occurrence or other item at such time could reasonably be expected to have a material adverse effect on the business,
operations or prospects of the Company and its subsidiaries taken as a whole, or (2) the disclosure otherwise relates to a material business transaction which has not been publicly disclosed and the
Board of Directors of the Issuer determines, in good faith, that any such disclosure would jeopardize the success of the transaction or that disclosure of the transaction is prohibited pursuant to the
terms thereof. Except as set forth in the preceding sentence, the Company shall be deemed not to have used commercially reasonable efforts to keep the Shelf Registration Statement effective during the
requisite period if it voluntarily takes any action that 

4

 

would
result in Holders of Securities covered thereby not being able to offer and sell such Securities during that period, unless such action is required by applicable law. 

        (c)   Notwithstanding
any other provisions of this Agreement to the contrary, the Company shall cause the Shelf Registration Statement and the related prospectus and any
amendment or supplement thereto, as of the effective date of the Shelf Registration Statement, amendment or supplement, (i) to comply in all material respects with the applicable requirements of the
Securities Act and the rules and regulations of the Commission and (ii) not to contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. 

        3.    Registration Procedures.    In connection with any Shelf Registration contemplated by Section 2 hereof and, to
the extent applicable, any Registered Exchange Offer contemplated by Section 1 hereof, the following provisions shall apply: 

        (a)   The
Company shall (i) furnish to each Initial Purchaser, prior to the filing thereof with the Commission, a copy of the Registration Statement and each amendment thereof
and each supplement, if any, to the prospectus included therein and, in the event that an Initial Purchaser (with respect to any portion of an unsold allotment from the original offering) is
participating in the Registered Exchange Offer or the Shelf Registration Statement, the Company shall use commercially reasonable efforts to reflect in each such document, when so filed with the
Commission, such comments as such Initial Purchaser reasonably may propose; (ii) include the information set forth in Annex A hereto on the cover, in Annex B hereto in the "Exchange
Offer Procedures" section and the "Purpose of the Exchange Offer" section and in Annex C hereto in the "Plan of Distribution" section of the prospectus forming a part of the Exchange Offer
Registration Statement and include the information set forth in
Annex D hereto in the Letter of Transmittal delivered pursuant to the Registered Exchange Offer; (iii) if requested by an Initial Purchaser, include the information required by Items 507 or 508
of Regulation S-K under the Securities Act, as applicable, in the prospectus forming a part of the Exchange Offer Registration Statement; (iv) include within the prospectus contained in the
Exchange Offer Registration Statement a section entitled "Plan of Distribution," reasonably acceptable to the Initial Purchasers, which shall contain a summary statement of the positions taken or
policies made by the staff of the Commission with respect to the potential "underwriter" status of any broker-dealer that is the beneficial owner (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) of Exchange Securities received by such broker-dealer in the Registered Exchange Offer (a "Participating Broker-Dealer"), whether such positions
or policies have been publicly disseminated by the staff of the Commission or such positions or policies, in the reasonable judgment of the Initial Purchasers based upon advice of counsel (which may
be in-house counsel), represent the prevailing views of the staff of the Commission; and (v) in the case of a Shelf Registration Statement, include the names of the Holders, who propose to sell
Securities pursuant to the Shelf Registration Statement, as selling securityholders. 

        (b)   The
Company shall give written notice to the Initial Purchasers, the Holders of the Securities and any Participating Broker-Dealer from whom the Company has received
prior written notice that it will be a Participating Broker-Dealer in the Registered Exchange Offer (which notice pursuant to clauses (ii)-(v) hereof shall be accompanied by an instruction to suspend
the use of the prospectus until the requisite changes have been made): 

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

5

  

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

        (iii)  of
the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose; 

        (iv)  of
the receipt by the Company or its legal counsel of any notification with respect to the suspension of the qualification of the Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for such purpose; and 

         (v)  of
the happening of any event that requires the Company to make changes in the Registration Statement or the prospectus in order that the Registration Statement or the
prospectus do not contain an untrue statement of a material fact nor omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of the
prospectus, in light of the circumstances under which they were made) not misleading, provided that such notice need only state the occurrence of such an event and need not identify or describe such
event. 

        (c)   The
Company shall make every reasonable effort to obtain the withdrawal at the earliest possible time, of any order suspending the effectiveness of the Registration
Statement. 

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

        (e)   The
Company shall deliver to each Exchanging Dealer and each Initial Purchaser, and to any other Holder who so requests, without charge, at least one copy of the
Exchange Offer Registration Statement and any post-effective amendment thereto, including financial statements and schedules, and, if any Initial Purchaser or any such Holder requests, all exhibits
thereto (including those incorporated by reference). 

        (f)    The
Company shall, during the Shelf Registration Period, deliver to each Holder of Securities included within the coverage of the Shelf Registration, without charge, as
many copies of the prospectus (including each preliminary prospectus) included in the Shelf Registration Statement and any amendment or supplement thereto as such person may reasonably request. The
Company consents, subject to the provisions of this Agreement, to the use of the prospectus or any amendment or supplement thereto by each of the selling Holders of the Securities in connection with
the offering and sale of the Securities covered by the prospectus, or any amendment or supplement thereto, included in the Shelf Registration Statement. 

        (g)   The
Company shall deliver to each Initial Purchaser, any Exchanging Dealer, any Participating Broker-Dealer and such other persons required to deliver a prospectus
following the Registered Exchange Offer, without charge, as many copies of the final prospectus included in the Exchange Offer Registration Statement and any amendment or supplement thereto as such
persons may reasonably request. The Company consents, subject to the provisions of this Agreement, to the use of the prospectus or any amendment or supplement thereto by any Initial Purchaser, if
necessary, any Participating Broker-Dealer and such other persons required to deliver a prospectus following the Registered Exchange Offer in connection with the offering and sale of the Exchange
Securities covered by the prospectus, or any amendment or supplement thereto, included in such Exchange Offer Registration Statement. 

        (h)   Prior
to any public offering of the Securities, pursuant to any Registration Statement, the Company shall register or qualify or cooperate with the Holders of the
Securities included therein 

6

 

and
their respective counsel in connection with the registration or qualification of the Securities for offer and sale under the securities or "blue sky" laws of such states of the United States as
any Holder of the Securities reasonably requests in writing and do any and all other acts or things reasonably necessary or advisable to enable the offer and sale in such jurisdictions of the
Securities covered by such Registration Statement; provided, however, that the Company shall not be required to (i) qualify generally to do business in any jurisdiction where it is not then so
qualified or (ii) take any action which would subject it to general service of process or to taxation in any jurisdiction where it is not then so subject. 

        (i)    The
Company shall cooperate with the Holders of the Securities to facilitate the timely preparation and delivery of certificates representing the Securities to be sold
pursuant to any Registration Statement free of any restrictive legends and in such denominations and registered in such names as the Holders may request a reasonable period of time prior to sales of
the Securities pursuant to such Registration Statement. 

        (j)    Upon
the occurrence of any event contemplated by paragraphs (ii) through (v) of Section 3(b) above during the period for which the Company is required to maintain an
effective Registration Statement, the Company shall promptly prepare and file a post-effective amendment to the Registration Statement or a supplement to the related prospectus and any other required
document so that, as thereafter
delivered to Holders of the Securities or purchasers of Securities, the prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. If the Company notifies the Initial Purchasers, the Holders of the
Securities and any known Participating Broker-Dealer in accordance with paragraphs (ii) through (v) of Section 3(b) above to suspend the use of the prospectus until the requisite changes to the
prospectus have been made, then the Initial Purchasers, the Holders of the Securities and any such Participating Broker-Dealers shall suspend use of such prospectus, and the period of effectiveness of
the Shelf Registration Statement provided for in Section 2(b) above and the Exchange Offer Registration Statement provided for in Section 1 above shall each be extended by the number of days from and
including the date of the giving of such notice to and including the date when the Initial Purchasers, the Holders of the Securities and any known Participating Broker-Dealer shall have received such
amended or supplemented prospectus pursuant to this Section 3(j). 

        (k)   Not
later than the effective date of the applicable Registration Statement, the Company will provide a CUSIP number for the Initial Securities, the Exchange Securities
or the Private Exchange Securities, as the case may be, and provide the applicable trustee with printed certificates for the Initial Securities, the Exchange Securities or the Private Exchange
Securities, as the case may be, in a form eligible for deposit with The Depository Trust Company. 

        (l)    The
Company will comply with all rules and regulations of the Commission to the extent and so long as they are applicable to the Registered Exchange Offer or the Shelf
Registration and will make generally available to its security holders (or otherwise provide in accordance with Section 11(a) of the Securities Act) an earnings statement satisfying the
provisions of Section 11(a) of the Securities Act, no later than 45 days after the end of a 12-month period (or 90 days, if such period is a fiscal year) beginning with the first month of the
Company's first fiscal quarter commencing after the effective date of the Registration Statement, which statement shall cover such 12-month period. 

        (m)  The
Company shall cause the Indenture to be qualified under the Trust Indenture Act of 1939, as amended, in a timely manner and containing such changes, if any, as shall
be necessary for such qualification. In the event that such qualification would require the appointment of a new 

7

 

trustee
under the Indenture, the Company shall appoint a new trustee thereunder pursuant to the applicable provisions of the Indenture. 

        (n)   The
Company may require each Holder of Securities to be sold pursuant to the Shelf Registration Statement to furnish to the Company such information regarding the Holder
and the distribution of the Securities as the Company may from time to time reasonably require for inclusion in the Shelf Registration Statement, and the Company may exclude from such registration the
Securities of any Holder that unreasonably fails to furnish such information within a reasonable time after receiving such request. 

        (o)   The
Company shall enter into such customary agreements (including, if requested, an underwriting agreement in customary form) and take all such other action, if any, as
any Holder of the Securities, shall reasonably request in order to facilitate the disposition of the Securities pursuant to any Shelf Registration. 

        (p)   In
the case of any Shelf Registration, the Company shall (i) make reasonably available for inspection by the Holders of the Securities, any underwriter participating in
any disposition pursuant to the Shelf Registration Statement and any attorney, accountant or other agent retained by the Holders of the Securities or any such underwriter all relevant financial and
other records, pertinent corporate documents and properties of the Company and (ii) cause the Company's officers, directors, employees, accountants and auditors to supply all relevant information
reasonably requested by the Holders of the Securities or any such underwriter, attorney, accountant or agent in connection with the Shelf Registration Statement, in each case, as shall be reasonably
necessary to enable such persons, to conduct a reasonable investigation within the meaning of Section 11 of the Securities Act; provided, however, that the foregoing inspection and information
gathering shall be coordinated on behalf of the Initial Purchasers by you and on behalf of the other parties, by one counsel designated by and on behalf of such other parties as described in
Section 4 hereof and provided that the Company may require such persons to keep confidential any material non-public information relating to the Company received by such persons and abstain
from trading in violation of applicable securities laws on the basis of such information. 

        (q)   In
the case of any Shelf Registration, the Company, if requested by any Holder of Securities covered thereby, shall cause (i) its counsel (which may be in-house counsel)
to deliver an opinion and updates thereof relating to the Securities in customary form addressed to such Holders and the managing underwriters, if any, thereof and dated, in the case of the initial
opinion, the effective date of such Shelf Registration Statement (it being agreed that the matters to be covered by such opinion shall include, without limitation, the due incorporation and good
standing of the Company and its subsidiaries; the qualification of the Company and its subsidiaries to transact business as foreign corporations; the due authorization, execution and delivery of the
relevant agreement of the type referred to in Section 3(o) hereof; the due authorization, execution, authentication and issuance, and the validity and enforceability, of the applicable Securities; the
absence of undisclosed material legal or governmental proceedings involving the Company and its subsidiaries; the absence of governmental approvals required to be obtained in connection with the Shelf
Registration Statement, the offering and sale of the applicable Securities, or any agreement of the type referred to in Section 3(o) hereof; the compliance as to form of such Shelf Registration
Statement and any documents incorporated by reference therein and of the Indenture with the requirements of the Securities Act and the Trust Indenture Act, respectively; and, as of the date of the
opinion and as of the effective date of the Shelf Registration Statement or most recent post-effective amendment thereto, as the case may be, the absence from such Shelf Registration Statement and the
prospectus included therein, as then amended or supplemented, and from any documents incorporated by reference therein of an untrue statement of a material fact or the omission to state therein a
material fact required to be stated therein or necessary to make the statements therein not misleading (in the case of any such documents, in the light of the 

8

 

circumstances
existing at the time that such documents were filed with the Commission under the Exchange Ac); (ii) its officers to execute and deliver all customary documents and certificates and
updates thereof requested by any underwriters of the applicable Securities and (iii) its independent public accountants and the independent public accountants with respect to any other entity for
which financial information is provided in the Shelf Registration Statement to provide to the selling Holders of the applicable Securities and any underwriter therefor a comfort letter in customary
form and covering matters of the type customarily covered in comfort letters in connection with primary underwritten offerings, subject to receipt of appropriate documentation as contemplated, and
only if permitted, by Statement of Auditing Standards No. 72. 

        (r)   In
the case of the Registered Exchange Offer, if requested by any Initial Purchaser or any known Participating Broker-Dealer, the Company shall cause (i) its counsel to
deliver to such Initial Purchaser or such Participating Broker-Dealer a signed opinion in the form set forth in Section 6(c)-(g) of the Purchase Agreement with such changes as are customary in
connection with the preparation of a Registration Statement and (ii) its independent public accountants and the independent public accountants with respect to any other entity for which financial
information is provided in the Registration Statement to deliver to such Initial Purchaser or such Participating Broker-Dealer a comfort letter, in customary form, meeting the requirements as to the
substance thereof as set forth in Section 6(a) of the Purchase Agreement, with appropriate date changes. 

        (s)   If
a Registered Exchange Offer or a Private Exchange is to be consummated, upon delivery of the Initial Securities by Holders to the Company (or to such other Person as
directed by the Company) in exchange for the Exchange Securities or the Private Exchange Securities, as the case may be, the
Company shall mark, or cause to be marked, on the Initial Securities so exchanged that such Initial Securities are being canceled in exchange for the Exchange Securities or the Private Exchange
Securities, as the case may be; in no event shall the Initial Securities be marked as paid or otherwise satisfied. 

        (t)    The
Company will use its commercially reasonable efforts to (a) if the Initial Securities have been rated prior to the initial sale of such Initial Securities, confirm
such ratings will apply to the Securities covered by a Registration Statement, or (b) if the Initial Securities were not previously rated, cause the Securities covered by a Registration Statement to
be rated with the appropriate rating agencies, if so requested by Holders of a majority in aggregate principal amount of Securities covered by such Registration Statement, or by the managing
underwriters, if any. 

        (u)   In
the event that any broker-dealer registered under the Exchange Act shall underwrite any Securities or participate as a member of an underwriting syndicate or selling
group or "assist in the distribution" (within the meaning of the Conduct Rules (the "Rules") of the National Association of Securities Dealers, Inc. ("NASD")) thereof, whether as a Holder of such
Securities or as an underwriter, a placement or sales agent or a broker or dealer in respect thereof, or otherwise, the Company will assist such broker-dealer in complying with the requirements of
such Rules, including, without limitation, by (i) if such Rules, including Rule 2720, shall so require, engaging a "qualified independent underwriter" (as defined in Rule 2720) to participate in the
preparation of the Registration Statement relating to such Securities, to exercise usual standards of due diligence in respect thereto and, if any portion of the offering contemplated by such
Registration Statement is an underwritten offering or is made through a placement or sales agent, to recommend the yield of such Securities, (ii) indemnifying any such qualified independent
underwriter to the extent of the indemnification of underwriters provided in Section 5 hereof and (iii) providing such information to such broker-dealer as may be required in order for such
broker-dealer to comply with the requirements of the Rules. 

9

 

        (v)   The
Company shall use commercially reasonable efforts to take all other steps necessary to effect the registration of the Securities covered by a Registration Statement
contemplated hereby. 

        4.    Registration Expenses.    The Company shall bear all fees and expenses incurred in connection with the
performance of its obligations under Sections 1 through 3 hereof (including the reasonable fees and expenses, if any, of Cravath, Swaine & Moore LLP, counsel for the Initial Purchasers,
incurred in connection with the Registered Exchange Offer), whether or not the Registered Exchange Offer or a Shelf Registration is filed or becomes effective, and, in the event of a Shelf
Registration, shall bear or reimburse the Holders of the Securities covered thereby for the reasonable fees and disbursements of one firm of counsel designated by the Holders of a majority in
principal amount of the Initial Securities covered thereby to act as counsel for the Holders of the Initial Securities in connection therewith. 

        5.    Indemnification.    (a) The Company agrees to indemnify and hold harmless each Holder of the Securities, any
Participating Broker-Dealer and each person, if any, who controls such Holder or such Participating Broker-Dealer within the meaning of the Securities Act or the Exchange Act (each Holder, any
Participating Broker-Dealer and such controlling persons are referred to collectively as the "Indemnified Parties") from and against any losses, claims, damages or liabilities, joint or several, or
any actions in respect thereof (including, but not limited to, any losses, claims, damages, liabilities or actions relating to purchases and sales of the Securities) to which each Indemnified Party
may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such losses, claims, damages, liabilities or actions arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in a Registration Statement or prospectus or in any amendment or supplement thereto or in any preliminary prospectus relating to a Shelf
Registration, or arise out of, or are based upon, the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not
misleading, and shall reimburse, as incurred, the Indemnified Parties for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim,
damage, liability or action in respect thereof; provided, however, that (i) the Company shall not be liable in any such case to the extent that such loss, claim, damage or liability arises out of or
is based upon any untrue statement or alleged untrue statement or omission or alleged omission made in a Registration Statement or prospectus or in any amendment or supplement thereto or in any
preliminary prospectus relating to a Shelf Registration in reliance upon and in conformity with written information pertaining to such Holder and furnished to the Company by or on behalf of such
Holder specifically for inclusion therein and (ii) the foregoing; indemnity agreement with respect to losses, claims, damages or liabilities shall not inure to the benefit of any Holder or
Participating Broker-Dealer (or any person controlling any such person) with respect to any losses, claims, damages or liabilities arising out of or based upon (x) any untrue statement or alleged
untrue statement of any material fact in the preliminary prospectus or (y) the omission or alleged omission to state in the preliminary prospectus a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made, not misleading, if (1) the Company furnished to such Holder or Participating Broker Dealer sufficient copies of the final
prospectus on a timely basis to permit delivery of such final prospectus with the written confirmation of the sale of the Securities concerned to such persons; (2) the person asserting such losses,
claims, damages or liabilities purchased Securities from such Purchaser in a sale in which the Holder or Participating Broker-Dealer was required to deliver a final prospectus and a copy of the final
prospectus was not sent or given by or on behalf of such Holder or Participating Broker-Dealer to such person at or prior to the delivery of the written confirmation of such sale; and (3) the final
prospectus would have cured the defect giving rise to such losses, claims, damages or liabilities. 

        (b)   Each
Holder of the Securities, severally and not jointly, will indemnify and hold harmless the Company and each person, if any, who controls the Company within the
meaning of the Securities Act or the Exchange Act from and against any losses, claims, damages or liabilities or any actions in respect 

10

 

thereof,
to which the Company or any such controlling person may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such losses, claims, damages, liabilities or actions
arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in a Registration Statement or prospectus or in any amendment or supplement thereto or in
any preliminary prospectus relating to a Shelf Registration, or arise out of or are based upon the omission or alleged omission to state therein a material fact necessary to make the statements
therein not misleading, but in each case only to the extent that the untrue statement or omission or alleged untrue statement or omission was made in reliance upon and in conformity with written
information pertaining to such Holder and furnished to the Company by or on behalf of such Holder specifically for inclusion therein; and, subject to the limitation set forth immediately preceding
this clause, shall reimburse, as incurred, the Company for any legal or other expenses reasonably incurred by the Company or any such controlling person in connection with investigating or defending
any loss, claim, damage, liability or action in respect thereof. This indemnity agreement will be in addition to any liability which such Holder may otherwise have to the Company or any of its
controlling persons. 

        (c)   Promptly
after receipt by an indemnified party under this Section 5 of notice of the commencement of any action or proceeding (including a governmental investigation),
such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 5, notify the indemnifying party of the commencement thereof; but the failure
to notify the indemnifying party shall not relieve the indemnifying party from any liability that it may have under subsection (a) or (b) above except to the extent that it has been materially
prejudiced (through the forfeiture of substantive rights or defenses) by such failure; and provided further that the failure to notify the indemnifying party shall not relieve it from any liability
that it may have to an indemnified party otherwise than under subsection (a) or (b) above. In case any such action is brought against any indemnified party, and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel reasonably satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and after
notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof the indemnifying party will not be liable to such indemnified party under this Section 5
for any legal or other expenses, other than reasonable costs of investigation, subsequently incurred by such indemnified party in connection with the defense thereof. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any settlement of any pending or threatened action in respect of which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party unless such settlement (i) includes an unconditional release of such indemnified party from all liability on any claims that are
the subject matter of such action, and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party. 

11

   
        (d)   If the indemnification provided for in this Section 5 is unavailable or insufficient to hold harmless an indemnified party under subsections (a) or (b) above, then each
indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to in
subsection (a) or (b) above (i) in such proportion as is appropriate to reflect the relative benefits received by the indemnifying party or parties on the one hand and the indemnified party on the
other from the exchange of the Securities, pursuant to the Registered Exchange Offer, or (ii) if the allocation provided by the foregoing clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the indemnifying party or parties on the one hand and the
indemnified party on the other in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities (or actions in respect thereof) as well as any other relevant
equitable considerations. The relative fault of the parties shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission
or alleged omission to state a material fact relates to information supplied by the Company on the one hand or such Holder or such other indemnified pariy, as the case may be, on the other, and the
parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid by an indemnified party as a result of the losses, claims,
damages or liabilities referred to in the first sentence of this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any action or claim which is the subject of this subsection (d). Notwithstanding any other provision of this Section 5(d), the Holders of the Securities shall not be
required to contribute any amount in excess of the amount by which the net proceeds received by such Holders from the sale of the Securities pursuant to a Registration Statement exceeds the amount of
damages which such Holders have otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this paragraph
(d), each person, if any, who controls such indemnified party within the meaning of the Securities Act or the Exchange Act shall have the same rights to contribution as such indemnified party and each
person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act shall have the same rights to contribution as the Company. 

        (e)   The
agreements contained in this Section 5 shall survive the sale of the Securities pursuant to a Registration Statement and shall remain in full force and effect,
regardless of any termination or cancellation of this Agreement or any investigation made by or on behalf of any indemnified party. 

        6.    Additional Interest Under Certain Circumstances.    (a) Additional interest (the "Additional Interest") with
respect to the Initial Securities shall be assessed as follows if any of the following events occur (each such event in clauses (i) through (vi) below a "Registration Default"): 

          (i)  the
Company fails to file an Exchange Offer Registration Statement with the Commission on or prior to April 26, 2004; 

         (ii)  the
Exchange Offer Registration Statement is not declared effective by the Commission on or prior to July 26, 2004 or, if obligated to file a Shelf Registration
Statement pursuant to Section 2(i), a Shelf Registration Statement is not declared effective by the Commission on or prior to July 26, 2004; 

        (iii)  the
Registered Exchange Offer is not consummated on or before the 40th day after the Exchange Offer Registration Statement is declared effective; 

        (iv)  if
obligated to file a Shelf Registration Statement pursuant to Section 2(ii), (iii) or (iv), the Company fails to file the Shelf Registration Statement with the
Commission on or prior to the 

12

 

45th day
(the "Shelf Filing Date") after the date on which the obligation to file a Shelf Registration Statement arises; 

         (v)  if
obligated to file a Shelf Registration Statement pursuant to Section 2(ii), (iii) or (iv), the Shelf Registration Statement is not declared effective on or prior to
the 90th day after the Shelf Filing Date; or 

        (vi)  after
the Exchange Offer Registration Statement or the Shelf Registration Statement, as the case may be, is declared effective, (A) such Registration Statement
thereafter ceases to be effective; or (B) such Registration Statement or the related prospectus ceases to be usable (except as permitted in paragraph (b) below) in connection with resales of Transfer
Restricted Securities during the periods specified herein because either (1) any event occurs as a result of which the related prospectus forming part of such Registration Statement would include any
untrue statement of a material fact or omit to state any material fact necessary to make the statements therein in light of the circumstances under which they were made not misleading or (2) it shall
be necessary to amend such Registration Statement, or supplement the related prospectus, to comply with the Securities Act or the Exchange Act or the respective rules thereunder. 

        Additional
Interest shall accrue on the Initial Securities over and above the interest set forth in the title of the Securities from and including the date on which any such Registration
Default shall occur to but excluding the date on which all such Registration Defaults have been cured, at a rate of 0.50% per annum for the first 90-day period immediately following the occurrence of
a Registration Default, and such rate shall increase by an additional 0.50% per annum with respect to each subsequent 90-day period until all Registration Defaults have been cured, up to a maximum
additional interest rate of 1.5% per annum. Such Additional Interest shall be in addition to any other interest payable from time to time with respect to the Initial Securities and the Exchange
Securities. The Company shall give
prompt written notice to the Trustee of (x) the occurrence of a Registration Default and (y) the cure of a Registration Default. 

        (b)   A
Registration Default referred to in Section 6(a)(vi)(B) hereof shall be deemed not to have occurred and be continuing in relation to a Shelf Registration Statement or
the related prospectus if (i) such Registration Default has occurred solely as a result of (x) the filing of a post-effective amendment to such Shelf Registration Statement to incorporate annual
audited financial information with respect to the Company where such post-effective amendment is not yet effective and needs to be declared effective to permit Holders to use the related prospectus or
(y) other material events, with respect to the Company that would need to be described in such Shelf Registration Statement or the related prospectus and (ii) in the case of clause (y), the Company is
proceeding promptly and in good faith to amend or supplement such Shelf Registration Statement and related prospectus to describe such events; provided, however, that in any case if such Registration
Default occurs for a continuous period in excess of 30 days, Additional Interest shall be payable in accordance with the above paragraph from the day such Registration Default occurs until such
Registration Default is cured. 

        (c)   Any
amounts of Additional Interest due pursuant to Section 6(a) above will be payable in cash on the regular interest payment dates with respect to the Initial
Securities. The amount of Additional Interest will be determined by multiplying the applicable Additional Interest rate by the principal amount of the Initial Securities, multiplied by a fraction, the
numerator of which is the number of days such Additional Interest rate was applicable during such period (determined on the basis of a 360-day year comprised of twelve 30-day months), and the
denominator of which is 360. 

        (d)   "Transfer
Restricted Securities" means each Security until (i) the date on which such Transfer Restricted Security has been exchanged by a person other than a
broker-dealer for a freely transferable Exchange Security in the Registered Exchange Offer, (ii) following the exchange by a broker-dealer in the Registered Exchange Offer of an Initial Security for
an Exchange Note, the date on which such Exchange Note is sold to a purchaser who receives from such broker-dealer on or prior to the date of 

13

 

such
sale a copy of the prospectus contained in the Exchange Offer Registration Statement, (iii) the date on which such Initial Security has been effectively registered under the Securities Act and
disposed of in accordance with the Shelf Registration Statement or (iv) the date on which such Initial Securities is distributed to the public pursuant to Rule 144 under the Securities Act or is
saleable pursuant to Rule 144(k) under the Securities Act. 

        7.    Rules 144 and 144A.    The Company shall use commercially reasonable efforts to file the reports required to be
filed by it under the Securities Act and the Exchange Act in a timely manner and, if at any time the Company is not required to file such reports, it will, upon the request of any Holder of Initial
Securities, make publicly available other information so long as necessary to permit sales of their securities pursuant to Rules 144 and 144A. The Company covenants that it will take such further
action as any Holder of Initial Securities may reasonably request, all to the extent required from time to time
to enable such Holder to sell Initial Securities without registration under the Securities Act within the limitation of the exemptions provided by Rules 144 and 144A (including the requirements of
Rule 144A(d)(4)). The Company will provide a copy of this Agreement to prospective purchasers of Initial Securities identified to the Company by the Initial Purchasers upon request. Upon the request
of any Holder of Initial Securities, the Company shall deliver to such Holder a written statement as to whether it has complied with such requirements. Notwithstanding the foregoing, nothing in this
Section 7 shall be deemed to require the Company to register any of its securities pursuant to the Exchange Act. 

        8.    Underwritten Registrations.    If any of the Transfer Restricted Securities covered by any Shelf Registration
are to be sold in an underwritten offering, the investment banker or investment bankers and manager or managers that will administer the offering ("Managing Underwriters") will be selected by the
Holders of a majority in aggregate principal amount of such Transfer Restricted Securities to be included in such offering and shall be reasonably acceptable to the Company. 

        No
person may participate in any underwritten registration hereunder unless such person (i) agrees to sell such person's Transfer Restricted Securities on the basis reasonably provided
in any underwriting arrangements approved by the persons entitled hereunder to approve such arrangements and (ii) completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements. 

        9.    Miscellaneous.    

        (a)    Amendments and Waivers.    The provisions of this Agreement may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given, except by the Company and the written consent of the Holders of a majority in principal amount of the Securities affected
by imch amendment, modification, supplement, waiver or consents. 

        (b)    Notices.    All notices and other communications provided for or permitted hereunder shall be made in writing
by hand delivery, first-class mail, facsimile transmission, or air courier which guarantees overnight delivery: 

        (1)   if
to a Holder of the Securities, at the most current address given by such Holder to the Company. 

        (2)   if
to the Initial Purchasers; 

Credit
Suisse First Boston LLC

Eleven Madison Avenue

New York, NY 10010-3629

Fax No.: (212) 325-8278

Attention: Transactions Advisory Group 

14

 

with
a copy to: 

Cravath,
Swaine & Moore LLP

825 Eighth Avenue

Worldwide Plaza

New York, NY 10019-7475

Attention: William J. Whelan, III, Esq. 

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

EXCO
Resources, Inc.

12377 Merit Drive, Suite 1700

Dallas, TX 75251 

with
a copy to: 

Haynes
and Boone LLP

2505 N. Plano Rd., Suite 4000

Richardson, TX 75082

Attention: William L. Boeing, Esq. 

        All
such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; three business days after being deposited in the
mail, postage prepaid, if mailed; when receipt is acknowledged by recipient's facsimile machine operator, if sent by facsimile transmission; and on the day delivered, if sent by overnight air courier
guaranteeing next day delivery. 

        (c)    No Inconsistent Agreements.    The Company has not, as of the date hereof, entered into, nor shall it, on or
after the date hereof, enter into, any agreement with respect to its securities that is inconsistent with the rights granted to the Holders herein or otherwise conflicts with the provisions hereof. 

        (d)    Successors and Assigns.    This Agreement shall be binding upon the Company and its successors and assigns. 

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

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

        (g)    Governing Law.    THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. 

        (h)    Severability.    If any one or more of the provisions contained herein, or the application thereof in any
circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall
not be affected or unpaired thereby. 

        (i)    Securities Held by the Company.    Whenever the consent or approval of Holders of a specified percentage of
principal amount of Securities is required hereunder, Securities held by the Company or its affiliates (other than subsequent Holders of Securities if such subsequent Holders are deemed to be
affiliates solely by reason of their holdings of such Securities) shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage. 

        (j)    Additional Securities.    To the extent the terms of this Agreement conflict with the terms, or provide
additional terms to, the Registration Rights Agreement dated as of January 20, 2004 (the "Initial Registration Rights Agreement"), this Agreement, to the extent of such conflict or addition, shall
supercede the Initial Registration Rights Agreement and shall be applicable to the Securities (as defined in the Initial Registration Rights Agreement). The Initial Registration Rights Agreement shall
otherwise continue in full force and effect. 

15

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

	 	 	Very truly yours,
	

 	
 	

EXCO RESOURCES, INC.
	

 	
 	

by	
 	

 

	 	 	 	 	Name:	J. Douglas Ramsey
	 	 	 	 	Title:	Vice President
	

 	
 	

TAURUS ACQUISITION, INC.
	

 	
 	

by	
 	

 

 

	 	 	 	 	Name:	J. Douglas Ramsey
	 	 	 	 	Title:	Vice President
	

 	
 	

EXCO INVESTMENT I, LLC
	

 	
 	

by	
 	

/s/  RICHARD L. HODGES      

	 	 	 	 	Name:	Richard L. Hodges
	 	 	 	 	Title:	Vice President
	

 	
 	

EXCO INVESTMENT II, LLC
	

 	
 	

by	
 	

 

 

	 	 	 	 	Name:	J. Douglas Ramsey
	 	 	 	 	Title:	Vice President
	

 	
 	

NORTH COAST ENERGY, INC.
	

 	
 	

by	
 	

 

 

	 	 	 	 	Name:	J. Douglas Ramsey
	 	 	 	 	Title:	Vice President
	

 	
 	

EXCO OPERATING, LP, by EXCO Investment II, LLC, its general partner
	

 	
 	

by	
 	

 

 

	 	 	 	 	Name:	J. Douglas Ramsey
	 	 	 	 	Title:	Vice President
	

 	
 	

NORTH COAST ENERGY EASTERN, INC.
	

 	
 	

by	
 	

 

 

	 	 	 	 	Name:	J. Douglas Ramsey
	 	 	 	 	Title:	Vice President

	The foregoing Registration

Rights Agreement is hereby confirmed

and accepted as of the date first

above written.	 	 
	

CREDIT SUISSE FIRST BOSTON LLC

BANC ONE CAPITAL MARKETS, INC.

BNP PARIBAS SECURITIES CORP.

COMERICA SECURITIES, INC.

SCOTIA CAPITAL (USA) INC.

TD SECURITIES (USA) INC.	
 	

 
	

By	
 	

CREDIT SUISSE FIRST BOSTON LLC	
 	

 
	

 	
 	

by	
 	

/s/  TIMOTHY PERRY      
	
 	

 
	 	 	 	 	Name:	 	Timothy Perry	 	 
	 	 	 	 	Title:	 	Director	 	 

ANNEX A  

        Each
broker-dealer that receives Exchange Securities for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale
of such Exchange Securities. The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Securities received in
exchange for Initial Securities where such Initial Securities were acquired by such broker-dealer as a result of market-making activities or other trading activities. The Company has agreed that, for
a period of 180 days after the Expiration Date (as defined herein), it will make this Prospectus available to any broker-dealer for use in connection with any such resale. See "Plan of Distribution." 

ANNEX B  

        Each
broker-dealer that receives Exchange Securities for its own account in exchange for Securities, where such Initial Securities were acquired by such broker-dealer as a result of
market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. See "Plan of Distribution." 

ANNEX C  

PLAN OF DISTRIBUTION  

        Each broker-dealer that receives Exchange Securities for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Securities. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange
Securities received in exchange for Initial Securities where such Initial Securities were acquired as a result of market-making activities or other trading activities. The Company has agreed that, for
a period of 180 days after the Expiration Date, it will make this prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale. In addition, until
                        , 200  , all dealers effecting transactions in the Exchange Securities may be required to
deliver a prospectus.(1) 

	(1)
	In
addition, the legend required by Item 502(e) of Regulation S-K will appear on the back cover page of the Exchange Offer prospectus. 

        The
Company will not receive any proceeds from any sale of Exchange Securities by broker-dealers. Exchange Securities received by broker-dealers for their own account pursuant to the
Exchange Offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the Exchange Securities or a
combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or negotiated prices. Any such resale may be made directly
to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer or the purchasers of any such Exchange Securities.
Any broker-dealer that resells Exchange Securities that were received by it for its own account pursuant to the Exchange Offer and any broker or dealer that participates in a distribution of such
Exchange Securities may be deemed to be an "underwriter" within the meaning of the Securities Act and any profit on any such resale of Exchange 

        Securities
and any commission or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The Letter of Transmittal states that,
by
acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. 

        For
a period of 180 days after the Expiration Date the Company will promptly send additional copies of this Prospectus and any amendment or supplement to this Prospectus to any
broker-dealer that requests such documents in the Letter of Transmittal. The Company has agreed to pay all expenses incident to the Exchange Offer (including the expenses of one counsel for the
Holders of the Securities) other than commissions or concessions of any brokers or dealers and will indemnify the Holders of the Securities (including any broker-dealers) against certain liabilities,
including liabilities under the Securities Act. 

ANNEX D  

o    CHECK
HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR
SUPPLEMENTS THERETO. 

	 	 	Name:	 
	 	 
	 	 	Address:	 
	 	 
	 	 	 	 
	 	 

        If
the undersigned is not a broker-dealer, the undersigned represents that it is not engaged in, and does not intend to engage in, a distribution of Exchange Securities. If the
undersigned is a broker-dealer that will receive Exchange Securities for its own account in exchange for Initial Securities that were acquired as a result of market-making activities or other trading
activities, it acknowledges that it will deliver a prospectus in connection with any resale of such Exchange Securities; however, by so acknowledging and by delivering a prospectus, the undersigned
will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. 

QuickLinks

$100,000,000 EXCO RESOURCES, INC. 7 1/4% Senior Notes due 2011 REGISTRATION RIGHTS AGREEMENT

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