SUBORDINATED CREDIT AGREEMENT

Exhibit 10.2

EXECUTION VERSION

      THIS INSTRUMENT AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE IN THE MANNER AND TO THE EXTENT SET FORTH IN THAT CERTAIN INTERCREDITOR AGREEMENT (AS AMENDED, THE "SUBORDINATION AGREEMENT") DATED AS OF MARCH 7, 2007, AMONG BANK OF AMERICA, N.A., AS ADMINISTRATIVE AGENT, EAP OPERATING, INC., A DELAWARE CORPORATION, AS LENDER, ENCORE ENERGY PARTNERS OPERATING LLC, A DELAWARE LIMITED LIABILITY COMPANY, AND ENCORE ENERGY PARTNERS LP, A DELAWARE LIMITED PARTNERSHIP, TO THE SENIOR OBLIGATIONS (AS DEFINED THEREIN), AS MORE PARTICULARLY DESCRIBED IN THE SUBORDINATION AGREEMENT.

SUBORDINATED CREDIT AGREEMENT

Dated as of March 7, 2007

among

ENCORE ENERGY PARTNERS OPERATING LLC,
as the Borrower,

ENCORE ENERGY PARTNERS LP,
as a Guarantor,

and

EAP OPERATING, INC.,
as the Lender

TABLE OF CONTENTS

i

ii

iii

iv

SUBORDINATED CREDIT AGREEMENT

     This SUBORDINATED CREDIT AGREEMENT (" Agreement ") is entered into as of March 7, 2007, among ENCORE ENERGY PARTNERS OPERATING LLC, a Delaware limited liability company (the " Borrower" ), ENCORE ENERGY PARTNERS LP, a Delaware limited partnership (" Parent "), and EAP OPERATING, INC., a Delaware corporation, as the Lender (the " Lender ").

     The Borrower and Parent have requested that the Lender provide a term credit facility, and the Lender is willing to do so on the terms and conditions set forth herein.

     In consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:

ARTICLE I.
DEFINITIONS AND ACCOUNTING TERMS

      1.01 Defined Terms. As used in this Agreement, the following terms shall have the meanings set forth below:

     " Acquisition " means the acquisition on the Closing Date by the Borrower of the Properties (as defined in and as contemplated by the Acquisition Agreement) pursuant to the terms and conditions of the Acquisition Agreement.

     " Acquisition Agreement " means that certain Purchase and Sale Agreement dated January 16, 2007 between Clear Fork Pipeline Company, Howell Petroleum Corporation and Kerr-McGee Oil & Gas Onshore LP, as sellers, and EAC, as purchaser.

     " Administrative Agent " means Bank of America in its capacity as the Administrative Agent under the Senior Credit Agreement, or any successor administrative agent.

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

     " Agreement " means this Subordinated Credit Agreement.

     " Applicable Margin " means, on any date, (i) for a Eurodollar Rate Loan, a rate equal to 5.00% per annum, and (ii) for a Base Rate Loan, a rate equal to 3.75% per annum.

     " Asset Disposition " means the sale, assignment, transfer, exchange or other disposition by any Credit Party of (i) any Borrowing Base Property or (ii) all or substantially all of its right, title and interest in any Restricted Subsidiary owning any Borrowing Base Property, other than to another Credit Party in accordance with the terms hereof.

     " Assignment and Assumption " means an assignment and assumption entered into by the Lender and an Eligible Assignee (with the consent of any party whose consent is required by

1

Section 10.06(b) ) in substantially the form of Exhibit D or any other form approved by the Lender.

     " Availability " means Availability as determined from time to time under the Senior Credit Agreement.

     " Bank of America " means Bank of America, N.A. and its successors.

     " Base Rate " means for any day a fluctuating rate per annum equal to the higher of (a) the Federal Funds Rate plus 1/2 of 1% and (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its "prime rate." Any change in such rate announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of such change.

     " Base Rate Loan " means a Loan that bears interest based on the Base Rate.

     " Borrower " has the meaning specified in the introductory paragraph hereto.

     " Borrower-Related Parties " means, collectively, Parent, the Borrower, each Restricted Subsidiary of the Borrower and each Unrestricted Subsidiary of the Borrower, and "Borrower-Related Party" means any one of the foregoing.

     " Borrowing " means the borrowing on the Closing Date by the Borrower of the Loan pursuant to Section 2.01 .

     " Borrowing Base " means the Borrowing Base as determined from time to time under the Senior Credit Agreement.

     " Borrowing Base Deficiency " means any Borrowing Base Deficiency as determined from time to time under the Senior Credit Agreement.

     " Borrowing Base Properties " means the Borrowing Base Properties as determined from time to time under the Senior Credit Agreement.

     " Business Day " means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the state where the Lender’s Office is located and, if such day relates to any Eurodollar Rate Loan, means any such day on which dealings in Dollar deposits are conducted by and between banks in the London interbank eurodollar market.

     " Change in Law " means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation or application thereof by any Governmental Authority or (c) the making or issuance of any request, guideline or directive (whether or not having the force of law) by any Governmental Authority.

     " Change of Control " means the occurrence of any of the following whether voluntarily or involuntarily, including by operation of law:

2

     (a) the Borrower shall cease to be a wholly owned Subsidiary of Parent;

     (b) General Partner shall cease to be the sole general partner of Parent; or General Partner shall cease to be Controlled by EAC; or any "person" or "group" (for purposes of this clause (b) and the following clause (c), as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (the " Exchange Act ")), other than EAC, any wholly owned Subsidiary of EAC or one or more Designated EAC Stockholders, is or becomes the "beneficial owner" (for purposes of this clause (b) and the following clause (c), as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that such a person shall be deemed to have "beneficial ownership" of all shares that any such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 35% of the total voting power of the voting stock of General Partner;

     (c) any "person" or "group", other than one or more Designated EAC Stockholders, is or becomes the "beneficial owner", directly or indirectly, of more than 35% of the total voting power of the voting stock of EAC; provided, however, the foregoing shall not constitute a Change of Control so long as the Designated EAC Stockholders are the beneficial owners (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, in the aggregate of a greater percentage of the total voting power of the voting stock of EAC than such other person or group or have the right or ability by voting power, contract or otherwise to elect or designate for election a majority of the board of directors of EAC (for the purposes of this clause (c), such other person or group referred to above shall be deemed to be the beneficial owner of any voting stock of a Person (the "specified person") held by any other Person (the "parent entity"), if such other person or group is the beneficial owner (as defined above), directly or indirectly, of more than 35% of the voting power of the voting stock of such parent entity and the Designated EAC Stockholders are the beneficial owners, directly or indirectly, in the aggregate of a lesser percentage of the voting power of the voting stock of such parent entity and do not have the right or ability by voting power, contract or otherwise to elect or designate for election a majority of the board of directors of such parent entity); or

     (d) during any period of two consecutive years, individuals who, at the beginning of such period, constituted the board of directors of EAC (together with (A) any new directors whose election by such board of directors of EAC or whose nomination for election by the shareholders of EAC was approved by a vote of the majority of the directors of EAC then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved and (B) any representative of a Designated EAC Stockholder) cease for any reason to constitute a majority of the board of directors of EAC then in office.

     " Closing Date " means the first date all the conditions precedent in Section 4.01 are satisfied or waived in accordance with Section 10.01 .

     " Code " means the Internal Revenue Code of 1986.

     " Collateral " means all property of any kind which, under the terms of any Loan Document, is subject to a Lien in favor of the Lender.

3

     " Commitment " means the Lender’s obligation to make a single Loan to the Borrower pursuant to Section 2.01 in an aggregate principal amount not to exceed $120,000,000.

     " Compliance Certificate " means a certificate substantially in the form of Exhibit C .

     " Consolidated Adjusted EBITDA " means, for any period, Consolidated EBITDA; provided that , if, since the beginning of the four fiscal quarter period ending on the date for which Consolidated Adjusted EBITDA is determined, a Material Adjustment Event has occurred, Consolidated Adjusted EBITDA shall be calculated giving pro forma effect thereto as if the Material Adjustment Event had occurred on the first day of such period. Such pro forma effect shall be determined (a) in good faith by a Responsible Officer of General Partner (with adjustments for commodity prices, Hedge Transactions and other items as are acceptable to the Lender) and (b) without giving effect to any anticipated or proposed change in operations as a result of such Material Adjustments Event, except as may be acceptable to the Lender. As used in this definition, " Material Adjustment Event " means any of the following events having a fair market value in excess of $20,000,000 on a cumulative basis with any other of the following events occurring subsequent to the beginning of the applicable period for which Consolidated Adjusted EBITDA is being determined or the immediately preceding Material Adjustment Event occurring during such period, if any (so that none of the following shall be included more than once): (i) any acquisition of the Equity Interests of any Person that becomes a Restricted Subsidiary, (ii) any acquisition of assets by the Borrower or any of its Restricted Subsidiaries, (iii) the sale, transfer or other disposition of any assets (including Equity Interests) by the Borrower or any of its Restricted Subsidiaries, (iv) any merger and consolidation of the Borrower or any of its Restricted Subsidiaries with a Person that is not the Borrower, Parent or a Restricted Subsidiary and (v) any redesignation of a Subsidiary as either an Unrestricted Subsidiary or a Restricted Subsidiary.

     " Consolidated Current Assets " means, at any time, the sum of (a) the current assets of Parent, the Borrower and its Consolidated Restricted Subsidiaries at such time, plus (b) the Availability at such time.

     " Consolidated Current Liabilities " means, at any time, the current liabilities of Parent, the Borrower and its Consolidated Restricted Subsidiaries at such time, but excluding current maturities of Long Term Debt of Parent, the Borrower and its Consolidated Restricted Subsidiaries outstanding at such time.

     " Consolidated EBITDA " means, for any period, an amount equal to the Consolidated Net Income of Parent, the Borrower and its Consolidated Restricted Subsidiaries for such period, plus each of the following determined for Parent, the Borrower and its Consolidated Restricted Subsidiaries on a consolidated basis for such period: (a) any provision for (or less any benefit from) income or franchise Taxes included in determining Consolidated Net Income; (b) Consolidated Net Interest Expense deducted in determining Consolidated Net Income; (c) depreciation, depletion, amortization and exploration expense deducted in determining Consolidated Net Income; (d) other non-cash charges deducted in determining Consolidated Net Income to the extent not already included in clauses (b) and (c) of this definition, and (e) any unrealized non-cash gains or losses or charges in respect of any Hedge Transactions resulting

4

from the requirements of FAS 133 to the extent not already included in clause (d) of this definition.

     " Consolidated Funded Debt " means, the Debt of Parent, the Borrower and its Consolidated Restricted Subsidiaries on a consolidated basis; provided, however, that such Consolidated Funded Indebtedness shall not include Debt under this Agreement and Guarantees thereof.

     " Consolidated Net Income " means, for any period, the net income (or loss) of the Borrower and its Consolidated Restricted Subsidiaries for such period determined in accordance with GAAP, but excluding (without duplication): (a) (i) the income of any other Person (other than the Borrower’s Consolidated Restricted Subsidiaries) in which the Borrower or any of its Consolidated Restricted Subsidiaries has an ownership interest, unless received by the Borrower or any of its Consolidated Restricted Subsidiaries in a cash dividend, cash interest payment or other cash distribution and (ii) the loss of any other Person (other than the Borrower’s Consolidated Restricted Subsidiaries) in which the Borrower or any of its Consolidated Restricted Subsidiaries has an ownership interest, except to the extent of the aggregate cash actually contributed to such Person by the Borrower or any Consolidated Restricted Subsidiaries; (b) any after-tax gains or losses attributable to asset dispositions by the Borrower or any of its Consolidated Restricted Subsidiaries, together with all related fees and expenses; (c) any after-tax (i) extraordinary or non-recurring gains or (ii) extraordinary or nonrecurring losses, together with all related fees and expenses; (d) any impairment losses on oil and natural gas properties; (e) any unrealized non-cash gains or losses or charges in respect of any Hedge Transactions resulting from the requirements of FAS 133 and (f) any non-cash compensation charge arising from any grant of stock, stock options or other equity-based awards.

     " Consolidated Net Interest Expense " means, for any period, the remainder of the following for Parent, the Borrower and its Consolidated Restricted Subsidiaries for such period: (a) interest expense, minus (b) interest income.

     " Consolidated Restricted Subsidiary " or " Consolidated Restricted Subsidiaries " means any Subsidiary, the accounts of which would be consolidated with those of the Borrower in its consolidated financial statements, excluding each Unrestricted Subsidiary.

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

     " Credit Parties " means, collectively, the Borrower, Parent and each Restricted Subsidiary of the Borrower, and "Credit Party" means any one of the foregoing.

     " Debt " means, for any Person at any time, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (c) capitalized lease obligations, other than usual and customary oil and gas leases, of such Person, (d) all Guarantees by such Person of items described in clauses (a) through (c) and (e) through (h) of this definition, (e) the unfunded or

5

unreimbursed portion of all letters of credit issued for the account of such Person, (f) any amount owed by such Person representing the deferred purchase price of property or services (other than accounts payable incurred in the ordinary course of business which have not been outstanding for more than 120 days past the invoice date), other than obligations contested in good faith by appropriate proceedings, if required, and for which adequate reserves are maintained on the books of such Person in accordance with GAAP, (g) indebtedness (excluding prepaid interest thereon) of such Person secured by a Lien on any property or asset owned or being purchased by that Person regardless of whether the indebtedness secured thereby shall have been assumed by that Person or is non-recourse to the credit of that Person (the amount of such indebtedness being deemed to be the lesser of the liquidation value of such property or asset and the amount of the indebtedness so secured), (h) the undischarged balance of any production payment created by such Person or for the creation of which such Person directly or indirectly received payment, and (i) all liability of such Person as a general partner of a partnership for obligations of such partnership of the nature described in (a) through (h) preceding, unless such obligations are expressly non-recourse to such Person (subject to customary exceptions acceptable to the Lender).

     " Debtor Relief Laws " means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.

     " Default " means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.

     " Default Rate " means an interest rate equal to (a) the Base Rate plus (b) the Applicable Margin, if any, applicable to a Base Rate Loan plus (c) 2% per annum; provided, however, that with respect to a Eurodollar Rate Loan, the Default Rate shall be an interest rate equal to the interest rate (including any Applicable Margin) otherwise applicable to such Eurodollar Rate Loan plus 2% per annum.

     " Designated EAC Stockholders " means (a) I. Jon Brumley, (b) Jon S. Brumley, (c) Warburg Pincus Equity Partners L.P., (d) trusts, the sole beneficiaries and trustees of which are the individuals listed in clauses (a) and (b) above or their immediate family members, (e) corporations, partnerships and other entities (i) of which the individuals listed in clauses (a) and (b) above or their immediate family members are the beneficial owners of all capital stock and other equity or voting interests, and (ii) that are controlled by such individuals and their immediate family members, and (f) any Affiliates as of the Closing Date or successors of any of the entities listed in clauses (c) and (d) above.

     " Distribution " by any Person means (a) with respect to any stock issued by such Person or any partnership, joint venture, limited liability company, membership or other interest of such Person, the retirement, redemption, purchase, or other acquisition for value of any such stock or partnership, joint venture, limited liability company, membership or other interest, (b) the declaration or payment of any dividend or other distribution on or with respect to any stock, partnership, joint venture, limited liability company, membership or other interest of such

6

Person, and (c) any other payment by such Person with respect to such stock, partnership, joint venture, limited liability company, membership or other interest of such Person.

     " Dollar " and " $ " mean lawful money of the United States.

     " Domestic Restricted Subsidiary " means a Restricted Subsidiary incorporated or organized under the laws of the United States, any State thereof or the District of Columbia.

     " EAC " means Encore Acquisition Company, a Delaware corporation.

     " EAC Credit Party " means EAC and each Person that is a "Credit Party", as such term is defined in the Amended and Restated Credit Agreement dated as of even date herewith among EAC, Encore Operating, L.P., Bank of America, N.A., as Administrative Agent and L/C Issuer, and the Lenders party thereto.

     " Eligible Assignee " means any Person that meets the requirements to be an assignee under Section 10.06(b)(iii) (subject to such consents, if any, as may be required under Section 10.06(b)(iii)) .

     " Environmental Complaint " means any complaint, summons, citation, notice, directive, order, claim, litigation, investigation, proceeding, judgment, letter or other written communication from any federal, state or municipal authority or any other party against any Borrower-Related Party involving (a) a Hazardous Discharge from, onto or about any real property owned, leased or operated at any time by any Borrower-Related Party, (b) a Hazardous Discharge caused, in whole or in part, by any Borrower-Related Party or by any Person acting on behalf of or at the instruction of any Borrower-Related Party, or (c) any violation of any Environmental Law by any Borrower-Related Party.

     " Environmental Laws " means any and all Federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the release of any Hazardous Substances into the environment, including those related to hazardous substances or wastes, air emissions and discharges to waste or public systems.

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

     " Equity Interests " means, with respect to any Person, all of the shares of capital stock of (or other ownership or profit interests in) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, all of the securities convertible into or exchangeable for shares of capital stock of (or other ownership

7

or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such shares (or such other interests), and all of the other ownership or profit interests in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination.

     " ERISA " means the Employee Retirement Income Security Act of 1974.

     " ERISA Affiliate " means any trade or business (whether or not incorporated) under common control with any Borrower-Related Party within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).

     " ERISA Event " means (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by any Borrower-Related Party or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by any Borrower-Related Party or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under Sections 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon any Borrower-Related Party or any ERISA Affiliate.

     " Eurodollar Rate " means, for any Interest Period with respect to a Eurodollar Rate Loan, the rate per annum equal to the British Bankers Association LIBOR Rate ("BBA LIBOR"), as published by Reuters (or other commercially available source providing quotations of BBA LIBOR as designated by the Lender from time to time) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, for Dollar deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period. If such rate is not available at such time for any reason, then the "Eurodollar Rate" for such Interest Period shall be the rate per annum determined by the Lender to be the rate at which deposits in Dollars for delivery on the first day of such Interest Period in same day funds in the approximate amount of the Eurodollar Rate Loan being made, continued or converted by Bank of America and with a term equivalent to such Interest Period would be offered by Bank of America’s London Branch to major banks in the London interbank eurodollar market at their request at approximately 11:00 a.m. (London time) two Business Days prior to the commencement of such Interest Period.

     " Eurodollar Rate Loan " means a Loan that bears interest at a rate based on the Eurodollar Rate.

8

     " Event of Default " has the meaning specified in Section 8.01 .

     " Excluded Taxes " means, with respect to the Lender or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, (a) taxes imposed on or measured by its overall net income (however denominated), and franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any political subdivision thereof) under the laws of which such recipient is organized or in which its principal office is located or in which its applicable Lending Office is located and (b) any branch profits taxes imposed by the United States or any similar tax imposed by any other jurisdiction in which the Borrower is located.

     " Federal Funds Rate " means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of America on such day on such transactions as determined by the Lender.

     " First Tier Restricted Subsidiary " has the meaning specified in the definition of the Pledge Agreement.

     " Fiscal Quarter " means each three (3) month period ending on March 31, June 30, September 30 and December 31 of each Fiscal Year.

     " Fiscal Year " means each twelve (12) month period ending December 31 of each calendar year.

     " Foreign Restricted Subsidiary " means any Restricted Subsidiary that is not a Domestic Restricted Subsidiary.

     " FRB " means the Board of Governors of the Federal Reserve System of the United States.

     " GAAP " means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied.

     " General Partner " means Encore Energy Partners GP LLC, a Delaware limited liability company.

9

     " Governmental Authority " means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

     " GP Holdings " means Encore Partners GP Holdings LLC, a Delaware limited liability company.

     " Guarantee " means, as to any Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Debt or other obligation payable or performable by another Person (the "primary obligor") in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Debt or other obligation of the payment or performance of such Debt or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Debt or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Debt or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any Debt or other obligation of any other Person, whether or not such Debt or other obligation is assumed by such Person (or any right, contingent or otherwise, of any holder of such Debt to obtain any such Lien) (the amount of such Debt or other obligation being deemed to be the lesser of the liquidation value of such property or asset and the amount of the Debt or other obligation so secured). The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith. The term "Guarantee" as a verb has a corresponding meaning.

     " Guarantors " means, collectively, (i) Parent, (ii) all Domestic Restricted Subsidiaries of the Borrower and (iii) to the extent no material adverse tax consequences would result, all Foreign Restricted Subsidiaries of the Borrower.

     " Guaranty " means the Guaranty made by the Guarantors in favor of the Lender, substantially in the form of Exhibit E .

     " Hazardous Discharge " means any releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, disposing or dumping of any Hazardous Substance from or onto any real property owned, leased or operated at any time by any Borrower-Related Party or any real property owned, leased or operated by any other party.

     " Hazardous Substance " means any pollutant, toxic substance, hazardous waste, compound, element or chemical that is defined as hazardous, toxic, noxious, dangerous or

10

infectious pursuant to any Environmental Law or which is otherwise regulated by any Environmental Law or is required to be investigated and/or remediated by or pursuant to any Environmental Law.

     " Hedge Transaction " means any commodity, interest rate, currency or other swap, option, collar, futures contract or other contract pursuant to which a Person hedges risks related to commodity prices, interest rates, currency exchange rates, securities prices or financial market conditions. Hedge Transactions expressly include Oil and Gas Hedge Transactions.

     " Hydrocarbons " means oil, gas, casinghead gas, drip gasolines, natural gasoline, condensate, distillate, and all other liquid and gaseous hydrocarbons produced or to be produced in conjunction therewith, and all products, by-products and all other substances derived therefrom or the processing thereof, and all other minerals and substances, including, but not limited to, sulphur, lignite, coal, uranium, thorium, iron, geothermal steam, water, carbon dioxide, helium, and any and all other minerals, ores, or substances of value, and the products and proceeds therefrom, including, without limitation, all gas resulting from the in-situ combustion of coal or lignite.

     " Immaterial Title Deficiencies " means, with respect to Borrowing Base Properties, defects or clouds on title, discrepancies in reported net revenue and working interest ownership percentage and other Liens, defects, discrepancies and similar matters which do not, individually or in the aggregate, affect Borrowing Base Properties with a Recognized Value greater than two percent (2%) of the Recognized Value of all such Borrowing Base Properties.

     " Indemnified Taxes " means Taxes other than Excluded Taxes.

     " Indemnitee " has the meaning specified in Section 10.04(b) .

     " Initial Reserve Report " means the Initial Reserve Report as defined in the Senior Credit Agreement.

     " Interest Paid In Kind " has the meaning specified in Section 2.07(c) .

     " Interest Payment Date " means, (a) as to a Eurodollar Rate Loan, (i) the last day of each Interest Period applicable to such Eurodollar Rate Loan and (ii) the Maturity Date; provided, however, that if any Interest Period for a Eurodollar Rate Loan exceeds three months, the respective dates that fall every three months after the beginning of such Interest Period shall also be Interest Payment Dates; and (b) as to any Base Rate Loan, the last Business Day of each March, June, September and December and the Maturity Date.

     " Interest Period " means, as to each Eurodollar Rate Loan, the period commencing on the date such Eurodollar Rate Loan is disbursed or converted to or continued as a Eurodollar Rate Loan and ending on the date one, two, three or six months thereafter, as selected by the Borrower in its Loan Notice, or such other period that is twelve months or less requested by the Borrower and consented to by the Lender; provided that:

     (i) any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless such

11

Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day;

     (ii) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and

     (iii) no Interest Period shall extend beyond the Maturity Date.

     " Investment " means, as to any Person, any acquisition or investment by such Person by means of (a) the purchase or other acquisition of capital stock or other securities of another Person, (b) a loan, advance or capital contribution to, Guarantee or assumption of Debt of, or purchase or other acquisition of any other Debt or equity participation or interest in, another Person, including any partnership or joint venture interest in such other Person and any arrangement pursuant to which the investor Guarantees Debt of such other Person, or (c) the purchase or other acquisition (in one transaction or a series of transactions) of assets of another Person that constitute a business unit. For purposes of Section 7.08 , the amount of any Restricted Investments outstanding under Section 7.08(i) shall be the amount actually invested (without adjustment for subsequent increases or decreases in the value of such Restricted Investment) reduced by the cash proceeds received upon the sale, liquidation, repayment or disposition of all or any part of any such Restricted Investments (less all costs thereof) and other cash received in respect of all or any part of any such Restricted Investments, whether as income or as a return of capital, in an aggregate amount up to but not in excess of the amount of all Restricted Investments permitted to be outstanding pursuant to Section 7.08(i) . For purposes of the definition of "Unrestricted Subsidiary" and the definition of "Restricted Investment": (x) "Investment" shall include the portion (proportionate to the Borrower’s Equity Interest in such Subsidiary) of the fair market value of the net assets of any Subsidiary of the Borrower at the time that such Subsidiary is designated an Unrestricted Subsidiary; provided, however, that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Borrower shall be deemed to continue to have a permanent "Investment" in an Unrestricted Subsidiary equal to an amount (if positive) equal to (i) the Borrower’s "Investment" in such Subsidiary at the time of such redesignation less (ii) the portion (proportionate to the Borrower’s Equity Interest in such Subsidiary) of the fair market value of the net assets of such Subsidiary at the time of such redesignation; and (y) any property transferred to or from an Unrestricted Subsidiary shall be valued at its fair market value at the time of such transfer, in each case as determined in good faith by the board of directors of the Borrower.

     " IPO Effective Date " means the date of the initial issuance of limited partnership units of Parent pursuant to an underwriting of such limited partnership units under a Form S-1 registration statement under the Securities Act of 1933.

     " Laws " means, collectively, all international, foreign, Federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and

12

permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.

     " Lender " has the meaning specified in the introductory paragraph hereto.

     " Lender’s Office " means the Lender’s address and, as appropriate, account as set forth on Schedule 10.02 , or such other address or account as the Lender may from time to time notify the Borrower.

     " Letter of Credit Fee " means any Letter of Credit Fee as determined from time to time under the Senior Credit Agreement.

     " Lien " means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement in the nature of a security interest of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any easement, right of way or other encumbrance on title to real property, and any financing lease having substantially the same economic effect as any of the foregoing).

     " Limited Recourse Equity Pledge " means the pledge of Equity Interests in any Unrestricted Subsidiary to secure Non-Recourse Debt of such Unrestricted Subsidiary pursuant to an agreement that expressly states that the pledgee shall have no recourse to the pledgor or any of its assets or revenues under any circumstance other than recourse to the Equity Interests of the Unrestricted Subsidiary that are described in such pledge.

     " Loan " has the meaning specified in Section 2.01 .

     " Loan Documents " means this Agreement, the Note, the Pledge Agreement, the Mortgage, any Guaranty of the Loan under this Agreement, any other pledge, security interest, mortgage or deed of trust at any time hereafter delivered to secure the Obligations under this Agreement, as the foregoing may be amended from time to time.

     " Loan Notice " means a notice of (a) Borrowing, (b) a conversion of the Loan from one Type to the other, or (c) a continuation of a Eurodollar Rate Loan, in each case pursuant to Section 2.02(a) , which, if in writing, shall be substantially in the form of Exhibit A .

     " Long Term Debt " means Debt which matures more than one year from the date it is incurred, or which can be extended at the option of the obligor(s) to a date more than one year from the date it is incurred.

     " LP Holdings " means Encore Partners LP Holdings LLC, a Delaware limited liability company.

     " Margin Regulations " means Regulations T, U and X of the FRB, as in effect from time to time.

     " Margin Stock " means "margin stock" as defined in Regulation U of the FRB, as in effect from time to time.

13

     " Material Adverse Change " means any circumstance or event that has had a Material Adverse Effect.

     " Material Adverse Effect " means a material adverse effect on (a) the assets, properties, financial condition or business operations of Parent, the Borrower and the Borrower-Related Parties, taken as a whole, (b) the right or ability of any Credit Party to perform its obligations under the Loan Documents, (c) the validity or enforceability of any Loan Document against any Credit Party (to the extent a party thereto), or (d) the rights and remedies of the Lender under the Loan Documents.

     " Material Agreement " means any material written or oral agreement, contract, commitment, or understanding to which a Person is a party, by which such Person is directly or indirectly bound, or to which any assets of such Person may be subject, which is not cancelable by such Person upon notice of thirty (30) days or less without liability for further payment other than nominal penalty.

     " Maturity Date " means March 7, 2013.

     " Maximum Rate " shall have the meaning set forth in Section 10.09 .

     " Mineral Interests " means rights, estates, titles, and interests in and to oil and gas leases and any oil and gas interests, royalty and overriding royalty interest, production payment, net profits interests, oil and gas fee interests, and other rights therein, including, without limitation, any reversionary or carried interests relating to the foregoing, together with rights, titles, and interests created by or arising under the terms of any unitization, communitization, and pooling agreements or arrangements, and all properties, rights and interests covered thereby, whether arising by contract, by order, or by operation of Laws, which now or hereafter include all or any part of the foregoing.

     " Mortgages " means all mortgages, deeds of trust, security agreements, pledge agreements and similar documents, instruments and agreements creating, evidencing, perfecting or otherwise establishing the Liens required by Section 6.14 hereof in the Proved Mineral Interests of any Credit Party as may heretofore or may hereafter be granted or assigned to the Lender to secure payment of the Obligations or any part thereof. All Mortgages shall be in form and substance reasonably satisfactory to the Lender.

     " Multiemployer Plan " means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which any Borrower-Related Party or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions.

     " Net Cash Proceeds " means the remainder of (a) the gross cash proceeds received by any Credit Party from any Asset Disposition less (b) commissions, legal, accounting and other professional fees and expenses, and other usual and customary transaction costs, including, without limitation, indemnification and other post-closing obligations and reserves related to any such Asset Disposition, in each case only to the extent paid or payable by a Credit Party in cash and related to such Asset Disposition.

14

     " Non-Recourse Debt " means Debt of a Subsidiary: (a) as to which neither the Borrower nor any Restricted Subsidiary (i) provides credit support of any kind, including any Guarantee, undertaking, agreement or instrument that would constitute Debt or any Lien on any of its assets or revenues, other than a Limited Recourse Equity Pledge, nor (ii) is directly or indirectly liable as a partner, guarantor or otherwise; (b) no default with respect to which (including any rights that the holders thereof may have to take enforcement action against an Unrestricted Subsidiary) would permit upon notice, lapse of time or both any holder of Debt of the Borrower or any Restricted Subsidiary to declare a default on such Debt or cause the payment thereof to be accelerated or payable prior to its stated maturity; and (c) in the case of Debt for borrowed money, as to which the lenders of such Debt, or if represented by a trustee, such trustee, have been notified in writing that such lenders will not have any recourse to the Borrower, any Restricted Subsidiary or any assets of any of them, other than a Limited Recourse Equity Pledge.

     " Note " means a promissory note made by the Borrower in favor of the Lender evidencing the Loan made by the Lender, substantially in the form of Exhibit B .

     " Obligations " means all advances to, and debts, liabilities, obligations, covenants and duties of, any Credit Party arising under any Loan Document, absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against any Credit Party or any Affiliate thereof of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding.

     " Oil and Gas Hedge Transaction " means a Hedge Transaction pursuant to which any Person hedges the price to be received by it for future production of Hydrocarbons.

     " Organization Documents " means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.

     " Original Senior Debt Documents " means the documents, instruments and agreements evidencing or otherwise pertaining to the Senior Debt in effect on the Closing Date.

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

15

     " Outstanding Amount " means on any date, the aggregate outstanding principal amount of the Loan after giving effect to any prepayments or repayments thereon occurring on or prior to such date.

     " Parent " means Encore Energy Partners LP, a Delaware limited partnership.

     " Partnership Agreement " means the Agreement of Limited Partnership of Parent, as in effect on the IPO Effective Date and from time to time thereafter.

     " PBGC " means the Pension Benefit Guaranty Corporation.

     " Pension Plan " means any "employee pension benefit plan" (as such term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or maintained by any Borrower-Related Party or any ERISA Affiliate or to which any Borrower-Related Party or any ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple employer or other plan described in Section 4064(a) of ERISA, has made contributions at any time during the immediately preceding five plan years.

     " Permitted Cash Equivalent Investments " means (a) readily marketable direct obligations of the United States (or investments in mutual funds or similar funds which invest solely in such obligations), (b) fully insured time deposits and certificates of deposit with maturities of one year or less of any commercial bank operating in the United States having capital and surplus in excess of $500,000,000, (c) commercial paper of a domestic issuer if at the time of purchase such paper is rated in one of the two highest ratings categories of Standard and Poor’s Corporation or Moody’s Investors Service, and (d) deposits in money market funds investing exclusively in Investments described in the foregoing clauses (a), (b) and (c).

     " Permitted Encumbrances " means with respect to any asset:

          (a) Liens (if any) securing the Obligations;

          (b) minor defects in title which do not secure the payment of money and otherwise have no material adverse effect on the value or the operation of the subject property, and for the purposes of this Agreement, a minor defect in title shall include, but not be limited to, easements, zoning restrictions, rights-of-way, servitudes, permits, surface leases and other similar rights in respect of surface operations, and easements for pipelines, streets, alleys, highways, telephone lines, power lines, railways and other easements and rights-of-way, on, over or in respect of any of the properties of any Credit Party that are customarily granted in the oil and gas industry;

          (c) (i) contractual or statutory Liens securing obligations for labor, services, materials and supplies furnished to Mineral Interests, or (ii) Liens on pipeline or pipeline facilities which arise out of operation of law, or (iii) Liens arising in the ordinary course of business under operating agreements, joint venture agreements, partnership agreements, oil and gas leases, farm-out agreements, division orders, contracts for the sale, purchase, transportation, processing or exchange of oil, gas or other hydrocarbons, unitization and pooling declarations and agreements, area of mutual interest agreements, development agreements, joint ownership arrangements and other agreements which are customary in the oil and gas business, provided

16

that , in the case of any Lien described in the foregoing clauses (i), (ii) or (iii), such Lien secures obligations that are not Debt and are not delinquent (except to the extent permitted by Section 6.07 ), and such Lien has no material adverse effect on the value or operation of the property encumbered thereby;

          (d) contractual or statutory mechanic’s, materialmen’s, warehouseman’s, journeyman’s and carrier’s Liens and other similar Liens arising in the ordinary course of business which are not delinquent (except to the extent permitted by Section 6.07 );

          (e) Liens for Taxes or assessments not yet due or not yet delinquent, or, if delinquent, that are not required to be paid subject to satisfaction of the conditions set forth in Section 6.07 ;

          (f) lease burdens payable to third parties which are deducted in the calculation of discounted present value in any Reserve Report including, without limitation, any royalty, overriding royalty, net profits interest, production payment, carried interest or reversionary working interest;

          (g) Liens securing Hedge Transactions, including, without limitation, pledges of cash or cash equivalents, provided, that, (i) such Hedge Transactions comply with Section 7.10 to the extent applicable, and (ii) the aggregate amount of cash or cash equivalents pledged (or the fair market value of other, non-cash collateral pledged) shall not, at any time, exceed ten percent (10%) of the Borrowing Base then in effect;

          (h) rights of first refusal, purchase options and similar rights granted pursuant to joint operating agreements, joint ownership agreements, stockholders agreements, organic documents and other similar agreements and documents that have been disclosed to the Lender in writing;

          (i) Liens incurred in the ordinary course of business on cash or securities pledged in connection with workmen’s compensation, unemployment insurance or other forms of governmental insurance or benefits, or to secure performance of tenders, statutory obligations, leases and contracts (other than for Debt) entered into in the ordinary course of business (including lessee and operator obligations under statute, governmental regulations or instruments related to the ownership, exploration and production of oil, gas and minerals on state, federal or foreign lands or waters) or to secure obligations on surety or appeal bonds;

          (j) pre-judgment Liens and judgment Liens in existence less than 15 days after the entry thereof or with respect to which execution has been stayed or the payment of which is covered in full (subject to a customary deductible) by insurance;

          (k) Liens resulting from the deposit of funds or evidences of Debt in trust for the purpose of defeasing Debt of Parent, the Borrower or any of its Subsidiaries to the extent any such defeasance is not prohibited by this Agreement;

          (l) customary Liens for the fees, costs and expenses of trustees and escrow agents pursuant to the indenture, escrow agreement or other similar agreement establishing such trust or escrow arrangement;

17

          (m) Liens pursuant to merger agreements, stock purchase agreements, asset sale agreements and similar agreements (i) limiting the transfer of properties and assets pending consummation of the subject transaction and (ii) in respect of earnest money deposits, good faith deposits, purchase price adjustment escrows and similar deposits and escrow arrangements made or established thereunder;

          (n) rights reserved to or vested in any municipality or governmental, statutory or public authority by the terms of any right, power, franchise, grant, license or permit, or by any provision of law, to terminate such right, power, franchise, grant, license or permit or to purchase, condemn, expropriate or recapture or to designate a purchaser of any of the property of such Person; rights reserved to or vested in any municipality or governmental, statutory or public authority to control or regulate any property of such Person, or to use such property in a manner which does not materially impair the use of such property for the purposes for which it is held by such Person; and any obligation or duties affecting the property of such Person to any municipality or governmental, statutory or public authority with respect to any franchise, grant, license or permit;

          (o) Limited Recourse Equity Pledges;

          (p) Liens securing the Senior Debt;

          (q) to the extent not included in clauses (a) through (p) above, Permitted Encumbrances under and as defined in the Mortgages; and

          (r) Liens on property not securing the Obligations and not otherwise permitted by the foregoing clauses of this definition; provided that the aggregate principal or face amount of all Debt secured under this clause (r) shall not exceed $15,000,000 at any time.

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

     " Plan " means any "employee benefit plan" (as such term is defined in Section 3(3) of ERISA) established by any Borrower-Related Party or, with respect to any such plan that is subject to Section 412 of the Code or Title IV of ERISA, any ERISA Affiliate.

     " Pledge Agreement " means a pledge agreement substantially in the form of Exhibit F attached hereto to be executed by (i) the Borrower, pursuant to which the Borrower shall pledge to the Lender all of the issued and outstanding Equity Interests directly owned by the Borrower in each existing or hereafter created or acquired (x) Domestic Restricted Subsidiary of the Borrower, and (y) to the extent no material adverse tax consequences would result, Foreign Restricted Subsidiary of the Borrower, and (ii) each existing and future Domestic Restricted Subsidiary of the Borrower (any such Restricted Subsidiary being referred to herein as a " First Tier Restricted Subsidiary "), pursuant to which such First Tier Restricted Subsidiary shall pledge to the Lender all of the issued and outstanding Equity Interests directly owned by such First Tier Restricted Subsidiary in each existing or hereafter created (x) Domestic Restricted Subsidiary of such First Tier Restricted Subsidiary and (y) to the extent no material adverse tax consequences would result, Foreign Restricted Subsidiary of such First Tier Restricted Subsidiary, in each case to secure the Obligations.

18

     " Proved Mineral Interests " means, collectively, Proved Producing Mineral Interests, Proved Non-producing Mineral Interests, and Proved Undeveloped Mineral Interests.

     " Proved Non-producing Mineral Interests " means all Mineral Interests which constitute proved developed non-producing reserves.

     " Proved Producing Mineral Interests " means all Mineral Interests which constitute proved developed producing reserves.

     " Proved Undeveloped Mineral Interests " means all Mineral Interests which constitute proved undeveloped reserves.

     " RCRA " means the Resource Conservation and Recovery Act of 1976, as amended by the Used Oil Recycling Act of 1980, the Solid Waste Recovery Act of 1976, as amended by the Solid Waste Disposal Act of 1980, and the Hazardous and Solid Waste Amendments of 1984 as amended from time to time.

     " Recognized Value " means, with respect to Mineral Interests, the discounted present value of the estimated net cash flow to be realized from the production of Hydrocarbons from such Mineral Interests as determined from time to time under the Senior Credit Agreement.

     " Redetermination Date " means any Redetermination Date under the Senior Credit Agreement.

     " Related Parties " means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents and advisors of such Person and of such Person’s Affiliates.

     " Reportable Event " means any of the events set forth in Section 4043(c) of ERISA, other than events for which the 30 day notice period has been waived.

     " Reserve Report " means any unsuperseded Reserve Report delivered under the Senior Credit Agreement.

     " Responsible Officer " of any Credit Party means the chief executive officer, president, chief financial officer, treasurer or assistant treasurer of such Credit Party (or, if such Credit Party is a limited partnership, the chief executive officer, president, chief financial officer, treasurer or assistant treasurer of the general partner of such Credit Party). Any document delivered hereunder that is signed by a Responsible Officer of a Credit Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Credit Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Credit Party.

     " Restricted Investment " means Investments in Unrestricted Subsidiaries (including any Investment in any Subsidiary at the time of its designation as an Unrestricted Subsidiary) and Investments in Persons not otherwise permitted under clauses (a) through (h) of Section 7.08 , in either case who are principally engaged in the businesses specified in Section 6.02 ; provided that

19

(i) the Borrower shall comply with Section 6.14 and Section 7.15 , if applicable, (ii) no Default exists or will result therefrom and (iii) no Borrowing Base Deficiency exists.

     " Restricted Payment " means, with respect to any Credit Party, (a) any Distribution by such Credit Party (other than Distributions by one Credit Party to another Credit Party, Distributions consisting of common or preferred Equity Interests of Parent, and, in the case of a Credit Party that is not a wholly owned Restricted Subsidiary of the Borrower, Distributions made by such Credit Party on a pro rata basis (or on a basis more favorable to the Borrower or to a Restricted Subsidiary) to the Persons owning Equity Interests in such Credit Party) and (b) the purchase, retirement, redemption or payment by the Borrower or any other Credit Party of any part of the principal of any Debt of such Person (other than the Obligations, Senior Debt and intercompany Debt between Credit Parties) at any time prior to the scheduled maturity of such Debt.

     " Restricted Subsidiary " means any Subsidiary that is not an Unrestricted Subsidiary.

     " Senior Credit Agreement " means that certain Credit Agreement dated as of even date herewith among Borrower, Parent, each lender from time to time party thereto and Bank of America, as Administrative Agent and L/C Issuer, as the same may be amended, modified, restated, extended, increased, refunded, refinanced or replaced without limitation on the principal amount thereof outstanding from time to time.

     " Senior Debt " means, collectively, (a) the Debt of the Borrower owing under the Senior Credit Agreement to the Lenders (as defined therein) without limitation on the principal amount thereof outstanding from time to time and (b) any Debt incurred in exchange for, or the net proceeds of which are applied to extend, increase, refund, refinance, repurchase, retire or replace the Debt described in the foregoing clause (a).

     " Solvent " means, with respect to any Person on a particular date, the condition that, on such date (a) the fair value of the property of such Person is greater than the total amount of liabilities, including, without limitation, contingent liabilities, of such Person, (b) the present fair salable value of the assets of such Person is not less than the amount that will be required to pay the liability of such Person on its debts as they become absolute and matured, and (c) such Person is able to realize upon its assets and pay its debts and other liabilities, contingent obligations and other commitments as they mature in the normal course of business.

     " Subordination Agreement " means that certain Intercreditor Agreement dated as of even date herewith among the Lender, the Administrative Agent, Borrower and the Parent.

     " Subsidiary " of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise specified, all references herein to a "Subsidiary" or to "Subsidiaries" shall refer to a Subsidiary or Subsidiaries of Parent.

20

     " Taxes " means all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

     " Type " means, with respect to the Loan, its character as a Base Rate Loan or a Eurodollar Rate Loan.

     " Unfunded Pension Liability " means the excess of a Pension Plan’s benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of that Pension Plan’s assets, determined in accordance with the assumptions used for funding the Pension Plan pursuant to Section 412 of the Code for the applicable plan year.

     " United States " and " U.S. " mean the United States of America.

     " Unrestricted Subsidiary " means (i) any Subsidiary that has been designated as an Unrestricted Subsidiary by the Borrower in accordance with Section 7.15 , and (ii) each Subsidiary of any such Unrestricted Subsidiary.

      1.02 Other Interpretive Provisions. With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document:

     (a) The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include," "includes" and "including" shall be deemed to be followed by the phrase "without limitation." The word "will" shall be construed to have the same meaning and effect as the word "shall." Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document (including any Organization Document) shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or in any other Loan Document), (ii) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (iii) the words "herein," "hereof" and "hereunder," and words of similar import when used in any Loan Document, shall be construed to refer to such Loan Document in its entirety and not to any particular provision thereof, (iv) all references in a Loan Document to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, the Loan Document in which such references appear, (v) any reference to any law shall include all statutory and regulatory provisions consolidating, amending replacing or interpreting such law and any reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time, and (vi) the words "asset" and "property" shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

     (b) In the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including;" the words "to" and "until" each mean "to but excluding;" and the word "through" means "to and including."

21

     (c) Section headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document.

      1.03 Accounting Terms.

     (a)  Generally . All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the financial statements of EAC for the Fiscal Year ended December 31, 2005, except as disclosed in the Forms 10-Q of EAC for the first three Fiscal Quarters of 2006 or as otherwise specifically prescribed herein.

     (b)  Changes in GAAP . If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either the Borrower or the Lender shall so request, the Lender and the Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Lender); provided that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Borrower shall provide to the Lender financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.

      1.04 Rounding. Any financial ratios required to be maintained by the Borrower pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).

      1.05 Times of Day. Unless otherwise specified, all references herein to times of day shall be references to Eastern time (daylight or standard, as applicable).

      1.06 Reserved.

      1.07 Petroleum Terms. As used herein, the terms "proved reserves," "proved developed reserves," "proved developed producing reserves," "proved developed non-producing reserves," and "proved undeveloped reserves" have the meaning given such terms from time to time and at the time in question by the Society of Petroleum Engineers of the American Institute of Mining Engineers.

ARTICLE II.
THE COMMITMENT AND LOAN

      2.01 The Loan. Subject to the terms and conditions set forth herein, the Lender agrees to make a loan (the " Loan ") to the Borrower in a single advance on the Closing Date in the principal amount requested by the Borrower not exceeding the Commitment. No portion of the

22

Loan that has been repaid or prepaid may be reborrowed. The Loan may be a Base Rate Loan or a Eurodollar Rate Loan, as further provided herein.

      2.02 Borrowing, Conversions and Continuations of the Loan.

     (a) The Borrowing, each conversion of the Loan from one Type to the other, and each continuation of a Eurodollar Rate Loan shall be made upon the Borrower’s irrevocable notice to the Lender, which may be given by telephone. Each such notice must be received by the Lender not later than 11:00 a.m. (i) three Business Days prior to the requested date of any Borrowing of, conversion to or continuation of a Eurodollar Rate Loan or of any conversion of a Eurodollar Rate Loan to a Base Rate Loan, and (ii) on the requested date of any Borrowing of a Base Rate Loan; provided, however, that if the Borrower wishes to request a Eurodollar Rate Loan having an Interest Period other than one, two, three or six months in duration as provided in the definition of " Interest Period ," the applicable notice must be received by the Lender not later than 11:00 a.m. four Business Days prior to the requested date of such Borrowing, conversion or continuation, whereupon the Lender shall determine whether the requested Interest Period is acceptable to the Lender. Not later than 11:00 a.m., three Business Days before the requested date of such Borrowing, conversion or continuation, the Lender shall notify the Borrower (which notice may be by telephone) whether or not the requested Interest Period has been consented to by the Lender. Each telephonic notice by the Borrower pursuant to this Section 2.02(a) must be confirmed promptly by delivery to the Lender of a written Loan Notice, appropriately completed and signed by a Responsible Officer of the Borrower. Each conversion to or continuation of a Eurodollar Rate Loan shall be in a principal amount of $1,000,000 or a whole multiple of $1,000,000 in excess thereof. Each conversion to a Base Rate Loan shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof. Each Loan Notice (whether telephonic or written) shall specify (i) whether the Borrower is requesting a Borrowing, a conversion of the Loan from one Type to the other, or a continuation of a Eurodollar Rate Loan, (ii) the requested date of the Borrowing, conversion or continuation, as the case may be (which shall be a Business Day), (iii) the principal amount of the Loan to be borrowed, converted or continued, (iv) the Type of Loan to be borrowed or to which the Loan is to be converted, and (v) if applicable, the duration of the Interest Period with respect thereto. If the Borrower fails to specify a Type of Loan in a Loan Notice or if the Borrower fails to give a timely notice requesting a conversion or continuation, then the Loan shall be made as, or converted to, a Base Rate Loan. Any such automatic conversion to a Base Rate Loan shall be effective as of the last day of the Interest Period then in effect with respect to the applicable Eurodollar Rate Loan. If the Borrower requests a Borrowing of, conversion to, or continuation of a Eurodollar Rate Loan in any such Loan Notice, but fails to specify an Interest Period, it will be deemed to have specified an Interest Period of one month.

     (b) Upon satisfaction of the applicable conditions set forth in Section 4.01 , the Lender shall make the Loan available to the Borrower by effecting a wire transfer of such amount to an account designated by the Borrower to the Lender.

     (c) Except as otherwise provided herein, a Eurodollar Rate Loan may be continued or converted only on the last day of an Interest Period for such Eurodollar Rate Loan. During the existence of a Default, the Loan may not be converted to or continued as a Eurodollar Rate Loan without the consent of the Lender.

23

     (d) The Lender shall promptly notify the Borrower of the interest rate applicable to any Interest Period for a Eurodollar Rate Loan upon determination of such interest rate. At any time that a Base Rate Loan is outstanding, the Lender shall notify the Borrower of any change in Bank of America’s prime rate used in determining the Base Rate promptly following the public announcement of such change.

      2.03 Reserved.

      2.04 Prepayments.

     (a) Subject to the terms of the Subordination Agreement, the Borrower may, upon notice to the Lender, at any time or from time to time voluntarily prepay the Loan in whole or in part without premium or penalty; provided that (i) such notice must be received by the Lender not later than 11:00 a.m. (A) three Business Days prior to any date of prepayment of a Eurodollar Rate Loan and (B) on the date of prepayment of a Base Rate Loan; (ii) any prepayment of a Eurodollar Rate Loan shall be in a principal amount of $1,000,000 or a whole multiple of $1,000,000 in excess thereof; and (iii) any prepayment of a Base Rate Loan shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof or, in each case, if less, the entire principal amount thereof then outstanding. Each such notice shall specify the date and amount of such prepayment and the Type of Loan to be prepaid and, if a Eurodollar Rate Loan is to be prepaid, the Interest Period of such Eurodollar Rate Loan. If such notice is given by the Borrower, the Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein. Any prepayment of a Eurodollar Rate Loan shall be accompanied by all accrued interest on the amount prepaid, together with any additional amounts required pursuant to Section 3.05 .

     (b)  Reserved .

     (c)  Reserved .

     (d)  Reserved .

      2.05 Termination of Commitment. The Commitment of the Lender shall be automatically and permanently reduced to zero on the Closing Date immediately after the funding of the Loan.

      2.06 Repayment of the Loan. The Borrower shall repay to the Lender on the Maturity Date the aggregate principal amount of the Loan outstanding on such date.

      2.07 Interest.

     (a) Subject to the provisions of subsection (b) below, (i) each Eurodollar Rate Loan shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to the Eurodollar Rate for such Interest Period plus the Applicable Margin; and (ii) each Base Rate Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate plus the Applicable Margin.

24

     (b) (i) If any amount of principal of the Loan is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.

     (ii) If any amount (other than principal of the Loan) payable by the Borrower under any Loan Document is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, then upon the election of the Lender, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.

     (iii) Upon the election of the Lender, while any Event of Default exists, the Borrower shall pay interest on the principal amount of all outstanding Obligations hereunder at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.

     (iv) Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable upon demand.

     (c) Interest on the Loan shall be due and payable in arrears on each Interest Payment Date applicable thereto and at such other times as may be specified herein; provided that, any amount of accrued interest that is not paid in cash on an Interest Payment Date other than the Maturity Date (any such amount, " Interest Paid In Kind ") shall be deferred as to payment and the principal amount of the Loan shall be automatically increased on such Interest Payment Date by the amount of such Interest Paid In Kind. For the avoidance of doubt, with respect to any accrued unpaid interest on the Loan that is added to the principal amount of the Loan as Interest Paid In Kind in accordance with the preceding sentence, the Borrower shall not be deemed to have defaulted in the payment of such accrued unpaid interest. Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law.

      2.08 Reserved.

      2.09 Computation of Interest and Fees. All computations of interest for a Base Rate Loan when the Base Rate is determined by Bank of America’s "prime rate" shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed. All other computations of fees and interest shall be made on the basis of a 360-day year and actual days elapsed (which results in more fees or interest, as applicable, being paid than if computed on the basis of a 365-day year). Interest shall accrue on the Loan for the day on which the Loan is made, and shall not accrue on the Loan, or any portion thereof, for the day on which the Loan or such portion is paid. Each determination by the Lender of an interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest error.

      2.10 Evidence of Debt. The Loan shall be evidenced by accounts or records maintained by the Lender in the ordinary course of business. The accounts or records maintained by the Lender shall be prima facie evidence of the amount of the Loan made by the Lender to the

25

Borrower and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrower hereunder to pay any amount owing with respect to the Obligations. Upon the request of the Lender, the Borrower shall execute and deliver to the Lender a Note, which shall evidence the Loan in addition to such accounts or records. The Lender may attach schedules to its Note and endorse thereon the date, Type (if applicable), amount and maturity of the Loan, payments with respect thereto and amounts of Interest Paid In Kind.

      2.11 Payments Generally.

     (a)  General . All payments to be made by the Borrower shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff. Except as otherwise expressly provided herein, all payments by the Borrower hereunder shall be made to the Lender at the Lender’s Office in Dollars and in immediately available funds not later than 2:00 p.m. on the date specified herein. All payments received by the Lender after 2:00 p.m. shall be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue. If any payment to be made by the Borrower shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be.

     (b)  Reserved .

     (c)  Reserved .

     (d)  Reserved .

     (e)  Funding Source . Nothing herein shall be deemed to obligate the Lender to obtain the funds for the Loan in any particular place or manner or to constitute a representation by the Lender that it has obtained or will obtain the funds for the Loan in any particular place or manner.

      2.12 Reserved.

      2.13 Reserved.

ARTICLE III.
TAXES, YIELD PROTECTION AND ILLEGALITY

      3.01 Taxes.

     (a)  Payments Free of Taxes . Any and all payments by or on account of any obligation of the Borrower hereunder or under any other Loan Document shall be made free and clear of and without reduction or withholding for any Indemnified Taxes or Other Taxes, provided that if the Borrower shall be required by applicable law to deduct any Indemnified Taxes (including any Other Taxes) from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Lender receives an amount equal to the