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EXHIBIT 10.2
SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT (herein so called) is executed as of June
30, 1999, by XXXXX FARGO BANK (TEXAS), N.A., a national banking association
(collectively, "XXXXX FARGO"), and EXCO RESOURCES, INC., a Texas corporation
("EXCO").
R E C I T A L S:
X. Xxxxx Fargo and Venus Exploration, Inc., a Delaware corporation,
formerly known as XPLOR Corporation, a Delaware corporation ("BORROWER") have
entered into that certain Second Amended and Restated Loan Agreement dated
December 22, 1997 (as modified, amended, renewed, extended, and/or restated
from time to time, the "CREDIT AGREEMENT").
B. Pursuant to that certain Convertible Promissory Note dated as of
June 30, 1999, executed by Borrower and payable to the order of Secured Party
in the original principal amount of $8,000,000.00, (together with all
modifications, amendments, renewals, extensions, and restatements, if any, from
time to time thereafter thereto, the "EXCO NOTE"), EXCO has made certain loans
to Borrower.
C. As a condition precedent to the making of advances and other
extensions of credit under the EXCO Note, Borrower has executed that certain
Pledge Agreement dated of even date herewith (together with all modifications,
amendments, renewals, extensions, and restatements, if any, from time to time
thereafter thereto, the "EXCO PLEDGE AGREEMENT ") covering, among other
collateral, all of membership interests in EXUS Energy, LLC, a Delaware limited
liability company (as such limited liability company exists or may hereinafter
be restated, amended, or restructured, and any limited liability company,
partnership, joint venture, or corporation formed as a result of the
restructure, reorganization, or amendment of any of such limited liability
company, the "COMPANY") now owned or hereafter acquired by Borrower.
X. Xxxxx Fargo has consented to the execution, delivery, and
performance of the EXCO Note and the EXCO Pledge Agreement.
E. As a condition precedent to the making of advances and other
extensions of credit under the EXCO Note, EXCO has required that Xxxxx Fargo
subordinate its liens and security interests, if any, in all or any portion of
the Collateral (as defined in the Pledge Agreement) securing the obligations of
Borrower under the Credit Agreement and the other loan documents executed in
connection therewith (the "XXXXX FARGO SECURITY INTERESTS") to the liens and
security interests in the Collateral created under the Pledge Agreement (the
"EXCO SECURITY INTERESTS").
NOW, THEREFORE, for good and valuable consideration, the receipt and
legal sufficiency of which are hereby acknowledged, Xxxxx Fargo and EXCO agree
as follows:
1. SUBORDINATION. Xxxxx Fargo hereby subordinates the Xxxxx Fargo
Security Interests to the EXCO Security Interests.
2. NO AMENDMENT TO COLLATERAL. EXCO agrees that it will not agree to
any amendment to the definition of "Collateral" in the EXCO Pledge Agreement
without the prior written consent of Xxxxx Fargo.
3. LIMITED SUBORDINATION BY EXCO. EXCO agrees that the recourse
obligations of Borrower under the EXCO Note for (a) any and all damages, costs,
and expenses suffered or incurred by EXCO as a result of, in connection with or
relating to any representation or warranty made by Borrower to EXCO which
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shall prove to be untrue or inaccurate in any material respects, and (b) the
costs, expenses, and fees, including but not limited to, court costs and
reasonable attorneys' fees, arising in connection with the collection of the
EXCO Note (the "RECOURSE OBLIGATIONS") shall be subordinate and junior in right
of payment to the prior payment in full of all obligations of Borrower to Xxxxx
Fargo under the Credit Agreement and EXCO agrees that is will not take any
action to collect the Recourse Obligations from Borrower until the payment in
full of all obligations of Borrower to Xxxxx Fargo under the Credit Agreement;
provided that the foregoing subordination shall not prohibit or restrict EXCO
from exercising its rights and remedies in the Collateral to enforce payment of
the EXCO Note or the Recourse Obligations.
4. FURTHER ASSURANCES. Xxxxx Fargo, upon the reasonable request of
EXCO, shall execute, acknowledge, deliver, and record such further instruments
(including UCC-3 Amendments to any Financing Statements) and do such further
acts as may be reasonably necessary to evidence the agreements of Xxxxx Fargo
contained in this Subordination Agreement.
5. SUCCESSOR AND ASSIGNS. This Subordination Agreement, and the terms,
covenants, and conditions hereof, shall be binding upon and inure to the
benefit of the parties hereto, and their respective heirs, personal
representatives, successors, and assigns.
6. GOVERNING LAW. THIS SUBORDINATION AGREEMENT WILL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS.
7. MISCELLANEOUS. Unless stated otherwise (a) the singular number
includes the plural and vice versa and words of any gender include each other
gender, in each case, as appropriate, (b) headings and captions may not be
construed in interpreting provisions, (c) if any part of this Subordination
Agreement is for any reason found to be unenforceable, all other portions of it
nevertheless remain enforceable, and (d) this Subordination Agreement may be
executed in any number of counterparts with the same effect as if all
signatories had signed the same document, and all of those counterparts must be
construed together to constitute the same document.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGES TO FOLLOW]
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SIGNATURE PAGE TO SUBORDINATION AGREEMENT
EXCO RESOURCES, INC.,
a Texas corporation
By: /s/ X. X. XXXXXX
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Name: X. X. Xxxxxx
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Title: President
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XXXXX FARGO BANK (TEXAS), N.A.,
a national banking association
By: /s/ XXXXXX X. XXX
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Name: Xxxxxx X. Xxx
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Title: Vice President
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