EXHIBIT 2
Pledge Agreement Date: September 15, 1998
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SECURED PARTY: PLEDGOR/DEBTOR:
EXCO Resources, Inc. Xxxxxxx X. Xxxxxx
c/o Chief Executive Officer Glenshannon Circle
0000 Xxxxxxxx Xx., Xxxxx 000 Xxxxxx, Xxxxx 752
Dallas, Xxxxxx Xxxxxx, Xxxxx 00000
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A. SECURITY INTEREST. For good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Pledgor/Debtor (hereinafter referred
to as "Pledgor") pledges, assigns and grants to EXCO Resources, Inc., a Texas
corporation ("EXCO"), a security interest and lien in the Collateral
(hereinafter defined) to secure the payment and the performance of the
Obligation (hereinafter defined).
B. COLLATERAL. The security interest is granted in the following collateral
(the "Collateral"):
1. SPECIFIC INVESTMENT PROPERTY/SECURITIES: 75,000 shares of common stock
of EXCO, together with all investment property and/or securities hereafter
delivered to and accepted by EXCO, in its sole discretion, in substitution
therefor or in addition thereto.
2. All additions, substitutes and replacements for and proceeds of the
above Collateral (including all income and benefits resulting from any of the
above, such as dividends payable or distributable in cash, property or stock;
interest, premium and principal payments; redemption proceeds and subscription
rights; and shares or other proceeds of conversions or splits of any securities
in the Collateral). Any investment property and/or securities received by
Pledgor, which shall comprise such additions, substitutes and replacements for,
or proceeds of, the Collateral, shall be held in trust for EXCO and shall be
delivered immediately to EXCO. Any cash proceeds shall be held in trust for EXCO
and upon request shall be delivered immediately to EXCO.
C. OBLIGATION. The following obligations ("Obligation") are secured by this
Agreement: (a) All debt, obligations and liabilities of Pledgor to EXCO under
that certain Promissory Note (herein so called) made by Pledgor to EXCO dated on
even date herewith, now existing or hereafter arising; (b) All costs incurred by
EXCO to obtain, preserve, perfect and enforce this agreement and maintain,
preserve, collect and enforce the Collateral; (c) Interest on the amounts below
determined in accordance with applicable agreements between EXCO and Pledgor;
(d) All expenses of the EXCO, including fees and expenses of the EXCO's counsel,
incident to the enforcement of payment of the Obligation by any action or
participation in, or in connection with a case or proceeding under the
Bankruptcy Code, or any successor statute thereto.
D. PLEDGOR'S WARRANTIES. Pledgor hereby represents and warrants to EXCO as
follows:
1. FINANCING STATEMENTS. Except as may be noted by schedule attached
hereto and incorporated herein by reference, no financing statement covering the
Collateral is or will be on file in any public office, except the financing
statements relating to this security interest, and no security interest, other
than the one herein created, has attached or been perfected in the Collateral or
any part thereof.
2. OWNERSHIP. Pledgor owns the Collateral free from any setoff, claim,
restriction, lien, security interest or encumbrance except liens for taxes not
yet due and payable and the security interest hereunder.
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3. POWER AND AUTHORITY. Pledgor has full power and authority to make this
Agreement, and all necessary consents and approvals of any persons, entities,
governmental or regulatory authorities and securities exchanges have been
obtained to effectuate the validity of this Agreement.
E. PLEDGOR'S COVENANTS. Until full payment and performance of all of the
Obligation, unless EXCO otherwise consents in writing:
1. OBLIGATION AND THIS AGREEMENT. Pledgor shall perform all of its
agreements herein.
2. OWNERSHIP OF COLLATERAL. Pledgor shall defend the Collateral against
all claims and demands of all persons at any time claiming any interest therein
adverse to EXCO. Pledgor shall keep the Collateral free from all liens and
security interests except those for taxes not yet due and payable and the
security interest hereby created.
3. EXCO'S COSTS. Pledgor shall pay all costs necessary to obtain,
preserve, perfect, defend and enforce the security interest created by this
Agreement, collect the Obligation, and preserve, defend, enforce and collect the
Collateral, including but not limited to taxes, assessments, reasonable
attorney's fees, legal expenses and expenses of sales. Whether the Collateral is
or is not in EXCO's possession, and without any obligation to do so and without
waiving Pledgor's default for failure to make any such payment, EXCO at its
option may pay any such costs and expenses and discharge encumbrances on the
Collateral, and such payments shall be a part of the Obligation and bear
interest at the rate set out in the Obligation. Pledgor agrees to reimburse EXCO
on demand for any costs so incurred.
4. INFORMATION AND INSPECTION. Pledgor shall (i) promptly furnish EXCO
any information with respect to the Collateral requested by EXCO; (ii) allow
EXCO or its representatives to inspect and copy, or furnish EXCO or its
representatives with copies of, all records relating to the Collateral and the
Obligation; and (iii) promptly furnish EXCO or its representatives with any
other information EXCO may reasonably request regarding the Obligation.
5. ADDITIONAL DOCUMENTS. Pledgor shall sign and deliver any papers
furnished by EXCO which are necessary or desirable in the judgment of EXCO to
obtain, maintain and perfect the security interest hereunder and to enable EXCO
to comply with any federal or state law in order to obtain or perfect EXCO's
interest in the Collateral or to obtain proceeds of the Collateral.
6. NOTICE OF CHANGES. Pledgor shall notify EXCO immediately of (i) any
material change in the Collateral, (ii) a change in Pledgor's residence or
location, or (iii) a material change in any matter warranted or represented by
Pledgor in this Agreement.
7. POSSESSION OF COLLATERAL. Pledgor shall deliver all investment
securities and other instruments and documents which are a part of the
Collateral and in Pledgor's possession to EXCO immediately upon request, or if
hereafter acquired, immediately following acquisition, in a form suitable for
transfer by delivery or accompanied by duly executed instruments of transfer or
assignment in blank with signatures appropriately guaranteed in form and
substance suitable to EXCO.
8. CHANGE OF NAME/STATUS. Pledgor shall not change its name, change its
corporate status, use any trade name or engage in any business not reasonably
related to its business as presently conducted, except with prior written notice
to the EXCO.
9. POWER OF ATTORNEY. Pledgor appoints EXCO and any officer thereof as
Pledgor's attorney-in-fact with full power in Pledgor's name and on Pledgor's
behalf to do every act which Pledgor is obligated to do or may be required to do
hereunder; however, nothing in this paragraph shall be construed to obligate
EXCO to take any action hereunder nor shall EXCO be liable to Pledgor for
failure to take any action hereunder. This appointment shall be deemed a power
coupled with an interest and shall not be terminable as long as the Obligation
is outstanding and shall not terminate on the disability or incompetence of
Pledgor. Without limiting the generality of the foregoing, EXCO shall have the
right and power to receive, indorse and collect all checks and other orders for
the payment of money made payable to Pledgor representing any dividend, interest
payment or other distribution payable in respect of the Collateral or any part
thereof.
10. OTHER PARTIES AND OTHER COLLATERAL. No renewal or extensions of or any
other indulgence with respect to the Obligation or any part thereof, no
modification of the document(s) evidencing the Obligation, no release of any
security, no release of any person (including any maker, indorser, guarantor or
surety) liable on the Obligation, no delay in enforcement of payment, and no
delay or omission or lack of diligence or care in exercising any right or power
with respect to the Obligation or any security therefor or guaranty thereof or
under this Agreement shall in any manner impair or affect the rights of EXCO
under any law,
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hereunder, or under any other agreement pertaining to the Collateral. EXCO need
not file suit or assert a claim for any part of the Obligation before
foreclosing or otherwise realizing upon the Collateral.
11. WAIVERS BY PLEDGOR. Pledgor waives notice of the creation, advance,
increase, existence, extension or renewal of, and of any indulgence with respect
to, the Obligation; waives presentment, demand, notice of dishonor, and protest;
waives notice of the amount of the Obligation outstanding at any time, notice of
any change in financial condition of any person liable for the Obligation or any
part thereof, notice of any Event of Default, and all other notices respecting
the Obligation; and agrees that maturity of the Obligation and any part thereof
may be accelerated, extended or renewed one or more times by EXCO in its
discretion, without notice to Pledgor. Pledgor further waives any right of
subrogation or to enforce any right of action against any other pledgor until
the Obligation is paid in full.
F. RIGHTS AND POWERS OF EXCO.
1. GENERAL. EXCO, before or after default, without liability to Pledgor
may: take control of proceeds, including stock received as dividends or by
reason of stock splits; release the Collateral in its possession to any Pledgor,
temporarily or otherwise; require additional Collateral from the Company; reject
as unsatisfactory any property hereafter offered by Pledgor as Collateral; take
control of funds generated by the Collateral, such as cash dividends, interest
and proceeds, and use same to reduce any part of the Obligation and exercise all
other rights which an owner of such Collateral may exercise, except the right to
vote or dispose of the Collateral before an Event of Default; and at any time
transfer any of the Collateral or evidence thereof into its own name or that of
its nominee. EXCO shall not be liable for failure to collect any account or
instruments, or for any act or omission on the part of EXCO, its officers,
agents or employees, except for its or their own willful misconduct or gross
negligence. The foregoing rights and powers of EXCO will be in addition to, and
not a limitation upon, any rights and powers of EXCO given by law, elsewhere in
this Agreement, or otherwise.
2. CONVERTIBLE COLLATERAL. EXCO may present for conversion any Collateral
which is convertible into any other instrument or investment security or a
combination thereof with cash, but EXCO shall not have any duty to present for
conversion any Collateral unless it shall have received from Pledgor detailed
written instructions to that effect at a time reasonably far in advance of the
final conversion date to make such conversion possible.
G. DEFAULT.
1. EVENT OF DEFAULT. An event of default ("Event of Default") under this
Agreement shall occur if an event of default occurs under the Promissory Note
(as it may be renewed, extended, amended, or restated).
2. RIGHTS AND REMEDIES. If any event of default shall occur, then, in
each and every such case, EXCO may, without (a) presentment, demand, or protest,
(b) notice of default, dishonor, demand, non-payment, or protest, (c) notice of
intent to accelerate all or any part of the Obligation, (d) notice of
acceleration of all or any part of the Obligation, or (e) notice of any other
kind, all of which Pledgor hereby expressly waives (except for any notice
required under this Agreement, any other loan document concerning the Obligation
or which may not be waived under applicable law), at any time thereafter
exercise and/or enforce any of the following rights and remedies, at EXCO's
option:
i. ACCELERATION. The Obligation shall, at EXCO's option, become
immediately due and payable, and the obligation, if any, of EXCO to permit
further borrowings under the Obligation shall at EXCO's option immediately cease
and terminate.
ii. LIQUIDATION OF COLLATERAL. Upon 20 days written to notice to
Pledgor (and if such event of default has not been cured), sell, or instruct any
Agent or Broker to sell, all or any part of the Collateral in a public or
private sale, direct any Agent or Broker to liquidate all or any part of the
Collateral and deliver all proceeds thereof to EXCO, and apply all proceeds to
the payment of any or all of the Obligation in such order and manner as EXCO
shall, in its discretion, choose.
iii. UNIFORM COMMERCIAL CODE. Upon 20 days written to notice to
Pledgor (and if such Event of Default has not been cured), all of the rights,
powers and remedies of a secured creditor under the Uniform Commercial Code
("UCC") as adopted in the jurisdiction to which EXCO is subject under this
Agreement.
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iv. CANCELLATION OF SHARES. EXCO may cancel the Collateral on its
stock transfer books at a value equal to the closing price on the Nasdaq Stock
Market or other securities market on which shares of EXCO's Common Stock is then
traded on the date of cancellation.
Pledgor specifically understands and agrees that any sale by EXCO of all or part
of the Collateral pursuant to the terms of this Agreement may be effected by
EXCO at times and in manners which could result in the proceeds of such sale as
being significantly and materially less than might have been received if such
sale had occurred at different times or in different manners, and Pledgor
hereby releases EXCO and its officers and representatives from and against any
and all obligations and liabilities arising out of or related to the timing or
manner of any such sale.
If, in the opinion of EXCO, there is any question that a public sale or
distribution of any Collateral will violate any state or federal securities law,
EXCO may offer and sell such Collateral in a transaction exempt from
registration under federal securities law, and any such sale made in good faith
by EXCO shall be deemed "commercially reasonable."
H. GENERAL.
1. PARTIES BOUND. EXCO's rights hereunder shall inure to the benefit of
its successors and assigns, and in the event of any assignment or transfer of
any of the Obligation or the Collateral, EXCO thereafter shall be fully
discharged from any responsibility with respect to the Collateral so assigned or
transferred, but EXCO shall retain all rights and powers hereby given with
respect to any of the Obligation or the Collateral not so assigned or
transferred. All representations, warranties and agreements of Pledgor if more
than one are joint and several and all shall be binding upon the personal
representatives, heirs, successors and assigns of Pledgor.
2. WAIVER. No delay of EXCO in exercising any power or right shall
operate as a waiver thereof; nor shall any single or partial exercise of any
power or right preclude other or further exercise thereof or the exercise of any
other power or right. No waiver by EXCO of any right hereunder or of any default
by Pledgor shall be binding upon EXCO unless in writing, and no failure by EXCO
to exercise any power or right hereunder or waiver of any default by Pledgor
shall operate as a waiver of any other or further exercise of such right or
power or of any further default. Each right, power and remedy of EXCO as
provided for herein or in any of the loan documents related to the Obligation,
or which shall now or hereafter exist at law or in equity or by statute or
otherwise, shall be cumulative and concurrent and shall be in addition to every
other such right, power or remedy. The exercise or beginning of the exercise by
EXCO of any one or more of such rights, powers or remedies shall not preclude
the simultaneous or later exercise by EXCO of any or all other such rights,
powers or remedies.
3. AGREEMENT CONTINUING. This Agreement shall constitute a continuing
agreement.
4. DEFINITIONS. Unless the context indicates otherwise, definitions in
the UCC apply to words and phrases in this Agreement; if UCC definitions
conflict, Article 8 and/or 9 definitions apply.
5. NOTICE. Notice shall be deemed reasonable if mailed postage prepaid at
least 5 days before the related action (or if the UCC elsewhere specifies a
longer period, such longer period) to the address of Pledgor given above. Each
notice, request and demand shall be deemed given or made, if sent by mail, upon
the earlier of the date of receipt or five (5) days after deposit in the U.S.
Mail, first class postage prepaid, or if sent by any other means, upon delivery.
6. MODIFICATIONS. No provision hereof shall be modified or limited except
by a written agreement expressly referring hereto and to the provisions so
modified or limited and signed by Pledgor and EXCO. The provisions of this
Agreement shall not be modified or limited by course of conduct or usage of
trade.
7. PARTIAL INVALIDITY. The unenforceability or invalidity of any
provision of this Agreement shall not affect the enforceability or validity of
any other provision herein, and the invalidity or unenforceability of any
provision of any loan document related to the Obligation to any person or
circumstance shall not affect the enforceability or validity of such provision
as it may apply to other persons or circumstances.
8. APPLICABLE LAW AND VENUE. This Agreement has been delivered in the
State of Texas and shall be construed in accordance with the laws of that State.
It is performable by Pledgor in Dallas, Dallas County, Texas and Pledgor
expressly waives any objection as to venue in any such location. Wherever
possible each provision of this Agreement shall be interpreted in such
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manner as to be effective and valid under applicable law, but if any provision
of this Agreement shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provisions or the remaining
provisions of this Agreement.
9. FINANCING STATEMENT. To the extent permitted by applicable law, a
carbon, photographic or other reproduction of this Agreement or any financing
statement covering the Collateral shall be sufficient as a financing statement.
10. ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES
HERETO INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO THIS
INSTRUMENT, AGREEMENT OR DOCUMENT OR ANY RELATED INSTRUMENTS, AGREEMENTS OR
DOCUMENTS, INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL
BE DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL ARBITRATION
ACT (OR IF NOT APPLICABLE, THE APPLICABLE STATE LAW), THE RULES OF PRACTICE AND
PROCEDURE FOR THE ARBITRATION OF COMMERCIAL DISPUTES OF J.A.M.S./ENDISPUTE OR
ANY SUCCESSOR THEREOF ("J.A.M.S."), AND THE "SPECIAL RULES" SET FORTH BELOW. IN
THE EVENT OF ANY INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL. JUDGMENT UPON
ANY ARBITRATION AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. ANY PARTY
TO THIS INSTRUMENT, AGREEMENT OR DOCUMENT MAY BRING AN ACTION, INCLUDING A
SUMMARY OR EXPEDITED PROCEEDING, TO COMPEL ARBITRATION OF ANY CONTROVERSY OR
CLAIM TO WHICH THIS AGREEMENT APPLIES IN ANY COURT HAVING JURISDICTION OVER SUCH
ACTION.
i. SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN THE
COUNTY OF DALLAS, TEXAS AND ADMINISTERED BY J.A.M.S. WHO WILL APPOINT AN
ARBITRATOR; IF J.A.M.S. IS UNABLE OR LEGALLY PRECLUDED FROM ADMINISTERING THE
ARBITRATION, THEN THE AMERICAN ARBITRATION ASSOCIATION WILL SERVE. ALL
ARBITRATION HEARINGS WILL BE COMMENCED WITHIN 90 DAYS OF THE DEMAND FOR
ARBITRATION; FURTHER, THE ARBITRATOR SHALL ONLY, UPON A SHOWING OF CAUSE, BE
PERMITTED TO EXTEND THE COMMENCEMENT OF SUCH HEARING FOR UP TO AN ADDITIONAL 60
DAYS.
ii. RESERVATION OF RIGHTS. NOTHING IN THIS ARBITRATION PROVISION
SHALL BE DEEMED TO (i) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE
STATUTES OF LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS INSTRUMENT,
AGREEMENT OR DOCUMENT; OR (ii) BE A WAIVER BY EXCO OF THE PROTECTION AFFORDED TO
IT BY 12 U.S.C. SEC. 91 OR ANY SUBSTANTIALLY EQUIVALENT STATE LAW; OR (iii)
LIMIT THE RIGHT OF EXCO HERETO (A) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT
NOT LIMITED TO) SETOFF, OR (B) TO FORECLOSE AGAINST ANY REAL OR PERSONAL
PROPERTY COLLATERAL, OR (C) TO OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY
REMEDIES SUCH AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF, WRIT OF POSSESSION OR
THE APPOINTMENT OF A RECEIVER. EXCO MAY EXERCISE SUCH SELF HELP RIGHTS,
FORECLOSE UPON SUCH PROPERTY, OR OBTAIN SUCH PROVISIONAL OR ANCILLARY REMEDIES
BEFORE, DURING OR AFTER THE PENDENCY OF ANY ARBITRATION PROCEEDING BROUGHT
PURSUANT TO THIS INSTRUMENT, AGREEMENT OR DOCUMENT. NEITHER THIS EXERCISE OF
SELF HELP REMEDIES NOR THE INSTITUTION OR MAINTENANCE OF AN ACTION FOR
FORECLOSURE OR PROVISIONAL OR ANCILLARY REMEDIES SHALL CONSTITUTE A WAIVER OF
THE RIGHT OF ANY PARTY, INCLUDING THE CLAIMANT IN ANY SUCH ACTION, TO ARBITRATE
THE MERITS OF THE CONTROVERSY OR CLAIM OCCASIONING RESORT TO SUCH REMEDIES.
I. NOTICE OF FINAL AGREEMENT. THIS WRITTEN AGREEMENT AND ANY OTHER DOCUMENTS
EXECUTED IN CONNECTION HEREWITH REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their duly authorized representatives as of the date first above
written.
SECURED PARTY: PLEDGOR/DEBTOR:
EXCO RESOURCES, INC.
By: /s/ XXXXXXX X. XXXXXX /s/ XXXXXXX X. XXXXXX
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Chief Executive Officer Xxxxxxx X. Xxxxxx
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