EXHIBIT 10.1
August 27, 1996
Exco Resources, Inc.
0000 X. Xxxxxxx Xxxxxxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Re: $200,000.00 Loan from Comerica Bank-Texas ("Bank")
Gentlemen:
Exco Resources, Inc., ("Borrower"), has requested that Bank
provide to Borrower a loan of $200,000.00 (the "Loan"). Bank is
willing to provide the Loan to Borrower pursuant to a DEMAND note
and subject to the further terms and conditions set forth herein.
In consideration of the Loan and for other good and valuable
consideration, the receipt and adequacy of which are hereby
acknowledged, Xxxxxxxx agrees as follows:
1. Financial Statements. Borrower shall deliver to Bank
within 60 days after the end of each fiscal year, (i) its balance
sheet as of the end of such year, and (ii) a statement of income
and statement of cash flow for such year, fairly presenting the
financial condition and results of operations of Borrower, audited
by certified independent public accountants acceptable to Bank.
Borrower shall deliver to Bank within 45 days after the end of each
calendar quarter, (i) its balance sheet as of the end of such
quarter, and (ii) a statement of income and statement of cash flow
for such quarter and for the calendar year through the end of such
quarter, fairly presenting the financial condition and results of
operations of Borrower, certified by the chief financial officer
of Borrower as being true and correct and as accurately reflecting
the financial condition of Borrower without any material omissions
or misstatements and as having been prepared in accordance with
GAAP (except for year-end audit adjustments). Borrower shall also
deliver to Bank such other financial information and financial
statements as Bank may request from time to time.
2. Production Reports. As soon as available and in any
event within thirty (30) days after the end of each month, Xxxxxxxx
shall deliver to Bank a report prepared by Borrower for each of the
properties subject to a mortgage for the benefit of Bank (the
"Mortgaged Properties"), detailing production, revenue, lease
operating expenses, price information and such other information as
Bank may request for such month and further detailing any changes
to any producing reservoir, production equipment, or producing well
which could have a material adverse effect on any of the Mortgaged
Properties. Such report shall be in form and substance acceptable
to, and provide such detail and back-up as may be requested by,
Bank.
Exco Resources, Inc.
August 27, 1996
Page 2
3. Limitation on Indebtedness. Without the prior written
consent of Bank, Borrower shall not incur, create, contract, waive,
assume, have outstanding, guarantee or otherwise be or become,
directly or indirectly, liable in respect of any indebtedness
except (i) the Loan and (ii) indebtedness for ordinary trade
payables not more than forty five (45) days past due.
4. Negative Pledge. Except for liens in favor of Bank,
Xxxxxxxx shall not hereafter create or xxxxx x xxxx in any oil or
gas property of Borrower, whether royalty, overriding royalty,
mineral or working interests.
5. Working Capital. Borrower shall at all time maintain
current assets, determined in accordance with GAAP, in excess of
current liabilities (excluding the Loan), determined in accordance
with GAAP.
6. Use of Funds. The proceeds of the Loan shall be used by
Borrower solely for the costs and expenses related to the planned
public offering of the Borrower's capital stock and acquisitions
related thereto.
7. Further Assurances. Borrower will make, execute and
endorse, and acknowledge and deliver or file or cause the same to
be done, all such vouchers, invoices, notices, certifications and
additional agreements, undertakings, conveyances, security
agreements, transfers, assignments, financing statements or other
assurances, and take any and all such other action, as Bank may,
from time to time, reasonably deem necessary or proper in
connection with this Agreement or the obligations of Borrower , or
for better assuring and confirming unto Bank all or any part of the
security for the Loans or for granting to Bank a perfected first
priority lien in the Mortgaged Properties as security for the Loan.
8. Offset. Borrower hereby grants to Bank the right of
offset, to secure repayment of the Loan, upon any and all monies,
securities or other property of Borrower and the proceeds therefrom
now or hereafter held or received by or in transit to Bank or any
of its agents, from or for the account of Borrower, whether for
safekeeping, custody, pledge, transmission, collection, or
otherwise and also upon any and all deposits (general or special)
and credits of Borrower, and any and all claims of Borrower against
Bank at any time existing.
9. Expenses of Bank. Borrower shall pay all reasonable
costs, fees and expenses of Bank (including, without limitation,
all reasonable attorneys' fees, costs and expenses of Bank's legal
counsel) incurred (i) in connection with the negotiation,
preparation, execution and delivery of loan documents and any and
all renewals, amendments, waivers and modifications thereto, and
(ii) by Bank in connection with the preservation and enforcement of
Bank's rights under this Agreement, the note evidencing the Loan
(the "Note") and/or other loan documents, specifically
Exco Resources, Inc.
August 27, 1996
Page 3
including, without limitation, all costs and expenses incurred with
respect to any bankruptcy, insolvency or reorganization proceeding.
Xxxxxxxx agrees to indemnify, defend, save and hold harmless Bank,
and its officers, directors, employees, agents and attorneys, and
each of them (the "Indemnified Parties"), from and against all
claims, actions, suits and other legal proceedings, damages, costs,
interest, charges, counsel fees and other expenses and penalties
which any of the Indemnified Parties may sustain or incur by reason
of or arising from the execution and delivery of this Agreement,
the Note or any of the loan documents, or the consummation of the
Loan (collectively, the "Subject Transactions"). Xxxxxxxx agrees
to indemnify, defend, save and hold harmless the Indemnified
Parties from and against all claims, actions, suits and other legal
proceedings, damages, costs, interest, charges, counsel fees and
other expenses and penalties which any of the Indemnified Parties
may sustain or incur by reason of or arising out of (i) any
environmental liability related to the Mortgaged Property or (ii)
any other litigation of whatever nature in which Borrower or any of
the Mortgaged Property is involved, including, without limitation,
costs and expenses related to producing evidence in any litigation
or testifying in any litigation. Notwithstanding anything to the
contrary contained in this paragraph, Xxxxxxxx does not indemnify
Indemnified Parties against losses, liabilities, damages, claims,
costs and expenses incurred by any of the Indemnified Parties which
arise directly from their willful misconduct or gross negligence;
PROVIDED, HOWEVER, THE INDEMNIFICATION PROVISIONS SET FORTH ABOVE
DO EXPRESSLY REQUIRE THE INDEMNIFICATION OF THE INDEMNIFIED PARTIES
FOR THEIR OWN NEGLIGENCE. The obligations of Borrower under this
paragraph shall survive any termination of this Agreement and
payment of the Loan.
10. Notices. All notices, requests and demands to and upon
the respective parties hereto shall be in writing and shall be
deemed given or made (i) when deposited in the mail, postage
prepaid, addressed as set forth below, (ii) when such communication
is telecopied to the fax number set forth below, or (iii) when
delivered to an overnight delivery service, addressed as set forth
below. Each party may change the address or fax number for notice
by a writing to the other party delivered in accordance with the
terms hereof.
To Borrower: Exco Resources, Inc.
0000 X. Xxxxxxx Xxxxxxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Fax No.: (000) 000-0000
Attention: Xxxx Xxxxx
To Bank: Comerica Bank-Texas
P. O. Box 650282, MC 6593
Dallas, Texas 75265-0282
Exco Resources, Inc.
August 27, 1996
Page 4
Fax No.: (000) 000-0000
Attention: Xxxxx Xxxxxxxxxx
11. Governing Law. This Agreement and the Note shall be
governed by and construed in accordance with the law of the State
of Texas and applicable federal law.
12. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of Borrower and Bank and the
successors and assigns of Bank; Borrower may not assign or transfer
any of its rights or obligations under this Agreement.
13. Amendment and Waiver. Except as provided herein, this
Agreement may not be amended or modified, nor may any of its terms
be waived, except by written instrument signed by all parties
hereto.
14. Maximum Interest. Regardless of any provision contained
herein or therein, the holder or holders of the Note shall never be
entitled to contract for, charge, receive, take, collect, reserve
or apply as interest on the Note any amount in excess of the
Maximum Rate, and in the event the holder of the Note ever
contracts for, charges, receives, takes, collects, reserves or
applies as interest any such excess, such amount which would be
deemed excessive interest shall be deemed a partial prepayment of
principal on the Note and shall be treated thereunder as such; and
if the Note is paid in full, any remaining excess shall be promptly
paid to Borrower. In determining whether or not the interest paid
or payable under any specific contingency exceeds interest at the
Maximum Rate, the holder of the Note shall, to the extent permitted
under applicable law, (a) characterize any non-principal payment as
an expense, fee or premium rather than as interest, (b) exclude
voluntary prepayments and the effects thereof, and (c) amortize,
prorate, allocate and spread the total amounts of interest
throughout the entire contemplated term of the Note; provided,
however, if the unpaid principal balance thereof is paid and
performed in full prior to the end of the full contemplated term
thereof, and if the interest received for the actual period of
existence thereof exceeds interest at the Maximum Rate, the holder
thereof shall refund to Borrower the amount of such excess and, in
such event, the holder thereof shall not be subject to any
penalties provided by any laws for contracting for, charging,
receiving, taking, collecting, reserving, or applying interest in
excess of the Maximum Rate.
15. No Oral Agreements. THIS AGREEMENT, THE NOTE AND ALL
OTHER LOAN DOCUMENTS EXECUTED IN CONNECTION XXXXXXXX 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.
Exco Resources, Inc.
August 27, 1996
Page 5
16. Multiple Counterparts. This Agreement may be executed in
any number of counterparts, all of which taken together shall
constitute one and the same agreement, and any of the parties
hereto may execute this Agreement by signing any such counterpart.
17. Article 15.10 (b). Borrower and Bank hereby agree that,
except for Section 15.10(b) thereof, the provisions of Art.
5069-15.01 et seq. of the Revised Civil Statutes of Texas, 1925, as
amended (regulating certain revolving credit loans and revolving
triparty accounts) shall not apply to the Loan.
18. DEMAND OBLIGATION. Notwithstanding any other term or
provision hereof or in any other agreement, the obligation of the
Borrower evidenced by the Note is a demand obligation, and Bank may
demand payment thereof in full at any time in its sole discretion.
If you find the terms of this Agreement to be satisfactory,
please sign as indicated below and return an executed original copy
to us.
Comerica Bank - Texas
By: /s/ Xxxxx Xxxxxxxxxx
-------------------------------
Its: Banking Officer
- -----------------------------
Accepted and Agreed to as of
August 27, 1996.
Exco Resources, Inc.
By: /s/ Xxxxx X. Xxxxx
---------------------------------
DEMAND NOTE
$200,000.00 August 27, 1996
ON DEMAND, OR IF NOT SOONER DEMANDED, ON FEBRUARY 27, 1997,
FOR VALUE RECEIVED, the undersigned, EXCO RESOURCES, INC., a Texas
corporation ("Borrower"), hereby promises to pay to the order of
Comerica Bank - Texas, a banking association organized under the
laws of the State of Texas ("Lender"), at 0000 Xxx Xxxxxx, Xxxxxx,
Xxxxxx Xxxxxx, Xxxxx 00000, the principal amount of TWO HUNDRED
THOUSAND AND NO/100 DOLLARS ($200,000.00), or such lesser amount as
may from time to time be advanced and remain unpaid and outstanding
hereunder, together with accrued interest as provided hereinbelow.
Xxxxxxxx further promises to pay interest to Lender in like
money, from the date hereof on the unpaid principal amount hereof
from time to time outstanding, at a rate per annum which shall from
day to day be equal to the lesser of (i) the Maximum Rate (as
hereinafter defined), or (ii) two percent (2.0%) above the Base
Rate (as hereinafter defined) in effect on such day (the
"Fluctuating Rate"). "Maximum Rate" shall mean the highest
nonusurious interest rate, if any, that at any time or from time to
time may be contracted for, taken, reserved, charged, or received
on this Note, under laws applicable to the Lender which are
presently in effect or, to the extent allowed by law, under such
applicable laws which may hereafter be in effect and which allow a
higher maximum nonusurious interest rate than applicable laws now
allow. "Base Rate" shall mean the variable rate of interest per
annum established by Lender, from time to time as its base or prime
rate (which rate may not be the lowest rate charged by Lender, on
similar loans or on loans to its most credit-worthy commercial
borrowers). Each change in the Fluctuating Rate shall become
effective, without notice to Borrower, on the effective date of
each change in the Base Rate. For the purposes of calculating
interest accrued hereon at the Fluctuating Rate, interest on this
Note shall be calculated on the basis of a 360-day year. Interest
at the Maximum Rate shall be calculated on the basis of a year of
365 or 366 days, as the case may be.
Any overdue principal hereunder and, to the extent permitted
by law, overdue interest hereon, shall bear interest, payable ON
DEMAND, for each day from and including the date payment thereof
was due to, but excluding, the date of actual payment, at a rate
per annum which shall from day to day be equal to the the lesser of
(i) the Maximum Rate and (ii) six percent (6.0%) above the Base
Rate in effect on such day (the "Default Rate"). Each change in
the Default Rate shall become effective, without notice to
Borrower, on the effective date of each change in the Base Rate.
For the purposes of calculating interest hereon at the Default
Rate, interest on this Note shall be calculated on the basis of a
360 day year.
It shall be within Xxxxxx's sole discretion to make or to
refuse to make any and all loans requested hereunder by Xxxxxxxx.
Xxxxxx's records shall be conclusive proof of loans, payments and
interest accruals hereunder, absent proof by Borrower of error.
Principal may be borrowed and repaid from time to time,
subject in all respects to the terms hereof. All unpaid principal
and accrued interest under this promissory note shall be payable as
- 1 -
follows: Accrued interest shall be payable monthly, at the rate
prescribed herein, on the last Business Day of each calendar month.
All unpaid principal borrowed under this promissory note and all
unpaid accrued interest thereon, and all other amounts payable
hereunder, shall be due and payable to Lender in full ON DEMAND, OR
IF NOT SOONER DEMANDED, ON FEBRUARY 27, 1997. As used herein,
"Business Day" means any day upon which Lender is open for banking
business in Dallas, Texas.
No delay by Xxxxxx in the exercise of any power or right
hereunder shall operate as a waiver of, or impair, Xxxxxx's rights
and remedies under this promissory note. Borrower and each other
party ever liable hereunder severally hereby expressly waives
presentment, demand, notice of intention to demand, notice of
intention to accelerate, notice of acceleration, protest, notice of
protest and any other notice of any kind, and agrees that its
liability hereunder shall not be affected by any renewals,
extensions or modifications, from time to time, of the time or
manner of payment hereof, or by any release or modification of any
security for the obligations and indebtedness evidenced hereby.
Borrower hereby promises to pay to Lender all reasonable costs
and expenses of enforcement and collection of any amounts under
this promissory note, including without limitation, reasonable
attorneys' fees (including, without limitation, fees incurred
pursuant to or in connection with a proceeding brought pursuant to
11 U.S.C., the Federal Bankruptcy Code).
In no contingency or event whatsoever shall the amount
hereunder paid by Xxxxxxxx, received by Xxxxxx, agreed to be paid
by Xxxxxxxx, or requested to be paid by Xxxxxx, exceed the maximum
amount permitted by applicable law. In the event any such sums
paid to Lender by Borrower would exceed the maximum amount
permitted by applicable law as interest, Lender shall automatically
apply such excess to any unpaid principal or, if the amount of such
excess exceeds said unpaid principal, such excess shall be paid to
Borrower. All sums paid, or agreed to be paid, by Borrower which
are or hereafter may be construed to be compensation for the use,
forbearance, or detention of money shall, to the extent permitted
by applicable law, be amortized, prorated, spread and allocated
throughout the full term of all such indebtedness until the
indebtedness is paid in full. Notwithstanding any other provisions
contained herein, Lender shall never be entitled to receive,
collect or apply, as interest on the indebtedness arising
hereunder, any amount in excess of the maximum amount (the "Maximum
Amount") which could be contracted for, charged or collected by
application of the Maximum Rate and, in the event Lender ever
receives, collects, or applies as interest any such excess, such
amount which could be excessive interest shall be applied to the
reduction of the unpaid principal balance of the indebtedness
arising hereunder, and, if the principal balance of such
indebtedness is paid in full, any remaining excess shall forthwith
be paid to Borrower. In determining whether or not the interest
paid or payable under any specific contingency exceeds the Maximum
Amount or the Maximum Rate, Borrower and Lender shall, to the
maximum extent permitted under applicable law, (i) characterize any
non-principal payment as a standby fee, commitment fee, prepayment
charge, delinquency charge or reimbursement for a third-party
expense rather than as interest, (ii) exclude voluntary prepayments
and the effect thereof, and (iii) amortize, prorate, allocate and
spread in equal parts throughout the entire period during which the
indebtedness was outstanding the total amount of interest at any
time contracted for, charged or received.
- 2 -
The promissory note may not be changed, amended or modified
except in writing executed by Xxxxxx and Xxxxxxxx.
This promissory note shall be governed by and construed
according to the laws of the State of Texas, except as to
provisions relating to the rate of interest to be charged on the
unpaid principal hereof, in which case, to the extent federal law
otherwise would allow a higher rate of interest than would be
allowed by the laws of the State of Texas, such federal law shall
apply; provided, further, that in no event shall Tex. Rev. Civ.
Stat. Xxx. art. 5069 ch.15 (which regulates certain revolving loan
accounts and revolving triparty accounts) apply to this promissory
note. To the extent that TEX. REV. CIV. STAT. XXX. art. 5069-1.04,
as amended, is applicable to this promissory note, the "indicated
rate" specified in such article is the applicable ceiling; provided
that, if any applicable law permits greater interest, the law
permitting the greatest interest shall apply.
THIS PROMISSORY NOTE AND ALL OTHER WRITTEN AGREEMENTS EXECUTED IN
CONNECTION XXXXXXXX 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.
EXCO RESOURCES, INC.
By: /s/ Xxxxx X. Xxxxx
------------------------------
Name: Xxxxx X. Xxxxx
-----------------------------
Title: Treasurer
----------------------------
Acknowledged this ___ day of August, 1996
COMERICA BANK - TEXAS
By: /s/ Xxxxx Xxxxxxxxxx
----------------------------------------
Name: Xxxxx Xxxxxxxxxx
---------------------------------------
Title: Banking Officer
--------------------------------------
- 3 -
