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EXHIBIT 10.1
June ___, 1998
Ares Management, L.P.
1999 Avenue of the Stars
Suite 1900
Los Angeles, California 90067
Attn: Xxxx Xxxxx
Re: Standby Purchase Commitment
Gentlemen:
EXCO Resources, Inc., a Texas corporation (the "Company"), hereby
confirms its agreement with Ares Management, L.P., on behalf of Ares Leveraged
Investment Fund, L.P. (the "Purchaser") as follows:
1. Offering of Rights to Purchase Common Stock. As described in
that certain Prospectus (herein so called) of the Company, dated June __, 1998,
the Company distributed (the "Rights Offering") to all of its recordholders of
Common Stock, par value $0.02 per share (the "Common Stock"), the right (each a
"Right" and collectively, the "Rights") to purchase authorized but unissued
shares of Common Stock at an exercise price of $____ per share (the "Exercise
Price"). The shares of Common Stock which are issuable upon exercise of the
Rights are herein called the "Rights Shares." All unexercised Rights will
expire at the close of business 45 days after the effective date of the Rights
Offering (the "Expiration Date").
One of the components of the Rights Offering is a standby commitment
(the "Standby Commitment") to exercise any Rights which have not been exercised
at or prior to the close of business on the Expiration Date. Subject to the
terms and conditions hereinafter set forth, Purchaser hereby assumes the
Standby Commitment and agrees to exercise any and all Rights which would
otherwise expired unexercised on the Expiration Date (up to a maximum of 2
million Rights) at a price equal to the Exercise Price. The shares of Common
Stock purchased pursuant to the Standby Commitment are hereinafter referred to
as the "Standby Shares."
2. Representations and Warranties of the Company. The Company
represents, warrants and agrees that:
(1) The Company is subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and in accordance therewith has timely filed
documents (the "Exchange Act Documents") with the Securities and
Exchange Commission (the "Commission") since December 1, 1997. At the
time such Exchange Act Documents were filed with the Commission, they
complied in all material respects with the
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requirements of the Exchange Act and the rules and regulations of the
Commission thereunder (the "Rules and Regulations"), and did not
include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading, and any Exchange Act Documents
hereafter filed will, when they are filed with the Commission, comply
in all material respects with the requirements of the Exchange Act and
the Rules and Regulations, and will not include an untrue statement of
a material fact or omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they are made, not misleading.
(2) Since the date of the Company's most recent Exchange
Act Document, there is no material fact, circumstance or event with
respect to the Company or any of its subsidiaries that has had or may
be expected to have a material adverse effect on the business,
properties, condition (financial or other) or results of operations of
the Company and its subsidiaries taken as a whole.
(3) The issued and outstanding shares of Common Stock of
the Company and the shares of Common Stock issuable upon exercise of
the Rights have been duly authorized. The issued and outstanding
shares of Common Stock of the Company are validly issued and
outstanding, fully paid and non-assessable, with no personal liability
attaching to the ownership thereof. There are no issued or
outstanding shares of Preferred Stock, par value $0.01 per share, of
the Company. There is not any preemptive or other right to subscribe
for or to purchase, or any lien, charge, encumbrance, restriction on
voting or transfer of, or any other claim of any third party on, any
issued and outstanding shares of Common Stock or the Rights Shares,
pursuant to the Company's corporate charter or by-laws or any
agreement or other instrument to which the Company is a party or by
which the Company may be bound. The capitalization of the Company as
of the date hereof and the anticipated capitalization of the Company
after the completion of the Rights offering are set forth in the
Capitalization section of the Prospectus.
(4) The Standby Shares will, when issued and sold to the
Purchaser as contemplated hereby, be validly authorized, issued and
outstanding, fully paid and non-assessable with no personal liability
attaching to the ownership thereof and will conform to the description
of the Common Stock contained in the Exchange Act Documents.
(5) Each Right is convertible into one share of Common
Stock.
(6) As of the close of business on the second business
day preceding the date hereof, there were 508,900 shares of Common
Stock outstanding; the exercise of all the Rights has been duly
authorized by the Company.
(7) This Agreement has been duly authorized, executed and
delivered by the Company, constitutes the valid and binding agreement
of the Company and is enforceable against the Company in accordance
with its terms. No further approval or authorization of the
shareholders or the Board of Directors of the Company or any other
entity will be
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required for the issuance and sale of Common Stock referred to in
subparagraph (d) above. Neither such issuance nor the consummation of
any other transactions herein contemplated will result in a breach by
the Company of any terms of, or constitute a default under, any other
agreement or undertaking of the Company, which breach or default might
be expected to have a material adverse effect on such Common Stock,
the Company or the transactions contemplated herein. Other than as
contemplated herein, no person has the right to require the Company or
any subsidiary of the Company to register any capital stock for
offering and sale under the Securities Act of 1933, as amended (the
"SECURITIES ACT").
(8) The Company and its subsidiary each have been duly
incorporated and each is a validly existing corporation in good
standing under the laws of its jurisdiction of incorporation and is
duly qualified and in good standing in each jurisdiction in which its
ownership of property or the conduct of its business requires such
qualification (except where the failure to so qualify would not have a
material adverse effect upon the Company and its subsidiary taken as a
whole). The Company and its subsidiary each have the corporate power
and authority and holds all valid permits and other required
authorizations from governmental authorities necessary to carry on
business as now conducted and as to be conducted on the Delivery Date
(as hereinafter defined) except such permits and authorizations that
are not singly or in the aggregate, material to the Company and its
subsidiary taken as a whole; neither entity has received any notice
relating to the revocation or modification of any such permits or
authorizations that are singly or in the aggregate material to the
Company and its subsidiary taken as a whole.
(9) Except as described in the Exchange Act Documents,
there is no action, suit or proceeding pending before any court,
arbitrator or governmental body, nor, to the knowledge of the Company,
is any such action threatened, which (i) might affect the consummation
of the transactions contemplated by this Agreement, (ii) is required
to be disclosed under the Exchange Act or the Rules and Regulations
or, in the case of any threatened action, would be required to be so
disclosed if such action were pending or (iii) would be likely to
result in any material adverse change in the financial position,
results of operations or business of the Company and its subsidiaries
taken as a whole.
3. Representations and Warranties of Purchaser. The Purchaser
represents and warrants that it is purchasing the Standby Shares for its own
account and not with any intention of selling or transferring the Standby
Shares in violation of the Securities Act, subject, nevertheless, to the
understanding that the disposition of Purchaser's property shall at all times
be and remain within Purchaser's control.
4. Purchase, Delivery and Payment of Conversion Shares.
Purchaser agrees to purchase from the Company the Standby Shares at a purchase
price equal to the aggregate applicable Exercise Price of the Standby Shares.
Delivery of and payment for the Standby Shares shall be made
at the offices of Xxxxxx and Xxxxx, LLP, 000 Xxxx Xxxxxx, Xxxxx 0000, Xxxxxx,
Xxxxx, at 9:00 a.m., Dallas time, on ______________, 1998, or on such later
date (but not later than three business days after the
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Expiration Date) as may be specified by written notice from the Purchaser to
the Company given not more than two business days prior to the Expiration Date
(such delivery and payment date being the "Delivery Date"). The date and time
for such delivery and payment are herein sometimes referred to as the Delivery
Date. On the Delivery Date, the Company shall deliver to the Purchaser
certificates for the Standby Shares against payment of the purchase price
therefor by wire transfer to an account designated by the Company to the
Purchaser at least one business day prior to the Delivery Date. Such
certificates shall be registered in such name or names and in such number of
shares of Common Stock as the Purchaser shall request in writing not less than
two full business days prior to the Delivery Date. For purposes of expediting
the checking and packaging of the certificates to be so delivered, the Company
shall make such certificates available for inspection by the Purchaser in
Dallas, Texas, not later than 5:00 p.m., Dallas time, on the business day prior
to the Delivery Date.
5. Further Agreements of the Company. The Company agrees:
(1) To timely file all documents, and any amendments of
previously filed documents, required to be filed by it pursuant to
Section 13, 14 or 15(d) of the Exchange Act;
(2) To direct the Transfer Agent to advise you daily of
the number of Rights exercised for Common Stock on the preceding day;
(3) To take no action the effect of which would be to
require an adjustment in the exercise price of the shares of Common
Stock from the present price set above;
6. Conditions of the Purchaser's Obligations. The obligations of
the Purchaser hereunder are subject to the accuracy in all material respects,
when made and on the Delivery Date, of the representations and warranties of
the Company contained herein, to performance by the Company of its obligations
hereunder and to each of the following additional terms and conditions:
(1) The legality and sufficiency of the exercise of the
Rights for shares of Common Stock, the validity and form of the
certificates representing the Common Stock deliverable to the
Purchaser hereunder, all corporate proceedings and other legal matters
incident to the foregoing and to the authorization, form and validity
of this Agreement and all other legal matters relating to this
Agreement and the transactions contemplated hereby shall be reasonably
satisfactory in all material respects to purchaser and its counsel and
the Company shall have furnished to such counsel all documents and
information that such counsel shall reasonably request to enable them
to pass upon such matters.
(b) The number of unexercised Rights which are subject to
the Standby Commitment shall be no less than
1,000,000 shares and no greater than 2,000,000
shares.
(c) The Company shall have furnished such additional
documents and certificates as the Purchaser or its
counsel may reasonably request.
(d) The Purchaser shall have no obligation to purchase
any of the Standby Shares unless and until:
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(i) Xxxxxxx X. Xxxxxx purchases a minimum of
250,000 shares pursuant to the Rights he
receives in the Rights Offering; and
(ii) At least 3,000,000 shares are purchased
pursuant to the Rights Offering.
(e) On the Delivery Date, the Company shall have
furnished to the Purchaser a certificate dated the
Delivery Date, signed by the Company's counsel, to
the effect that the signer of such certificate has
examined the Exchange Act Documents and that, in his
opinion, (i) as of the date of the Exchange Act
Documents, the statements made in the Exchange Act
Documents were true and correct, and none of the
Exchange Act Documents omits to state a material fact
required to be stated therein or necessary in order
to make the statements therein not misleading in
light of the circumstances under which they were
made, (ii) since the date of the Exchange Act
Documents no event has occurred which should have
been set forth in an amendment of or supplement to
the Exchange Act Documents but which has not been so
set forth, (iii) neither the Company nor any of its
subsidiaries has any material contingent obligation
which is not disclosed in the Exchange Act Documents
and (iv) the representations and warranties of the
Company herein are true and correct as of the
Delivery Date, the Company has complied with all its
agreements contained herein and the conditions on its
part to be fulfilled set forth herein have been
fulfilled.
7. Notices. The Company shall be entitled to act and rely upon
any request, consent, notice or agreement given or made by the Purchaser. Any
notice to the Purchaser shall be sufficient if given in writing by telecopy,
overnight courier service or personal delivery addressed to Ares Management,
L.P., on behalf of Ares Leveraged Investment Fund, L.P. (telecopy (310)
210-4170), attention of Xxxx Xxxxx; and any notice to the Company shall be
sufficient if given in writing by telecopy, overnight courier service or
personal delivery addressed to the Company at EXCO Resources, Inc., 0000
Xxxxxxxx Xxxxx, Xxxxx 000 (telecopy (000) 000-0000), attention of Xxxxxxx X.
Xxxxxx.
8. Effective Date of Termination. This Agreement may not be
terminated except by the written agreement of the Purchaser and the Company.
If the Company shall fail to deliver the Standby Shares to the
Purchaser for any reason permitted under this Agreement or if the Purchaser
shall decline to purchase the Standby Shares for any reason permitted under
this Agreement, the Company shall reimburse the Purchaser for the reasonable
fees and expenses of its counsel incurred in connection with this Agreement and
the proposed purchase of the Standby Shares, and upon demand the Company shall
pay the full amount thereof to the Purchaser; provided, however, that if this
Agreement is terminated by notice from the Purchaser pursuant to the second
sentence of the prior paragraph, the Company shall not be obligated to
reimburse the Purchaser on account of these expenses. The Company shall not be
liable to the Purchaser under any circumstances for damages on account of the
loss of anticipated profits from the sale of Standby Shares. In any event, the
Company shall pay its own expenses.
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9. Persons Entitled to Benefit of Agreement. This Agreement
shall inure to the benefit of and be binding upon the Purchaser, the Company
and their respective successors. This Agreement and the terms and provisions
hereof are for the sole benefit of only those persons, except that (a) the
representations, warranties, and agreements of the Company contained in this
Agreement shall also be deemed to be for the benefit of the person or persons,
if any, who control the Purchaser within the meaning of the Securities Act.
Nothing in this Agreement is intended or shall be construed to give any person
other than the persons mentioned in the preceding two sentences any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision contained herein.
10. Certain Definitions. For purposes of this Agreement, (a)
"business day" means any day on which the New York Stock Exchange is open for
trading and "close of business" means 5:00 p.m., Dallas time, (b) "subsidiary"
has the meaning set forth in Rule 405 of the rules and regulations promulgated
under the Securities Act.
11. Governing Law; Counterparts. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS. This
Agreement may be executed in one or more counterparts and, if executed in more
than one counterpart, the executed counterparts shall together constitute a
single instrument.
If the foregoing correctly sets forth the agreement between
the Company and the Purchaser, please indicate your acceptance in the space
provided for that purpose below.
Very truly yours,
EXCO RESOURCES, INC.
By:
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Name: Xxxxxxx X. Xxxxxx
Title: Chairman and Chief Executive
Officer
Accepted and agreed to this_____,
day of June, 1998.
Ares Management, L.P. on behalf of
Ares Leveraged Investment Fund
By:
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Name:
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Title:
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