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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. ____)*
EXCO Resources, Inc.
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(Name of Issuer)
COMMON STOCK, PAR VALUE $0.20 PER SHARE
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(Title of Class of Securities)
269279 10 5
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(CUSIP Number)
Kenneth Liang
Managing Director and General Counsel
Oaktree Capital Management, LLC
550 South Hope Street, 22nd Floor
Los Angeles, California 90071
(213) 614-0900
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
AUGUST 13, 1998
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Sections 240.13d-1(e), 240.13d-l(f) or 240.13d-1(g), check
the following box. / /
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Section 240.13d-7 for
other parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
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The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section
of the Act but shall be subject to all other provisions of the Act (however,
see the Notes).
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SCHEDULE 13D
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CUSIP NO. 269279105 PAGE 3 OF 9 PAGES
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NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Oaktree Capital Management, LLC
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
2 (b) /x/
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SEC USE ONLY
3
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SOURCE OF FUNDS*
4
Not applicable.
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CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
5 PURSUANT TO ITEMS 2(d) OR 2(e) / /
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CITIZENSHIP OR PLACE OF ORGANIZATION
6
California
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SOLE VOTING POWER
NUMBER OF 7
1,000,000
SHARES -----------------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
-0-
OWNED BY -----------------------------------------------------------------
SOLE DISPOSITIVE POWER
EACH 9
1,000,000
REPORTING -----------------------------------------------------------------
SHARED DISPOSITIVE POWER
PERSON WITH 10
-0-
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
1,000,000
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CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
12 CERTAIN SHARES* / /
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
15.3%
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TYPE OF REPORTING PERSON*
14
IA, OO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE
ATTESTATION.
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SCHEDULE 13D
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CUSIP NO. 269279105 PAGE 4 OF 9 PAGES
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NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
OCM Principal Opportunities Fund, L.P.
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
2 (b) / /
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SEC USE ONLY
3
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SOURCE OF FUNDS*
4
OO, WC
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CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
5 PURSUANT TO ITEMS 2(d) OR 2(e) / /
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CITIZENSHIP OR PLACE OF ORGANIZATION
6
Delaware
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SOLE VOTING POWER
NUMBER OF 7
1,000,000
SHARES -----------------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
-0-
OWNED BY -----------------------------------------------------------------
SOLE DISPOSITIVE POWER
EACH 9
1,000,000
REPORTING -----------------------------------------------------------------
SHARED DISPOSITIVE POWER
PERSON WITH 10
-0-
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
1,000,000
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CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
12 CERTAIN SHARES* / /
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
15.3%
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TYPE OF REPORTING PERSON*
14
PN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE
ATTESTATION.
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<PAGE>
Item 1. SECURITY AND ISSUER
This Schedule 13D relates to the Common Stock, par value $0.20 per share
("Common Stock"), of EXCO Resources, Inc., a Texas corporation (the
"Issuer"). The address of the principal executive office of the Issuer is
5735 Pineland Drive, Suite 235, Dallas, Texas 75231.
Item 2. IDENTITY AND BACKGROUND
This Schedule 13D is filed on behalf of :
(1) Oaktree Capital Management, LLC, a California limited liability
company ("Oaktree"), in its capacity as general partner of the
Principal Opportunities Fund (see below); and
(2) OCM Principal Opportunities Fund, L.P., a Delaware limited
partnership (the "Principal Opportunities Fund").
The principal business of Oaktree is providing investment advice and
management services to institutional and individual investors. The Principal
Opportunities Fund is a limited partnership which invests in entities in
which there is a potential for the fund to exercise significant influence
over such entities. Based on Oaktree's relationship with the Principal
Opportunities Fund, Oaktree may be deemed to beneficially own the shares of
Common Stock held by the Principal Opportunities Fund.
(A)-(C) & (F)
Oaktree is the general partner of the Principal Opportunities Fund. The
address of the principal business and principal office for Oaktree, the
Principal Opportunities Fund and the portfolio managers is 550 South Hope
Street, 22nd floor, Los Angeles, California 90071. The members and executive
officers of Oaktree and the Principal Opportunities Fund are listed below.
The principal address for each member and executive officer of Oaktree and
the Principal Opportunities Fund is 550 South Hope Street, Los Angeles,
California 90071. Each individual listed below is a citizen of the United
States of America.
EXECUTIVE OFFICERS & MEMBERS
Howard S. Marks Chairman and Principal
Bruce A. Karsh President and Principal
Sheldon M. Stone Principal
David Richard Masson Principal
Larry W. Keele Principal
Stephen A. Kaplan Principal
Russel S. Bernard Principal
David Kirchheimer Managing Director and Chief Financial and
Administrative Officer
Kenneth Liang Managing Director and General Counsel
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PORTFOLIO MANAGERS
Stephen A. Kaplan Principal
Bruce A. Karsh President and Principal
(D)-(E)
During the last five years, neither Oaktree, the Principal Opportunities Fund,
nor, to the best of their knowledge, any of their respective executive officers,
directors and general partners (i) has been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors); or (ii) has been a party
to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceedings was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
The Principal Opportunities Fund holds 1,000,000 shares of the Issuer's Common
Stock as of the date hereof. The Principal Opportunities Fund used $6,000,000 of
funds obtained from its working capital for the acquisition of such shares of
Common Stock.
ITEM 4. PURPOSE OF TRANSACTION
The shares of the Issuer's Common Stock described herein were acquired for
investment purposes.
On July 16, 1998, the Principal Opportunities Fund and the Issuer entered into a
letter agreement (the "Letter Agreement"), pursuant to which the Principal
Opportunities Fund made a standby commitment, subject to conditions, to exercise
rights to purchase up to 1,000,000 shares of authorized but unissued Common
Stock, at an exercise price of $6.00 per share (the "Rights"). Pursuant to the
Letter Agreement, the Issuer also agreed to increase the number of directors on
the Board of Directors of the Issuer so that the Principal Opportunities Fund
may designate one additional director (reasonably acceptable to the Issuer) to
serve on the Board. The Principal Opportunities Fund would retain the right to
nominate such a designee so long as the Principal Opportunities Fund's ownership
equals or exceeds 10% of the outstanding Common Stock that has been distributed
by the Issuer to its shareholders.
Oaktree, as the general partner of the Principal Opportunities Fund, will
evaluate the Issuer's businesses and prospects, alternative investment
opportunities and all other factors deemed relevant in determining whether
additional shares of the Issuer's Common Stock will be acquired. The investment
strategy of the Principal Opportunities Fund is to invest in entities in which
there is a potential to exercise significant influence over such entities.
Additional shares of Common Stock may be acquired in the open market or in
privately negotiated transactions, or some or all of the shares of the Issuer's
Common Stock beneficially owned by Oaktree may be sold. Oaktree has made no
proposals and has entered into no agreements, beneficially or otherwise, which
would be related to or would result in any of the matters described in Items
4(a)-(j) of Schedule 13D other than the Letter Agreement mentioned above;
however, as part of its ongoing review of investment
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alternatives, Oaktree has not excluded the possibility of considering such
matters in the future or, subject to applicable law, formulating a plan with
respect to such matters, and, from time to time, Oaktree may hold discussions
with or make formal proposals to management or the Board of Directors of the
Issuer, other shareholders of the Issuer or other third parties regarding
such matters.
ITEM 5. INTEREST AND SECURITIES OF THE ISSUER
(A) As of the date of this Schedule 13D, the Principal Opportunities Fund
owns and has sole power to vote and dispose of, 1,000,000 shares of Common
Stock of the Issuer (approximately 15.3% of the outstanding shares of the
Issuer's Common Stock).
As of the date of this Schedule 13D, Oaktree, in its capacity as the general
partner of the Principal Opportunities Fund may be deemed to be beneficially
own 1,000,000 shares of Common Stock of the Issuer (approximately 15.3% of
the outstanding shares of the Issuer's Common Stock).
(B) Oaktree, has discretionary authority and control over all of the assets
of the Principal Opportunities Fund pursuant to its status as general
partner, including the power to vote and dispose of the Issuer's Common
Stock. Therefore, Oaktree has the power to vote and dispose of 1,000,000
shares of the Issuer's Common Stock.
(C) On August 13, 1998, pursuant to the Letter Agreement attached hereto as
Exhibit 1 and 2, the Principal Opportunities Fund exercised the Rights and
purchased from the Issuer 1,000,000 shares of Common Stock, at a purchase
price of $6.00 per share. Oaktree, as general partner of the Principal
Opportunities Fund, may be deemed to beneficially own the shares of the
Issuer's Common Stock which were purchased by the Principal Opportunities
Fund. Other than this transaction, neither the Principal Opportunities Fund
nor Oaktree, has effected transaction involving the Issuer's Common Stock
during the last 60 days.
(D) None
(E) Not applicable
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
Oaktree, as general partner of the Principal Opportunities Fund, receives a
management fee for managing the assets of the Principal Opportunities Fund
and has a carried interest in the Principal Opportunities Fund.
Pursuant to the letter agreement dated as of August 12, 1998, by and between the
Issuer and the Principal Opportunities Fund, attached hereto as Exhibit 3, the
Issuer agrees to provide certain rights of access in connection with the
Principal Opportunities Fund's investment in securities of the Issuer.
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Except as described above and herein in this Schedule 13D, there are no
other contracts, understandings or relationships (legal or otherwise) among
or between the Principal Opportunities Fund, Oaktree, or, to the best of
their knowledge, their respective executive officers, directors or general
partner or between or among any of such persons and with respect to any
securities of the Issuer.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
The following are filed herewith as Exhibits to this Schedule 13D:
Exhibit 1- Letter Agreement dated as of July 16, 1998, by and between the
Issuer and the Principal Opportunities Fund.
Exhibit 2- Amendment to the Letter Agreement, dated as of July 16, 1998, by
and between the Issuer and the Principal Opportunities Fund.
Exhibit 3- Letter Agreement dated as of August 12, 1998, by and between the
Issuer and the Principal Opportunities Fund.
Exhibit 4- A written agreement relating to the filing of the joint
acquisition statement as required by Rule 13d-1(k)(1) under the
Securities Exchange Act of 1934, as amended.
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SIGNATURE
After reasonable inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this Schedule 13D is
true, complete and correct.
Dated as of this 21st day of August, 1998.
OAKTREE CAPITAL MANAGEMENT, LLC
BY: /s/ STEPHEN A. KAPLAN
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Stephen A. Kaplan
Principal
OCM PRINCIPAL OPPORTUNITIES FUND, L.P.
BY: /s/ STEPHEN A. KAPLAN
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Stephen A. Kaplan
Principal of Oaktree Capital Management, LLC,
general partner of OCM Principal Opportunities
Fund, L.P.
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<PAGE>
EXHIBIT 1
EXCO RESOURCES INC.
5735 Pineland Dr., Suite 235, Dallas, Texas 75231
(214)368-2084 - FAX (214)368-2087
July 16, 1998
OCM Principal Opportunities Fund, L.P.
c/o Oaktree Capital Management, LLC
550 South Hope Street
Suite 2200
Los Angeles, California 90071
Re: Standby Purchase Commitment
Gentlemen:
EXCO Resources, Inc., a Texas corporation (the "Company"), hereby
confirms its agreement with Oaktree Capital Management, LLC, on behalf of OCM
Principal Opportunities 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 July 15, 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 $6.00 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. By agreement dated
July 16, 1998 (the "Standby Agreement"), Ares Management, L.P. on behalf of Ares
Leveraged Investment Fund, L.P. ("Ares") agreed to assume the Standby Commitment
for a minimum of one million shares and a maximum of two million the shares. It
is anticipated that there will be additional unexercised Rights which Purchaser
desires to acquire and exercise pursuant to the Standby Commitment. Subject to
the terms and conditions hereinafter set forth, Purchaser hereby assumes a
portion of the Standby Commitment and agrees to exercise one million (1,000,000)
rights which would otherwise expire unexercised on the Expiration Date at a
price equal to the Exercise Price. The shares of Common Stock purchased
pursuant to this agreement are hereinafter referred to as the "OCM Standby
Shares."
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents, warrants and agrees that:
<PAGE>
(a) 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
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.
(b) 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.
(c) 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.
(d) The OCM Standby Shares will, when issued and sold to the
Purchaser as contemplated hereby, be validly authorized, issued and
outstanding, fully paid and nonassessable 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.
(e) Each Right is convertible into one share of Common Stock.
(f) As of the close of business on the second business day preceding
the date hereof, there were 594,336 shares of Common Stock outstanding; the
issuance of all the Rights has been duly authorized by the Company.
<PAGE>
(g) 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 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 require
any capital stock for offering and sale under the Securities Act of 1933,
as amended (the "Securities Act").
(h) 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.
(i) 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 OCM Standby Shares for its own account
and not with any intention of selling or transferring the OCM 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.
<PAGE>
4. PURCHASE, DELIVERY AND PAYMENT OF CONVERSION SHARES. Purchaser agrees
to purchase from the Company the OCM Standby Shares at a purchase price equal to
the aggregate applicable exercise price of the OCM Standby Shares.
Delivery of and payment for the OCM Standby Shares shall be made at
the offices of Haynes and Boone, LLP, 901 Main Street, Suite 3100, Dallas,
Texas, at 9:00 A.M., Dallas time on August 11, 1998, or on such later date (but
not later than three business days after the 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 OCM 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:
(a) 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;
(b) To direct the Transfer Agent to advise you daily of the number of
Rights exercised for Common Stock on the preceding day;
(c) 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;
(d) As soon as practicable after the completion of the Rights
Offering and Purchaser's purchase of the OCM Standby Shares pursuant to
this agreement, the Company will take all necessary actions (including
solicitation of consent from shareholders, if necessary) to increase the
number of directors of the Company's board of directors such that the
Purchaser may designate one additional director to serve on the board (the
"Purchaser's Designee"), which designation shall be reasonably acceptable
to the Company. As long as the Purchaser owns at least ten percent (10%)
of the Company's issued and outstanding common stock, the Purchaser shall
have the right to nominate the Purchaser's Designee to the Company's board
of directors.
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
<PAGE>
the Company of its obligations hereunder and to each of the following
additional terms and conditions:
(a) 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 this
Agreement shall be 1,000,000 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 OCM
Standby Shares unless and until:
(i) Douglas H. Miller purchases a minimum of 250,000 shares
pursuant to the Rights he receives in the Rights Offering;
and
(ii) At least 2,000,000 shares are purchased pursuant to the
Rights Offering (inclusive of shares purchased by Douglas
H. Miller, but exclusive of shares purchased by Ares).
(iii) Ares shall have purchased at least one million (1,000,000)
shares pursuant to the terms of the Standby Agreement and
any additional shares required to be purchased by Ares
thereunder.
(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 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
set forth herein have been fulfilled.
<PAGE>
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 Oaktree Capital
Management, LLC, on behalf of OCM Principal Opportunities Fund, L.P. (telecopy
(213) 694-1593), attention of Vincent J. Cebula; 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., 5735
Pineland Drive, Suite 235 (telecopy (214) 368-2087), attention of Douglas H.
Miller.
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 OCM Standby Shares to the
Purchaser for any reason permitted under this Agreement or if the Purchaser
shall decline to purchase the OCM 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 OCM Standby Shares, and upon demand the Company
shall pay the full amount thereof to the Purchaser. 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 OCM Standby Shares. In any event,
the Company shall pay its own expenses.
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 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 NEW YORK. 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.
<PAGE>
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,
By: /s/ DOUGLAS H. MILLER
------------------------------
Douglas H. Miller
Chairman and Chief Executive Officer
Accepted and agreed this 16th
of July, 1998.
OCM Principal Opportunities Fund, L.P.
By: Oaktree Capital Management, LLC
Its General Partner
By: /s/ STEPHEN A. KAPLAN
--------------------------------
Stephen A. Kaplan
Principal
By: /s/ VINCENT J. CEBULA
--------------------------------
Vincent J. Cebula
Managing Director
<PAGE>
EXHIBIT 2
EXCO RESOURCES INC.
5735 Pineland Dr., Suite 235, Dallas, Texas 75231
(214)368-2084 - FAX (214)368-2087
July 16, 1998
OCM Principal Opportunities Fund, L.P.
c/o Oaktree Capital Management, LLC
550 South Hope Street
Suite 2200
Los Angeles, California 90071
Re: Standby Purchase Commitment
Gentlemen:
EXCO Resources, Inc. ("EXCO") and OCM Principal Opportunities Fund,
L.P. ("OCM") have entered into a standby purchase agreement (the "Standby
Agreement") of even date herewith, reference to which is here made for all
purposes. Section 6(b) of the Standby Agreement provides that as a condition of
closing that there will be 1,000,000 shares subject to the standby purchase
commitment. It is anticipated that there may not be sufficient unexercised
rights to enable OCM to purchase 1,000,000 shares in the Rights Offering. This
letter, when executed as hereinafter set forth, shall constitute the agreement
of EXCO and OCM to modify and waive Section 6(b) of the Standby Agreement as
follows:
1. The minimum number of shares subject to the Standby Agreement
shall be reduced to 835,000 shares;
2. In order to reach the 1,000,000 share minimum set forth in the
Standby Agreement, OCM shall have the obligation to purchase an
additional 165,000 shares out of one-half (1/2) of any shares
which were not purchased pursuant to the Rights Offering, it
being understood that there may not be sufficient unexercised
rights to permit the purchase of the full 165,000 shares by Ares.
3. Except as specifically modified herein, the Standby Agreement is
here expressly ratified and confined and is in full force and
effect in accordance with all of its terms and conditions.
<PAGE>
If the foregoing correctly sets forth your understanding of the
agreement between EXCO and OCM, please indicate your agreement and acceptance
hereof by executing two copies of this letter in the space provided for that
purpose below.
Very truly yours,
EXCO RESOURCES, INC.
By: /s/ Douglas H. Miller
--------------------------------
Douglas H. Miller
Chairman and Chief Executive Officer
Accepted and agreed this 16th
day of July, 1998.
OCM Principal Opportunities Fund, L.P.
By: Oaktree Capital Management, LLC
Its General Partner
By: /s/ Stephen A. Kaplan
--------------------------------
Stephen A. Kaplan
Principal
By: /s/ Vincent J. Cebula
--------------------------------
Vincent J. Cebula
Managing Director
2
<PAGE>
EXHIBIT 3
EXCO RESOURCES, INC.
5735 PINELAND DRIVE
SUITE 235
DALLAS, TX 75231
August 12, 1998
OCM Principal Opportunities Fund, L.P.
c/o Oaktree Capital Management, LLC
550 South Hope Street, 22nd Floor
Los Angeles, CA 90071
Attention: Vincent J. Cebula
Dear Sirs:
This letter confirms the agreement of EXCO Resources, Inc. (the
"Company") to provide certain contractual rights set forth below to OCM
Principal Opportunities Fund, L.P. (the "Fund") in connection with the Fund's
investment in any of the securities of the Company (the "Securities"). During
the period of time when the Fund holds Securities, the Fund shall be entitled to
the following rights (the "Management Rights"):
The Fund (or any designated representative on behalf of the Fund)
shall be entitled to (a) discuss the business, operations, properties and
financial and other conditions of the Company with any authorized officer,
employee, agent, representative, director or independent accountant of the
Company and, upon reasonable notice to the Company, any such authorized officer,
agent, representative, director or independent accountant of any subsidiary of
the Company, (b) submit proposals or suggestions to the Company's management
from time to time with the requirement that the management of the company and,
upon reasonable notice to the Company, management of any subsidiary of the
Company shall discuss such proposals or suggestions with the Fund (or any
designated representative on behalf of the Fund) within a reasonable period of
time after such submission and (c) call a meeting at reasonable times and upon
reasonable notice with the management of the Company and, upon reasonable notice
to the Company, management of any subsidiary of the Company in order to discuss
such proposals or suggestions or for other purposes.
The Fund agrees that it will not disclose to any third party, other
than any of the Fund's or its general partner's, directors, employees,
attorneys, accountants or other representatives which the Fund or its general
partner reasonably believes have a need to know such information or any other
party that is bound by a similar confidentiality agreement with or for the
benefit of the Company, any information provided to the Fund by the Company
hereunder which is not generally available to the public except (i) any such
information which is independently developed by the Fund without the use of any
confidential information or
<PAGE>
becomes available to the Fund on a non-confidential basis from a person who to
the Fund's knowledge is not bound by a confidentiality agreement with the
company, (ii) with the prior express consent of the Company or (iii) as many
otherwise be required or requested by any court or governmental agency or as
may be required by applicable law.
The Management Rights granted to the Fund hereunder are not in
substitution for, and shall not be deemed to be in limitation of, any rights
otherwise available to the Fund as a holder of Securities.
Very truly yours,
By: /s/ DOUGLAS H. MILLER
----------------------------------
Douglas H. Miller
Chairman and Chief Executive Officer
Agreed to and accepted as of the
date set forth above
OCM Principal Opportunities Fund, L.P.
By: Oaktree Capital Management, LLC
its General Partner
By: /s/ STEPHEN A. KAPLAN
----------------------------------
Stephen A. Kaplan
Principal
By: /s/ VINCENT J. CEBULA
----------------------------------
Vincent J. Cebula
Managing Director
<PAGE>
EXHIBIT 4
JOINT FILING AGREEMENT
Each of the undersigned acknowledges and agrees that the foregoing
statement on Schedule 13D is filed on behalf of the undersigned and that all
subsequent amendments to this statement on Schedule 13D shall be filed on
behalf of the undersigned without the necessity of filing additional joint
acquisition statements. Each of the undersigned acknowledges that it shall
be responsible for the timely filing of such amendments, and for the
completeness and accuracy of the information concerning it contained therein,
but shall not be responsible for the completeness and accuracy of the
information concerning the other, except to the extent that he or it knows or
has reason to believe that such information is inaccurate.
Dated as of this 21st day of August, 1998.
OAKTREE CAPITAL MANAGEMENT, LLC
By: /s/ Stephen A. Kaplan
----------------------------------
Stephen A. Kaplan
Principal
OCM PRINCIPAL OPPORTUNITIES FUND, L.P.
By: /s/ Stephen A. Kaplan
----------------------------------
Stephen A. Kaplan
Principal of Oaktree Capital Management, LLC,
general partner of OCM Principal Opportunities
Fund, L.P.
