Amended Annual Report (10-k/a)

Date : 04/30/2019 @ 10:23PM
Source : Edgar (US Regulatory)
Stock : Exco Resources Inc (XCO)
Quote : 0.6355  0.0 (0.00%) @ 1:00AM

Amended Annual Report (10-k/a)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K/A
Amendment No. 1
þ
 
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2018
OR
o
 
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
FOR THE TRANSITION PERIOD FROM __________TO __________ 
Commission file number: 001-32743
EXCO RESOURCES, INC.
(Exact name of Registrant as specified in its charter)
Texas
(State of incorporation)
 
74-1492779
(I.R.S. Employer Identification No.)
 
 
 
12377 Merit Drive, Suite 1700, Dallas, Texas
(Address of principal executive offices)
 
75251
(Zip Code)
Registrant’s telephone number, including area code: (214) 368-2084
Securities registered pursuant to Section 12 (b) of the Act: None
Securities registered pursuant to Section 12 (g) of the Act: Common Shares, par value $0.001 per share
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No þ
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No þ
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer o
 
Accelerated filer o
Non-accelerated filer þ
 
Smaller reporting company þ
Emerging growth company o
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ
As of April 25, 2019 , the registrant had 21,584,514 outstanding common shares, par value $0.001 per share, which is its only class of common shares. As of the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market value of the registrant’s common shares held by non-affiliates was approximately $1,501,809 .




EXPLANATORY NOTE

Unless the context requires otherwise, references in this Annual Report on Form 10-K to “EXCO,” “EXCO Resources,” “Company,” “we,” “our,” and “us” are to EXCO Resources, Inc. and its consolidated subsidiaries.

Amendment to Form 10-K

The Company is filing this Amendment No. 1 to Form 10-K on Form 10-K/A (this “Form 10-K/A”) to amend its Annual Report on Form 10-K for the fiscal year ended December 31, 2018 (the “Form 10-K”), filed with the Securities and Exchange Commission (the “SEC”) on March 18, 2019. The purpose of this Form 10-K/A is solely to disclose the information required in Part III (Items 10, 11, 12, 13 and 14) of the Form 10-K, which information was previously omitted from the Form 10-K in reliance on General Instruction G(3) to Form 10-K. Accordingly, we hereby amend and restate in its entirety Part III of the Form 10-K. Capitalized terms not otherwise defined in Part III of this Form 10-K/A shall have the same meanings assigned to such terms in Parts I and II of the Form 10-K.

In addition, pursuant to the rules of the SEC, Item 15 of Part IV has been amended to include the currently dated certifications of the Company’s principal executive officer and principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. The certifications of the Company’s principal executive officer and principal financial officer are filed with this Form 10-K/A as Exhibits 31.3 and 31.4 hereto. Except as described above, this Form 10-K/A does not amend any other information set forth in the Form 10-K, and we have not updated disclosures included therein to reflect any subsequent events. This Form 10-K/A should be read in conjunction with the Form 10-K and with our other filings with the SEC.

Bankruptcy Proceedings under Chapter 11

On January 15, 2018, the Company and certain of its subsidiaries, including EXCO Services, Inc., EXCO Partners GP, LLC, EXCO GP Partners Old, LP, EXCO Partners OLP GP, LLC, EXCO Operating Company, LP, EXCO Midcontinent MLP, LLC, EXCO Holding (PA), Inc., EXCO Production Company (PA), LLC, EXCO Resources (XA), LLC, EXCO Production Company (WV), LLC, EXCO Land Company, LLC, EXCO Holding MLP, Inc., Raider Marketing, LP, Raider Marketing GP, LLC (collectively, the “Filing Subsidiaries” and, together with the Company, the “Debtors”), filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code (“Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of Texas (the “Court”). The Chapter 11 cases are being jointly administered under the caption In Re EXCO Resources, Inc., Case No. 18-30155 (MI) (“Chapter 11 Cases”). The Court granted all of the first day motions filed by the Debtors that were designed primarily to minimize the impact of the Chapter 11 proceedings on our operations, customers and employees. We will continue to operate our businesses as “debtors in possession” under the jurisdiction of the Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Court. We expect to continue our operations without interruption during the pendency of the Chapter 11 proceedings.

On April 10, 2019, the Debtors filed a Third Amended Settlement Joint Chapter 11 Plan of Reorganization (“April 2019 Plan”) and related Disclosure Statement with the Court. The Plan does not currently contemplate the divestiture of any of the Company’s assets. The April 2019 Plan included the following key elements:

Holders of the DIP Credit Agreement will receive payment in full in cash with proceeds from a new revolving credit facility;
Holders of allowed 1.5 Lien Notes claims will receive their pro rata share of 61.2 percent of the equity in the reorganized Company (prior to giving effect to the Secured Lender Settlement defined below);
Holders of allowed 1.75 Lien Term Loans claims will receive their pro rata share of 38.8 percent of the equity in the reorganized Company;
Holders of the Second Lien Term Loans, 2018 Notes, 2022 Notes and allowed general unsecured claims will receive their pro rata share of the equity provided from the Secured Lender Settlement less certain holdback provisions. The Secured Lender Settlement provides for certain of our lenders under the 1.5 Lien Notes and 1.75 Lien Notes to transfer 11.6 percent of the certain lenders’ recoveries under the April 2019 Plan to the unsecured creditors in exchange for full and final settlement of any and all claims against said lenders.
Holders of allowed general unsecured claims less than or equal to $0.5 million (“Allowed Convenience Claim”) shall receive their pro rata share of $1.1 million in cash subject to a 20 percent limitation of such Allowed Convenience Claim;
Holders of existing equity interests in EXCO shall not receive a distribution and the equity interests will be deemed canceled, discharged, released and extinguished; and



The carriers of directors’ and officers’ liability insurance coverage related to the Debtors will contribute $13.4 million to the Debtors in exchange for full and final settlement of potential claims and causes of action against current and former directors and officers.

For the duration of the Chapter 11 proceedings, our operations and our ability to develop and execute our business plan are subject to risks and uncertainties associated with Chapter 11 proceedings described under “Item 1A. Risk Factors” in the Form 10-K. As a result of these risks and uncertainties, our assets, liabilities, shareholders’ equity, officers and/or directors could be significantly different following the conclusion of the Chapter 11 Cases, and the description of our operations, properties and capital plans included in the Form 10-K may not accurately reflect our operations, properties and capital plans following the Chapter 11 Cases. See further discussions of the Chapter 11 Cases in “Note 1. Organization and basis of presentation” in the Notes to our Consolidated Financial Statements in the Form 10-K.




EXCO RESOURCES, INC.
TABLE OF CONTENTS




PART III
 
Item 10.    Directors, Executive Officers and Corporate Governance

The following table sets forth the name, age and positions of our executive officers and directors as of April 30, 2019:

Name
 
Age
 
Position
Harold L. Hickey
 
63
 
Chief Executive Officer and President
Harold H. Jameson
 
51
 
Vice President and Chief Operating Officer
Tyler S. Farquharson
 
36
 
Vice President, Chief Financial Officer and Treasurer
Anthony R. Horton (1)(2)(3)
 
58
 
Director
Randall E. King (1)(2)(4)
 
64
 
Director
Robert L. Stillwell (1)(2)(3)
 
82
 
Director
___________________________
(1)
Member of the audit committee.
(2)
Member of the compensation committee.
(3)
Member of the nominating and corporate governance committee.
(4)
Member of the technical committee.

Executive Officers

Harold L. Hickey became our Chief Executive Officer in March 2015 and President in February 2013. Mr. Hickey previously served as Chief Operating Officer from October 2005 until March 2015. From October 2005 until February 2013, Mr. Hickey served as our Vice President and from January 2004 until October 2005, Mr. Hickey served as President of our wholly owned subsidiary, North Coast Energy, Inc. Mr. Hickey was our Production and Asset Manager from February 2001 to January 2004. From April 2000 until he joined us, Mr. Hickey was Chief Operating Officer of Inca Natural Resources Group, L.P., an independent oil and natural gas exploration company. Prior to that, Mr. Hickey worked at Mobil Oil Corporation from 1979 to March 2000. Mr. Hickey received a B.S. in Chemical Engineering from Louisiana State University in 1978.

Harold H. Jameson became our Vice President and Chief Operating Officer in April 2015. Mr. Jameson most recently served as our Vice President of Development and Production with primary responsibilities including the Company’s horizontal shale development drilling programs in the Haynesville, Eagle Ford and Marcellus assets. Mr. Jameson has served in a Vice President role since March 2011. From August 2008 until March 2011, Mr. Jameson served as General Manager of our East Texas/North Louisiana area with primary responsibility for our Haynesville/Bossier shale horizontal development. Prior to the Haynesville/Bossier shale project, Mr. Jameson served as General Manager of our Vernon Field project. Prior to joining EXCO in April 2007, Mr. Jameson was employed at Anadarko Petroleum Corporation from 1991 to 2007, and during his career he has had multiple responsibilities in technical or leadership roles including asset management, drilling and completions, production engineering, reservoir engineering, economic evaluations and field development in U.S. onshore and international projects. Mr. Jameson received a B.S. in Petroleum Engineering from Texas Tech University in 1991.

Tyler S. Farquharson became our Vice President, Chief Financial Officer and Treasurer in February 2017. Mr. Farquharson previously served as our acting Chief Financial Officer and Treasurer from October 2016 and our Vice President of Strategic Planning from August 2016 until February 2017. Prior to this, Mr. Farquharson had served in various roles since joining the Company as a Financial Analyst in August 2005, including as our Strategic Analysis and Financial Planning Director. He received his B.S.B. in Finance from the University of Kansas in 2005.


Directors

Anthony R. Horton became one of our directors in February 2017. In 2018, Mr. Horton became President of A R Horton Restructuring Advisors, LLC and CEO of PurpleCore Capital Advisors, LLC. Mr. Horton also serves as the Plan Administrator Board for Energy Future Holdings Corp. (“EFH”) and is a member of the Restructuring Working Group for FirstEnergy Utilities.  Also, Mr. Horton is Chairman of the Board of NanoLumens, an Independent Director for Mission Coal and Frontera Holdings. Until March 2018, Mr. Horton served as Chief Financial Officer and Executive Vice President of EFH. Prior to then, Mr. Horton served as Senior Vice President, Treasurer and Assistant Secretary of EFH from April 2004.  Mr. Horton also served as an officer of several subsidiaries of EFH, including serving as Senior Vice President and Treasurer at Energy Future

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Competitive Holdings Company LLC, Treasurer and Assistant Secretary at TXU Competitive Energy Holding Company LLC and Senior Vice President and Treasurer of Energy Future Intermediate Holding Company LLC. In addition, Mr. Horton has also served on the board of directors of several private companies. Mr. Horton holds a B.B.A. in Management and Economics from the University of Texas at Arlington and a Masters of Professional Accounting and Finance from the University of Texas at Arlington and Dallas. Professional certifications held by Mr. Horton include CPA, CFA, CMA and CFM. Mr. Horton’s substantial experience in finance and management provides him with unique insights regarding business strategy, leadership, marketing and strategic transactions.

Randall E. King became one of our directors in March 2017. Mr. King is a founding member and Managing Partner of Anderson King Energy Consultants, LLC (“AK”). Prior to forming AK in 2012, Mr. King was a Managing Director for Bank of America Merrill Lynch’s oil and gas divestiture business and supervised a team of professionals based in Houston, Texas. Mr. King joined Petrie Parkman at its founding in 1989 and was extensively involved in closing over $65 billion of transactions at the firm. His experience includes advising clients on over 130 divestitures with Petrie Parkman as well as numerous acquisition, merger, fairness opinion and restructuring assignments for public and private companies of all sizes. He has a long history of working with the public and private upstream independent sector in providing liquidity options and strategic transaction services. A registered petroleum engineer, Mr. King is a former Vice President of Netherland, Sewell & Associates, an engineering consulting firm based in Dallas, Texas. Prior to joining Netherland Sewell in 1981, Mr. King held several management and engineering positions with Exxon Company U.S.A.’s production and corporate planning departments. His experience in the oil and gas industry includes a heavy emphasis on reservoir engineering and reserve and economic evaluation of oil and gas properties. Mr. King received his B.S. (honors) in Petroleum Engineering from the University of Alabama. Mr. King is an active member of the Society of Petroleum Evaluation Engineers. Mr. King’s oil and gas background, combined with his leadership and management experience, provides him with valuable insight regarding business strategy, operations and management.

Robert L. Stillwell became one of our directors in October 2005. Mr. Stillwell served as the General Counsel of BP Capital, L.P., Mesa Water, Inc. and affiliated companies engaged in the petroleum business from 2001 until he retired in March 2013. Mr. Stillwell was a lawyer and Senior Partner at Baker Botts LLP in Houston, Texas from 1961 to 2001. He also served as a director of Mesa Petroleum Co. and Pioneer Natural Resources Company from 1969 to 2001. Mr. Stillwell’s background and experience provide him with extensive knowledge of the oil and natural gas industry as well as significant legal experience and important insights into corporate governance, executive compensation and board functions.

Corporate Governance

The Company, with the oversight of the Board of Directors and its committees, operates within a comprehensive plan of corporate governance for the purpose of defining independence, assigning responsibilities, setting high standards of professional and personal conduct and assuring compliance with such responsibilities and standards.

Director Nomination Policy

There have been no material changes to the procedures by which shareholders may recommend nominees to the Board of Directors.

Audit Committee of the Board of Directors

The audit committee of our Board of Directors recommends the appointment of our independent registered public accountants, reviews our internal accounting procedures and financial statements and consults with and reviews the services provided by our independent registered public accountants, including the results and scope of their audit. The audit committee is currently comprised of Messrs. Horton (chair), Stillwell and King, each of whom is independent within the meaning of applicable SEC and New York Stock Exchange (“NYSE”) standards. The Board of Directors has designated Mr. Horton as an audit committee financial expert, as currently defined under the SEC rules implementing the Sarbanes-Oxley Act of 2002. We believe that the composition and functioning of our audit committee complies with the requirements of the Exchange Act of 1934, as amended (the “Exchange Act”).

Other Committees of the Board of Directors

Our Board of Directors currently has an audit committee, a compensation committee, a nominating and corporate governance committee and a technical committee. The compensation committee is currently comprised of Messrs. Stillwell (chair), Horton and King. The nominating and corporate governance committee currently consists of Messrs. Stillwell (chair) and Horton. The technical committee is currently comprised of Mr. King.

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Family Relationships

There are no family relationships between any of our executive officers or directors.

Legal Proceedings

There have been no material legal proceedings requiring disclosure under the federal securities laws within the past ten years that are material to an evaluation of the ability or integrity of our directors or executive officers, except that, as previously disclosed, we voluntarily filed a petition under Chapter 11 of the Bankruptcy Code in January 2018, and at such time, each of Messrs. Hickey, Jameson and Farquharson served as an executive officer of the Company.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our officers and directors, and persons who own more than 10% of a registered class of our equity securities, to file reports of ownership and changes of ownership with the SEC. Our officers, directors and 10% shareholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms so filed.

Based solely on a review of copies of such forms received, we believe that, during the last fiscal year, all filing requirements under Section 16(a) applicable to our officers, directors and 10% shareholders were timely met.
 
Code of Business Conduct and Ethics

We have adopted Corporate Governance Guidelines, a Code of Business Conduct and Ethics, and a Code of Ethics for the Chief Executive Officer and Senior Financial Officers. Copies of the codes can be obtained free of charge from our website, www.excoresources.com, or by contacting us at EXCO Resources, Inc., 12377 Merit Drive, Suite 1700, Dallas, Texas 75251 to the attention of Secretary or by telephone at (214) 368-2084. We intend to post any amendments to, or waivers from, our Code of Ethics that apply to our Chief Executive Officer or Senior Financial Officers on our website at www.excoresources.com.

Item 11.     Executive Compensation

This Item 11 describes the compensation arrangements we have with our named executive officers as set forth under the rules of the SEC. For purposes of disclosure in this Form 10-K/A, the “Named Executive Officers” for the year ended December 31, 2018 include the following persons:

Harold L. Hickey, Chief Executive Officer and President and principal executive officer;
Harold H. Jameson, Vice President and Chief Operating Officer; and
Tyler S. Farquharson, Vice President, Chief Financial Officer and Treasurer and principal financial officer.

2018 AND 2017 SUMMARY COMPENSATION TABLE

Name and Principal Position
 
Year
 
Salary
($)
 
Bonus
($)(1)
 
Share Awards
($)(2)
 
Option Awards
($)
 
Non-Equity Incentive Plan Compensation
($) (3)
 
Nonqualified Deferred Compensation Earnings
($)
 
All Other Compensation
($)(4)
 
Total
($)
Harold L. Hickey
Chief Executive Officer and President
 
2018
 
$
750,000

 
$

 
$

 
$

 
$

 
$

 
$
11,000

 
$
761,000

 
2017
 
750,000

 
2,258,044

 
177,777

 

 
1,313,248

 

 
8,100

 
4,507,169

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Harold H. Jameson
Vice President and Chief Operating Officer
 
2018
 
425,000

 

 

 

 

 

 
11,000

 
436,000

 
2017
 
425,000

 
1,279,558

 
96,284

 

 
650,975

 

 
8,100

 
2,459,917

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tyler S. Farquharson (5)
Vice President, Chief Financial Officer and Treasurer
 
2018
 
385,000

 

 

 

 

 

 
11,000

 
396,000

 
2017
 
375,833

 
1,154,447

 
30,004

 

 
588,137

 

 
8,100

 
2,156,521

___________________________
(1)
Bonus column for 2017 includes retention bonuses and incentive payments made to each Named Executive Officer during 2017.
(2)
This column represents the aggregate grant date fair value of restricted shares, RSUs and/or PSUs issued to each Named Executive Officer in 2017 in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718-Compensation-Stock Compensation (“ASC 718”), with the exception that the amount shown assumes no forfeitures. Assumptions used in the calculation of these amounts are included

3


in “Note 2. Significant accounting policies - Equity-based compensation” and “Note 11. Equity-based and other incentive-based compensation” to our audited financial statements for the fiscal year ended December 31, 2018 included in the Form 10-K.
(3)
Non-Equity Incentive Plan Compensation column for 2017 includes payments made pursuant to the Key Employee Incentive Plan (the "KEIP”), which provided for incentive payments to our Named Executive Officers based on the achievement of quarterly performance goals during 2017. In 2018, the KEIP was amended to provide for potential incentive payments to our Named Executive Officers based on (i) the achievement of annual performance goals as of the end of 2018 and (ii) the confirmation of a plan of reorganization by the Court. Because a plan of reorganization has not yet been confirmed, no incentive payments under the KEIP have been deemed earned or payable for services in 2018.
(4)
The amounts shown in this column reflect matching contributions allocated by us to each of the Named Executive Officers pursuant to the EXCO Resources, Inc. 401(k) Plan in 2018 and 2017 as follows: Mr. Hickey-$11,000 for 2018 and $8,100 for 2017; Mr. Jameson-$11,000 for 2018 and $8,100 for 2017; and Mr. Farquharson-$11,000 for 2018 and $8,100 for 2017.
(5)
Mr. Farquharson became our Vice President, Chief Financial Officer and Treasurer on February 1, 2017 and in connection therewith his base salary was increased to $385,000.

2018 Fiscal Year Outstanding Equity Awards at Fiscal Year End

 
 
Option Awards (1)
 
Share Awards
Name
 
Grant Date
 
Number of Securities Underlying Unexercised Options
(#) Exercisable
 
Number of Securities Underlying Unexercised Options
(#) Unexercisable
 
Equity Incentive Plan Awards:
Number of Securities Underlying Unexercised Unearned Options
(#)
 
Option Exercise Price
($)
 
Option Expiration Date
 
Number of Shares or Units of Shares That Have Not Vested
(#)
 
Market Value of Shares or Units of Shares That Have Not Vested
($)(2)
 
Equity Incentive Plan Awards:
Number of Unearned Shares, Units or Other Rights That Have Not Vested
(#)
 
Equity Incentive Plan Awards:
Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested
($)(2)
Harold L. Hickey
 
12/1/2009
 
2,333

 

 

 
264.00

 
11/30/2019

 

 

 

 

 
12/7/2010
 
2,919

 

 

 
277.50

 
12/6/2020

 

 

 

 

 
8/13/2013
 
13,660

 

 

 
115.20

 
8/12/2023

 

 

 

 

 
7/1/2016
 

 

 

 

 

 

 

 
44,445

(3
)
889

Harold H. Jameson
 
12/1/2009
 
2,666

 

 

 
264.00

 
11/30/2019

 

 

 

 

 
12/7/2010
 
2,046

 

 

 
277.50

 
12/6/2020

 

 

 

 

 
8/13/2013
 
4,986

 

 

 
115.20

 
8/12/2023

 

 

 

 

 
7/1/2016
 

 

 

 

 

 

 

 
21,112

(3
)
422

Tyler S. Farquharson
 
12/1/2009
 
578

 

 

 
264.00

 
11/30/2019

 

 

 

 

 
12/1/2009
 
7

 

 

 
264.00

 
11/30/2019

 

 

 

 

 
12/7/2010
 
186

 

 

 
277.50

 
12/6/2020

 

 

 

 

 
11/21/2011
 
340

 

 

 
159.45

 
11/20/2021

 

 

 

 

 
8/13/2013
 
693

 

 

 
115.20

 
8/12/2023

 

 

 

 

 
7/1/2016
 

 

 

 

 

 

 

 
1,500

(3
)
30

___________________________
(1)
Pursuant to the terms of the stock option agreements that we entered into with the Named Executive Officer, these options are vested as to 25% of the shares subject to the option on the date of grant and vest an additional 25% on each of the next three anniversaries of the date of grant provided that the holder of the option remains employed with us on that date. These options become fully vested and exercisable, subject to their early termination as provided in the option agreements, immediately prior to a change of control.
(2)
Market value is based on a per share closing price of our common shares of $0.02 as reported by the OTC Markets as of December 31, 2018.
(3)
Unit amounts represent the threshold level achievement for performance-based PSUs, which equals 40% of the target number of PSUs granted on July 1, 2016 and is the most probable level of payout other than no award. Upon vesting, each unit will convert, at the sole election of the Company, into (i) a cash payment in an aggregate amount equal to the number of vested PSUs multiplied by the fair market value of a Common Share as of the vesting date, (ii) the number of whole common shares equal to the number of vested PSUs (up to a maximum of 133,334 shares), or (iii) a combination thereof. The actual number of units that will vest is between 0% and 150% of the target number of PSUs, with 25% of the PSUs vesting on July 1, 2017 and 75% of the PSUs vesting on July 1, 2019, in each case based on the Company’s achievement of TSR relative to the TSR achieved by a peer group established by the compensation committee. These PSUs were issued to the Named Executive Officer pursuant to the Incentive Plan and a PSU award agreement dated as of July 1, 2016 and are subject to forfeiture, accelerated vesting and other restrictions as more fully set forth in the Incentive Plan and the PSU award agreement.


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Narrative Disclosure to the Summary Compensation Table and Outstanding Equity Awards at Fiscal Year End

In connection with our review of strategic alternatives during 2017, the compensation committee of the Board of Directors determined that (i) normal annual and long-term incentive cycles are likely to be ineffective due to our ongoing strategic restructuring efforts and (ii) the use of equity compensation is currently ineffective and inefficient. As a result, the compensation committee and the Company restructured our incentive plans to retain employees and discontinued the grant of share-based compensation to officers and employees until the completion of the Chapter 11 Proceedings. As a result, there were no grants of share-based compensation during 2018, and we made only limited share-based compensation grants in 2017. The adoption of the KEIP and retention bonuses paid in 2017 were intended to replace all existing cash-based bonus and equity-based compensation programs. Our compensation committee did not make any material changes to our executive compensation programs during 2018, except for the amendments to the KEIP described above in the footnotes to the Summary Compensation Table.

401(k) Plan

All of our employees are eligible to participate in the EXCO Resources, Inc. 401(k) Plan. We matched 100% of employee contributions to the 401(k) plan up to a 4% limit during 2018 with vesting of Company matching contributions based on years of service with us. Effective January 1, 2019, we increased the matching limit from 4% to 5%.

Severance Plans

Change of Control Severance Plan

Our Fourth Amended and Restated EXCO Resources, Inc. Severance Plan (the “Change of Control Severance Plan”), provides for the payment of severance in the event the employee’s employment is terminated or there is an adverse change in the employee’s job or compensation, as more specifically described in the Change of Control Severance Plan, in each case within twelve months following a change of control. The Change of Control Severance Plan is administered by our compensation committee, which has the sole discretion to determine whether an employee’s termination of employment is eligible for payment of severance. All of our regular, full-time employees are eligible to participate in and receive benefits under the Change of Control Severance Plan.

A change of control is defined under the Change of Control Severance Plan as the occurrence of any of the following: (i) we are merged or consolidated into or with another entity, and as a result less than a majority of the combined voting power of the surviving entity is held by the holders of our voting shares prior to the merger; (ii) we sell or otherwise transfer all or substantially all of our assets to any person or entity if less than a majority of the combined voting power of such person or entity immediately after such sale or transfer is held by the holders of our voting shares prior to such sale or transfer; (iii) any person is or becomes the beneficial owner, directly or indirectly, of more than 50% of our total voting power; (iv) individuals who on the effective date of the Change of Control Severance Plan constituted our Board of Directors and their successors or other nominees that are appointed or otherwise approved by the Board of Directors then still in office, cease for any reason to constitute a majority of the Board of Directors; or (v) the adoption of a plan relating to the liquidation or dissolution of us. The definition of change of control specifically excludes an event in which any subsidiary of EXCO is spun off by means of a rights offering to EXCO’s shareholders or an underwritten public offering, or any combination thereof, even where less than a majority of the voting equity ownership is retained by EXCO.

A severance payment under the Change of Control Severance Plan will be made only if the employee fully executes a release form with the plan administrator to release and forever discharge us from any and all liability which the employee may have against us as a result of employment with or subsequent termination from us. Severance payment is equal to 1.25 times an employee’s annual base salary to be paid in cash in a lump sum 60 days following termination of employment, provided that we have timely received an executed release form.

Reduction in Force Severance Plan

In addition to the Change of Control Severance Plan, our EXCO Resources, Inc. Severance Plan (the “Reduction in Force Severance Plan”), provides benefits upon an employee’s involuntary termination as a result of a Reduction in Force (as defined the Reduction in Force Severance Plan). All of our regular, full-time employees are eligible to participate in and receive benefits under this plan.

A Reduction in Force is defined in the plan as an action in which the employment of a specified, designated or identified group of employees’ employment is terminated without the expectation of recall as part of a reduction in employee headcount

5


due to lack of work, reorganization of a business unit or operation, lack of funding, or other business reasons, in each case which is determined by the Company to be a Reduction in Force. The Company has the sole authority and discretion to designate those employees whose employment will be terminated as part of a Reduction in Force, and only those employees are eligible for benefits under the plan.

Severance payments under the plan are based on a schedule of the employee’s years of employment with the Company; provided, however, that in lieu of payments based on such schedule, payments to officers are equal to the lesser of: (i) 20 weeks of base pay or (ii) a specific monetary amount specified in the plan.

A severance payment will be made only if the employee fully executes a release form with the Company to release and forever discharge us from any and all liability which the employee may have against us, including those arising from the employee’s employment and termination of employment.

Director Compensation

The following table provides compensation information for the year ended December 31, 2018 for each non-employee member of our Board of Directors during 2018:

2018 FISCAL YEAR DIRECTOR COMPENSATION TABLE

Name
 
Fees Earned or Paid in Cash
($)
 
Share
Awards
($)
 
Option
Awards
($)
 
Non-Equity
Incentive Plan
Compensation
($)
 
Nonqualified Deferred Compensation Earnings
($)
 
All Other Compensation
($) (1)
 
Total
($)
Anthony R. Horton (2)
 
420,000

 

 

 

 

 
8,046

 
428,046

Randall E. King (3)
 
320,000

 

 

 

 

 

 
320,000

Robert L. Stillwell (4)
 
325,000

 

 

 

 

 

 
325,000

___________________________
(1)
Includes amounts reimbursed for expenses.
(2)
Includes fees for services on our audit committee, compensation committee and nominating and corporate governance committee. As of December 31, 2018, Mr. Horton did not hold any outstanding stock options or share awards.
(3)
Includes fees for services on our audit committee, compensation committee and technical committee. Mr. King became entitled to receive additional fees as a member of the technical committee beginning on April 1, 2018. As of December 31, 2018, Mr. King did not hold any outstanding stock options or share awards.
(4)
Includes fees for services on our audit committee, compensation committee and nominating and corporate governance committee. As of December 31, 2018, Mr. Stillwell held (i) an option to purchase 1,000 common shares granted on December 1, 2009, all of which have vested, (ii) an option to purchase 333 common shares granted on November 5, 2010, all of which have vested, (iii) an option to purchase 333 common shares granted on November 4, 2011, all of which have vested, and (iv) an option to purchase 333 common shares granted on November 1, 2013, all of which have vested. Mr. Stillwell also has the right to acquire 360 common shares granted pursuant to the Director Plan (as defined herein) as deferred compensation in lieu of cash for Mr. Stillwell’s service on our Board of Directors and committees that will be settled upon the satisfaction of certain criteria specified in the Director Plan.

Our compensation package for our non-employee directors consists of two components: (i) retainer fees, which, at the election of a non-employee director, may be paid in cash, our common shares or a combination of cash and common shares, and (ii) automatic annual lump-sum cash payments.

Retainer Fees and Director Plan.

Our non-employee directors earned an annual retainer of $40,000 in 2018. The chairs of our compensation committee and nominating and corporate governance committee were each entitled to receive an additional $10,000 annually in 2018 and the chair of the audit committee was entitled to receive an additional $50,000 annually in 2018. Each non-chair member of our compensation committee, nominating and corporate governance committee and audit committee earned an additional $5,000 in 2018. The members of the technical committee were entitled to receive $5,000 annually for 2018, and the chair of the technical committee was entitled to receive $10,000 annually for 2018. The chair of our audit committee was entitled to receive an additional $15,000 per month in connection with the expanded responsibilities of the audit committee as a result of the Company’s restructuring process. Each non-chair member of our audit committee was entitled to receive an additional $10,000 per month in connection with the expanded responsibilities of the audit committee as a result of the Company’s restructuring process. All directors, including our employee directors (if any), are reimbursed for reasonable out-of-pocket expenses incurred

6


in connection with their attendance at meetings of the Board of Directors and committee meetings. The Board of Directors has not made any changes to the director compensation plan for fiscal 2019.

The Amended and Restated 2007 Director Plan (as amended, the “Director Plan”) permits non-employee directors who receive fees for their service on the Board of Directors and its committees to make an election to receive their fees (i) entirely in cash, (ii) 50% in cash and 50% in our common shares or (iii) entirely in our common shares. All of the members of our Board of Directors elected to receive cash for their service during 2018. All director fees are paid on a quarterly basis.

The Director Plan also permits a non-employee director to defer the payment of his or her director fees. A director may defer the payment of director fees, whether payable in the form of cash or our common shares, to (i) a specified date, (ii) his or her termination of service, (iii) the occurrence of a change of control or (iv) the earlier of two or more of those events. This deferral satisfies the requirements of Section 409A of the Code.

Pursuant to the Director Plan, each of our non-employee directors is also entitled to receive, in addition to any other director fees, an annual director equity grant received as cash in the amount of $140,000. These payments were made on October 31, 2018. These annual lump-sum cash grants are made in addition to any retainer fees paid to our non-employee directors.

Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Equity Compensation Plan Information

The following table provides certain information as of December 31, 2018 with respect to our equity compensation plans under which our equity securities are authorized for issuance:

 
 
(a)
 
(b)
 
(c)
Plan Category
 
Number of securities to be issued upon exercise of outstanding options, warrants and rights
 
Weighted-average exercise price of outstanding options, warrants and rights
 
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
Equity compensation plans approved by security holders
 
79,694
 
$184.93
 
1,376,008
Equity compensation plans not approved by security holders
 
Not applicable
 
Not applicable
 
Not applicable
Total
 
79,694
 
$184.93
 
1,376,008

Security Ownership of Certain Beneficial Owners and Management

The following tables set forth as of April 25, 2019, the number and percentage of our common shares beneficially owned by (i) each person known by us to beneficially own more than 5% of our outstanding common shares, (ii) each of our directors and each of our Named Executive Officers and (iii) all of our directors and executive officers as a group.

Beneficial ownership is determined in accordance with the rules of the SEC. Beneficial ownership information is based on the most recent Forms 3, 4 and 5 and Schedules 13D and 13G filings with the SEC and reports made directly to us. In computing the number of common shares beneficially owned by a person and the beneficial ownership percentage of that person, common shares subject to options or warrants held by that person that are currently exercisable or exercisable within 60 days of April 25, 2019 , are deemed outstanding, but are not deemed outstanding for computing the percentage ownership of any other person. Percentage of beneficial ownership of our common shares is based upon 21,584,514 common shares outstanding as of April 25, 2019 . To our knowledge, except as set forth in the footnotes to this table and subject to applicable community property laws, each person named in the table has sole voting and investment power with respect to the common shares set forth opposite such person’s name. Unless otherwise indicated below, the address for each individual listed below is c/o EXCO Resources, Inc., 12377 Merit Drive, Suite 1700, Dallas, Texas 75251.


7


Principal Shareholders

 
 
Common Share
Beneficial Ownership
Beneficial owner
 
Shares
 
% of Class
Holders of more than 5%
 
 
 
 
Oaktree Capital Group Holdings GP, LLC (1)
333 S. Grand Avenue, 28 th  Floor
Los Angeles, CA 90071
 
4,889,121

 
20.0
%
Fairfax Financial Holdings Limited (2)
95 Wellington Street West
Suite 800 Toronto, Ontario M5J 2N7
 
3,525,303

 
16.3
%
Energy Strategic Advisory Services LLC (3)
200 Crescent Ct., Ste. 1900
Dallas, TX 75201
 
6,433,630

 
24.2
%
___________________________
(1)
Based on the information contained in the Schedule 13D/A filed with the SEC on March 17, 2017 and the Company’s records and includes 2,831,542 common shares underlying 2017 Warrants.
(2)
Based solely on the information contained in the Schedule 13G/A filed with the SEC on February 14, 2018.
(3)
Based solely on the information contained in the Schedule 13D/A filed with the SEC on November 13, 2017 and includes 5,017,922 common shares underlying 2017 Warrants.

Executive Officers and Directors

Beneficial owner
 
Shares(1)
 
Options exercisable within 60 days
 
Percentage of shares outstanding
Named Executive Officers
 
 
 
 
 
 
Harold L. Hickey
 
95,682

(2)
18,912

 
*
Harold H. Jameson
 
38,886

(3)
9,698

 
*
Tyler S. Farquharson
 
4,867

(4)
1,804

 
*
Directors
 
 
 
 
 
 
Anthony R. Horton
 

 

 
*
Randall E. King
 

 

 
*
Robert L. Stillwell
 
22,237

(5)
1,999

 
*
All executive officers and directors as a group (6 persons)
 
161,672

 
32,413

 
*
*Less than 1%
___________________________
(1)
Includes the options exercisable within 60 days of April 25, 2019 shown in the options column.
(2)
Includes (a) 1,387 common shares held in a 401(k) account and (b) the vested portion of (i) an option to purchase 2,333 common shares granted on December 1, 2009, all of which have vested, (ii) an option to purchase 2,919 common shares granted on December 7, 2010, all of which have vested, and (iii) an option to purchase 13,660 common shares granted on August 13, 2013, all of which have vested. Excludes restricted stock units with performance-based vesting criteria because the satisfaction of such vesting criteria is deemed to be outside of the holder’s control.
(3)
Includes (a) 908 common shares held in a 401(k) account and (b) the vested portion of (i) an option to purchase 2,666 common shares granted on December 1, 2009, all of which have vested, (ii) an option to purchase 2,046 common shares granted on December 7, 2010, all of which have vested, and (iii) an option to purchase 4,986 common shares granted on August 13, 2013, all of which have vested. Excludes restricted stock units with performance-based vesting criteria because the satisfaction of such vesting criteria is deemed to be outside of the holder’s control.
(4)
Includes (a) 529 common shares held in a 401(k) account and (b) the vested portion of (i) an option to purchase 578 common shares granted on December 1, 2009, all of which have vested, (iii) an option to purchase 7 common shares granted on December 1, 2009, all of which have vested, (iv) an option to purchase 186 common shares granted on December 7, 2010, all of which have vested, (v) an option to purchase 340 common shares granted on November 21, 2011, all of which have vested, and (vi) an option to purchase 693 common shares granted on August 13, 2013, all of which have vested. Excludes restricted stock units with performance-based vesting criteria because the satisfaction of such vesting criteria is deemed to be outside of the holder’s control.
(5)
Includes the right to acquire 360 common shares granted pursuant to the Director Plan as deferred compensation in lieu of cash for Mr. Stillwell’s service on our Board of Directors and committees. These shares vested immediately and are to be settled in our common shares upon the earlier to occur of (i) as soon as administratively feasible after the date on which Mr. Stillwell incurs a “Termination of Service” under the Director Plan and (ii) a “Change in Control” under the Director Plan. Also includes the vested portion of (i) an option to purchase 1,000 common shares granted on December 1, 2009, all of which have vested, (ii) an option to purchase 333 common shares granted on November 5, 2010, all of which have vested, (iii) an option to purchase 333 common shares granted on November 4, 2011, all of which have vested, (iv) an option to purchase 333 common shares granted on November 1, 2013, all of which have vested.


8


Item 13.    Certain Relationships and Related Transactions and Director Independence

Fairfax Second Lien Term Loan and Exchange Second Lien Term Loan

On October 19, 2015, as part of a series of transactions by which we restructured a portion of our indebtedness, we entered into a 12.5% senior secured second lien term loan with certain affiliates of Fairfax in the aggregate principal amount of $300.0 million (the “Fairfax Term Loan”) and a 12.5% senior secured second lien term loan with certain unsecured noteholders in the aggregate principal amount of $400.0 million (“Exchange Term Loan,” and together with the Fairfax Term Loan, the “Second Lien Term Loans”). As further discussed below, the Fairfax Term Loan was deemed repaid in full in connection with the Second Lien Term Loan Exchange (as defined below).

In the first quarter of 2016, ESAS entered into an agreement with an unaffiliated lender under the Exchange Term Loan, pursuant to which the lender made periodic payments to ESAS or received periodic payments from ESAS based on changes in the market value of the Exchange Term Loan, and the lender made periodic payments to ESAS based on the interest rate of the Exchange Term Loan. In January 2017, ESAS irrevocably purchased and assumed all the rights and obligations from this unaffiliated lender and became a direct lender under a portion of the Exchange Term Loan. As further discussed below, the portion of the Exchange Term Loan held by ESAS was exchanged for 1.75 Lien Term Loans (as defined below) in connection with the Second Lien Term Loan Exchange (as defined below).

ESAS Services and Investment Agreement

On March 31, 2015, we entered into a services and investment agreement with ESAS (the “ESAS Services and Investment Agreement”). As consideration for the services provided under the agreement, we agreed to pay ESAS a monthly fee of $300,000 and an annual incentive payment of up to $2.4 million per year that was based on our common share price achieving certain performance hurdles as compared to a peer group. As an additional performance incentive under the services and investment agreement, EXCO issued ESAS warrants in four tranches to purchase an aggregate of 5,333,335 common shares, subject to the satisfaction of certain performance criteria, at exercise prices ranging from $41.25 per share to $150.00 per share (the “ESAS Warrants”).

On November 9, 2017, we entered into an agreement with ESAS pursuant to which, among other things: (i) the ESAS Services and Investment Agreement was suspended such that, during the suspension period and subject to the terms and conditions of the agreement: (a) ESAS is not required to provide any services to us, (b) we are not required to make any payments to ESAS with respect to the suspension period and (c) ESAS does not have the right to nominate a member to the Company’s Board of Directors; and (ii) the ESAS Warrants were forfeited and canceled and we have no further obligations under the ESAS Warrants. The payments to ESAS as part of the services and investment agreement were $3.4 million during 2017.

1.5 Lien Note Offering

On March 15, 2017, we closed the offering of $300.0 million in aggregate principal amount of senior secured 1.5 lien notes due March 20, 2022 (the “1.5 Lien Notes”) in a private offering exempt from the registration requirements of the Securities Act. The 1.5 Lien Notes bear interest at a cash interest rate of 8% per annum. The proceeds from the issuance of the 1.5 Lien Notes were primarily utilized to repay all of the outstanding indebtedness under our former credit agreement (the “EXCO Resources Credit Agreement”), transaction fees and expenses and for general corporate purposes. On February 22, 2018, the Court approved our ability to make adequate protection payments for interest on the DIP Credit Agreement (as defined below) and the 1.5 Lien Notes.

1.75 Lien Term Loans and Second Lien Term Loan Exchange

On March 15, 2017, in connection with the offering of the 1.5 Lien Notes, we exchanged an aggregate of $682.8 million of the Second Lien Term Loans for a like amount of senior secured 1.75 lien term loans (the “1.75 Lien Term Loans”) due October 26, 2020 (the “Second Lien Term Loan Exchange”). The terms of the indenture governing the 1.5 Lien Notes and the credit agreement governing the 1.75 Lien Term Loans allow for interest payments in cash, common shares (“PIK Shares”) or, in certain circumstances, additional indebtedness (such interest payments in common shares, or additional indebtedness, “PIK Payments”), subject to certain restrictions and limitations.

In connection with the issuance of the 1.5 Lien Notes, on March 15, 2017, we issued warrants to the investors of 1.5 Lien Notes representing the right to purchase an aggregate of up to 21,505,383 common shares (assuming a cash exercise) at an exercise price of $13.95 per share (the “Financing Warrants”), and warrants representing the right to purchase an aggregate of

9


up to 431,433 common shares (assuming a cash exercise) at an exercise price of $0.01 per share (the “Commitment Fee Warrants”). In addition, certain exchanging holders of the Second Lien Term Loans received warrants representing the right to purchase an aggregate of up to 1,325,546 common shares (assuming a cash exercise) at an exercise price of $0.01 per share (the “Amendment Fee Warrants”, and together with the Commitment Fee Warrants and Financing Warrants, the “2017 Warrants”).

Certain related parties of our former directors, directly or indirectly, participated in the offering of the 1.5 Lien Notes and the Second Lien Term Loan Exchange, and certain of our former directors may have had direct or indirect interests in holdings of the 1.5 Lien Notes, 1.75 Lien Term Loans and/or the 2017 Warrants (collectively, the “2017 Financing Transactions”), including:

Samuel Mitchell, a former member of our Board of Directors, serves as a Managing Director of Hamblin Watsa Investment Counsel Ltd. (“Hamblin Watsa”), the investment manager of Fairfax and certain affiliates thereof. Samuel Mitchell was a member of our Board of Directors until his resignation on September 20, 2017. On September 20, 2017, certain affiliates of Fairfax received $8.5 million and $15.8 million of PIK Payments in the form of additional 1.5 Lien Notes and 1.75 Lien Term Loans, respectively, resulting in Fairfax holding, directly or indirectly, $159.5 million in aggregate principal amount of 1.5 Lien Notes and $427.9 million in aggregate principal amount of 1.75 Lien Term Loans as of December 31, 2017. During the year ended December 31, 2017, Fairfax also received $10.6 million of cash interest payments on the Fairfax Term Loan and the Exchange Term Loan and 1,657,330 PIK Shares under the 1.75 Lien Term Loans. As a result of the commencement Chapter 11 Proceedings, any efforts to enforce our obligations under our debt instruments are automatically stayed. Accordingly, we did not make any principal or interest payments on the Fairfax Term Loan, Exchange Term Loan or 1.75 Lien Term Loans during the year ended December 31, 2018. However, due to the Court approving our ability to make adequate protection payments for interest on the 1.5 Lien Notes in February 2018, we paid Fairfax $12.8 million of cash interest on the 1.5 Lien Notes during 2018. Fairfax was also granted with the right, so long as they remain the holder any Financing Warrants or Commitment Fee Warrants, to purchase all or any portion of any common shares that the Company propose to issue in an offering for cash (other than shares to be issued to directors, officers, employees and consultants in connection with their service as such), pro rata in proportion to their ownership stake in the Company, based on the amount of common shares they would own as if their respective warrants had been exercised immediately prior to such offering (such rights, the “Preemptive Rights”). In addition, Fairfax held Financing Warrants representing the right to purchase an aggregate of 10,824,377 common shares at an exercise price equal to $13.95 per share, Commitment Fee Warrants representing the right to purchase an aggregate of 431,433 common shares at an exercise price equal to $0.01 per share and Amendment Fee Warrants representing the right to purchase an aggregate of 1,294,143 common shares at an exercise price equal to $0.01 per share. On January 16, 2018, affiliates of Fairfax surrendered all of their rights in the 2017 Warrants.
John Wilder, a former member of our Board of Directors, serves as the sole manager and has the power to direct the affairs of Bluescape Resources Company LLC (“Bluescape”), which serves as the general partner of and directs Bluescape Fund, the owner of ESAS. On September 20, 2017, ESAS received $4.0 million and $1.8 million of PIK Payments in the form of additional 1.5 Lien Notes and 1.75 Lien Term Loans, respectively, resulting in ESAS holding $74.0 million in aggregate principal amount of 1.5 Lien Notes and $49.7 million in aggregate principal amount of 1.75 Lien Term Loans as of December 31, 2017. During the year ended December 31, 2017, ESAS also received $1.2 million of cash interest payments on the Exchange Term Loan and 192,609 PIK Shares under the 1.75 Lien Term Loans. As a result of the commencement Chapter 11 Proceedings, any efforts to enforce our obligations under our debt instruments are automatically stayed. Accordingly, we did not make any principal or interest payments on the Exchange Term Loan or 1.75 Lien Term Loans during the year ended December 31, 2018. However, due to the Court approving our ability to make adequate protection payments for interest on the 1.5 Lien Notes in February 2018, we paid ESAS $5.9 million of cash interest on the 1.5 Lien Notes during 2018. In addition, ESAS holds Financing Warrants representing the right to purchase an aggregate of 5,017,922 common shares at an exercise price equal to $13.95 per share. ESAS received a consent fee of $1.6 million in cash for exchanging its interest in the Second Lien Term Loans, and a commitment fee of $2.1 million in cash in connection with the issuance of the 1.5 Lien Notes. ESAS was also granted the Preemptive Rights in connection with the issuance of the 1.5 Lien Notes.
B. James Ford, a former member of our Board of Directors, serves as a Senior Advisor of Oaktree Capital Management, LP (“Oaktree”). On September 20, 2017, Oaktree received $2.2 million of PIK Payments in the form of additional 1.5 Lien Notes resulting in certain affiliates of Oaktree holding, directly or indirectly, $41.7 million in aggregate principal amount of 1.5 Lien Notes as of December 31, 2017. As a result of the commencement Chapter 11 Proceedings, any efforts to enforce our obligations under our debt instruments are automatically stayed. However, due to the Court approving our ability to make adequate protection payments for interest on the 1.5 Lien Notes in February 2018, we paid Oaktree $6.7 million of cash interest on the 1.5 Lien Notes during 2018. In

10


addition, certain affiliates of Oaktree hold Financing Warrants representing the right to purchase an aggregate of 2,831,542 common shares at an exercise price equal to $13.95 per share. Oaktree also received a commitment fee of $1.2 million in cash in connection with the issuance of the 1.5 Lien Notes. Oaktree affiliates were also granted the Preemptive Rights in connection with the issuance of the 1.5 Lien Notes.

DIP Credit Agreement

On January 22, 2018, we closed a Debtor-in-Possession Credit Agreement (the “DIP Credit Agreement”) with lenders including affiliates of Fairfax, Bluescape and JPMorgan Chase Bank, N.A. (collectively, the “DIP Lenders”). The DIP Credit Agreement includes a senior secured debtor-in-possession revolving credit facility in an aggregate principal amount of $125.0 million (“Revolver A Facility”) and a senior secured debtor-in-possession revolving credit facility in an aggregate principal amount of $125.0 million (“Revolver B Facility”, and together with the Revolver A Facility, the “DIP Facilities”). The proceeds from the DIP Facilities were used to refinance all obligations outstanding under the EXCO Resources Credit Agreement and will provide additional liquidity to fund our operations during the Chapter 11 process.

Forbearance Agreements

Due to liquidity constraints and restrictions and limitations on our ability to pay interest in cash, common shares or additional indebtedness, we did not make our interest payment on the 1.75 Lien Term Loans that was due on December 20, 2017 or the interest payment on the Second Lien Term Loans that was due on December 26, 2017. In anticipation of certain events of default related to compliance with financial covenants and failure to pay interest on certain debt instruments, we entered into agreements with certain holders of the indebtedness under the EXCO Resources Credit Agreement, 1.5 Lien Notes, and 1.75 Lien Term Loans to forbear from exercising their rights and remedies as a result of an event of default under such debt instruments until January 15, 2018.

Procedures for Approval of Related Party Transactions

In accordance with our audit committee charter, our audit committee is responsible for reviewing and pre-approving the terms and conditions of all related party transactions that are required to be disclosed under Item 404 of Regulation S-K, unless the audit committee deems it appropriate to diverge from this responsibility. Our audit committee determined that it was appropriate for a special committee of our Board of Directors to pre-approve the transactions that described above occurred during 2017, and the special committee pre-approved the 2017 Financing Transactions. Following the resignation of certain members of our Board of Directors during 2017, our Board of Directors was composed entirely of the same three independent directors that comprise our audit committee. Therefore, our Board of Directors approved the DIP Credit Agreement and the Forbearance Agreements without a separate pre-approval from our audit committee.

Director Independence

Our common shares are currently quoted over-the-counter under the symbol “XCOOQ”. Prior to December 27, 2017, our common shares were traded on the NYSE.

Even though our common shares are no longer listed on the NYSE, our Board of Directors continues to refer to the director independence standards adopted by the NYSE, as well as the SEC’s additional standards for audit committee members, in making determinations of independence. The Board of Directors has affirmatively determined that all of our current directors are independent under the applicable NYSE and SEC standards. In determining that our directors are independent, the Board of Directors considered the transactions, relationships and arrangements described in our prior proxy statements and in this Form 10-K/A under Item 13, “Certain Relationships and Related Transactions and Director Independence.”


11


Item 14.     Principal Accountant Fees and Services

The Company’s independent registered public accounting firm for the year ended December 31, 2018 was KPMG LLP.

Fees to Independent Registered Public Accounting Firm

Aggregate fees for professional services provided to us by our principal accountant, KPMG LLP, for the years ended December 31, 2018 and 2017 were as follows:

 
 
 
2018
 
2017
 
 
(in thousands)
Audit Fees (1)
 
$
1,000

 
$
1,177

Audit-Related Fees (2)
 
300

 

Tax Fees (3)
 
168

 
174

All Other Fees (4)
 

 

Total
 
$
1,468

 
$
1,351

___________________________
(1)
Fees for audit services include fees associated with the annual audit, the reviews of EXCO’s quarterly reports on Form 10-Q and Sarbanes-Oxley compliance test work.
(2)
Audit-related fees principally include costs incurred related to accounting consultations related to generally accepted accounting principles and the application of generally accepted accounting principles to proposed transactions.
(3)
Tax fees include tax compliance and tax planning.
(4)
Include fees for services provided in connection with our restructuring process.

In considering the nature of the services provided by KPMG LLP, the audit committee determined that such services are compatible with the provision of independent audit services. The audit committee discussed these services with KPMG LLP and our management to determine that they are permitted under the rules and regulations concerning auditor independence promulgated by the SEC to implement the Sarbanes-Oxley Act of 2002, as well as the American Institute of Certified Public Accountants.

Pre-Approval Policies and Procedures

The audit committee has adopted a policy that requires advance approval of all audit services and non-audit services performed by the independent registered public accounting firm or other public accounting firms. Audit services approved by the audit committee within the scope of the engagement of the independent registered public accounting firm are deemed to have been pre-approved. The policy further provides that pre-approval of non-audit services by the independent registered public accounting firm will not be required if:

the aggregate amount of all such non-audit services provided by the independent registered public accounting firm to us does not constitute more than 5% of the total amount of revenues paid by us to the independent auditor during that fiscal year;
such non-audit services were not recognized by us at the time of the independent registered public accounting firm’s engagement to be non-audit services; and
such non-audit services are promptly brought to the attention of the audit committee and approved by the audit committee prior to the completion of the audit.

The audit committee may delegate to one or more members of the audit committee the authority to grant pre-approval of non-audit services provided that such member or members reports any decision to the audit committee at its next scheduled meeting.

The audit committee pre-approved all of the aggregate audit fees, audit-related fees, tax fees and other fees set forth in the table above.


12


PART IV

Item 15.     Exhibits and Financial Statement Schedules
(a)(1)    Financial Statements
See Part II, Item 8. Financial Statements and Supplementary Data of the Annual Report on Form 10-K.
(a)(2)    Financial Statement Schedule
None.
(a)(3)     Listing of Exhibits
See "Index to Exhibits" below.

INDEX TO EXHIBITS
Exhibit
Number
 
Description of Exhibits
 
 
 
3.1
 
 
 
 
3.2
 
 
 
 
4.1
 
 
 
 
4.2
 
 
 
 
4.3
 
 
 
 
4.4
 
 
 
 
4.5
 
 
 
 
4.6
 
 
 
 
4.7
 
 
 
 
4.8
 
 
 
 

13


4.9
 
 
 
 
4.10
 
 
 
 
4.11
 
 
 
 
4.12
 
 
 
 
4.13
 
 
 
 
4.14
 
 
 
 
4.15
 
 
 
 
4.16
 
 
 
 
4.17
 
 
 
 
4.18
 
 
 
 
4.19
 
 
 
 
4.20
 
 
 
 
4.21
 
 
 
 
4.22
 
 
 
 

14


10.1
 
 
 
 
10.2
 
 
 
 
10.3
 
 
 
 
10.4
 
 
 
 
10.5
 
 
 
 
10.6
 
 
 
 
10.7
 
 
 
 
10.8
 
 
 
 
10.9
 
 
 
 
10.10
 
 
 
 
10.11
 
 
 
 
10.12
 
 
 
 
10.13
 
 
 
 
10.14
 
 
 
 
10.15
 
 
 
 
10.16
 

15


 
 
 
10.17
 
 
 
 
10.18
 
 
 
 
10.19
 
 
 
 
10.20
 
 
 
 
10.21
 
 
 
 
10.22
 
 
 
 
10.23
 
 
 
 
10.24
 
 
 
 
10.25
 
 
 
 
10.26
 
 
 
 
10.27
 
 
 
 
10.28
 
 
 
 
10.29
 
 
 
 
10.30
 
 
 
 

16


10.31
 
 
 
 
10.32
 
 
 
 
10.33
 
 
 
 
10.34
 
 
 
 
10.35
 
 
 
 
10.36
 
 
 
 
10.37
 
 
 
 
10.38
 
 
 
 
10.39
 
 
 
 
10.40
 
 
 
 
10.41
 
 
 
 
10.42
 
 
 
 
10.43
 
 
 
 

17


10.44
 
 
 
 
10.45
 
 
 
 
10.46
 
 
 
 
10.47
 
 
 
 
10.48
 
 
 
 
10.49
 
 
 
 
10.50
 
 
 
 
10.51
 
 
 
 
10.52
 
 
 
 
10.53
 
 
 
 
10.54
 
 
 
 
10.55
 
 
 
 

18


10.56
 
 
 
 
10.57
 
 
 
 
10.58
 
 
 
 
10.59
 
 
 
 
10.60
 
 
 
 
10.61
 
 
 
 
10.62
 
 
 
 
10.63
 
 
 
 
10.64
 
 
 
 
10.65
 
 
 
 
10.66
 
 
 
 
10.67
 
 
 
 
10.68
 
 
 
 

19


10.69
 
 
 
 
10.70
 
 
 
 
10.71
 
 
 
 
10.72
 
 
 
 
10.73
 
 
 
 
10.74
 
 
 
 
21.1
 
 
 
 
31.1
 
 
 
 
31.2
 
 
 
 
31.3
 
 
 
 
31.4
 
 
 
 
32.1
 
 
 
 
99.1
 
 
 
 
99.2
 
 
 
 
101.INS
 
XBRL Instance Document.
 
 
 
101.SCH
 
XBRL Taxonomy Extension Schema Document.

20


 
 
 
101.CAL
 
XBRL Taxonomy Calculation Linkbase Document.
 
 
 
101.DEF
 
XBRL Taxonomy Definition Linkbase Document.
 
 
 
101.LAB
 
XBRL Taxonomy Label Linkbase Document.
 
 
 
101.PRE
 
XBRL Taxonomy Presentation Linkbase Document.
 
 
 
*
 
These exhibits are management contracts.

(b)    Exhibits
See Item 15 (a)(3) above.
(c)    Financial Statement Schedules
None.

21


SIGNATURES
    
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

        
Date:
April 30, 2019
 
EXCO RESOURCES, INC.
 
 
 
(Registrant)
 
 
 
 
 
 
 
/s/ Tyler S. Farquharson
 
 
 
Tyler S. Farquharson
 
 
 
Vice President, Chief Financial Officer and Treasurer
 
 
 
 
 
 
 
 
 
 
 
 

22


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