SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or
Rule 14a-12
XCL LTD.
(Name of Registrant as Specified in Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction
applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth
the amount on which the filing fee is calculated and
state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[X] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided
by Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was p aid previously. Identify the
previous filing by registration statement number, or the
form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
XCL LTD.
DEAR SHAREHOLDER:
You are cordially invited to attend the Annual Meeting
of Shareholders of XCL Ltd. to be held at 10:00 a.m.,
Central Daylight Savings Time, on Monday, July 1, 1996, in the
Heymann Ballroom of the Petroleum Club of Lafayette, located
at 111 Heymann Boulevard, Lafayette, Louisiana 70503.
The attached materials include the Notice of Annual
Meeting of Shareholders and the Proxy Statement, which
contains information concerning the meeting, the nominees for
election as members of the Board of Directors, and other
relevant matters.
Management will report on the Company's activities
and future plans and prospects of the Company during the last
fiscal year and future plans and prospects of the Company,
and shareholders will have an opportunity to ask questions about
its operations and prospects.
Shareholder interest in the affairs of the Company
is welcomed and encouraged, and it is requested that you
please complete, sign, date, and promptly return your proxy
in the enclosed envelope. Such action will not limit your right
to vote in person if you attend the meeting in person, but will
assure your representation if you cannot attend.
Sincerely,
MARSDEN W. MILLER, JR.
Chairman of the Board
and Chief Executive Officer
May 28, 1996
<PAGE>
XCL LTD.
(a Delaware corporation)
110 Rue Jean Lafitte
Lafayette, Louisiana 70508
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held On July 1, 1996
TO OUR SHAREHOLDERS:
The Annual Meeting of Shareholders (the "Meeting") of
XCL Ltd. (the "Company") will be held in the Heymann Ballroom of
the Petroleum Club of Lafayette, located at 111 Heymann
Boulevard, Lafayette, Louisiana 70503, on July 1, 1996 at
10:00 a.m., Central Daylight Savings Time, to consider and take
action on the following matters:
1. The election of two Class III directors for three-year
terms, each to hold office until the 1999 Annual
Meeting of Shareholders or until a successor shall have
been elected and shall have qualified;
2. To amend the Company's Certificate of Incorporation to
increase the number of authorized shares of Common
Stock, par value $.01 per share, from 350,000,000
shares to 500,000,000 shares, and authorized shares of
Preferred Stock, par value $1.00 per share, from
1,200,000 shares to 2,400,000 shares; and
3. The transaction of such other business as may properly
come before the Meeting or any adjournments thereof.
Only shareholders of record at the close of business
on Friday, May 3, 1996 are entitled to notice of and to vote at
the Meeting.
YOUR PROXY IS IMPORTANT TO ASSURE A QUORUM AT THE
MEETING. WHETHER OR NOT YOU EXPECT TO BE PERSONALLY PRESENT
AT THE MEETING, PLEASE BE SURE THAT THE ENCLOSED PROXY IS
PROPERLY COMPLETED, DATED, SIGNED AND RETURNED WITHOUT DELAY
IN THE ENCLOSED ENVELOPE.
BY ORDER OF THE BOARD OF DIRECTORS,
DAVID A. MELMAN
Secretary
May 28, 1996
<PAGE>
This document is important and requires your
immediate attention. If you are in any doubt as to the action
you should take, you should consult your stockbroker, bank
manager, solicitor, accountant or other professional advisor
immediately.
If you have sold all of your shares of XCL Ltd. after May 3,
1996, the record date of the Meeting, you should hand this
document and accompanying form of proxy to the purchaser or to
the agent through whom the sale was effected for transmission to
the purchaser.
XCL LTD.
(Incorporated with limited liability in the United States of
America under the laws of the State of Delaware)
May 28, 1996
Directors: Principal Executive Office:
- --------- --------------------------
M.W. Miller, Jr.* (Chairman 110 Rue Jean Lafitte
and Chief Executive Officer) Lafayette, Louisiana 70508
J.T. Chandler* USA
D.A. Melman*
E. McIlhenny, Jr.*
F. Hofheinz*
A.W. Hummel, Jr.*
M. Palliser
F.J. Reinhardt, Jr.*
* U.S. Citizen
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
Solicitation and Voting of Proxies
- ----------------------------------
This Proxy Statement is furnished in connection
with the solicitation of proxies on behalf of the Board of
Directors of XCL Ltd. (the "Company") to be voted at the Annual
Meeting of Shareholders (the "Meeting") to be held in the
Heymann Ballroom of the Petroleum Club of Lafayette, located
at 111 Heymann Boulevard, Lafayette, Louisiana, on Monday,
July 1, 1996, at 10:00 a.m., Central Daylight Savings Time, and
at any adjournment thereof. The approximate date on which this
Proxy Statement and the enclosed form of proxies are first
being sent or given to shareholders of record is May 28, 1996.
The Board of Directors of the Company has fixed the
close of business on May 3, 1996 as the record date for the
determination of holders of shares of outstanding capital stock
entitled to notice of and to vote at the Meeting. On May 3,
1996, there were outstanding: 266,040,305 shares of common
stock, $.01 par value ("Common Stock"), the holders of which
will be entitled to cast one vote per share on each matter
submitted to a vote at the Meeting; 599,244 shares of Series
A, Cumulative Convertible Preferred Stock, $1.00 par value
("Series A Preferred Stock"), the holders of which will be
entitled to twenty-one (21) votes per share on each matter
submitted to a vote at the Meeting; and 44,436 shares of Series
B, Cumulative Preferred Stock, $1.00 par value ("Series B
Preferred Stock"), the holders of which will be entitled to
fifty (50) votes per share on each matter submitted to a vote
at the Meeting. The presence, in person or by proxy, of the
holders of issued and outstanding shares of capital stock
entitled to cast an aggregate of 140,423,116 votes at the Meeting
will constitute a quorum for the transaction of business.
Proxies in the accompanying forms which are
properly completed, signed, dated and returned to the Company
and not revoked will be voted in accordance with instructions
contained therein. Shareholders are urged to specify their
choices by marking the appropriate boxes on the enclosed proxy
card; if no choice has been specified, the shares will
be voted as recommended by the Board of Directors. Accordingly,
proxies will be voted "FOR" Proposals 1 and 2 set forth in the
accompanying forms of proxy.
Shareholders have 3 choices as to their vote on
Proposal 2 to be voted upon at the Meeting in addition to the
election of directors. Shareholders may vote "FOR" such
Proposal or vote "AGAINST" such Proposal or "ABSTAIN" from
voting by checking the appropriate box. Abstentions and broker
non-votes (matters of a non-routine nature as to which brokers
holding shares in street name have received no instructions
from their clients and, accordingly, do not vote) on Proposal
2 will have the effect of a negative vote since the amendment
of the Certificate of Incorporation requires the approval
of a majority of the outstanding shares of Common Stock.
Abstentions and broker non votes are counted for purposes of
determining the presence or absence of a quorum for the
transaction of business. Abstentions are counted in
tabulations of the votes cast on proposals presented to
shareholders, whereas broker non-votes are not counted for
purposes of determining whether a proposal has been approved.
The Board of Directors hopes that shareholders will exercise
their right to vote rather than abstaining from voting. It is
necessary that proxies be completed, signed, dated and
returned for all such shares to be voted at the Meeting.
Each shareholder who executes the enclosed proxy may
revoke it at any time prior to its being exercised by delivering
written notice to the Secretary of the Company. Mere attendance
at the Meeting will not revoke the proxy, but a shareholder
present at the Meeting, upon notice to the Secretary, may
revoke such proxy and vote in person.
Expenses of Solicitation
- ------------------------
The cost of soliciting proxies will be borne by the Company,
including expenses incurred in connection with the preparation
and mailing of this Proxy Statement and all documents which now
accompany or may hereafter supplement it. The solicitations will
be made in person and by mail. The Company will supply brokers or
persons holding shares of record in their names or in the names
of their nominees for other persons, as beneficial owners, with
such additional copies of proxies and Proxy Statements as may
reasonably be requested in order for such record holders to send
one copy to each beneficial owner, and will, upon request of such
record holders, reimburse them for their reasonable expenses in
mailing such materials.
The Company has retained the services of Chemical
Mellon Shareholder Services to solicit proxies on behalf of the
Company. Services to be performed under the agreement will
include consultation with respect to planning and organizing the
Meeting, search and distribution of materials, and solicitation
of proxies from brokers, banks, nominees and other
institutional holders. The fee for this solicitation service is
$4,500 and will be paid by the Company, as well as
reimbursement of out-of-pocket expenses.
Further, certain directors, officers and employees of
the Company and its financial advisors, not especially employed
for this purpose, may solicit proxies, without
additional remuneration therefor, by mail, telephone, telegraph
or personal interview.
Security Ownership of Management
- --------------------------------
The following table sets forth information concerning
the shares of the Company's Common Stock owned beneficially by
each director and nominee for director of the Company and
all directors and officers as a group as of April 30, 1996. As
of that date there were 266,040,305 shares of Common Stock
issued and outstanding. The mailing address for all such
individuals is XCL Ltd., 110 Rue Jean Lafitte, Lafayette,
Louisiana 70508.
Common Stock
----------------------------------
Percent
Name of BeneficialOwner Number of Shares of Class
- ----------------------- -------------------- --------
Marsden W. Miller, Jr. 10,648,799 (1)(2)(3) 3.89
John T. Chandler 3,324,177 (1)(2)(3) 1.24
David A. Melman 2,377,742 (2)(3) 0.89
Edmund McIlhenny, Jr. 631,040 (2)(4) 0.24
Fred Hofheinz 100,000 (2) 0.04
Arthur W. Hummel, Jr. 100,000 (2) 0.04
Sir Michael Palliser 100,000 (2) 0.04
Francis J. Reinhardt, Jr. 652,017 (2)(5) 0.24
All directors and officers of
the Company as a group
(11 persons) 19,379,715 (1)(2)(3) 6.91
- -------------
(1) Includes 200,000 shares which are subject to an option
granted under agreement dated October 1, 1985 in favor of
John T. Chandler. Such shares are also included in Mr.
Chandler's holding inasmuch as the option is presently
exercisable. For purposes of the total holdings of the
group, the shares are included solely in Mr. Miller's share
holdings.
(2) Includes shares of Common Stock which may be acquired
pursuant to options which are exercisable within 60 days.
(3) Includes shares of Common Stock which may be acquired
pursuant to stock purchase warrants exercisable within 60
days.
(4) Includes warrants to acquire 521,400 shares of Common Stock
owned by Pamela McIlhenny, wife of Edmund McIlhenny, Jr.
Mr. McIlhenny disclaims beneficial ownership of such shares.
On April 11, 1996, the Compensation Committee, in accordance
with Company policy regarding non-executive directors,
granted 100,000 nonqualified stock options to Mr. McIlhenny.
(5) Includes 100,000 shares of Common Stock owned by Carl H.
Pforzheimer & Co. of which Mr. Reinhardt is a general
partner and 200,000 shares owned by Petroleum and Trading
Corporation of which Mr. Reinhardt is an officer and
director. Mr. Reinhardt disclaims beneficial ownership of
the shares owned by Petroleum and Trading Corporation.
Security Ownership of Certain Beneficial Owners
- -----------------------------------------------
The following table sets forth as of March 30, 1996, the
individuals or entities known to the Company to own more
than 3 percent of the Company's outstanding shares of voting
securities. As of that date there were 264,240,305 shares of
Common Stock issued and outstanding. Except as otherwise
indicated, all shares are owned both of record and
beneficially.
<TABLE>
<CAPTION>
Series A Series B
Common Stock (1) Preferred Stock(2) Preferred Stock(3)
----------------------- ------------------- -------------------
Name and Address Number of Percent Number of Percent Number of Percent
of Beneficial Owner Shares of Class Shares of Class Shares of Class
<S> <C> <C> <C> <C> <C> <C> <C>
China Investment & Development 11,130,344 (4) 4.0 -- -- 44,954 100
Co., Ltd.
16th Floor, No. 563
Chung Hsiao E. Road, Sec. 4
Taipei, Taiwan
Brown Brothers & Harriman & Co. 985,411 (5) 0.37 21,200 3.54 -- --
59 Wall Street
New York, New York 10005-2818
Barclays Nominees Gracechurch 514,500 (6) 0.19 24,500 4.09 -- --
Limited A/C 6275B
P.O. Box 1043
Willow Grove House
Windsor Road
Trowbridge, Wilts BA14 0YT
United Kingdom
Broca Nominees M&G Group Ltd. 391,671 (6) 0.15 18,651 3.11 -- --
New London Bridge House
25 London Bridge Street
London SET 9SG
United Kingdom
Cumberland Associates 5,049,043 (7) 1.89 120,691 20.14 -- --
1114 Avenue of the Americas
New York, New York 10036
Egger & Co. 603,771 (6) 0.23 28,751 4.80 -- --
c/o The Chase Manhattan Bank N.A.
P.O. Box 1508
Church Street Station
New York, New York 10008
Hanover Nominees Limited A/C U64 420,000 (6) 0.16 20,000 3.34 -- --
1 Gerry Raffles Square
Stratford
London E15 1XG
United Kingdom
Kayne Anderson Investment 5,755,246 (8) 2.14 124,093 20.71 -- --
Management, Inc.
1800 Avenue of the Stars
2nd Floor
Los Angeles, CA 90067
Marsden W. Miller, Jr. 10,107,132 (9) 3.73 -- -- -- --
110 Rue Jean Lafitte
Lafayette, Louisiana 70508
Phildrew Nominees Limited 686,469 (6) 0.26 32,689 5.46 -- --
Triton Court
14 Finsbury Square
London EC2A 1PD
United Kingdom
Royal Bank of Scotland Edinburgh 972,636 (6) 0.37 47,457 7.92 -- --
Nominees Limited
31 St. Andrews Square
Edinburgh EH2 2PS
Scotland
Sigler & Co. 513,261 (6) 0.19 24,441 4.08 -- --
c/o Chemical Bank
P.O. Box 50000
Newark, New Jersey 07101
T. Rowe Price & Associates, Inc. 1,499,543 (10) 0.57 45,000 7.51 -- --
100 East Pratt Street, 9th Floor
Baltimore, Maryland 21202
</TABLE>
- -----------------
(1) This table includes shares of Common Stock issuable upon
conversion of the shares of Series A Preferred Stock. Each
share of Series A Preferred Stock is convertible into
approximately 21 shares of Common Stock, subject to
adjustment.
(2) In light of the fact that the Company is more than six
months in arrears with respect to the payment of the
dividend payable June 30, 1995 on the Series A Preferred
Stock, pursuant to the terms of the stock, the holders
thereof are eligible to cast 21 votes for each share of
Series A Preferred Stock held at any meeting of shareholders
called until the arrearage is paid.
(3) Each share of Series B Preferred Stock is entitled to cast
50 votes per share.
(4) Includes 3,325,000 shares of Common Stock which are issuable
upon exercise of outstanding Class B Warrants, 3,910,100
shares issued and held by a broker for sale pursuant to a
notice of redemption and 3,940,244 shares reserved for
redemption, which may be issued to or sold on behalf of the
holder.
(5) Includes 445,200 shares issuable upon conversion of Series A
Preferred Stock.
(6) Represents shares issuable upon conversion of Series A
Preferred Stock.
(7) Includes 2,534,511 shares issuable upon conversion of Series
A Preferred Stock and 533,333 shares issuable upon exercise
of stock purchase warrants exercisable within 60 days.
(8) Includes 2,605,953 shares issuable upon conversion of Series
A Preferred Stock and 1,933,332 shares issuable upon
exercise of stock purchase warrants exercisable within 60
days. These shares are held by four limited partnerships, of
which Kayne Anderson Investment Management is General
Partner.
(9) Includes 200,000 shares which are subject to an option
granted under agreement dated October 1, 1985 in favor of
John T. Chandler. Includes 4,483,333 shares issuable upon
exercise of options and 2,400,000 shares issuable upon
exercise of stock purchase warrants exercisable within 60
days.
(10) Includes 945,000 shares issuable upon conversion of Series A
Preferred Stock.
PROPOSAL 1 - ELECTION OF DIRECTORS
Board of Directors and Committees
- ---------------------------------
Under the Certificate of Incorporation, as amended, and
the Amended and Restated Bylaws of the Company, the Board
of Directors is divided into three classes of directors
serving staggered three-year terms, with one class of directors
to be elected at each annual meeting of shareholders and to hold
office until the end of their term or until their successors
have been elected and qualified. The current Class III
directors, whose terms of office expire at the Meeting are
Messrs. John T. Chandler and Fred Hofheinz; the current Class
I directors are Messrs. David A. Melman, Sir Michael
Palliser and Arthur W. Hummel, Jr. and the current Class
II directors are Messrs. Marsden W. Miller, Jr., Edmund
McIlhenny, Jr. and Francis J. Reinhardt, Jr.
The Board held four meetings in 1995. The average attendance
by directors at these meetings was 86 percent, and all directors
attended 95 percent of the Board and Committee meetings they were
scheduled to attend.
Under Delaware law and the Amended and Restated Bylaws,
incumbent directors have the power to fill any vacancies
on the Board of Directors, however occurring, whether by an
increase in the number of directors, death, resignation,
retirement, disqualification, removal from office or otherwise.
Any director elected by the Board to fill a vacancy would hold
office for the unexpired term of the director whose place has
been filled; except that a director elected to fill a newly
created directorship resulting from an increase in the number
of directors, whether elected by the Board or shareholders,
would hold office for the remainder of the full term of the class
of directors in which the new directorship was created or the
vacancy occurred or until his successor is elected and qualified.
If the size of the Board is increased, the additional directors
would be apportioned among the three classes to make all classes
as nearly equal as possible.
Pursuant to the terms of an agreement dated April 17,
1992 between the Company and China Investment & Development Co.,
Ltd. ("CIDC"), the Company granted to CIDC the right to
appoint a nonvoting observer to the Company's Board of Directors
so long as CIDC owns at least 16,667 shares of Series B
Preferred Stock or their equivalent in Common Stock on an as
converted basis. To date CIDC has not exercised this right.
There are no arrangements or understandings with
any directors pursuant to which he has been elected a director
nor are there any family relationships among any directors
or executive officers.
The Company has an Executive Committee, whose present
members include Messrs. Miller, Chandler and Melman.
The Committee met four times during 1995 and, subject to
certain statutory limitations on its authority, has all of the
powers of the Board of Directors while the Board is not in
session, except the power to declare dividends, make and
alter Bylaws, fill vacancies on the Board or the Executive
Committee, or change the membership of the Executive Committee.
The Company also has a Compensation Committee whose present
members are Messrs. Palliser, Hofheinz and Hummel. The
Compensation Committee met once in 1995. It is charged
with the responsibility of administering and interpreting the
Company's stock option plans; it also recommends to the Board
the compensation of employee directors, approves the
compensation of other executives and recommends policies
dealing with compensation and personnel engagements. The Company
also has an Audit Committee whose present members are Messrs.
Hofheinz, Hummel and Palliser. The Audit Committee met once
in 1995. It reviews with the independent auditors the
general scope of audit coverage. Such review includes
consideration of the Company's accounting practices, procedures
and system of internal accounting controls. The Audit Committee
also recommends to the Board the appointment of the Company's
independent auditors engaged by the Company. The Company has
no standing nominating committee, the functions customarily
attributable to such committee being performed by the Board of
Directors as a whole.
Nominees for Directors and Recommendation of the Board
- ------------------------------------------------------
Messrs. John T. Chandler and Fred Hofheinz have
been nominated by the Board for election as Class III
directors, to hold office for three-year terms expiring at the
1999 annual meeting of shareholders, or in all cases until
their successors are elected and qualified. Unless authority to
vote for election of directors (or for one or all nominees)
shall have been withheld in the manner provided in the
accompanying proxies, the votes represented by such proxies
will be cast for the election of the nominees set forth
herein, or for one or more substitute nominees recommended by the
Board of Directors in the event that, by reason of contingencies
not presently known to the Board of Directors, one or all
nominees should become unavailable for election. The
affirmative vote of a plurality of the votes cast at the
Meeting by shareholders present in person or by proxy, a quorum
being present, is required for the election of such
directors. The Board of Directors recommends that shareholders
vote FOR the nominees for election as Class III directors.
Biographical Information
- ------------------------
Set forth below is a brief biographical summary of the
nominees for election as directors, each of whom presently serves
as a director.
JOHN T. CHANDLER, sixty-three years old, is President of the
Company and Chairman and Chief Executive Officer of XCL-China
Ltd., a wholly owned subsidiary of the Company responsible for
the Company's operations in the PRC. He joined the Company in
June 1982, becoming a director in May 1983. From 1976 until he
joined the Company, he was the Managing Partner of the Oil and
Gas Group of GSA Equity, Inc., New York and director of Executive
Monetary Management, Inc., the parent company of GSA Equity, Inc.
From 1972 to 1976, he was director and Vice President of
Exploration and Production of Westrans Petroleum, Inc. and a
director of a number of its subsidiaries. During 1971 and 1972,
he was a petroleum consultant and manager of the oil department
of Den Norske Creditbank in Oslo, Norway. Mr. Chandler was Vice
President and Manager of the Petroleum Department of the Deposit
Guaranty National Bank in Jackson, Mississippi from 1969 to
August 1971 and, from 1967 to February 1969, was a petroleum
engineer first for First National City Bank and then The Bank of
New York. From March 1963 to July 1967, he was employed by
Ashland Oil and Refining Company as a petroleum engineer. From
1959 to 1963, he held the same position with United Producing
Company, Inc., which was acquired by Ashland Oil.
Mr. Chandler graduated from the Colorado School of
Mines with a Professional degree in petroleum engineering and
is a Registered Professional Engineer in the States of
Colorado and Texas, a member of the Society of Petroleum
Evaluation Engineers and a member of AIME.
FRED HOFHEINZ, fifty-eight years old, is an attorney at
law in Houston, Texas. From 1984 to 1987, he served as President
of Energy Assets International Corporation, a fund management
company, now a subsidiary of Torch Energy Advisors, then served
as a consultant to Torch Energy Advisors until 1989. Mr. Hofheinz
also served as the Mayor of Houston, Texas from 1974 to 1978. He,
along with his family, developed the Astrodome in Houston, and
owned the Houston Astros baseball team until 1974. He is founder
and director of United Kiev Resources, Inc., an oil and gas
production company operating in the Republic of the Ukraine in
the name of its wholly owned subsidiary, Carpatsky Petroleum
Company. Mr. Hofheinz earned a Ph.D. degree in Economics from
the University of Texas and his law degree from the University of
Houston. He was appointed as a director by the Board at a
meeting held March 21, 1991.
The following pages contain biographical
information concerning the directors whose terms of office will
expire after the Meeting.
MARSDEN W. MILLER, JR., fifty-four years old, is the
Chairman and Chief Executive Officer of the Company, as well as a
director, and has held the positions of Chief Executive Officer
and director since its incorporation. Prior to 1981, from 1964,
Mr. Miller engaged in the oil business as an independent, was an
officer in various oil companies, principally Westrans
Industries, Inc. from 1970 to 1973, Meridian Minerals, Inc. from
1973 to 1976, and Miller Coal Services, Inc. and its subsidiaries
from 1979 to 1981, and practiced law.
DAVID A. MELMAN, fifty-three years old, is Executive Vice
President, General Counsel and Secretary of the Company and,
since September 14, 1987, a director of the Company. Prior to
joining the Company in December of 1983, he held senior
management positions with an oil and gas venture capital
partnership sponsored by Citibank N.A. (since May 1981) and with
Energy Assets International Corporation from September 1978 to
May 1981. His professional experience includes the practice of
law with Burke & Burke (1969-1971) and of accountancy with
Coopers & Lybrand (1968-1969). He is a member of the New York
State Bar and is a director of Sheffield Exploration Company,
Inc., an American Stock Exchange listed company. Mr. Melman
holds a B.S. degree in economics and J.D. and LL.M (taxation) law
degrees.
EDMUND McILHENNY, JR., fifty years old, joined the Company
in August 1991, as President of XCL Land, Ltd., a wholly owned
subsidiary of the Company. From 1972 to 1974, he was involved
in the practice of law in New Orleans, Louisiana. From 1975, Mr.
McIlhenny held various administrative positions with E.
McIlhenny's Son Corporation, and subsidiaries, involved primarily
in the manufacture of TABASCO (registered trademark) including
Vice President, Secretary and a director, as well as a member of
its Executive Committee. From 1984 to the present, he has been a
director, member of the Executive Committee and Land Management
Committee, and in 1988 was elected Vice President and Secretary,
of Vermilion Corporation, a land holding company located in
Abbeville, Louisiana. Mr. McIlhenny is a graduate of the
University of North Carolina at Chapel Hill with a B.A. degree
and the Tulane University School of Law with a J.D. degree. Mr.
McIlhenny was elected a director in June 1990. Effective February
1, 1996, Mr. McIlhenny resigned as President of XCL Land, Ltd.
ARTHUR W. HUMMEL, JR., seventy-five years old, a director
since April 1994, has been active in consulting with firms doing
business in East Asia, and participating in academic and
scholarly conferences in the U.S. and in the East Asia region
since his retirement, after thirty five years of service, from
the State Department in 1985. He is a member and trustee of many
academic, business, and philanthropic organizations involved in
international affairs.
Mr. Hummel was born in China. After education in the U.S.
he returned to China prior to Pearl Harbor. After internment by
the Japanese he escaped and fought with Chinese guerrillas behind
the Japanese lines in north China until the end of the war.
He obtained an M.A. (Phi Beta Kappa) in Chinese studies from
the University of Chicago in 1949, and joined the State
Department in 1950. His early foreign assignments include Hong
Kong, Japan and Burma. He was Deputy Director of the Voice of
America in 1961-1963; Deputy Chief of Mission of the American
Embassy in Taiwan, 1965-1968; Ambassador to Burma, 1968-1970;
Ambassador to Ethiopia, 1975-1976; Ambassador to Pakistan, 1977
1981; and Ambassador to the People's Republic of China, 1981-
1985. He was Assistant Secretary of State for East Asia 1976-
1977. He has received numerous professional awards from within
and outside the Government.
SIR MICHAEL PALLISER, seventy-three years old, a director
since April 1994, was until his retirement in March 1996, Vice
Chairman of Samuel Montagu & Co. Limited, the merchant bank which
was owned by Midland Bank, of which he was Deputy Chairman from
1987 to 1991, and which is now part of the Hong Kong & Shanghai
Banking Corporation. He was Chairman of Samuel Montagu from 1984
to 1993. In 1947, he joined the British Diplomatic Service and
served in a variety of overseas and Foreign Office posts before
becoming head of the Planning Staff in 1964-1966, Private
Secretary to the Prime Minister, 1966-1969, Minister in the
British Embassy in Paris, 1969-1971, and the British Ambassador
and Permanent Representative to the European Communities in
Brussels from 1971-1975. He was, from 1975 until his retirement
in 1982, Permanent Under-Secretary of State in the Foreign and
Commonwealth Office, and Head of the Diplomatic Service. From
April to July 1982, he was a special adviser to the Prime
Minister in the Cabinet Office during the Falklands War. He was
appointed a Member of the Privy Council in 1983. Effective
December 31, 1995, Mr. Palliser resigned as President of the
China-Britain Trade Group and a director of the UK-Japan 2000
Group, and effective February 29, 1996, he resigned as Deputy
Chairman of British Invisibles. Mr. Palliser currently is a
member of the Trilateral Commission, a director of the Royal
National Theatre, and Chairman of the Major Projects Association,
designed to assist in and for the handling of major industrial
projects. He is a former Director of BAT Industries, Bookers,
Eagle Star, Shell and United Biscuits.
Sir Michael Palliser was educated at Wellington College and
Merton College, Oxford. He saw wartime service in the British
Army with the Coldstream Guards.
FRANCIS J. REINHARDT, JR., sixty-six years old, is a partner
in the New York investment banking firm of Carl H. Pforzheimer &
Co. Mr. Reinhardt has been a partner in the firm for 30 years and
has held various positions, specializing in independent oil and
gas securities, mergers and acquisitions, placements participation
and institutional sales since 1956. Mr. Reinhardt holds a B.S.
degree from Seton Hall University and received his M.B.A. from
New York University. Mr. Reinhardt is a member of the New York
Society of Security Analysts, is a member of and has previously
served as president of the Oil Analysts Group of New York, is a
member and past president of the National Association of Petroleum
Investment Analysts and is a member of the Petroleum Exploration
Society of New York. Mr. Reinhardt also serves as a director of
Mallon Resources Corporation, a NASDAQ traded petroleum and mining
company, as well as several privately held companies. Mr. Reinhardt
was first appointed as a director of the Company by the Board at a
meeting held December 11, 1992.
Compliance with Section 16(a) Filing Requirements
- -------------------------------------------------
To the Company's knowledge, instances of failure to
file reports with respect to reportable transactions during the
year ended December 31, 1995, as required by Section 16(a) of
the Exchange Act are as follows:
Known
Reports Number of Failure to Number of
Reporting Person Filed Late Transactions File Form Transactions
- ---------------------- ----------- ------------ ---------- ------------
R. Thomas Fetters, Jr. Form 4 1 Form 4 1 (b)
E. McIlhenny, Jr. - - Form 4 1 (b)
Pamela G. Shanks (a) - - Form 4 1 (b)
Roy Chase - - Form 4 1 (b)
M. W. Miller, Jr. Form 4 1 - -
- -----------
(a) A former officer of the Company and wife of Edmund
McIlhenny, Jr., a director of the Company.
(b) Did not file upon resignation as an officer of the Company.
All other reporting persons who are officers or directors of
the Company have provided the Company with written representations
that no Form 5 filing was required in that all reportable
transactions were timely filed on the appropriate forms.
Executive Compensation
- ----------------------
The following table sets forth information regarding
the total compensation of the Chief Executive Officer and each of
the four most highly compensated executive officers of the
Company at the end of 1995, as well as the total compensation
paid to each such individual for the Company's two previous
fiscal years. Each of the named individuals has held his/her
respective office throughout the entire fiscal year.
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term Compensation
------------------------------------------
Annual Compensation Awards Payouts
------------------------- ---------------------- -------------------
(1) (2) (3) (4) (5) (6)
Other Restricted
Name and Annual Stock Options/ LTIP All Other
Principal Salary Bonus Compen- Awards SARs Payout Compen-
Position Year ($) ($) sation($) ($) (#) ($) sation($)
- ---------------------- ---- ------- ----- ---------- --------- -------- ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Marsden W. Miller, Jr. 1995 150,000 -- -- -- -- -- --
Chairman and
Chief Executive Officer 1994 150,000 -- -- -- 1,625,000 -- --
1,875,000
525,000
1993 168,750 -- -- -- -- -- --
John T. Chandler (7)(8) 1995 150,000 -- -- -- 120,000 -- --
President; Chairman and
Chief Executive Officer
of XCL-China, Ltd. 1994 150,000 -- -- -- 470,000 -- --
1,025,000
100,000
1993 168,750 -- -- -- -- -- --
David A. Melman (9) 1995 150,000 -- -- -- 300,000 -- --
Executive Vice President,
General Counsel and
Secretary 1994 150,000 -- -- -- 470,000 -- --
1,025,000
100,000
1993 168,750 -- -- -- -- -- --
Pamela G. Shanks (10) 1995 128,600 -- -- -- -- -- --
Vice President-Finance,
Chief Financial Officer
and Treasurer 1994 128,600 -- -- -- -- -- --
500,000
21,400
1993 144,050 -- -- -- -- -- --
Danny M. Dobbs 1995 116,250 -- -- -- -- -- --
Executive Vice President 1994 110,000 -- -- -- 148,000 -- --
and Chief Operations
Officer 1993 106,083 -- -- -- -- -- --
</TABLE>
- -----------
(1) Prior to April 1, 1994, each executive was employed under an
agreement with the Company which provided that if his/her
employment was terminated prior to the agreement's
termination under certain circumstances he/she would receive
compensation for thirty months. Such employment agreements
were surrendered, effective April 1, 1994, in exchange for
stock purchase warrants (see "Employment Agreements" below).
(2) Effective March 30, 1994, the Management Incentive Plan was
terminated.
(3) Excludes the cost to the Company of other compensation that,
with respect to any above named individual, does not exceed
the lesser of $50,000 or 10 percent of such individual's
salary and bonus.
(4) Although the Company's Long Term Stock Incentive Plan
permits grants of restricted stock and stock appreciation
rights, no grants of those incentive awards have been made.
(5) The first amount represents awards of stock options granted
under the Company's Long Term Stock Incentive Plan. The
second amount represents the number of five-year stock
purchase warrants, received upon surrender of an employment
agreement with the Company, determined based upon a formula
whereby each of the individuals were to be offered a
warrant, based upon the length of time of employment with
the Company, for a maximum of two shares of Common Stock for
each dollar of compensation remaining to be paid to such
individual under his or her agreement (based upon the
product of his or her highest monthly base salary and the
number of months remaining under his or her contract), at an
exercise price of $1.25 per share. The third number
represents five-year stock purchase warrants, received for
each dollar of salary reduction for the fifteen-month period
commencing January 1, 1993 through March 31, 1994,
determined based on the same formula and at the same
exercise price used in the granting of warrants upon
surrender of the employment agreements. (See "Employment
Agreements" below.)
(6) No payments have been made in respect of the Company's
Shareholder Value Performance Plan. The measurement period
for compensation under such plan ended on December 31, 1993,
and the Plan was terminated pursuant to its terms.
(7) XCL-China Ltd. is a wholly owned subsidiary of the Company
which manages the Company's operations in the PRC.
(8) Mr. Chandler was granted 120,000 options to replace options
granted in 1984 which expired unexercised in December 1994.
(9) Mr. Melman was granted 120,000 options to replace options
granted in 1984 which expired unexercised in December 1994,
and 180,000 options to replace options granted in 1985 which
expired unexercised in March 1995.
(10) Ms. Shanks commenced employment on October 8, 1992. As
part of her employment package she was awarded 360,000
options. Effective February 1, 1996, Ms. Shanks resigned as
an officer of the Company.
Stock Options
- -------------
The Company currently maintains five stock option plans
which were adopted by shareholders at various times commencing
in 1986. All of the plans are administered by the Compensation
Committee and provide for the granting of options to purchase
shares of Common Stock to key employees and directors of the
Company, and certain other persons who are not employees of the
Company but who from time to time provide substantial advice or
other assistance or services to the Company.
The most recent stock option plan was adopted on June
2, 1992 by shareholders who approved the Long Term Stock
Incentive Plan ("LTSIP"). The LTSIP was adopted with the view of
conforming the Company's plans to certain regulatory changes
adopted by the SEC and affording holders of previously granted
options the opportunity to exchange their options for
equivalent options under the LTSIP.
The LTSIP authorizes the Compensation Committee to
grant stock options intended to qualify as "incentive stock
options" under Section 422 of the Internal Revenue Code of 1986
as amended ("ISOs"), options which do not qualify under such tax
provision ("NSOs"), "ROs" (i.e., the granting of additional
options, where an employee exercises an option with previously
owned stock, covering the number of shares tendered as part of
the exercise price), "RSAs" (i.e., stock awarded to an employee
that is subject to forfeiture in the event of a premature
termination of employment, failure of the Company to meet certain
performance objectives or other conditions), "PUs" (i.e., share-
denominated units credited to the employee's account for delivery
or cash-out at some future date based upon performance criteria
to be determined by the Compensation Committee) and "tax
withholding" (i.e., where the employee has the option of having
the Company withhold shares on exercise of an award to satisfy
tax withholding requirements).
The LTSIP also formally incorporates resolutions
previously adopted by the Board regarding one-time grants of
NSOs covering 100,000 shares to each new non-employee director
upon his taking office.
The Compensation Committee develops administration
guidelines from time to time which define specific eligibility
criteria, the types of awards to be employed, and the value of
such awards. Specific terms of each award, including minimum
performance criteria which must be met to receive payment, are
provided in individual award agreements granted each award
recipient. Key employees and other individuals who the Committee
deems may provide a valuable contribution to the success of the
Company and its affiliates will be eligible to participate under
the Plan. Award agreements generally contain change-in-control
provisions.
Under the LTSIP, the Compensation Committee determines
the option price of all NSOs and ISOs; provided, however, in the
case of ISOs, the option price shall not be less than the fair
market value of the Common Stock on the date of grant. Such
"fair market value" is the average of the high and low prices
of a share of Common Stock traded on the relevant date, as
reported on the American Stock Exchange, or other national
securities exchange or an automated quotation system.
On July 1, 1994, the shareholders approved amendments to the
LTSIP to increase the number of shares reserved for issuance
under the Plan by an additional 1,500,000 shares to an aggregate
of 16.5 million and corresponding amendment to the Plan
increasing the limitation on the total number of shares subject
to options that can be granted to directors to 13,200,000 of
which 3,300,000 shares may be granted to non-employee directors.
At the same time, shareholders ratified the conditional grant of
options to acquire 3,076,500 shares, made by the Board of
Directors on March 30, 1994, to various executive officers and
directors. In 1994, additional options totaling 1,820,183 were
awarded to non-executive officers, employees and consultants of
the Company.
The closing price of the Company's Common Stock on the
American Stock Exchange on April 10, 1996 was $.3125 per share.
The following tables set forth, for those persons named in
the "Summary Compensation Table" information on stock options
granted during 1995 and all stock options outstanding as of
December 31, 1995.
Option/SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciation
Individual Grants for Option Term
------------------------------------------------------ -----------------------------
(a) (b) (c) (d) (e) (f) (g) (h)
% of Total
Options/
SARs
Granted to
Options/ Employees in Exercise or
SARs Fiscal Base Price Expiration
Name Granted (#) Year (3) ($/Share) Date 0% ($) 5% ($) 10% ($)
- --------------------- ----------- ------------ ----------- ---------- -------- ------- --------
<C> <C> <C> <C> <C> <C> <C>
Marsden W. Miller, Jr. -- 0% -- -- -- -- --
John T. Chandler 120,000 (1) 18% 1.25 03/31/99 (52,500) 8,817 936,324
David A. Melman 120,000 (2) 44% 1.25 03/31/99 (52,500) 8,817 936,324
180,000 (2) 1.25 06/13/05 (157,500) (115,050) (49,922)
Pamela G. Shanks (4) -- 0% -- -- -- -- --
Danny M. Dobbs -- 0% -- -- -- -- --
</TABLE>
- --------------------
(1) Mr. Chandler was granted 120,000 options to replace options
granted in 1984 which expired unexercised in December 1994.
(2) Mr. Melman was granted 120,000 options to replace options
granted in 1984 which expired unexercised in December 1994,
and 180,000 options to replace options granted in 1985 which
expired unexercised in March 1995.
(3) Represents the percentage of all options and warrants
granted to employees in the fiscal year.
(4) Effective February 1, 1996, Ms. Shanks resigned as an
officer of the Company.
Aggregated Option/SAR Exercises In Last Fiscal Year and
Fiscal Year-End Option/SAR Values
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Number of Securities Value of Unexercised
Shares Underlying Unexercised in-the-money
Acquired Options/SARs at Options/SARs at
on Value Fiscal Year-End (#) Fiscal Year-End ($)(3)
Exercise Realized ---------------------------- --------------------------
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- --------------------- -------- -------- ------------- ------------- ----------- -------------
<C> <C> <C> <C> <C> <C> <C>
Marsden W. Miller, Jr. -- -- 4,483,333 (1) 541,667 -- --
-- -- 2,400,000 (2) -- -- --
John T. Chandler -- -- 973,333 (1) 156,667 -- --
-- -- 1,125,000 (2) -- -- --
David A. Melman -- -- 973,333 (1) 156,667 -- --
-- -- 1,125,000 (2) -- -- --
Pamela G. Shanks (4) -- -- 360,000 (1) -- -- --
-- -- 521,400 (2) -- -- --
Danny M. Dobbs -- -- 261,666 (1) 49,334 -- --
-- -- 582,000 (2) -- -- --
</TABLE>
- ---------------
(1) Represents options exercisable under the Company's Long Term
Stock Incentive Plan at December 31, 1995.
(2) Represents the aggregate number of five-year stock purchase
warrants, received (a) upon surrender of an employment
agreement with the Company, determined based upon a formula
whereby each of the individuals were to be offered a
warrant, based upon the length of time of employment the
Company, for a maximum of two shares of Common Stock for
each dollar of compensation remaining to be paid to such
individual under his or her agreement (based upon the
product of his or her highest monthly base salary and the
number of months remaining under his or her contract), at an
exercise price of $1.25 per share, and (b) for each dollar
of salary reduction for the fifteen-month period commencing
January 1, 1993 through March 31, 1994, determined based on
the same formula and at the same exercise price used in the
granting of warrants upon surrender of the employment
agreements. (See "Employment Agreements" below.)
(3) At December 31, 1995, the Company's Common Stock price was
lower than the option exercise prices.
(4) Effective February 1, 1996, Ms. Shanks resigned as an
officer of the Company.
These options were all awarded under the Company's Stock
Option Plans described above.
Section 401(k) Plan
- -------------------
In 1989, the Company adopted an employee benefit plan under
Section 401(k) of the Internal Revenue Code for the benefit of
employees meeting certain eligibility requirements. The Company
has obtained a favorable determination from the Internal Revenue
Service regarding the tax favored status of the 401(k) plan.
Employees can contribute up to 10 percent of their compensation.
The Company, at its discretion and subject to certain
limitations, may contribute up to 75 percent of the contributions
of each participant. The Company did not make any contributions
to the plan during the year ended December 31, 1995.
Compensation of Directors and Other Arrangements
- ------------------------------------------------
The Company reimburses its directors for their travel and
lodging expenses incurred in attending meetings of the Board of
Directors. Effective January 1, 1990, directors (other than
Messrs. Hummel and Palliser and those directors who are officers
of the Company) were paid an annual retainer of $18,000 plus a
fee of $1,000 for each Board meeting attended. In addition, such
directors were paid a fee of $1,000 for each committee meeting
attended.
In April 1994, the Company entered into separate consulting
agreements with Messrs. Palliser and Hummel, upon their becoming
directors. Each of the agreements is terminable by each of the
parties thereto upon written notice and provides that the
individuals will render consulting services to the Company in
their respective areas of expertise. Pursuant to the terms of
the agreements, each of the directors will be entitled to receive
compensation at the rate of $50,000 per annum, which includes the
compensation they would otherwise be entitled to receive as
directors and for attending meetings of the Board. In addition,
pursuant to the terms of the LTSIP, each were granted stock
options for 100,000 shares of Common Stock exercisable at $1.25
per share.
During 1995 all regular employees were provided health
insurance, a portion of the premium for which is paid by the
Company, and life and disability insurance based upon a factor of
the employee's base salary.
Employment Agreements; Termination of Employment and Change-in
- ---------------------------------------------------------------
Control Arrangements
--------------------
Effective April 1, 1994, Messrs. M.W. Miller, Jr., J.T.
Chandler, D.A. Melman, D.M. Dobbs, R.T. Fetters, Jr., R.C. Cline,
P.L. Dragon, and Ms. P.G. Shanks, in their capacities as
executive and administrative officers of the Company and its
various subsidiaries agreed to surrender their employment
agreements in consideration of the issuance of five year warrants
to purchase Common Stock at an exercise price of $1.25 per share,
subject to customary anti-dilution adjustments. The number of
warrants issued to such individuals was determined based upon a
formula whereby each of the individuals was offered a warrant to
purchase, based upon the length of time of employment with the
Company, a maximum of two shares of Common Stock for each dollar
of compensation remaining to be paid to such individual under his
or her agreement (based upon the product of his or her highest
monthly base salary and the number of months remaining under his
or her agreement). Accordingly, Mr. Miller received warrants to
purchase 1,875,000 shares; Mr. Chandler, 1,025,000 shares; Mr.
Melman, 1,025,000 shares; Mr. Fetters, 875,000 shares; Mr. Dobbs,
575,000 shares; Mr. Dragon, 315,000 shares; Mr. Cline, 250,000
shares; and Ms. Shanks, 500,000 shares.
Effective January 1, 1989, the Company adopted a policy
addressing severance upon separation from the Company. Under
this policy benefits due upon a "change-in-control" as therein
defined, range from three months salary for employees with less
than one year of service to twenty-four months salary for
employees with more than ten years of service.
Report on Repricing of Options/SARs
During the fiscal year ended December 31, 1995, there were
no repricings of stock options awarded to any of the named
executive officers.
Compensation Committee Interlocks and Insider Participation
- -----------------------------------------------------------
For the year ended December 31, 1995, the following
nonexecutive directors of the Company, served as members of the
Compensation Committee of the Board of Directors: Messrs. M.
Palliser (Chairman), A.W. Hummel, Jr., F. Hofheinz and F.J.
Reinhardt, Jr. None of the members of the Compensation Committee
were formerly, nor are any members currently, officers or
employees of the Company or any of its subsidiaries.
Compensation Committee Report on Executive Compensation
-------------------------------------------------------
The Compensation Committee of the Board of Directors
("Committee") establishes the general compensation policies
of the Company, establishes the compensation plans and
specific compensation levels for executive officers and
certain other managers, and administers the Stock Option Plans
and Long Term Stock Incentive Plan. The Committee currently
consists of four independent, non-employee directors: Messrs.
M. Palliser, who serves as Chairman, Fred Hofheinz, Arthur W.
Hummel, Jr. and Francis J. Reinhardt, Jr.
Compensation Policies and Philosophy
- ------------------------------------
The Committee has determined that the compensation program
of the Company should not only be adequate to attract, motivate
and retain executives, key employees and other individuals who
the Company believes may make significant contribution to the
Company's results, but should also be linked to the value
delivered to shareholders as reflected in the price of the
Company's Common Stock.
The Committee believes that the cash compensation of
executive officers, as well as other key employees, should be
competitive with other similarly situated companies while, within
the Company, being fair and discriminating on the basis of
personal performance. In general, in establishing total cash
compensation for its executives, the Committee has taken into
account the median cash compensation of executives employed by
competitors including some of the companies reflected in the peer
group identified in the Performance Graph found on page 84, which
the Committee believes represent the Company's most direct
competition for executive talent. The Committee receives
recommendations from management as to executive compensation and,
in light of the Company's performance and the economic conditions
facing the Company, determines appropriate compensation levels
for recommendation to the Board of Directors. The Committee does
not assign relative weights to individual factors and criteria
used in determining executive compensation and does not use
quantifiable targets in determining compensation. For 1995, the
Company did not retain the services of a compensation consulting
firm.
Awards of stock options are intended both to retain
executives, key employees and other individuals who the Company
believes may make significant contributions to the Company's
results and to motivate them to improve long-term stock market
performance. Options are granted at or above the prevailing
market price and will have value only if the price of the
Company's Common Stock increases. Generally, options have a term
of ten years and vest one-third six months after grant, one-third
one year after grant and the remaining one-third two years after
grant.
Effective January 1, 1994, Section 162(m) of the Internal
Revenue Code of 1986 (the "Code") generally denies a tax
deduction to any publicly-held corporation for compensation that
exceeds $1 million paid to certain senior executives in a taxable
year, subject to an exception for "performance-based
compensation" as defined in the Code and subject to certain
transition provisions. Gains on the exercise of non-qualified
stock options granted through December 31, 1994, will be tax
deductible under the transition rules. Restricted stock awards
by definition granted after February 17, 1993, are not
deductible. At present the Committee does not intend to recommend
amendment to the Stock Option Plans to meet the restrictive
requirements of the Code.
The Committee believes that annual incentive awards should
be commensurate with performance. It further believes that in
order to meet this objective it needs to have the ability to
exercise its judgment or discretion to evaluate performance
against qualitative criteria. It is the Committee's opinion that
the benefits to the Company of the use of a qualitative approach
to the compensation of senior executives such as the Chairman
outweigh the non-material loss of a portion of the deductions
associated with that compensation.
On March 21, 1996, the Committee reviewed the Company's 1995
financial results and 1995 non-financial goals. The Committee
acknowledged that while financial goals were negatively impacted
by U.S. property write-downs, the non-financial goals,
(consisting of development of the Zhao Dong Block by drilling two
successful wells and positioning the Company to expand its
participation in the Chinese energy industry resulting from the
July 17, 1995 agreement to participate in a lubricating oil joint
venture and the December 14, 1995 letter agreement to participate
in a coal-bed methane joint venture) had been met and exceeded.
Company Performance and Chief Executive Officer Compensation
- ------------------------------------------------------------
The Committee, in connection with determining the
appropriate compensation for Marsden W. Miller, Jr. as Chief
Executive Officer ("CEO"), took into account the financial
condition of the Company, including its liquidity requirements.
It determined that the CEO had been instrumental in causing the
Company to secure the lube oil joint venture and initial
agreements with the Coal Ministry to create the coalbed methane
joint venture. Taking into consideration the current cash
position and near-term requirements, the Committee determined
that cash was unavailable for either salary increase or bonus.
Compensation of Other Executive Officers
- ----------------------------------------
The Committee, in consultation with the CEO, applied the
information and other factors outlined above in reviewing and
approving the compensation of the Company's other executive
officers.
March 21, 1996 COMPENSATION COMMITTEE
Michael Palliser, Chairman
Arthur W. Hummel
Fred Hofheinz
Francis J. Reinhardt, Jr.
Shareholder Return Performance Presentation
- -------------------------------------------
Set forth below is a line graph comparing the percentage
change in the cumulative total shareholder return on the
Company's Common Stock against the AMEX Market Value Index for
the years 1991 through 1995, with a peer group selected by the
Company for the past five fiscal years. The peer group consists
of the same independent oil and gas exploration and production
companies used in last year's comparison, with the exception of
DeKalb Energy Company which was acquired by Apache Corporation,
namely: Alta Energy Corporation; Amerac Energy Corporation
(formerly Wolverine Exploration Company); American Exploration
Company; Bellwether Exploration Company; Brock Exploration
Corporation; Tom Brown, Inc.; Caspen Oil, Inc.; Cobb Resources
Corporation; Coda Energy, Inc.; Comstock Resources, Inc.; Crystal
Oil Company; Edisto Resources Company; Energen Corporation; First
Mississippi Corporation; Forest Oil Corporation; Geodyne
Resources, Inc.; Global Natural Resources, Inc.; Goodrich
Petroleum Corporation (formerly Patrick Petroleum Company);
Hallador Pete Company; Hondo Oil & Gas Company; Kelley Oil & Gas
Partners; Magellan Petroleum Corporation; Maynard Oil Company;
McFarland Energy, Inc.; MSR Exploration Limited; Numac Energy,
Inc.; Pacific Enterprises; Penn Virginia Corporation; Plains
Resources, Inc.; Presidio Oil; Wainoco Oil Corporation; Wichita
River Oil; and Wiser Oil Company. The relevant information with
respect to the peer group was furnished by Standard & Poors
Compustat Service. The graph assumes that the value of the
investment in the Company's Common Stock and the peer group
stocks was $100 on January 1, 1990 and that all dividends were
reinvested.
[Shareholder Return Performance Graph]
1991 Return 1992 Return 1993 Return 1994 Return 1995 Return
----------- ----------- ----------- ----------- -----------
XCL 34.62 69.23 34.62 50.00 25.00
Peer Group 79.34 63.77 77.72 77.47 97.86
AMEX 128.21 129.57 154.86 140.83 178.45
Certain Relationships and Related Transactions
- ----------------------------------------------
During 1994, the Company was sued in an action entitled
Kathy M. McIlhenny vs. The Exploration Company of Louisiana, Inc.
(15th Judicial District Court, Parish of Lafayette, Louisiana,
Docket No. 941845). Kathy McIlhenny, former wife of a director of
the Company, has asserted a claim in the aggregate amount of
approximately $.5 million in respect of compensation for certain
services alleged to have been performed on behalf of the Company
and under an alleged verbal employment agreement and, by
amendment, asserted a claim for payments arising from purported
rights to mineral interests. The Company believes that such
claim is without merit and rejects the existence of any such
alleged agreement.
As a matter of policy the Company approves all transactions
involving insiders through the majority vote of disinterested
directors.
PROPOSAL 2 - APPROVAL OF AMENDMENT
TO ARTICLE FOURTH OF THE
CERTIFICATE OF INCORPORATION TO INCREASE THE
NUMBER OF AUTHORIZED SHARES OF THE COMPANY
On March 21, 1996, the Company's Board of Directors
unanimously adopted a resolution recommending that the Company's
shareholders adopt an amendment to the Company's Certificate of
Incorporation to increase the authorized Common Stock of the
Company from 350,000,000 shares to 500,000,000 shares, par value
$.01 per share, and increase the authorized Preferred Stock of
the Company from 1,200,000 shares to 2,400,000 shares, par value
$1.00 per share.
The proposed amendment will be submitted to the shareholders
for approval at the Meeting in substantially the following form:
"That Article FOURTH of the Certificate of Incorporation
of the Corporation be and the same hereby is amended to
provide that the total number of shares and the par value,
if any, of each class of stock which the Corporation is
authorized to issue shall be 2,400,000 shares of
Preferred Stock, par value $1.00 per share, and
500,000,000 shares of Common Stock, par value of $0.01 per
share, and that the Board if Directors be and hereby is
authorized to issue all or any part of the unissued
shares of Preferred Stock and Common Stock thus authorized
without further action by the stockholders, unless such
action is required by law or by the rules of any stock
exchange on which the Corporation's securities are then
listed."
As of April 10, 1996, there were reserved an aggregate of
(i) 14,875,334 shares of Common Stock subject to outstanding
options; (ii) 12,584,124 shares issuable upon conversion of the
Company's outstanding Series A Preferred Stock; (iii) 34,848,229
shares issuable upon exercise of the Company's outstanding
warrants; (iv) 3,940,244 shares issuable upon redemption of the
Company's outstanding Series B Preferred Stock; and (v)
18,036,764 shares issuable in connection with contractual
obligations. Under the terms of certain outstanding securities
and warrants, which are not respectively convertible or
exercisable until after November 30, 1996, the Company is
required to reserve a sufficient number of shares of Common Stock
(as of April 10, 1996, 17,830,002 shares) to enable such
securities to be so converted and exercised. Currently, the
Company has an insufficient number of shares available to satisfy
these obligations. If the Company fails to have such shares duly
authorized or otherwise available for issuance, the Company will
be subject to certain penalties.
The proposed amendment would increase the number of
authorized shares of Preferred Stock of the Company by 1,200,000
to 2,400,000 shares, however, would not affect the right of the
Board of Directors to issue Preferred Stock in one or more series
having such designations, preferences, and relative rights,
qualifications and limitations as it may fix by resolution at the
time of issuance. The Company is seeking to increase its
authorized Preferred Stock in order, among the other reasons
discussed below, to facilitate the payment of dividends on the
Series A and E Preferred Stock in kind as permitted under the
terms of such Stock in lieu of cash dividends. The shareholders
have previously authorized the Board to issue all of the
presently authorized but unissued shares of Common Stock and
Preferred Stock of the Corporation, and it is proposed that such
authorization be extended to include the additional shares of
Common Stock and Preferred Stock proposed to be authorized.
The Board of Directors believes that it would be desirable
to have additional shares of Common and Preferred Stock that
would be authorized by the proposed amendment available for
issuance in connection with possible future stock dividends or
splits, financing transactions, acquisitions of other companies
or business properties, employee benefit plans and other proper
corporate purposes. Having such additional authorized shares
available will give the Company greater flexibility by permitting
such shares to be issued without the expense or delay of a
special meeting of the shareholders. Such delay might deprive
the Company of the flexibility the Board views as important in
effectively using the Company's shares. These additional shares
of Common and Preferred Stock will be available without further
action by the shareholders, unless such action is required by
applicable law or the rules of the American Stock Exchange or The
London Stock Exchange Limited (the "London Stock Exchange"). Such
rules require stockholder approval as a prerequisite to the
listing of shares in several instances, including for certain
stock option plans, and under the rules of the American Stock
Exchange, for acquisition transactions where the present or
potential issuance of shares could result in an increase in the
number of shares of Common Stock outstanding of 20 percent or
more.
The Board currently has no agreements or arrangements for
the future issuance of additional shares of Common Stock, other
than the issuance of shares upon (1) the conversion of Series E,
Cumulative Convertible Preferred Stock (16,000,000 shares); (2)
the conversion of Series A Preferred Stock to be issued in
payment of the December 31, 1995 dividend and future dividends
(5,250,000 shares); and (3) the exercise of outstanding warrants
(1,830,002 shares).
The additional shares of Common Stock for which
authorization is sought would become part of the existing class
of Common Stock and, when issued, would have the same rights and
privileges as the shares of Common Stock presently outstanding.
The holders of Common Stock do not have preemptive rights to
subscribe for any of the Company's securities and will not have
any such rights to subscribe for the additional Common Stock
proposed to be authorized. If the proposed amendment is adopted
by the shareholders, each certificate representing shares of
Common Stock, par value $.01 per share, issued and outstanding or
held in the treasury of the Company will represent the same
number of shares of Common Stock having a par value of $0.01 per
share. Certificates representing outstanding shares of Common
Stock should be retained by the holder and should not be
forwarded to the Company or its transfer agent.
The increase in the number of authorized shares of Common or
Preferred Stock is not designed to deter or prevent a change in
control of the Company. However, under certain circumstances the
issuance of additional shares of Common or Preferred Stock could
be used to make a change in control more difficult if the Board
caused such shares to be issued to holders who might side with
the Board in opposing a takeover bid that the Board determines is
not in the best interests of the Company and its stockholders.
In addition, the availability of the additional shares might
theoretically discourage an attempt by another person or entity
to acquire control of the Company through the acquisition of a
substantial number of shares of Common or Preferred Stock, since
the issuance of such shares could dilute the stock ownership of
such person or entity. Pursuant to the rules of the London Stock
Exchange, no issue of shares of Common Stock will be made which
would effectively alter the control of the Company without prior
approval of the shareholders in general meeting. Pursuant to the
rules of the American Stock Exchange the sale or issuance of
Common Stock (or securities convertible into Common Stock)
including securities reserved for issuance upon exercise of
certain options to management, will require shareholder approval
in certain cases as a prerequisite to listing such securities on
such Exchange.
Wholly apart from this proposed amendment, the Board could
issue a series of Preferred Stock with rights and preferences
that might similarly impede or discourage proposed mergers,
tender offers, or attempts to gain control of the Company. In
addition, the Certificate of Incorporation contains a so-called
"fair price" provision and provides for a classified Board each
of which could be viewed as discouraging some attempts to obtain
control of the Company. Under the "fair price" provision, an
affirmative vote of 67 percent or more of the Company's voting
stock is required for business combinations between the Company
and an "interested stockholder" unless the business combination
is approved by the Board of Directors or a minimum price is
received by all stockholders and certain other conditions are
met.
The Board has no present intention of issuing additional
shares of Common or Preferred Stock for any of the purposes
described in the two immediately preceding paragraphs.
The Board of Directors recommends that shareholders vote FOR
Proposal 2. The affirmative vote of the holders of a majority of
the shares of Common, Series A Preferred Stock, and Series B
Preferred Stock outstanding and entitled to vote at the Meeting,
voting together as a single class, is required to approve this
proposal. Consequently, any shares not voted (whether by
abstention or broker non-votes) have the same effect as votes
against Proposal 2. Unless otherwise instructed the proxies will
be voted "FOR" approval of the proposal.
INDEPENDENT AUDITORS
The Board of Directors of the Company, upon the
recommendation of the Audit Committee, appointed the firm of
Coopers & Lybrand to serve as independent accountants of the
Company for the fiscal year ending December 31, 1996. Coopers &
Lybrand has served as independent accountants of the Company
since its inception and is considered by management of the
Company to be well qualified. The Company has been advised by
that firm that neither it nor any member thereof has any
financial interest, direct or indirect, in the Company or any of
its subsidiaries in any capacity.
One or more representatives of Coopers & Lybrand will be
present at the Meeting, will have an opportunity to make a
statement if he or she desires to do so and will be available to
respond to appropriate questions.
SHAREHOLDERS' PROPOSALS FOR
1997 ANNUAL MEETING OF SHAREHOLDERS
Pursuant to Rule 14a-8(a)(3)(i) promulgated by the U.S.
Securities and Exchange Commission, proposals of shareholders
intended to be presented at the 1997 Annual Meeting of
Shareholders must be received by the Company a reasonable time
prior to the solicitation of proxies for such meeting to be
eligible for inclusion in the Company's proxy statement and proxy
relating to that meeting. Assuming the 1997 annual meeting of
shareholders is held on May 20, 1997, as provided in the Bylaws,
proposals of shareholders intended to be presented at that
meeting should be received by the Company prior to January 16,
1997.
OTHER BUSINESS
The Board of Directors of the Company knows of no other
matters to come before the Meeting, other than those set forth
herein and in the accompanying Notice of Annual Meeting of
Shareholders. However, if any other matters should properly come
before the Meeting, it is the intention of the persons named in
the accompanying proxies to vote such proxies as in their
discretion they may deem advisable.
ANNUAL REPORT
The Annual Report of the Company for the fiscal year ended
December 31, 1995, has been mailed to shareholders on or about
May 28, 1996. The Annual Report does not form any part of the
material for solicitation of proxies.
ADDITIONAL INFORMATION
The form of proxy and Proxy Statement have been approved by
the Board of Directors and are being mailed and delivered to
shareholders by its authority.
Yours sincerely,
MARSDEN W. MILLER, JR.
Chairman and
Chief Executive Officer
May 28, 1996
<PAGE>
XCL LTD.
(a Delaware corporation)
COMMON STOCK PROXY
FOR THE ANNUAL MEETING
OF SHAREHOLDERS
TO BE HELD JULY 1, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Marsden W. Miller, Jr.
and David A. Melman, and either of them, attorneys and proxies,
with full power of substitution, and authorizes them to vote
all shares of Common Stock, $.01 par value ("Common Stock") of
XCL Ltd. (the "Company") held of record by the undersigned on May
3, 1996, at the Annual Meeting of Shareholders to be held in
the Heymann Ballroom of the Petroleum Club of Lafayette, located
at 111 Heymann Boulevard, Lafayette, Louisiana, Monday, July 1,
1996 at 10:00 AM, Central Daylight Savings Time, and any
adjournments thereof, on the matters set forth on the reverse
side.
THE MATTERS TO BE VOTED UPON, THE INSTRUCTIONS AND
A SPACE FOR YOUR VOTE AND SIGNATURE
ARE SET FORTH ON THE REVERSE SIDE.
PLEASE VOTE, SIGN AND RETURN PROMPTLY.
If this proxy is properly executed, the shares of Common Stock
represented thereby will be voted for items 1 and 2 in accordance
with the instructions on this proxy. If no instructions are
given, such shares will be voted FOR the election of all nominees
for director, FOR approval of the amendment to the Company's
Certificate of Incorporation and in the discretion of the proxies
upon any other matter which may properly come before the meeting.
Proposal 1. The election of two (2) directors to be designated
as Class III directors to serve a three-year term
until the 1999 Annual Meeting of Shareholders, to
wit: John T. Chandler and Fred Hofheinz.
[ ] FOR ALL NOMINEES
[ ] WITHHOLD FOR ALL NOMINEES
TO WITHHOLD VOTE on any nominee write the nominee's
name in the space below.
----------------------------------------------------
Proposal 2. The approval of the amendment to Article FOURTH of
the Company's Certificate of Incorporation to
increase the number of authorized shares of Common
Stock from 350,000,000 to 500,000,000 shares, and to
increase the number of authorized shares of
Preferred Stock from 1,200,000 to 2,400,000 shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Proposal 3. In their discretion, to vote upon such other
business as may properly come before the meeting.
Receipt is acknowledged of the Proxy Statement dated May 28,
1996.
THIS PROXY MUST BE SIGNED AS NAME APPEARS HEREON. Executors,
administrators, trustees, etc., should give full title as such.
If the signer is a corporation, please sign full corporate name
by a duly authorized officer.
----------------------------------
DATE
----------------------------------
SIGNATURE
----------------------------------
SIGNATURE
I plan to attend the Annual Meeting of Shareholders:
[ ] Yes [ ] No
<PAGE>
XCL LTD.
(a Delaware corporation)
SERIES A PREFERRED STOCK PROXY
FOR THE ANNUAL MEETING
OF SHAREHOLDERS
TO BE HELD JULY 1, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Marsden W. Miller, Jr.
and David A. Melman, and either of them, attorneys and proxies,
with full power of substitution, and authorizes them to vote
all shares of Series A , Cumulative Convertible Preferred Stock,
$1.00 par value ("Series A Preferred Stock") of XCL Ltd. (the
"Company") held of record by the undersigned on May 3, 1996, at
the Annual Meeting of Shareholders to be held in the Heymann
Ballroom of the Petroleum Club of Lafayette, located at 111
Heymann Boulevard, Lafayette, Louisiana, Monday, July 1, 1996 at
10:00 AM, Central Daylight Savings Time, and any adjournments
thereof, on the matters set forth on the reverse side.
THE MATTERS TO BE VOTED UPON, THE INSTRUCTIONS AND
A SPACE FOR YOUR VOTE AND SIGNATURE
ARE SET FORTH ON THE REVERSE SIDE.
PLEASE VOTE, SIGN AND RETURN PROMPTLY.
If this proxy is properly executed, the shares of Common Stock
represented thereby will be voted for items 1 and 2 in accordance
with the instructions on this proxy. If no instructions are
given, such shares will be voted FOR the election of all nominees
for director, FOR approval of the amendment to the Company's
Certificate of Incorporation and in the discretion of the proxies
upon any other matter which may properly come before the meeting.
Proposal 1. The election of two (2) directors to be designated
as Class III directors to serve a three-year term
until the 1999 Annual Meeting of Shareholders, to
wit: John T. Chandler and Fred Hofheinz.
[ ] FOR ALL NOMINEES
[ ] WITHHOLD FOR ALL NOMINEES
TO WITHHOLD VOTE on any nominee write the nominee's
name in the space below.
----------------------------------------------------
Proposal 2. The approval of the amendment to Article FOURTH of
the Company's Certificate of Incorporation to
increase the number of authorized shares of Common
Stock from 350,000,000 to 500,000,000 shares, and to
increase the number of authorized shares of
Preferred Stock from 1,200,000 to 2,400,000 shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Proposal 3. In their discretion, to vote upon such other
business as may properly come before the meeting.
Receipt is acknowledged of the Proxy Statement dated May 28,
1996.
THIS PROXY MUST BE SIGNED AS NAME APPEARS HEREON. Executors,
administrators, trustees, etc., should give full title as such.
If the signer is a corporation, please sign full corporate name
by a duly authorized officer.
----------------------------------
DATE
----------------------------------
SIGNATURE
----------------------------------
SIGNATURE
I plan to attend the Annual Meeting of Shareholders:
[ ] Yes [ ] No
<PAGE>
XCL LTD.
(a Delaware corporation)
SERIES B PREFERRED STOCK PROXY
FOR THE ANNUAL MEETING
OF SHAREHOLDERS
TO BE HELD JULY 1, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Marsden W. Miller, Jr.
and David A. Melman, and either of them, attorneys and proxies,
with full power of substitution, and authorizes them to vote
all shares of Series B, Cumulative Preferred Stock, $1.00 par
value ("Series B Preferred Stock") of XCL Ltd. (the "Company")
held of record by the undersigned on May 3, 1996, at the Annual
Meeting of Shareholders to be held in the Heymann Ballroom of
the Petroleum Club of Lafayette, located at 111 Heymann
Boulevard, Lafayette, Louisiana, Monday, July 1, 1996 at 10:00
AM, Central Daylight Savings Time, and any adjournments thereof,
on the matters set forth on the reverse side.
THE MATTERS TO BE VOTED UPON, THE INSTRUCTIONS AND
A SPACE FOR YOUR VOTE AND SIGNATURE
ARE SET FORTH ON THE REVERSE SIDE.
PLEASE VOTE, SIGN AND RETURN PROMPTLY.
If this proxy is properly executed, the shares of Common Stock
represented thereby will be voted for items 1 and 2 in accordance
with the instructions on this proxy. If no instructions are
given, such shares will be voted FOR the election of all nominees
for director, FOR approval of the amendment to the Company's
Certificate of Incorporation and in the discretion of the proxies
upon any other matter which may properly come before the meeting.
Proposal 1. The election of two (2) directors to be designated
as Class III directors to serve a three-year term
until the 1999 Annual Meeting of Shareholders, to
wit: John T. Chandler and Fred Hofheinz.
[ ] FOR ALL NOMINEES
[ ] WITHHOLD FOR ALL NOMINEES
TO WITHHOLD VOTE on any nominee write the nominee's
name in the space below.
----------------------------------------------------
Proposal 2. The approval of the amendment to Article FOURTH of
the Company's Certificate of Incorporation to
increase the number of authorized shares of Common
Stock from 350,000,000 to 500,000,000 shares, and to
increase the number of authorized shares of
Preferred Stock from 1,200,000 to 2,400,000 shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Proposal 3. In their discretion, to vote upon such other
business as may properly come before the meeting.
Receipt is acknowledged of the Proxy Statement dated May 28,
1996.
THIS PROXY MUST BE SIGNED AS NAME APPEARS HEREON. Executors,
administrators, trustees, etc., should give full title as such.
If the signer is a corporation, please sign full corporate name
by a duly authorized officer.
----------------------------------
DATE
----------------------------------
SIGNATURE
----------------------------------
SIGNATURE
I plan to attend the Annual Meeting of Shareholders:
[ ] Yes [ ] No
