UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report pursuant to Section 13 or 15(d) of the
[X] Securities Exchange Act of 1934
For the Quarterly Period Ended September 30, 1999
OR
Transition Report Pursuant to Section 13 or 15(d)of
[ ] the Securities Exchange Act of 1934
Commission File No. 1-10669
XCL Ltd.
(Exact name of registrant as specified in its charter)
Delaware 51-0305643
(State of Incorporation) (I.R.S. Employer
Identification Number)
Petroleum Tower, Suite 400
3639 Ambassador Caffery Parkway, Lafayette, LA 70503
(Address of principal executive offices) (Zip
Code)
318-989-0449
(Registrant's telephone number, including area code)
110 Rue Jean Lafitte, 2nd Floor, Lafayette, LA 70508
(Former name, former address and former fiscal year, if changed
since last report)
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[X] NO [ ]
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
23,377,971 shares Common Stock, $.01 par value were
outstanding on November 15, 1999.
<PAGE>
XCL LTD.
TABLE OF CONTENTS
Page
PART I
Item 1. Financial Statements 3
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 15
Item 3. Quantitative and Qualitative Disclosures About Market
Risk 19
PART II
Item 1. Legal Proceedings 20
Item 2. Changes in Securities 20
Item 3. Default Upon Senior Securities 21
Item 4. Submission of Matters to a Vote of Security Holders 21
Item 6. Exhibits and Reports on Form 8-K 21
<PAGE>
XCL Ltd. and Subsidiaries
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED BALANCE SHEETS
(In Thousands)
(Unaudited)
September 30, December 31,
A S S E T S 1999 1998
----------- ------------- ------------
Current assets:
Cash and cash equivalents $ 405 $ 83
Cash held in escrow (restricted) 192 205
Other 753 443
-------- ---------
Total current assets 1,350 731
-------- ---------
Property and equipment:
Oil and gas (full cost method):
Proved undeveloped properties,
not being amortized 31,247 28,274
Unevaluated properties 70,172 58,403
-------- --------
101,419 86,677
Other 1,338 1,344
-------- --------
102,757 88,021
Accumulated depreciation, depletion and
amortization (803) (761)
-------- --------
101,954 87,260
-------- --------
Investments 4,105 4,078
Investment in land 12,200 12,200
Oil and gas properties held for sale 5,059 5,099
Debt issue costs, less amortization 3,289 3,763
Other assets 1,608 1,542
-------- --------
Total assets $ 129,565 $ 114,673
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
---------------------------------------
Current liabilities:
Accounts payable and accrued expenses $ 3,250 $ 1,465
Accrued interest 11,071 2,049
Due to joint venture partner (Note 5) 10,926 8,168
Dividends payable 4,547 1,658
Notes payable 7,071 2,974
-------- --------
36,865 16,314
Senior secured notes reclassification 65,068 63,457
-------- --------
Total current liabilities 101,933 79,771
-------- --------
Long-term debt, net of current maturities -- --
Other liabilities 5,361 5,428
Commitments and contingencies (Note 8)
Shareholders' equity:
Preferred stock-$1.00 par value; authorized
2.4 million shares; issued shares of
1,342,109 at September 30, 1999 and
1,282,745 at December 31, 1998 -
liquidation preference of $115 million
at September 30, 1999 1,342 1,283
Preferred stock held in treasury -
$1.00 par value; 9,681 shares at
September 30, 1999 (10) --
Common stock-$.01 par value; authorized
500 million shares; issued shares of
23,377,971 at September 30, 1999 and
23,447,441 at December 31, 1998 233 234
Common stock held in treasury-$0.01 par
value: 69,470 shares at December 31, 1998 -- (1)
Additional paid-in capital 301,149 296,373
Accumulated deficit (272,172) (260,215)
Unearned compensation (8,271) (8,200)
-------- --------
Total shareholders' equity 22,271 29,474
-------- --------
Total liabilities and
shareholders' equity $ 129,565 $ 114,673
======== ========
The accompanying notes are an integral part of these financial
statements.
<PAGE>
XCL Ltd. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------- -----------------
1999 1998 1999 1998
------ ------ ------ ------
Costs and operating expenses:
General and administrative $ 1,082 $ 1,631 $ 3,257 $ 4,546
Other, net 32 46 102 118
------- ------- ------ ------
1,114 1,677 3,359 4,664
------- ------- ------ ------
Operating loss (1,114) (1,677) (3,359) (4,664)
------- ------- ------ ------
Other income (expense):
Interest income 2 146 6 864
Interest expense, net of
amounts capitalized (1,199) (99) (3,703) (1,951)
Other, net 660 744 994 745
------- ------- ------ ------
(537) 791 (2,703) (342)
------- ------- ------ ------
Net loss (1,651) (886) (6,062) (5,006)
Preferred stock dividends (3,097) (2,688) (5,895) (5,333)
------- ------- ------ ------
Net loss attributable to common stock $(4,748) $(3,574) $(11,957) $(10,339)
====== ====== ====== ======
Net loss per common share (basic) $ (0.20) $ (0.16) $ (0.51) $ (0.46)
====== ====== ======= =======
Net loss per common share (diluted) $ (0.20) $ (0.16) $ (0.51) $ (0.46)
====== ====== ======= =======
Weighted average number of common
shares outstanding:
Basic 23,373 22,922 23,373 22,723
Diluted 23,373 22,922 23,373 22,723
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
XCL Ltd. and Subsidiaries
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(In Thousands)
(Unaudited)
<CAPTION>
Preferred Common
Stock Stock Additional Total
Preferred Held In Common Held In Paid-In Accumulated Unearned Shareholders'
Stock Treasury Stock Treasury Capital Deficit Compensation Equity
--------- --------- ------ ------- -------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1998 $ 1,283 $ -- $ 234 $ (1) $296,373 $ (260,215) $ (8,200) $ 29,474
Net loss -- -- -- -- -- (6,062) -- (6,062)
Dividends -- -- -- -- 771 (5,895) -- (5,124)
Preferred shares issued 59 -- -- -- 2,099 -- -- 2,158
Preferred shares converted
to treasury shares -- (10) -- -- 10 -- -- --
Treasury shares retired -- -- (1) 1 -- -- -- --
Issuance of stock purchase
warrants -- -- -- -- 1,234 -- -- 1,234
Accretion of unearned
compensation -- -- -- -- 71 -- (71) --
Earned compensation -
stock options -- -- -- -- 591 -- -- 591
----- ---- ---- ---- -------- -------- -------- -------
Balance, September 30, 1999 $ 1,342 $ (10) $ 233 $ -- $301,149 $ (272,172) $ (8,271) $ 22,271
===== ==== ==== ==== ======= ======= ======== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
XCL Ltd. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
NineMonths Ended
September 30,
-----------------
1999 1998
---- -----
Cash flows from operating activities:
Net loss $ (6,062) $ (5,006)
------- ------
Adjustments to reconcile net loss to net cash
provided by (used in)operating activities:
Depreciation, depletion and amortization 83 78
Amortization of discount on senior secured
notes and land notes 3,239 1,610
Stock compensation programs 591 1,098
Stock issued for outside professional services -- 223
Change in operating assets and liabilities:
Accounts receivable -- (83)
Refundable deposits -- 1,200
Accounts payable and accrued costs 1,785 (350)
Accrued interest 13 2,813
Other, net (443) (268)
------ ------
Total adjustments 5,268 6,321
------ ------
Net cash provided by (used in)
operating activities (794) 1,315
------ ------
Cash flows from investing activities:
Change in cash held in escrow (restricted) 13 5,013
Note receivable -- (362)
Capital expenditures (2,969) (23,578)
Investments (27) (607)
Proceeds from sale of assets -- 3
------ -------
Net cash used in investing activities (2,983) (19,531)
------ -------
Cash flows from financing activities:
Proceeds from issuance of debt 4,800 --
Proceeds from exercise of common stock
warrants and options -- 1,209
Payment of long-term debt (624) (450)
Stock /note issuance costs and other (77) (93)
------ -------
Net cash provided by financing
activities 4,099 666
------ -------
Net increase (decrease) in cash and cash equivalents 322 (17,550)
Cash and cash equivalents at beginning of period 83 21,952
------ -------
Cash and cash equivalents at end of period $ 405 $ 4,402
====== =======
The accompanying notes are an integral part of these financial statements.
<PAGE>
XCL Ltd. and Subsidiaries
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1999
(1) Basis of Presentation
The consolidated financial statements at September 30, 1999,
and for the nine months then ended have been prepared by the
Company, without audit, pursuant to the Rules and Regulations of
the Securities and Exchange Commission. The Company believes that
the disclosures are adequate to make the information presented
herein not misleading. These consolidated financial statements
should be read in conjunction with the financial statements and
the notes thereto included in the Company's Annual Report on Form
10-K for the year ended December 31, 1998. The balance sheet at
December 31, 1998, included herein, has been derived from the
audited financial statements at that date, but does not include
all of the information and footnotes required by generally
accepted accounting principles for complete financial statements.
In the opinion of management all adjustments, consisting only of
normal recurring adjustments, necessary to present fairly the
financial position of XCL Ltd. and subsidiaries as of September
30, 1999, and the results of its operations for the nine months
ended September 30, 1999 and 1998, have been included. The 1998
dividends on the Amended Series A Preferred Stock for the nine and
three months ended September 30, 1998 have been restated by $2.0
million and $0.2 million, respectively, to reflect the fair value
of the preferred stock issued in satisfaction of such amounts and
will be accreted to the mandatory redemption date applying the
effective interest method. This adjustment had the effect of
reducing the 1998 loss per share attributable to Common Stock from
$0.54 per share to $0.46 per share for the nine months ended
September 30, 1998 and no effect per share for the three months
ended September 30, 1998. The results of the Company's operations
for such interim periods are not necessarily indicative of the
results for the full year.
(2) Liquidity and Capital Resources
The Company, in connection with its 1995 decision to dispose
of its domestic properties, is generating minimal annual revenues
and is devoting all of its efforts toward the development of its
China properties. The Company has cash available of approximately
$405,000 as of September 30, 1999, and a working capital deficit
of $101 million. The Senior Secured Notes (the "Notes") in the
amount of $65 million (net of unamortized discount of $10 million)
have been reclassified to current liabilities because the Company
did not make the May 1999 interest payment (in the approximate
amount of $6.0 million, including approximately $0.4 million in
default interest as of September 30, 1999). Further, the Company
failed to make the November 1999 interest payment (in the
approximate amount of $5.6 million). Absent an agreement with the
Note holders amending and/or extending the payment terms, the
holders of the Notes could declare all amounts outstanding
immediately due and payable. The Company is in discussions with
the holders of at least 95% of the Notes and believes that an
agreement can be reached to avoid a declaration that all amounts
outstanding are due and payable. The possible results of such a
declaration include the Company's loss of the stock of XCL-China
and/or its interest in the Contract. In addition to the
negotiations with the holders of the Notes regarding this matter,
the Company is exploring other options for meeting its obligations
under the Notes. A negotiated agreement with the Note holders
could substantially dilute the interests of the Company's existing
equity holders. There can be no assurance that a satisfactory
resolution will result.
As previously reported, the Company has not paid certain
disputed cash calls made by Apache with respect to the Zhao Dong
Block. On June 25, 1999, the Company initiated a $17 million
arbitration proceeding against Apache. The Company initiated the
arbitration proceedings because Apache demanded that the Company
pay $10 million in disputed Zhao Dong Block project costs in
addition to $7.2 million previously paid to Apache which has also
been disputed. Such disputed costs consist of (i) approximately
$8 million that Apache has demanded the Company pay for
engineering and design on the Zhao Dong Block (Apache has incurred
approximately $16 million in engineering and design expenditures
although Apache received written authority to spend at most $2.5
million), (ii) $5.3 million consisting primarily of project costs
challenged by the Company in joint account audits for the years
1995, 1996 and 1997, as well as certain similar issues in 1998 and
1999 and (iii) $3.9 million in exploration costs that the Company
believes were Apache's responsibility under its May 10, 1995
agreement with the Company. The Company has demanded a refund of
$7.2 million previously paid to Apache and has notified Apache
that it may seek their removal as operator of the Zhao Dong Block.
On that same date, but after Apache's receipt of the formal
arbitration notices, Apache filed a petition in U.S. Bankruptcy
Court to place the Company's subsidiary, XCL-China, Ltd., into
involuntary bankruptcy for failure to pay the $10 million in
disputed project costs. See Part II - "Item 1. Legal
Proceedings."
As more fully disclosed in Note 8, the Company is obligated
to meet certain minimum contractual requirements covering the Zhao
Dong and Zhang Dong Blocks in China. Failure by the Company to
meet such obligations, or secure an extension of time in order to
complete such contractual requirements, may result in the sale or
surrender of all or part of its interest in those properties,
and/or its other interests in China. If such properties are sold
or surrendered, there can be no assurance that the Company would
recover its carrying value.
Management plans to generate the additional cash needed
through the sale or financing of its domestic assets held for sale
and the completion of additional equity, debt or joint venture
transactions. There is no assurance, however, that the Company
will be able to sell or finance its assets held for sale or to
complete other transactions in the future at commercially
reasonable terms, if at all, or that it will be able to meet its
future contractual obligations. If production from the China
properties commences in 2000, as anticipated, the Company's
proportionate share of the related cash flow will be available to
help satisfy a portion of its cash requirements. However, there
is likewise no assurance that such development will be successful
and production will commence, and that such cash flow will be
available.
(3) Supplemental Cash Flow Information
There were no income taxes paid during the nine-month periods
ended September 30, 1999 and 1998.
Capitalized interest for the three- and nine-month periods
ended September 30, 1999 was approximately $3.0 million and $9.0
million respectively, as compared to approximately $3.3 million
and $8.8 million, respectively, for the same period in 1998.
Interest paid during the three- and nine-month periods ended
September 30, 1999 amounted to approximately $206,000 and
$247,000, respectively, as compared to $37,000 and $5.8 million,
respectively, for the same periods in 1998.
(4) Prepaid Lease
On August 19, 1999, the Company entered into a one-year lease
commencing on September 1, 1999, for its current office space in
Petroleum Tower. The Company prepaid the lease in advance for an
aggregate amount of $79,704.63, including a security deposit of
$6,131.13.
(5) Disputed Amounts
As disclosed in Note 2, arbitration proceedings have been
commenced contesting this amount. See Part II - "Item 1. Legal
Proceedings."
(6) Debt
Debt consists of the following (000's):
September 30, December 31,
1999 1998
------------ ------------
Senior secured notes, net of unamortized
discount of $9,932 and $11,543, respectively $ 65,068 $ 63,457
====== ======
Notes payable:
Lutcher Moore Group Limited Recourse Debt 2,950 1,474
XCL Land, Ltd. secured notes, net of
unamortized discount of $79 and $0,
respectively 4,121 1,500
------ -------
$ 7,071 $ 2,974
====== =======
Substantially all of the Company's assets collateralize these
borrowings.
Senior Secured Notes
- --------------------
The long-term portion of the Senior Secured Notes has been
reclassified to a current liability because the Company did not
make the May 1999 interest payment (in the approximate amount of
$6.0 million, including approximately $0.4 million in default
interest as of September 30, 1999). Further, the Company failed to
make the November 1999 interest payment (in the approximate amount
of $5.6 million). Absent an agreement with the Note holders
amending and/or extending the payment terms, the holders of the
Notes could declare all amounts outstanding immediately due and
payable. The Company is in negotiations with the holders of the
Notes regarding this matter.
The Exploration Company of Louisiana, Inc. (formerly XCL Land,
Ltd.) Secured Notes
- ------------------------------------------------------------------
In November 1998, January 1999, March 1999, April 1999 and
May 1999, the Company, through its wholly owned subsidiary, XCL
Land, Ltd., issued an aggregate of 41 units, each unit comprised
of a secured note in the principal amount of $100,000 each (the
"XCL Land Secured Notes") and five-year warrants to purchase
21,705 shares of Common Stock of the Company in a short-term
financing. Pursuant to the terms of the subscription agreements,
the exercise price of the warrants is reduced, if the exercise
price of those warrants issued in subsequent subscriptions are
more favorable. In connection with the additional subscriptions in
May 1999, and pursuant to the terms of the subscription
agreements, the exercise price of the warrants issued in the
November 1998 ($3.75 per share), January 1999 ($2.00 per share),
March 1999 ($1.50 per share) and April 1999 ($1.3125 per share)
offerings, were all reduced to $1.25 per share. The lenders were
granted a security interest in a portion of the partnership
interests of XCL Land, Ltd. and The Exploration Company of
Louisiana, Inc., in L.M. Holding Associates, L.P., the owner of
the Lutcher Moore Tract. The XCL Land Secured Notes bear interest
at 15% per annum and are payable 90 days from issuance, with the
option for two 90-day extensions, the second of which must be
approved by the respective lender. XCL Land, Ltd. received $4.1
million in proceeds, of which $1.2 million was allocated to the
warrants and is being amortized to interest expense over the term
of the notes. At September 30, 1999, the unamortized discount is
approximately $79,000. Approximately $0.7 million in proceeds were
used to pay outstanding indebtedness associated with the Lutcher
Moore Tract and the remaining $3.4 million was used to reduce
intercompany debt.
Also during March 1999, the Company, through XCL Land, Ltd.,
issued a secured note in the principal amount of $100,000 and five-
year warrants, exercisable at $1.25 per share, to purchase 10,000
shares of Common Stock of the Company in a short term financing
with one lender. The lender was granted a security interest in a
portion of the partnership interests of XCL Land, Ltd. and The
Exploration Company of Louisiana, Inc., in L.M. Holding
Associates, L.P., the owner of the Lutcher Moore Tract. The note
bears interest at 15% per annum and is payable 45 days after
issuance. The holder of the note has agreed to extend the due
date of the note and terms of the extension are being negotiated.
XCL Land, Ltd. received $100,000 in proceeds, of which
approximately $24,000 was allocated to the warrants. The value
allocated to the warrants was amortized to interest expense over
the term of the note. All of the proceeds were used by the Company
to reduce intercompany debt.
On September 8, 1999, XCL Land Ltd. was merged into The
Exploration Company of Louisiana, Inc.
During September 1999, one Note holder elected not to extend
its XCL Land Secured Note and was repaid $100,000 in principal
plus accrued interest thereon in October 1999. During October
1999, one Note holder elected not to extend its XCL Land Secured
Note in the principal amount of $200,000.
Lutcher Moore Seller's Notes
- ----------------------------
During July 1999, the Company through its wholly owned
subsidiaries XCL-Acquisitions, Inc. and XCL Land Ltd., reached
agreement with two lenders, whereby the lenders purchased an
aggregate of $2.247 million in principal of seller's notes
("Seller's Notes") secured by the Lutcher Moore Tract for a
purchase price of $2.1 million. The interest rate on the Seller's
Notes is 8%, and the Seller's Notes are payable on demand at any
time after November 30, 1999. The proceeds were used to reduce
intercompany debt.
The Company further agreed that the purchasers of the
Seller's Notes, and under certain circumstances the holders of the
XCL Land Secured Notes, will collectively on a pro rata basis
receive 12.5% of the net proceeds received from the sale of the
Lutcher Moore Tract. Until the Lutcher Moore Tract is sold, those
same entities are entitled to receive 12.5% of any net proceeds
received by the Company from any activity on or from the land,
except for payments for rights-of-way. Further, the Company has
agreed to grant an aggregate of 455,805 warrants, exercisable for
five-years at $0.10 per share. The holders of the warrants will
have the right after two-years, but only for a period of six
months, to exchange the warrants for fully paid shares of Common
Stock of the Company having a market value of $800,000 at the time
of exchange or, cash at the Company's option.
The Company and those purchasers of the Seller's Notes, and
their affiliates, who also hold an aggregate of $2.0 million in
XCL Land Secured Notes have agreed to extend the term of the XCL
Land Secured Notes to November 30, 1999. The exercise price of
all of the outstanding warrants issued in connection with the XCL
Land Secured Notes will be reduced to $0.10 per share. The
Company has also agreed to amend the terms of certain existing
warrants to purchase an aggregate of 217,052 shares of Common
Stock held by the purchasers and their affiliates. The warrants
will have a new five-year term expiring July 16, 2004, the
exercise price will be reduced from $0.15 per share to $0.01 per
share, and the holders of the warrants will have the right after
two-years, but only for a period of six months, to exchange the
warrants for fully paid shares of Common Stock of the Company
having a market value at the time of exchange of $400,000, or
cash, at the Company's option.
(7) Preferred Stock and Common Stock
As of September 30, 1999, the Company had the following
shares of Preferred Stock issued and outstanding:
Liquidation
Shares Value
------- -------------
Amended Series A 1,288,847 $ 109,551,995
Amended Series B 53,262 5,326,200
--------- -----------
1,342,109 $114,878,195
========= ===========
Amended Series A Preferred Stock
- --------------------------------
Unclaimed shares of Amended Series A Preferred Stock
resulting from the amendment, recapitalization and conversion of
the Series A, Cumulative Convertible Preferred Stock and Series E,
Cumulative Convertible Preferred Stock, including dividends
accrued thereon through November 10, 1998, are classified as
treasury stock. Pursuant to the terms of the amendment,
recapitalization and conversion, dividends have ceased to accrue
on the unclaimed shares.
During September 1999, the directors declared a dividend
payable in kind on November 1, 1999, to holders of Amended Series
A Preferred Stock on October 15, 1999, at the rate of 0.0475 new
shares for each share held. This dividend payment has not yet
been distributed.
Loss Per Share
- --------------
The following table sets forth the computation of basic and
diluted loss per share (in 000's, except for per share amounts):
Three Months Ended Nine Months Ended
September 30, September 30,
__________________ _________________
1999 1998 1999 1998
----- ----- ---- ----
Number of shares on which basic
loss per share is calculated: 23,373 22,922 23,373 22,723
Number of shares on which diluted
loss per share is calculated: 23,373 22,922 23,373 22,723
Net loss attributable to common
shareholders $(4,748) $(3,574) $(11,957) $(10,339)
Basic loss per share $ (0.20) $ (0.16) $(0.51) $ (0.46)
Diluted loss per share $ (0.20) $ (0.16) $(0.51) $ (0.46)
The effect of 38,148,107 and 35,273,606 shares of potential
common stock were anti-dilutive in the nine months ended September
30, 1999 and 1998, respectively, due to the losses in both
periods.
(8) Commitments and Contingencies
Other commitments and contingencies include:
* The Company acquired the rights to the exploration,
development and production of the Zhao Dong Block by executing a
Production Sharing Agreement with CNODC in February 1993. Under
the terms of the Production Sharing Agreement, the Company and its
partner are responsible for all exploration costs. If a commercial
discovery is made, and if CNODC exercises its option to
participate in the development of the field, all development and
operating costs and related oil and gas production will be shared
up to 51 percent by CNODC and the remainder by the Company and its
partner.
The Production Sharing Agreement includes the following additional
principal terms:
The Production Sharing Agreement is basically divided into three
periods: the Exploration period, the Development period and the
Production period. Work to be performed and expenditures to be
incurred during the Exploration period, which consists of three
phases totaling seven years from May 1, 1993, are the exclusive
responsibility of the Contractor (the Company and its partner as a
group). The Contractor's obligations in the three exploration
phases are as follows:
1. During the first three years, the Contractor is required to
drill three wildcat wells, perform seismic data acquisition and
processing and expend a minimum of $6 million. These obligations
have been met.
2. During the next two years, the Contractor is required to
drill two wildcat wells, perform seismic data acquisition and
processing and expend a minimum of $4 million. These obligations
have been met.
3. During the last two years, the Contractor is required to
drill two wildcat wells and expend a minimum of $4 million. The
Contractor has elected to proceed with the third phase of the
Exploration Period.
4. The Production Period for any oil and/or gas field covered
by the Contract (the "Contract Area") will be 15 consecutive years
(each of 12 months), commencing for each such field on the date of
commencement of commercial production (as determined under the
terms of the Production Sharing Agreement). However, prior to the
Production Period, and during the Development Period, oil and/or
gas may be produced and sold during a long-term testing period.
The Contractor may terminate the Production Sharing Agreement at
the end of each phase of the Exploration period, without further
obligation. The Company currently estimates that its share of the
development costs on proved reserves associated with the Zhao Dong
Block to be approximately $35.5 million.
* The Company, through its wholly owned subsidiary XCL-Cathay
Ltd., acquired the rights to appraisal, development and production
of the Zhang Dong Block, in the Bohai Bay shallow water sea area,
by executing a Petroleum Contract (the "Contract") with China
National Petroleum Corporation ("CNPC") in August 1998. The
Company is the Contractor. The Contractor shall pay all appraisal
costs. If CNPC exercises its option to participate in the
development of the field, all development and operating costs and
related oil and gas production will be shared up to 51 percent by
CNPC and the remainder by the Company.
The Contract is basically divided into three periods: the
Appraisal period, the Development period and the Production
period. Work to be performed and expenditures to be incurred
during the Appraisal period, which consists of three phases
totaling five years from October 1, 1998, are the exclusive
responsibility of the Company. The Contractor's obligations in the
three appraisal phases are as follows:
1. During the first year, the Contractor is required to drill
one appraisal well, perform seismic data processing, upgrade the
artificial island and causeway, and expend a minimum of $4
million. The parties have agreed to delay drilling of the first
appraisal well until March 2000. The parties have also agreed
that the Company may delay its election to enter the second phase
of the Zhang Dong Contract until the first appraisal well has been
drilled and evaluated. This agreement has not yet been formally
documented.
2. During the next two years, the Contractor is required to
drill two appraisal wells, make additional improvements to the
artificial island if Contractor elects to drill from such
facility, re-evaluate a minimum of three existing wellbores,
formulate a development program for any field determined to be
commercial, and expend a minimum of $6 million.
3. During the last two years, the Contractor is required to
drill two appraisal wells and expend a minimum of $6 million.
4. The Production Period for any oil and/or gas field covered
by the Agreement will be 20 consecutive years (each of 12 months),
commencing for each such field on the date of commencement of
commercial production (as determined under the terms of the
Contract). However, prior to the Production Period, and during the
Development Period, oil and/or gas may be produced and sold during
a long-term testing period.
The Contractor may terminate the Contract at the end of
either the first or second phase of the Appraisal period, without
further obligation. The Company has not yet paid certain amounts
due under the terms of the Zhang Dong Contract. Failure to make
those payments if demand is made will result in loss of the
Company's interest in the Zhang Dong Block.
* On October 1, 1999, the Company met with representatives of
the AMEX, at the request of the AMEX, to present information in
support of a continued listing. The Company's continued listing
is being reviewed because:
(a) the Company has incurred losses in each of the past five
fiscal years ending December 31, 1998 and the six months ending
June 30, 1999, and continues to have a working capital deficit;
(b) the Company received a going concern opinion from its
auditors on its audited financial statements for the year ended
December 31, 1998;
(c) the Company failed to make an interest payment on its
Senior Secured Notes in May 1999;
(d) the Company's low stock price.
The Company is waiting for a determination by the AMEX.
* As previously reported, the Company has not paid certain
cash calls and disputed charges to Apache totaling approximately
$10.9 million through November 1999 (approximately $10.7 million
at September 30, 1999). On December 1, 1995, XCL-China submitted
to arbitration certain accounting disputes arising from operations
in the Bohai Bay Shallow Water Sea Area, People's Republic of
China and governed by a Zhao Dong Block Operating Agreement. By
the initial submission, XCL-China disputed certain amounts charged
to it by Apache in the August, September and October 1995 joint
interest billings and the November and December 1995 cash calls
which could develop into an event that would trigger Apache's
option to purchase the Company's interest in the Production
Sharing Agreement. Thereafter, disputes involving joint interest
billings through December 1998 were added to the submission. In
1997, XCL-China made some payments with respect to the disputed
amounts although the arbitration proceeding remained unresolved
and inactive inasmuch as a third arbitrator had not been selected.
On June 25, 1999, the Company initiated a $17 million, arbitration
proceeding against Apache. The Company initiated the arbitration
proceedings when Apache demanded that the Company pay $10 million
in cash calls and billings that the Company disputes in addition
to $7.2 million previously paid to Apache which has also been
disputed. Such disputed costs consist of (i) approximately $8
million that Apache has demanded the Company pay for engineering
and design expenditures on the Zhao Dong Block Apache has incurred
approximately $16 million in improper and excessive engineering
and design expenditures although Apache received written authority
to spend at most $2.5 million), (ii) $5.3 million consisting
primarily of project costs challenged by the Company in joint
account audits for the years 1995, 1996 and 1997, as well as
certain similar issues in 1998 and 1999, and (iii) $3.9 million
in exploration costs that were Apache's responsibility under its
May 10, 1995 agreement with the Company. The Company has demanded
a refund of $7.2 million previously paid to Apache and has
notified Apache that it may seek their removal as operator of the
Zhao Dong Block. See Part II - "Item 1. Legal Proceedings."
On June 25, 1999, after receipt of formal arbitration notices from
the Company and its subsidiary, XCL-China, Ltd., contesting such
costs, Apache filed a petition in U.S. Bankruptcy Court to
involuntarily place the Company's subsidiary, XCL-China, Ltd. into
Chapter 7 bankruptcy for failure to pay the $10 million in
disputed project costs. . See Part II - "Item 1. Legal
Proceedings."
* The Company is in dispute over a 1992 tax assessment
(including penalties and interest through September 30, 1999) by
the Louisiana Department of Revenue and Taxation for the years
1987 through 1991 in the approximate amount of $3.2 million. The
Company is in dispute over a 1997 assessment (including penalties
and interest through September 30, 1999) from the Louisiana
Department of Revenue and Taxation for income tax years 1991 and
1992, and franchise tax years 1992 through 1996 in the approximate
amount of $3.5 million. The Company has filed written protests as
to these assessments, and will vigorously contest the asserted
deficiencies through the administrative appeals process and, if
necessary, litigation. The Company believes that adequate
provision has been made in the financial statements for any
liability.
* On July 26, 1996, an individual filed three lawsuits against
a wholly owned subsidiary with respect to oil and gas properties
held for sale. One suit alleges actual damage of $580,000 plus
additional amounts that could result from an accounting of a
pooled interest. Another seeks legal and related expenses of
$56,473 from an allegation the plaintiff was not adequately
represented before the Texas Railroad Commission. The third suit
seeks a declaratory judgement that a pooling of a 1938 lease and
another in 1985 should be declared terminated and further
plaintiffs seek damages in excess of $1 million to effect
environmental restoration. The Company believes these claims are
without merit and intends to vigorously defend itself.
* The Company is subject to other legal proceedings that arise
in the ordinary course of its business. In the opinion of
Management, the amount of ultimate liability with respect to these
actions will not materially affect the financial position of the
Company or results of operations of the Company.
(9) XCL-China Ltd.
The following summary financial information of XCL-China
Ltd., a wholly owned subsidiary, reflects its financial position
and its results of operations for the periods presented (in
thousands of dollars):
September 30, December 31,
1999 1998
----------- -----------
ASSETS
------
Current assets $ 452 $ 174
Oil and gas properties (full cost method):
Proved undeveloped properties,
not being amortized 31,247 28,274
Unevaluated properties 66,568 56,708
------ ------
97,815 84,982
Other 356 416
------ ------
98,171 85,398
Accumulated depreciation (13) (5)
------ ------
98,158 85,393
Other assets 416 359
------ ------
$ 99,026 $ 85,926
====== ======
LIABILITIES AND SHAREHOLDER'S DEFICIT
----------------------------------------
Total current liabilities $ 11,485 $ 8,397
Due to parent 90,866 80,425
Accumulated deficit (3,325) (2,896)
------ ------
$ 99,026 $ 85,926
====== ======
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
1999 1998 1999 1998
---- ---- ---- ----
Costs and expenses $ 335 $ 82 $ 429 $ 700
----- ---- ---- -----
Net loss $ (335) $ (82) $ (429) $ (700)
===== ==== ==== =====
<PAGE>
XCL LTD. AND SUBSIDIARIES
September 30, 1999
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Outlook
- -------
Cautionary Statement Pursuant to Safe Harbor Provisions of
the Private Securities Litigation Reform Act of 1995.
This report contains "forward-looking statements" within the
meaning of the federal securities laws. These forward-looking
statements include, among others, statements concerning the
Company's outlook for 1999 and beyond, the Company's expectations
as to funding its capital expenditures and other statements of
expectations, beliefs, future plans and strategies, anticipated
events or trends, and similar expressions concerning matters that
are not historical facts. The forward-looking statements in this
report are subject to risks and uncertainties that could cause
actual results to differ materially from those expressed in or
implied by the statements.
Liquidity and Capital Resources
- -------------------------------
The Company has generated minimal cash from operations since
the fourth quarter of 1995, when management made the decision to
focus its attention on operations in China and to sell its other
assets. This decision is supported by the excellent well test
results on the China properties.
At September 30, 1999, the Company had a net working capital
deficit of $101 million. The Company does not have, as of November
15, 1999, sufficient funds to cover the Company's working capital
requirements and capital expenditure obligations on the Zhao Dong
and Zhang Dong Blocks during 1999.
In addition, the Company failed to make interest payments on
the Senior Secured Notes (in the aggregate approximate amount of
$11.6 million, including approximately $0.4 million in default
interest as of September 30, 1999) due on May 3 and November 1,
1999. Absent an agreement with the Note holders amending and/or
extending the payment terms, the holders of the Notes could
declare all principal amounts outstanding, and accrued interest,
immediately due and payable. The Company is in discussion with the
holders of at least 95% of the Notes and believes that an
agreement can be reached to avoid a declaration that all amounts
outstanding are due and payable. The possible results of such a
declaration include the Company's loss of the stock of XCL-China
and/or its interest in the Contract. In addition to the
negotiations with the holders of the Notes regarding this matter,
the Company is exploring other options for meeting its obligations
under the Notes. A negotiated agreement with the Note holders
could substantially dilute the interests of the Company's existing
equity holders. There can be no assurance that a satisfactory
resolution will result.
As previously reported, the Company has not paid certain
disputed cash calls made by Apache with respect to the Zhao Dong
Block. On June 25, 1999, the Company initiated a $17 million
arbitration proceeding against Apache. The Company initiated the
arbitration proceedings because Apache demanded that the Company
pay $10 million in disputed Zhao Dong Block project costs in
addition to $7.2 million previously paid to Apache that has also
been disputed. Such disputed costs consist of (i) approximately
$8 million that Apache has demanded the Company pay for
engineering and design expenditures on the Zhao Dong Block (Apache
has incurred approximately $16 million in engineering and design
expenditures although Apache received written authority to spend
at most $2.5 million), (ii) $5.3 million consisting primarily of
project costs challenged by the Company in joint account audits
for the years 1995, 1996 and 1997, as well as certain similar
issues in 1998 and 1999, and (iii) $3.9 million in exploration
costs that the Company believes were Apache's responsibility under
its May 10, 1995 agreement. The Company has demanded a refund of
$7.2 million previously paid to Apache and has notified Apache it
may seek their removal as operator of the Zhao Dong Block. On
that same date, after receipt of formal arbitration notices from
the Company and its subsidiary, XCL-China, Ltd., contesting such
costs, Apache filed a petition in U.S. Bankruptcy Court to place
the Company's subsidiary, XCL-China, Ltd., into involuntary
bankruptcy for failure to pay the $10 million in disputed project
costs. See Part II - "Item 1. Legal Proceedings."
The Company believes that its plans for the Zhao Dong Block
continue to be economically feasible at current oil prices.
Should such prices decline, it will reduce the Company's projected
economic return from the project and may further impair its
ability to meet the debt service requirements.
As a result of the Company's decision to focus on China and
sell its U.S. assets, it presently has no source of significant
revenues. The Company incurred a loss for fiscal 1998 of $13.8
million (including a provision of $4.2 million for impairment of
certain oil and gas properties) and expects to incur a loss in
1999 as well because production and related cash flow from the
Zhao Dong and Zhang Dong Blocks are not expected until 2000, at
the earliest.
With respect to the C-D Field on the Zhao Dong Block, CNODC
has given written notice that it will participate as to its full
51% share and has urged that production begin as soon as
reasonably practicable. Except for certain exploratory wells on
which Apache has an obligation to pay for all the costs, the
Company is required to fund 50% of all exploration expenditures
and 24.5% of all development and production expenditures.
Based on the current disputes with Apache, the Company
estimates that its share of development expenses for 1999 will be
less than the approximately $13.7 million previously estimated by
the Company. The Company's share of exploration expenses for the
remaining two obligatory wells to be drilled prior to the end of
the Exploration Period (which expires April 30, 2000) is
approximately $5.0 million. The Company understands that Apache
has requested that the Exploration Period be extended by one year.
The Company presently projects and plans that these funds will be
available from the sale or refinancing of domestic oil and gas
properties held for sale and/or investment in land, project
financing, an increase in the amount of senior secured notes,
supplier financing, additional equity, joint ventures with other
oil companies, or proceeds from production. Based on continuing
discussions with major shareholders, major bondholders, investment
bankers, and potential purchasers, the Company believes that such
required funds should be available. However, there is no assurance
that such funds will be available and, if available, on
commercially reasonable terms. Any new debt could require
approval of the holders of the Notes and there is no assurance
that such approval could be obtained.
In addition, the Company is the operator of the Zhang Dong
Block and, as such, is required to cover the costs of initial
appraisal drilling, upgrading production facilities and additional
studies of seismic data. The Contract commits the Company to
drill at least one well during the first year. The parties have
agreed to delay drilling of this well until March 2000. Under the
Contract, the Company is entitled to 49% of the production. The
Company estimates that its minimum capital requirements over the
next year to satisfy the terms of the Zhang Dong Contract are
approximately $6.5 million. This amount is in addition to amounts
the Company expects to spend on the Zhao Dong Block during 1999.
Funds are expected to come from the previously mentioned sources.
Longer-term liquidity is dependent upon the Company's future
performance, including commencement of production in China, as
well as continued access to capital markets. In addition, the
Company's efforts to secure additional financing could be impaired
if its Common Stock is delisted from the AMEX.
If funds for the purposes described above and for general and
administrative expenses are not available, the Company may be
required to substantially curtail its operations or sell or
surrender all or part of its interest in the Zhao Dong or the
Zhang Dong Blocks and/or its other interests in China in order to
meet its obligations and continue as a going concern. If those
properties are sold or surrendered under these circumstances,
there can be no assurance the carrying value will be realized.
The Company is not obligated to make any additional capital
payments to its lubricating oil and coalbed methane projects,
however, is in discussions with the Chinese government about
expansion of its lube oil venture. The Company will require
additional capital investments if these discussions are
successfully concluded; however, at this time it is not known what
the extent or timing for such investments might be. Similarly, if
the Company's coalbed methane project becomes active and is
successful, the Company may make additional investments in that
business, however, the extent and timing of such investment if
any, is unknown at this time.
Other
- -----
The Company believes that inflation has had no material
impact on its sales, revenues or income during the reporting
periods.
The Company is subject to existing domestic and Chinese
federal, state and local laws and regulations governing
environmental quality and pollution control. Although management
believes that such operations are in general compliance with
applicable environmental regulations, risks of substantial costs
and liabilities are inherent in oil and gas operations, and there
can be no assurance that significant costs and liabilities will
not be incurred.
Results of Operations
- ---------------------
During the nine-month periods ended September 30, 1999 and
1998, the Company incurred net losses of $6.1 million and $5.0
million, respectively.
Revenues and operating expenses associated with oil and gas
properties held for sale are insignificant and accordingly, are
recorded in other costs and operating expenses in the accompanying
consolidated statements of operations.
Interest expense, net of amounts capitalized, for the three- and
nine-month periods ended September 30, 1999 was approximately $1.2
million and $3.7 million compared to approximately $0.1 million
and $2.0 million for the same periods in 1998. The increase was
primarily attributable to the discount amortization of the XCL
Land, Ltd. secured notes in the amount of approximately $1.2
million during the nine-month period ended September 30, 1999.
Preferred stock dividends were $5.9 million for the nine months
ended September 30, 1999, as compared to $5.3 million for the same
period in 1998. The increase is the result of the issuance of
additional shares in payment of prior period dividends. These
dividends are to be paid in additional shares of preferred stock
at the option of the Company.
General and administrative expenses for the three- and nine-month
periods ended September 30, 1999 were approximately $1.1 million
and $3.3 million, respectively, as compared to approximately $1.6
million and $4.5 million, respectively, for the same periods in
1998. The decrease was primarily attributable to reduction in
compensation expense of approximately $1.1 million and a reduction
in public company costs of approximately $0.1 million.
Year 2000 Compliance
- --------------------
The Year 2000 problem is the result of computer programs
being written using two digits (rather than four) to define the
applicable year and equipment with time-sensitive embedded
components. Any of the Company's programs that have time-
sensitive software or equipment that has time-sensitive embedded
components may recognize a date using "00" as the year 1900 rather
than the year 2000. This could result in a major system failure
or miscalculations. Although no assurance can be given because of
the potential wide scale manifestations of this problem which may
affect the Company's business, the Company presently believes that
the Year 2000 problem will not pose significant operational
problems for its computer systems.
The goal of the Company's Year 2000 project is to ensure that
all of the critical systems and processes that are under the
Company's direct control remain functional. Certain systems and
processes may be interrelated with or dependent upon systems
outside the Company's control, and systems within the Company's
control may have unpredicted problems. The Company has established
a project team to coordinate the phases of Year 2000 compliance to
assure that the Company's key automated systems and related
processes will remain functional through the year 2000. Those
phases consist of (i) assessment; (ii) remediation; (iii) testing;
(iv) implementation of the necessary modifications; and (v)
contingency planning. All phases of the Company's Year 2000 plan
will continue to be modified and adjusted throughout the year, as
additional information becomes available.
The Company's assessment phase consists of conducting a
company-wide inventory of its key automated systems and related
processes, analyzing and assigning levels of criticality to those
systems and processes, identifying and prioritizing resource
requirements, developing validation strategies and testing plans,
and evaluating business partner relationships. The portions of
the assessment phase related to internally developed computer
applications, hardware and equipment, and embedded chips are
substantially complete. The Company has completed the assessment
to determine the nature and impact of the Year 2000 date change
for third-party-developed software. The assessment phase of the
project also involves efforts to obtain representations and
assurances from third parties, including third party vendors, that
their hardware and equipment products, embedded chip systems, and
software products being used by or impacting the Company are or
will be modified to be Year 2000 compliant. To date, the
responses from such third parties, although generally encouraging,
are inconclusive. As a result, the Company cannot predict the
potential consequences if these or other third parties or their
products are not Year 2000 compliant. The Company is currently
evaluating the exposure associated with such business partner
relationships.
The remediation phase involves converting, modifying,
replacing or eliminating key automated systems identified in the
assessment phase. The Company estimates that it has completed
approximately 98 percent of the remediation phase. The Company
has to date spent approximately $165,000 for upgrades and/or
replacement of certain of its hardware and software to hardware
and software that purports to be Year 2000 compliant. The Company
estimates that an additional expense of $45,000 will be required
to replace and/or modify and install hardware or software
identified to date as non-Year 2000 compliant.
The testing phase involves the validation of the identified
key automated systems. The Company is utilizing test tools and
written test procedures to document and validate, as necessary,
its systems testing. The Company estimates that approximately 98
percent of the testing phase has been completed, and expects to be
completed by the end of 1999.
The implementation phase involves placing the converted or
replaced key automated systems into operation. In some cases,
this phase will also involve the implementation of contingency
plans needed to support business functions and processes that may
be interrupted by Year 2000 failures that are outside of the
Company's control. The Company has completed approximately 98
percent of the implementation phase, and expects to be completed
by the end of 1999.
The contingency planning phase consists of developing a risk
profile of the Company's critical business processes and then
providing for actions the Company will pursue to keep such
processes operational in the event of Year 2000 disruptions. The
focus of such contingency planning is on prompt response to any
adverse Year 2000 events and a plan for subsequent resumption of
normal operations. The plan is expected to assess the risk of a
significant failure to critical processes performed by the
Company, and to address the mitigation of those risks. The plan
will also consider any significant failures related to the most
reasonably likely worst case scenario, discussed below, as they
may occur. In addition the plan is expected to factor in the
severity and duration of the impact of a significant failure. The
Company has finalized its contingency plan.
The Company's present analysis of its most reasonably likely
worst case scenario for Year 2000 disruptions includes failures in
the telecommunications and electricity industries, and its
partners in its international operations to become Year 2000
compliant.
The Company does not expect the costs of its Year 2000
project to have a material adverse effect on its financial
position, results of operations, or cash flows. Based on
information available at this time the Company cannot conclude
that disruptions caused by internal or external Year 2000 related
failures will not have such an effect. Specific factors that
might affect the success of the Company's Year 2000 efforts and
the occurrence of Year 2000 disruption or expense include the
failure of the Company or its outside consultants to properly
identify deficient systems, the failure of the selected remedial
action to adequately address the deficiencies, the failure of the
Company's outside consultants to complete the remediation in a
timely manner (due to shortages of qualified labor or other
factors), unforeseen expenses related to the remediation of
existing systems or the transition to replacement systems, the
failure of third parties to become Year 2000 compliant or to
adequately notify the Company of potential noncompliance.
Item 3. Qualitative and Quantitative Disclosures About Market
Risk.
The Company had no interest in investments subject to market
risk during the period covered by this report.
<PAGE>
XCL LTD. AND SUBSIDIARIES
June 30, 1999
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Other than as disclosed in the Company's Annual Report on
Form 10-K or herein, there are no material pending legal
proceedings to which the Company or any of its subsidiaries is a
party or to which any of their properties are subject.
On June 25, 1999, the Company initiated a $17 million,
arbitration proceeding against Apache arising from operations in
the Bohai Bay Shallow Water Sea Area, People's Republic of China
and governed by the Zhao Dong Block Joint Operating Agreement,
Participation Agreement, and May 10, 1995 Agreement. The Company
initiated the arbitration proceedings when Apache demanded that
the Company pay $10 million in disputed Zhao Dong Block project
costs in addition to $7.2 million previously paid to Apache that
has also been disputed. Such disputed costs consist of: (i)
approximately $8 million that Apache has demanded the Company pay
for engineering and design on the Zhao Dong Block (Apache has
incurred approximately $16 million in improper and excessive
engineering and design expenditures, although Apache received
written authority to spend at most $2.5 million), (ii) $5.3
million consisting primarily of project costs challenged by the
Company in joint account audits for the years 1995, 1996 and 1997,
as well as certain similar issues in 1998 and 1999, and (iii) $3.9
million in exploration costs that were Apache's responsibility
under its May 10, 1995 Agreement with the Company. The Company
has demanded a refund of $7.2 million previously paid to Apache
and has notified Apache that it may seek their removal as operator
of the Zhao Dong Block. Apache has filed an answer and
counterclaim denying liability, it has appointed its arbitrator
and has asked the arbitration tribunal to determine, among other
things, that the Company's arbitration demands be denied.
On June 25, 1999, Apache China Corporation LDC filed a
petition in U.S. Bankruptcy Court Western District of Louisiana
(Case No. 99-BK-51330) to involuntarily place the Company's
subsidiary, XCL-China, Ltd., into a Chapter 7 bankruptcy for
failure to pay $10 million in disputed Zhao Dong Block project
costs. XCL-China, Ltd. has filed a motion to dismiss the
involuntary bankruptcy petition. Apache China Corporation has
filed a motion to determine whether the arbitration is stayed.
Both motions are being contested and a hearing was held during
August 1999. XCL-China, Ltd. is awaiting the court's decision.
Item 2(c). Changes in Securities
The following securities were issued in private placements with
accredited investors in transactions intended to qualify for the
exemption from registration pursuant to Section 4(2) under the
Securities Act of 1933, as amended.
* During July 1999, the Company through its wholly owned
subsidiaries XCL-Acquisitions, Inc. and XCL Land Ltd., reached
agreement with two lenders, whereby the lenders purchased an
aggregate of $2.247 million in principal of seller's notes secured
by the Lutcher Moore Tract ("Seller's Notes) for a purchase price
of $2.1 million. The interest rate of the Notes is 8%, and the
Seller's Notes are payable on demand at any time after November
30, 1999. The proceeds were used to reduce intercompany debt.
The Company further agreed that the purchasers of the Seller's
Notes, and under certain circumstances the holders of the XCL Land
Secured Notes, will collectively on a pro rata basis receive 12.5%
of the net proceeds received from the sale of the Lutcher Moore
Tract. Until the Lutcher Moore Tract is sold, those same entities
are entitled to receive 12.5% of any net proceeds received by the
Company from any activity on or from the land, except for payments
for rights-of-way. Further, the Company has agreed to grant an
aggregate of 455,805 warrants, exercisable for five-years at $0.10
per share. The holders of the warrants will have the right after
two-years, but only for a period of six months, to exchange the
warrants for fully paid shares of Common Stock of the Company
having a market value at the time of exchange of $800,000, or
cash, at the Company's option.
The Company and those purchasers of the Seller's Notes, and their
affiliates, who also hold and aggregate of $2.1 million in XCL
Land Secured Notes have agreed to extend the term of the XCL Land
Secured Notes to November 30, 1999.
Further the Company has agreed to amend the terms of certain
existing warrants to purchase an aggregate of 217,052 shares of
Common Stock held by the purchasers and their affiliates. The
warrants will have a new five-year term expiring July 16, 2004,
the exercise price will be reduced from $0.15 per share to $0.01
per share, and the holders of the warrants will have the right
after two-years, but only for a period of six months, to exchange
the warrants for fully paid shares of Common Stock of the Company
having a market value at the time of exchange of $400,000, or
cash, at the Company's option.
All of the above referenced warrants are first exercisable six
months to one year after issuance.
Item 3. Defaults Upon Senior Securities
On May 3, 1999, the Company failed to make a required
interest payment (in the approximate amount of $5.6 million) on
its Senior Secured Notes, and such amount remains outstanding to
date. Failure by the Company to make such payment could allow the
holders of the Notes to declare all principal amounts outstanding,
including accrued interest, immediately due and payable.
On November 1, 1999, the Company failed to make a required
interest payment (in the approximate amount of $5.6 million) on
its Senior Secured Notes.
The Company has not yet distributed a declared in kind
dividend payable November 1, 1999, on its Amended Series A
Preferred Stock.
Item 4. Submission of Matters to a Vote of Security-Holders
There were no matters submitted to a vote of the security
holders of the Company during the period covered by this report.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits required by Item 601 of Regulation S-K.
See Index to Exhibits.
(b) Reports on Form 8-K
A current report on Form 8-K was filed on July 1, 1999, to
report that the Company had received a petition filed with the
U.S. Bankruptcy Court by Apache China LDC, asking the court to
place the Company's wholly owned subsidiary, XCL-China, Ltd.,
under bankruptcy protection, claiming XCL-China had not paid a $10
million debt related to the companies joint venture project in the
Zhao Dong Block.
A current report on Form 8-K was filed on September 7, 1999,
to report that the Company had relocated its headquarters offices.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
XCL Ltd.
/s/ Marsden W. Miller, Jr.
By: __________________________
Marsden W. Miller, Jr.
Chief Executive Officer
and Principal Accounting Officer
Date: November 15, 1999
<PAGE>
INDEX TO EXHIBITS
Exhibit
- -------
2.0 Not applicable
3.1 Amended and Restated Certificate of Incorporation of the
Company. (Q)(i)
3.2 Amended and Restated By-Laws of the Company. (A)
4.1 Forms of Common Stock Certificates. (J)(i)
4.2 Form of Warrant dated January 31, 1994 to purchase
2,500,000 shares of Common Stock at an exercise price of $1.00 per
share, subject to adjustment, issued to INCC. (C)(i)
4.3 Form of Registrar and Stock Transfer Agency Agreement,
effective March 18, 1991, entered into between the Company and
Manufacturers Hanover Trust Company (predecessor to Chemical
Bank), whereby Chemical Bank (now known as ChaseMellon Shareholder
Services) serves as the Company's Registrar and U.S. Transfer
Agent. (D)
4.4 Copy of Warrant Agreement and Stock Purchase Warrant dated
March 1, 1994 to purchase 500,000 shares of Common Stock at an
exercise price of $1.00 per share, subject to adjustment, issued
to EnCap Investments, L.C. (C)(ii)
4.5 Copy of Warrant Agreement and form of Stock Purchase
Warrant dated March 1, 1994 to purchase an aggregate 600,000
shares of Common Stock at an exercise price of $1.00 per share,
subject to adjustment, issued to principals of San Jacinto
Securities, Inc. in connection with its financial consulting
agreement with the Company. (C)(iii)
4.6 Form of Warrant Agreement and Stock Purchase Warrant dated
May 25, 1994, to purchase an aggregate 100,000 shares of Common
Stock at an exercise price of $1.25 per share, subject to
adjustment, issued to the holders of Purchase Notes B, in
consideration of amendment to payment terms of such Notes.
(B)(i)
4.7 Form of Warrant Agreement and Stock Purchase Warrant dated
May 25, 1994, to purchase an aggregate 100,000 shares of Common
Stock at an exercise price of $1.25 per share, subject to
adjustment, issued to the holders of Purchase Notes B, in
consideration for the granting of an option to further extend
payment terms of such Notes. (B)(ii)
4.8 Form of Purchase Agreement between the Company and each of
the Purchasers of Units in the Regulation S Unit Offering
conducted by Rauscher Pierce & Clark with closings as follows:
December 22, 1995 116 Units
March 8, 1996 34 Units
April 23, 1996 30 Units (E)(i)
4.9 Form of Warrant Agreement between the Company and each of
the Purchasers of Units in the Regulation S Unit Offering
conducted by Rauscher Pierce & Clark, as follows:
Closing Date Warrants Exercise
Price
December 22, 1995 6,960,000 $.50
March 8, 1996 2,040,000 $.35
April 23, 1996 1,800,000 $.35
(E)(ii)
4.10 Form of Warrant Agreement between the Company and
Rauscher Pierce & Clark in consideration for acting as placement
agent in the Regulation S Units Offering, as follows:
Closing Date Warrants Exercise
Price
December 22, 1995 696,000 $.50
March 8, 1996 204,000 $.35
April 23, 1996 180,000 $.35
(E)(iii)
4.11 Form of a series of Stock Purchase Warrants issued to
Janz Financial Corp. Ltd. dated August 14, 1996, entitling the
holders thereof to purchase up to 3,080,000 shares of Common Stock
at $0.25 per share on or before August 13, 2001. (F)
4.12 Form of a series of Stock Purchase Warrants dated
November 26, 1996, entitling the following holders thereto to
purchase up to 2,666,666 shares of Common Stock at $0.125 per
share on or before December 31, 1999:
Warrant Holder Warrants
Opportunity Associates, L.P. 133,333
Kayne Anderson Non-Traditional Investments, L.P. 666,666
Arbco Associates, L.P 800,000
Offense Group Associates, L.P. 333,333
Foremost Insurance Company 266,667
Nobel Insurance Company 133,333
Evanston Insurance Company 133,333
Topa Insurance Company 200,000
(G)(i)
4.13 Form of a series of Stock Purchase Warrants dated
December 31, 1996 (2,128,000 warrants) and January 8, 1997
(2,040,000 warrants) to purchase up to an aggregate of 4,168,000
shares of Common Stock at $0.125 per share on or before August 13,
2001. (G)(ii)
4.14 Form of Stock Purchase Warrants dated February 6, 1997,
entitling the following holders to purchase an aggregate of
1,874,467 shares of Common Stock at $0.25 per share on or before
December 31, 1999:
Warrant Holder Warrants
Donald A. and Joanne R. Westerberg 241,660
T. Jerald Hanchey 1,632,807
(G)(iii)
4.15 Form of a series of Stock Purchase Warrants dated April
10, 1997, issued as a part of a unit offered with Unsecured Notes
of XCL-China Ltd., exercisable at $0.01 per share on or before
April 9, 2002, entitling the following holders to purchase up to
an aggregate of 10,092,980 shares of Common Stock:
Warrant Holder Warrants
Kayne Anderson Offshore L.P. 651,160
Offense Group Associates, L.P. 1,627,900
Kayne Anderson Non-Traditional Investments, L.P. 1,627,900
Opportunity Associates, L.P. 1,302,320
Arbco Associates, L.P. 1,627,900
J. Edgar Monroe Foundation 325,580
Estate of J. Edgar Monroe 976,740
Boland Machine & Mfg. Co., Inc. 325,580
Construction Specialists, Inc.
d/b/a Con-Spec, Inc. 1,627,900 (G)(iv)
4.16 Form of Purchase Agreement dated May 13, 1997, between
the Company and Jefferies & Company, Inc. (the "Initial
Purchaser") with respect to 75,000 Units each consisting of $1,000
principal amount of 13.5% Senior Secured Notes due May 1, 2004,
Series A and one warrant to purchase 1,280 shares of the Company's
Common Stock with an exercise price of $0.2063 per share ("Note
Warrants"). (H)(i)
4.17 Form of Purchase Agreement dated May 13, 1997, between
the Company and Jefferies & Company, Inc. (the "Initial
Purchaser") with respect to 294,118 Units each consisting of one
share of Amended Series A, Cumulative Convertible Preferred Stock
("Amended Series A Preferred Stock") and one warrant to purchase
327 shares of the Company's Common Stock with an exercise price of
$0.2063 per share ("Equity Warrants"). (H)(ii)
4.18 Form of Warrant Agreement and Warrant Certificate dated
May 20, 1997, between the Company and Jefferies & Company, Inc.,
as the Initial Purchaser, with respect to the Note Warrants.
(H)(iii)
4.19 Form of Warrant Agreement and Warrant Certificate dated
May 20, 1997, between the Company and Jefferies & Company, Inc.,
as the Initial Purchaser, with respect to the Equity Warrants.
(H)(iv)
4.20 Form of Designation of Amended Series A Preferred Stock
dated May 19, 1997. (H)(v)
4.21 Form of Amended Series A Preferred Stock certificate.
(H)(vi)
4.22 Form of Global Unit Certificate for 75,000 Units
consisting of 13.5% Senior Secured Notes due May 1, 2004 and
Warrants to Purchase Shares of Common Stock. (H)(vii)
4.23 Form of Global Unit Certificate for 293,765 Units
consisting of Amended Series A Preferred Stock and Warrants to
Purchase Shares of Common Stock. (H)(viii)
4.24 Form of Warrant Certificate dated May 20, 1997, issued to
Jefferies & Company, Inc., with respect to 12,755 warrants to
purchase shares of Common Stock of the Company at an exercise
price of $0.2063 per share. (H)(ix)
4.25 Form of Stock Purchase Agreement dated effective as of
October 1, 1997, between the Company and William Wang, whereby the
Company issued 800,000 shares of Common Stock to Mr. Wang, as
partial compensation pursuant to a Consulting Agreement. (I)(i)
4.26 Form of Stock Purchase Warrants dated effective as of
February 20, 1997, issued to Mr. Patrick B. Collins with respect
to 200,000 warrants to purchase shares of Common Stock of the
Company at an exercise price of $0.25 per share, issued as partial
compensation pursuant to a Consulting Agreement. (I)(ii)
4.27 Certificate of Amendment to the Certificate of
Designation of Series F, Cumulative Convertible Preferred Stock
dated January 6, 1998. (J)(ii)
4.28 Form of Stock Purchase Warrants dated January 16, 1998,
issued to Arthur Rosenbloom (6,389), Abby Leigh (12,600) and Mitch
Leigh (134,343) to purchase shares of Common Stock of the Company
at an exercise price of $0.15 per share, on or before December 31,
2001. (J)(iii)
4.29 Certificate of Designation of Amended Series B,
Cumulative Convertible Preferred Stock dated March 4, 1998.
(J)(iv)
4.30 Correction to Certificate of Designation of Amended
Series B, Cumulative Convertible Preferred Stock dated March 5,
1998. (J)(v)
4.31 Second Correction to Certificate of Designation of
Amended Series B Preferred Stock dated March 19, 1998. (J)(vi)
4.32 Form of Stock certificate representing shares of Amended
Series B Preferred Stock. (K)(ii)
4.33 Form of Agreement dated March 3, 1998 between the Company
and Arbco Associates, L.P., Kayne Anderson Non-Traditional
Investments, L.P., Offense Group Associates, L.P. and Opportunity
Associates, L.P. for the exchange of Series B Preferred Stock and
associated warrants into Amended Series B Preferred Stock and
warrants. (K)(iii)
4.34 Form of Stock Purchase Warrants dated March 3, 1998
between the Company and the following entities:
Holder Warrants
Arbco Associates, L.P. 85,107
Kayne Anderson Non-Traditional Investments, L.P. 79,787
Offense Group Associates, L.P. 61,170
Opportunity Associates, L.P. 23,936 (K)(iv)
4.35 Form of Stock Purchase Warrant dated effective as of June
30, 1998, issued to Mr. Patrick B. Collins with respect to 17,000
warrants to purchase shares of Common Stock of the Company at an
exercise price of $3.75 per share, issued as partial compensation
pursuant to a Consulting Agreement. (L)(i)
4.36 Form of Warrant Exchange Agreement and Stock Purchase
Warrant dated September 15, 1998 to purchase an aggregate of
351,015 shares of Common Stock at an exercise price of $2.50 per
share, subject to adjustment, issued to Cumberland Partners in
exchange for certain warrants held by Cumberland Partners. (L)(ii)
4.37 Form of Warrant Agreement dated October 1, 1998 to
purchase 50,000 shares of Common Stock at an exercise price of
$3.75 per share, subject to adjustment, issued to Steven B. Toon,
a former officer of the Company. (M)(i)
4.38 Form of a series of Stock Purchase Warrants dated
November 6, 1998, issued as a part of a unit offered with secured
Notes of XCL Land Ltd., exercisable at $3.50 per share on or
before November 6, 2003, entitling the following holders to
purchase up to an aggregate of 325,575 shares of Common Stock:
Warrant Holder Warrants
J. Edgar Monroe Foundation 21,705
Estate of J. Edgar Monroe 151,935
Construction Specialists, Inc. d/b/a Con-Spec, Inc. 151,935 (M)(ii)
4.39 Form of a series of Stock Purchase Warrants issued as
part of a unit offered with Secured Notes of XCL Land Ltd.,
entitling the following holders to purchase shares of Common
Stock:
Initial
Warrant Holder Warrants Exercise Price Date
Estate of J. Edgar Monroe 54,262 $2.00 January 15, 1999
Construction Specialists, Inc.
d/b/a Con-Spec, Inc. 54,262 $2.00 January 15, 1999
Doug Ashy 21,705 $1.50 March 22, 1999
Edgar D. Daigle 21,705 $1.50 March 25, 1999
T. Jerald Hanchey 43,410 $1.3125 April 13, 1999
Northern Securities Limited 325,575 $1.25 May 17, 1999
Mitch Leigh 43,410 $1.25 May 21, 1999 (N)(i)
4.40 Form of Warrant Amendment Agreement between the Company,
J. Edgar Monroe Foundation (1976), Estate of J. Edgar Monroe, and
Construction Specialists, Inc. d/b/a Con-Spec, Inc. amending the
warrant exercise price of warrants dated November 6, 1998, from
$3.50 to $2.00 per share. (N)(ii)
4.41 Form of a Stock Purchase Warrant dated March 15, 1999
issued to Mr. Robert R. Durkee, Jr. as part of a unit offering
with Secured Notes of XCL Land, Ltd., exercisable at $1.25 per
share on or before March 15, 2004. (N)(iii)
4.42 Form of a Second Warrant Amendment Agreement dated March
19, 1999, between the Company, J. Edgar Monroe Foundation (1976),
Estate of J. Edgar Monroe, and Construction Specialists, Inc.
d/b/a Con-Spec, Inc. amending the warrant exercise price of
warrants dated November 6, 1998, from $2.00 to $1.50 per share.
(N)(iv)
4.43 Form of a Third Warrant Amendment Agreement dated April
13, 1999, between the Company, J. Edgar Monroe Foundation (1976),
Estate of J. Edgar Monroe, and Construction Specialists, Inc.
d/b/a Con-Spec, Inc. amending the warrant exercise price of
warrants dated November 6, 1998 and January 15, 1999, from $1.50
per share to $1.3125 per share. (O)(i)
4.44 Form of a Warrant Amendment Agreement dated April 13,
1999, between the Company and Edgar D. Daigle, amending the
warrant exercise price of warrants dated March 25, 1999, from
$1.50 per share to $1.3125 per share. (O)(ii)
4.45 Form of a Warrant Amendment Agreement dated April 13,
1999, between the Company and Doug Ashy, Sr., amending the warrant
exercise price of warrants dated March 22, 1999, from $1.50 per
share to $1.3125 per share. (O)(iii)
4.46 Form of a Fourth Warrant Amendment Agreement dated May
21, 1999, between the Company, J. Edgar Monroe Foundation (1976),
Estate of J. Edgar Monroe, and Construction Specialists, Inc.
d/b/a Con-Spec, Inc. amending the warrant exercise price of
warrants dated November 6, 1998 and January 15, 1999, from $1.3125
per share to $1.25 per share. (O)(iv)
4.47 Form of a Second Warrant Amendment Agreement dated May
21, 1999, between the Company and Edgar D. Daigle, amending the
warrant exercise price of warrants dated March 25, 1999, from
$1.3125 per share to $1.25 per share. (O)(v)
4.48 Form of a Second Warrant Amendment Agreement dated May
21, 1999, between the Company and Doug Ashy, Sr., amending the
warrant exercise price of warrants dated March 22, 1999, from
$1.3125 per share to $1.25 per share. (O)(vi)
4.49 Form of a Warrant Amendment Agreement dated May 21, 1999,
between the Company and T. Jerald Hanchey, amending the warrant
exercise price of warrants dated April 13, 1999, from $1.3125 per
share to $1.25 per share. (O)(vii)
4.50 Form of a Warrant Amendment Agreement dated May 21, 1999,
between the Company and Mitch Leigh, Abby Leigh as Trustee Under
Indenture of Mitch Leigh F/B/O Andrew Leigh, Arthur Rosenbloom as
Trustee Under Indenture of Mitch Leigh F/B/O Rebecca Millicent
Leigh and Arthur Rosenbloom as Trustee Under Indenture of Mitch
Leigh F/B/O David George Leigh, amending the warrant exercise
price of warrants held individually and in trust for the benefit
of Andrew Leigh from $3.50 per share to $1.25 per share, and
extending the expiration of such warrants from December 31, 2001
to December 31, 2004; amending the exercise price of the warrants
held in trust for the benefit of Rebecca M. Leigh and David G.
Leigh from $7.50 per share to $1.25 per share and extending the
date of expiration of such warrants from January 2, 2001 to
December 31, 2004. (O)(viii)
4.51 Form of Stock Purchase Warrants dated July 16, 1999,
issued to Construction Specialists, Inc. d/b/a Con-Spec, Inc. and
the Estate of J. Edgar Monroe, to each purchase 227,902 shares of
Common Stock of the Company, at an exercise price of $0.10 per
share on or before April 13, 2004, in connection with the purchase
of an interest in certain Sellers Notes on the Lutcher Moore
Tract. *
4.52 Form of a Fifth Warrant Amendment Agreement dated July
16, 1999, between the Company, J. Edgar Monroe Foundation (1976),
Estate of J. Edgar Monroe, and Construction Specialists, Inc.
d/b/a Con-Spec, Inc. amending the warrant exercise price of
warrants dated November 6, 1998 and January 15, 1999, from $1.25
per share to $0.10 per share. *
4.53 Form of a Warrant Amendment Agreement dated July 16,
1999, between the Company and Boland Machine & Mfg. Co., Inc.,
extending the term of a warrant dated April 10, 1997, from April
9, 2002 to July 16, 2004, reducing the exercise price from $0.15
per share to $0.01 per share, and providing the holder an option
to exchange the warrants for $100,000 in Common Stock of the
Company or cash, at the Company's option, during a six month
period beginning July 17, 2001. *
4.54 Form of a Warrant Amendment Agreement dated July 16,
1999, between the Company and J. Edgar Monroe Foundation,
extending the term of a warrant dated April 10, 1997, from April
9, 2002 to July 16, 2004, reducing the exercise price from $0.15
per share to $0.01 per share, and providing the holder an option
to exchange the warrants for $32,000 in Common Stock of the
Company or cash, at the Company's option, during a six month
period beginning July 17, 2001. *
4.55 Form of a Warrant Amendment Agreement dated July 16,
1999, between the Company and the Estate of J. Edgar Monroe,
extending the term of a warrant dated April 10, 1997, from April
9, 2002 to July 16, 2004, reducing the exercise price from $0.15
per share to $0.01 per share, and providing the holder an option
to exchange the warrants for $100,000 in Common Stock of the
Company or cash, at the Company's option, during a six month
period beginning July 17, 2001. *
4.56 Form of a Warrant Amendment Agreement dated July 16,
1999, between the Company and Construction Specialists, Inc. d/b/a
Con-Spec, Inc., extending the term of a warrant dated April 10,
1997, from April 9, 2002 to July 16, 2004, reducing the exercise
price from $0.15 per share to $0.01 per share, and providing the
holder an option to exchange the warrants for $168,000 in Common
Stock of the Company or cash, at the Company's option, during a
six month period beginning July 17, 2001. *
4.57 Form of a Third Warrant Amendment Agreement dated July
16, 1999, between the Company and Doug Ashy, Sr., amending the
warrant exercise price of warrants dated March 22, 1999, from
$1.25 per share to $0.10 per share. *
4.58 Form of a Warrant Amendment Agreement dated July 16,
1999, between the Company and Northern Securities Limited,
amending the warrant exercise price of warrants dated May 17,
1999, from $1.25 per share to $0.10 per share. *
4.59 Form of a Warrant Amendment Agreement dated July 16,
1999, between the Company and Mitch Leigh, amending the warrant
exercise price of warrants dated May 21, 1999, from $1.25 per
share to $0.10 per share. *
9.0 Not applicable.
10.39 Form of Consulting Agreement dated June 15, 1998,
between the Company and Mr. Patrick B. Collins, whereby Mr.
Collins performs certain accounting advisory services. (L)(iii)
10.44 Zhang Dong Petroleum Sharing Contract dated August 20,
1998. (L)(vi)
10.45 Form of a series of Secured Notes dated November 6,
1998, between the Company and the following entities:
Note Holder Principal Amount
J. Edgar Monroe Foundation $100,000
Estate of J. Edgar Monroe $700,000
Construction Specialists, Inc.
d/b/a Con-Spec, Inc. $700,000 (M)(iii)
10.46 Form of Subscription Agreement dated November 6, 1998,
by and between XCL Land, Ltd., the Company and the subscribers of
Units, each unit comprised of $100,000 in secured Notes and 21,705
warrants. (M)(iv)
10.47 Form of Security Agreement dated November 6, 1998, by
and between XCL Land, Ltd. and holders of the secured Notes of XCL
Land, Ltd. dated November 6, 1998. (M)(v)
10.48 Form of Security Agreement dated November 6, 1998, by
and between The Exploration Company of Louisiana, Inc. and holders
of the secured Notes of XCL Land, Ltd. dated November 6, 1998.
(M)(vi)
10.49 Form of Subscription Agreement by and between XCL Land,
Ltd., the Company and the subscribers of Units, each unit
comprised of $100,000 in Secured Notes and 21,705 warrants. (N)(v)
Subscriber Units Date
Estate of J. Edgar Monroe 2.5 January 15, 1999
Construction Specialists, Inc.
d/b/a Con-Spec, Inc. 2.5 January 15, 1999
Doug Ashy, Sr. 1.0 March 22, 1999
Edgar D. Daigle 1.0 March 25, 1999
T. Jerald Hanchey 2.0 April 13, 1999
Northern Securities Limited 15.0 May 17, 1999
Mitch Leigh 2.0 May 21, 1999 (N)(vi)
10.50 Form of a series of secured Notes between the Company
and the following entities:
Note Holder Principal Amount Issue Date
Estate of J. Edgar Monroe $250,000 January 15, 1999
Construction Specialists, Inc.
d/b/a Con-Spec, Inc. $250,000 January 15, 1999
Doug Ashy, Sr. $100,000 March 22, 1999
Edgar D. Daigle $100,000 March 25, 1999
T. Jerald Hanchey $200,000 April 13, 1999
Northern Securities Limited $1,500,000 May 17, 1999
Mitch Leigh $200,000 May 21, 1999 (N)(vii)
10.51 Form of First Amendment to Security Agreement dated
January 15, 1999, by and between XCL Land, Ltd. and holders of the
Secured Notes of XCL Land, Ltd. dated November 6, 1999. (N)(viii)
10.52 Form of First Amendment to Security Agreement dated
January 15, 1999, by and between The Exploration Company of
Louisiana, Inc. and holders of the secured Notes of XCL Land, Ltd.
dated November 6, 1998. (N)(ix)
10.53 Acknowledgement and Agreement Regarding Security
Interest by the J. Edgar Monroe Foundation (1976) dated January
15, 1999. (N)(x)
10.54 Form of Security Agreement by and between XCL Land, Ltd.
and the following holders of the Secured Notes of XCL Land, Ltd.:
Note Holder Date
Doug Ashy, Sr. March 22, 1999
Edgar D. Daigle March 25, 1999 (N)(xi)
10.55 Form of Security Agreement by and between The
Exploration Company of Louisiana, Inc. and the following holders
of the Secured Notes of XCL Land, Ltd.
Note Holder Date
Doug Ashy, Sr. March 22, 1999
Edgar D. Daigle March 25, 1999 (N)(xii)
10.56 Form of Subscription Agreement dated March 15, 1999, by
and between XCL Land, Ltd. and Robert R. Durkee, Jr. for a unit
comprised of a $100,000 45-day secured note and 10,000 warrants to
purchase Common Stock of XCL Ltd.. (N)(xiii)
10.57 Form of Promissory Note dated March 15, 1999, by and
between Robert R. Durkee, Jr. in the principal amount of $100,000.
(N)(xiv)
10.58 Form of Security Agreement by and between XCL Land, Ltd.
and Robert R. Durkee, Jr. dated March 15, 1999. (N)(xv)
10.59 Form of Security Agreement by and between The
Exploration Company of Louisiana, Inc. and Robert R. Durkee, Jr.
dated March 15, 1999. (N)(xvi)
10.60 Consulting Agreement dated January 1, 1999, between the
Company and R. Thomas Fetters, Jr., a director of the Company,
whereby Mr. Fetters performs certain geological consulting
services. (N)(xvii)
10.61 Amendment to Personal Services Agreement dated January
15, 1999, between the Company and Benjamin B. Blanchet, an officer
and director of the Company. (N)(xviii)
10.62 Form of Security Agreement by and between XCL Land, Ltd.
and T. Jerald Hanchey dated April 13, 1999. (O)(ix)
10.63 Form of Security Agreement by and between The
Exploration Company of Louisiana, Inc. and
T. Jerald Hanchey dated April 13, 1999. (O)(x)
10.64 Form of Second Amendment to Security Agreement dated
April 13, 1999, between XCL Land, Ltd. and Estate of J. Edgar
Monroe, amending that Security Agreement dated November 6, 1998.
(O)(xi)
10.65 Form of Second Amendment to Security Agreement dated
April 13, 1999, between XCL Land, Ltd. and J. Edgar Monroe
Foundation (1976), amending that Security Agreement dated November
6, 1998. (O)(xii)
10.66 Form of Second Amendment to Security Agreement dated
April 13, 1999, between XCL Land, Ltd. and Construction
Specialists, Inc. d/b/a Con-Spec, Inc., amending that Security
Agreement dated November 6, 1998. (O)(xiii)
10.67 Form of First Amendment to Security Agreement dated
April 13, 1999, between XCL Land, Ltd. and Edgar D. Daigle,
amending that Security Agreement dated March 25, 1999. (O)(xiv)
10.68 Form of First Amendment to Security Agreement dated
April 13, 1999, between XCL Land, Ltd. and Doug Ashy, Sr.,
amending that Security Agreement dated March 22, 1999. (O)(xv)
10.69 Form of Second Amendment to Security Agreement dated
April 13, 1999, between The Exploration Company of Louisiana, Inc.
and Estate of J. Edgar Monroe, amending the Security Agreement
dated November 6, 1998. (O)(xvi)
10.70 Form of Second Amendment to Security Agreement dated
April 13, 1999, between The Exploration Company of Louisiana, Inc.
and J. Edgar Monroe Foundation (1976), amending the Security
Agreement dated November 6, 1998. (O)(xvii)
10.71 Form of Second Amendment to Security Agreement dated
April 13, 1999, between The Exploration Company of Louisiana, Inc.
and Construction Specialists, Inc. d/b/a Con-Spec, Inc., amending
the Security Agreement dated November 6, 1998. (O)(xviii)
10.72 Form of First Amendment to Security Agreement dated
April 13, 1999, between The Exploration Company of Louisiana, Inc.
and Edgar D. Daigle, amending the Security Agreement dated March
25, 1999. (O)(xix)
10.73 Form of First Amendment to Security Agreement dated
April 13, 1998 between The Exploration Company of Louisiana, Inc.
and Doug Ashy, Sr., amending the Security Agreement dated March
22, 1999. (O)(xx)
10.74 Form of Security Agreement dated May 17, 1999, between
XCL Land, Ltd. and Northern Securities Limited. (O)(xxi)
10.75 Form of Security Agreement dated May 17, 1999, between
The Exploration Company of Louisiana, Inc. and Northern Securities
Limited. (O)(xxii)
10.76 Form of Security Agreement dated May 21, 1999 between
XCL Land, Ltd. and Mitch Leigh. (O)(xxiii)
10.77 Form of Security Agreement dated May 21, 1999 between
The Exploration Company of Louisiana, Inc. and Mitch Leigh.
(O)(xxiv)
10.78 Form of Third Amendment to Security Agreement dated May
21, 1999, between XCL Land, Ltd. and Construction Specialists,
Inc. d/b/a Con-Spec, Inc., amending the Security Agreement dated
November 6, 1998. (O)(xxv)
10.79 Form of Third Amendment to Security Agreement dated May
21, 1999, between XCL Land, Ltd. and Estate of J. Edgar Monroe,
amending the Security Agreement dated November 6, 1998. (O)(xxvi)
10.80 Form of Third Amendment to Security Agreement dated May
21, 1999, between XCL Land, Ltd. and J. Edgar Monroe Foundation
(1976), amending the Security Agreement dated November 6, 1998.
(O)(xxvii)
10.81 Form of Third Amendment to Security Agreement dated May
21, 1999, between The Exploration Company of Louisiana, Inc. and
Estate of J. Edgar Monroe, amending the Security Agreement dated
November 6, 1998. (O)(xxviii)
10.82 Form of Third Amendment to Security Agreement dated May
21, 1999, between The Exploration Company of Louisiana, Inc. and
Construction Specialists, Inc. d/b/a Con-Spec, Inc., amending the
Security Agreement dated November 6, 1998. (O)(xxix)
10.83 Form of Third Amendment to Security Agreement dated May
21, 1999, between The Exploration Company of Louisiana, Inc. and
J. Edgar Monroe Foundation (1976), amending the Security Agreement
dated November 6, 1998. (O)(xxx)
10.84 Form of Second Amendment to Security Agreement dated May
21, 1999, between The Exploration Company of Louisiana, Inc. and
Edgar D. Daigle, amending the Security Agreement dated March 25,
1999. (O)(xxxi)
10.85 Form of Second Amendment to Security Agreement dated May
21, 1999, between XCL Land, Ltd. and Edgar D. Daigle, amending the
Security Agreement dated March 25, 1999. (O)(xxxii)
10.86 Form of Second Amendment to Security Agreement dated May
21, 1999, between The Exploration Company of Louisiana, Inc. and
Doug Ashy, Sr., amending the Security Agreement dated March 22,
1999. (O)(xxxiii)
10.87 Form of Second Amendment to Security Agreement dated May
21, 1999, between XCL Land, Ltd. and Doug Ashy, Sr., amending the
Security Agreement dated March 22, 1999. (O)(xxxiv)
10.88 Form of First Amendment to Security Agreement dated May
21, 1999, between The Exploration Company of Louisiana, Inc. and
T. Jerald Hanchey, amending the Security Agreement dated April 13,
1999. (O)(xxxv)
10.89 Form of First Amendment to Security Agreement dated May
21, 1999, between XCL Land, Ltd. and T. Jerald Hanchey, amending
the Security Agreement dated April 13, 1999. (O)(xxxvi)
10.90 Form of Security Agreement dated July 16, 1999, between
XCL-Acquisitions, Inc., as Grantor, and Construction Specialists,
Inc. and the Estate of J. Edgar Monroe, as Lenders, securing the
amounts owed the Lenders under the Seller Notes and XCL Land
Secured Notes. *
10.91 Form of Participation Agreement dated July 16, 1999, by
and between XCL-Acquisitions, Inc., Construction Specialists, Inc.
and the Estate of J. Edgar Monroe, setting forth the terms and
conditions pursuant to which the Lenders hold their interest in
the Seller Notes. *
10.92 Form of Note Modification and Amendment Agreements dated
July 16, 1999, by and between XCL Land, Ltd. and the Estate of J.
Edgar Monroe, Construction Specialists, Inc.a nd The J. Edgar
Monroe Foundation (1976), whereby the maturity of the XCL Land
Secured Notes dated November 6, 1998 and January 15, 1999 have
been extended to November 30, 1999. *
10.93 Form of Assignment of Net Proceeds whereby Con-Spec and
Estate of J. Edgar Monroe are to receive an aggregate of 7.5% of
any net proceeds received from the sale of the Lutcher Moore
Tract, less commissions and closing expenses, and 7.5% of any net
proceeds received from any activity on the Tract, except for
rights-of-ways. *
10.94 Form of First Amendment to and Assumption of Security
Agreement dated as of September 30,1999, by and between XCL-Texas,
Inc. and Mitch Leigh, whereby XCL-Texas assumed all of XCL Land's
obligations under the Security Agreement. *
10.95 Form of First Amendment to Security Agreement dated as
of September 30, 1999, by and between The Exploration Company of
Louisiana, Inc. and Mitch Leigh. *
10.96 Form of Fourth Amendment to Security Agreement dated as
of September 30, 1999, by and between The Exploration Company of
Louisiana, Inc. and Construction Specialists, Inc. *
10.97 Form of Fourth Amendment to and Assumption of Security
Agreement dated as of September 30, 1999, by and between XCL-
Texas, Inc. and Construction Specialists, Inc., whereby XCL-Texas
assumed all of XCL Land's obligations under the Security
Agreement. *
10.98 Form of First Amendment to and Assumption of Security
Agreement dated as of September 30, 1999, by and between XCL-
Texas, Inc. and Northern Securities Limited, whereby XCL-Texas
assumed all of XCL Land's obligations under the Security
Agreement. *
10.99 Form of First Amendment to Security Agreement dated as
of September 30, 1999, by and between The Exploration Company of
Louisiana, Inc. and Northern Securities Limited *
10.100 Form of Termination of Security Agreements dated
October 1, 1999, whereby the Security Agreements dated March 22,
1999 between The Exploration Company of Louisiana, Inc. and XCL
Land Ltd., respectively, and Doug Ashy, Sr. were terminated. *
11.0 Not applicable.
15.0 Not applicable.
18.0 Not applicable.
19.0 Not applicable.
22.0 Not applicable.
23.0 Not applicable.
24.0 Not applicable.
27.0 Financial Data Schedule *
99.0 Glossary of Terms *
_________________________
*Filed herewith.
(A) Incorporated by reference to the Registration Statement on
Form 8-B filed on July 28, 1988, where it appears as Exhibits
3(c).
(B) Incorporated by reference to Post-Effective Amendment No.
2 to Registration Statement on Form S-3 (File No. 33-68552) where
it appears as: (i) Exhibit 4.34 and (ii) Exhibit 4.36.
(C) Incorporated by reference to Amendment No. 1 to Annual
Report on Form 10-K filed April 15, 1994, where it appears as:
(i) Exhibit 4.32; (ii) Exhibit 4.36; and (iii) Exhibit 4.37.
(D) Incorporated by reference to an Annual Report on Form 10-K
for the fiscal year ended December 31, 1990, filed April 1, 1991,
where it appears as Exhibit 10.27.
(E) Incorporated by reference to Annual Report on Form 10-K
for the year ended December 31, 1995, filed April 15, 1996, where
it appears as: (i) through (iii) Exhibits 4.28 through 4.30,
respectively.
(F) Incorporated by reference to Quarterly Report on Form 10-
Q for the quarter ended September 30, 1996, filed November 14,
1996, where it appears as Exhibits 4.32.
(G) Incorporated by reference to Annual Report on Form 10-K
for the year ended December 31, 1996, filed April 15, 1997, where
it appears as (i) through (iii) Exhibits 4.35 through 4.38; and
(iv) Exhibit 4.40.
(H) Incorporated by reference to Current Report on Form 8-K
dated May 20, 1997, filed June 3, 1997, where it appears as (i)
through (ix) Exhibits 4.1 through 4.9, respectively.
(I) Incorporated by reference to Quarterly Report on Form 10-Q
for the quarter ended September 30, 1997, filed November 14, 1997,
where it appears as (i) Exhibit 4.52; and (ii) Exhibit 10.62.
(J) Incorporated by reference to Annual Report on Form 10-K
for the year ended December 31, 1997, filed April 15, 1998, where
it appears as (i) Exhibit 4.1; (ii) through (vi) Exhibits 4.32
through 4.36, respectively.
(K) Incorporated by reference to Amendment No. 1 to Annual
Report on Form 10-K for the year ended December 31, 1997, filed
April 22, 1998, where it appears as (i) Exhibit 3.1; and (ii)
through (iv) Exhibits 4.37 through 4.39, respectively.
(L) Incorporated by reference to Amendment No. 2 to
Registration Statement on Form S-1 filed October 23, 1998, where
it appears as: (i) Exhibit 4.40; (ii) Exhibit 4.41; (iii) Exhibit
10.49; and (vi) Exhibit 10.54.
(M) Incorporated by reference to Quarterly Report on Form 10-Q
for the quarter ended September 30, 1998, filed on November 16,
1998, where it appears as: (i) and (ii) Exhibits 4.42 and 4.43,
respectively; and (iii) through (vi) Exhibits 10.55 through 10.58,
respectively.
(N) Incorporated by reference to Annual Report on Form 10-K
for the year ended December 31, 1998, filed on April 15, 1999,
where it appears as: (i) through (iv) Exhibits 4.42 to 4.45; and
(v) through (xviii) Exhibits 10.49 through 10.61.
(O) Incorporated by reference to Quarterly Report on Form 10-Q
for the quarter ended June 30, 1999, filed on August 14, 1999,
where it appears as: (i) through (viii) Exhibits 4.43 through
4.50; and (vix) through (xxxvi) Exhibits 10.62 through 10.89.
THE WARRANTS REPRESENTED BY THIS CERTIFICATE, THE SHARES OF
COMMON STOCK ISSUABLE UPON THE EXERCISE THEREOF AND THE EXCHANGE
SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR ANY OTHER FEDERAL OR STATE
SECURITIES OR BLUE SKY LAWS, AND HAVE BEEN ISSUED IN RELIANCE
UPON AN EXEMPTION THEREFROM. NO OFFER, SALE, TRANSFER, PLEDGE OR
OTHER DISPOSITION (COLLECTIVELY, A "DISPOSAL") OF THE WARRANTS
REPRESENTED BY THIS CERTIFICATE OR THE SHARES OF COMMON STOCK
ISSUABLE UPON THE EXERCISE THEREOF OR THE EXCHANGE SHARES MAY BE
MADE UNLESS (I) REGISTERED UNDER THE SECURITIES ACT AND ANY
APPLICABLE STATE SECURITIES OR BLUE SKY LAWS OR (II) XCL LTD.
RECEIVES A WRITTEN OPINION OF UNITED STATES LEGAL COUNSEL IN FORM
AND SUBSTANCE SATISFACTORY TO IT TO THE EFFECT THAT SUCH DISPOSAL
IS EXEMPT FROM SUCH REGISTRATION REQUIREMENTS.
WARRANTS TO PURCHASE
COMMON STOCK OF XCL LTD.
Initial Issuance on July 16, 1999
Void after 5:00 p.m. New York Time, April 13, 2004
No. ____________
THIS CERTIFIES THAT, for value received,
___________________________ (the "Holder") (whose Taxpayer
Identification Number is _____________) is the registered holder
of warrants (the "Warrants") to purchase from XCL LTD., a
Delaware corporation (the "Company"), at any time or from time to
time beginning on January 17, 2000, and until 5:00 p.m., New York
time, on July 16, 2004 (the "Expiration Date"), subject to the
conditions set forth herein, at the initial exercise price of
U.S. $.10 per share (the "Initial Exercise Price"), subject to
adjustment as set forth herein (the "Exercise Price"), up to an
aggregate of 227,902 fully paid and non-assessable shares (the
"Shares"), par value $.01 per share (the "Common Stock"), of the
Company upon surrender of this certificate (the "Certificate")
and payment of the Exercise Price multiplied by the number of
Shares in respect of which Warrants are then being exercised (the
"Purchase Price") at the principal office of the Company
presently located at 110 Rue Jean Lafitte, 2nd Floor, Lafayette,
LA 70508.
1. Exercise of Warrants
(a) The exercise of any Warrants represented
by this Certificate is subject to the conditions set forth below
in Section 4, "Compliance with Securities Laws."
(b) Subject to compliance with all of the
conditions set forth herein, the Holder shall have the right to
purchase from the Company the number of Shares which the Holder
may at the time be entitled to purchase pursuant hereto, upon
surrender of this Certificate to the Company at its principal
office, together with the form of election to purchase attached
hereto duly completed and signed, and upon payment to the Company
of the Purchase Price; provided, that if the date of such
purchase is not a day on which banking institutions in New York
City are authorized or obligated to do business (a "Business
Day"), then such purchase shall take place before 5:00 p.m. New
York time on the next following Business Day.
(c) No Warrant may be exercised after 5:00
p.m., New York time, on the Expiration Date, at which time all
Warrants evidenced hereby, unless exercised prior thereto, shall
thereafter be null and void and all further rights in respect
thereof under this Certificate shall thereupon cease.
(d) Payment of the Purchase Price shall be
made in United States dollars in cash, by wire transfer or by
certified check or banker's draft payable to the order of the
Company, or any combination of the foregoing.
(e) The Warrants represented by this
Certificate are exercisable at the option of the Holder, in whole
or in part (but not as to fractional Shares), but upon exercise
in part, the election to exchange provided for in Section 11
shall terminate. Upon the exercise of less than all of the
Warrants evidenced by this Certificate, the Company shall
forthwith issue to the Holder a new certificate of like tenor
(but without the election to exchange provided for in Section 11
or other references to Exchange Shares) representing the number
of unexercised Warrants.
(f) Subject to compliance with all of the
conditions set forth herein, upon surrender of this Certificate
to the Company at its principal office, together with the form of
election to purchase attached hereto duly completed and signed,
and upon payment of the Purchase Price, the Company shall cause
to be delivered promptly to or upon the written order of the
Holder and in such name or names as the Holder may designate, a
certificate or certificates for the number of whole Shares
purchased upon the exercise of the Warrants.
2. Elimination of Fractional Interests. The
Company shall not be required to issue certificates representing
fractions of Shares or Exchange Shares (as hereinafter defined)
and shall not be required to issue scrip in lieu of fractional
interests. Instead of any such fractional interest that would
otherwise be issuable to such Holder, the Company shall
repurchase such fractional interest in cash in an amount equal to
such fractional interest of the closing bid price for the Common
Stock on The American Stock Exchange, Inc. or any other principal
stock exchange or in the over-the-counter market or other
securities market in which the Common Stock is then trading on
the date of determination (the "Market Price per Share");
provided, however, the Company shall not be required to pay any
Holder any amount in respect of such fractional interest which is
less than $1.00.
3. Payment of Taxes. The Company will pay all
documentary stamp taxes, if any, attributable to the issuance and
delivery of the Shares upon the exercise of the Warrants or the
Exchange Shares upon the exercise of the election to exchange;
provided, however, that the Company shall not be required to pay
any taxes which may be payable in respect of any transfer
involved in the issuance or delivery of any Warrant or any Shares
or any Exchange Shares in any name other than that of the Holder,
which transfer taxes shall be paid by the Holder, and until
payment of such transfer taxes, if any, the Company shall not be
required to issue such Shares or Exchange Shares.
4. Compliance with Securities Laws.
(a) The issuance of the Warrants and the
Shares issuable pursuant thereto and the Exchange Shares (the
Warrants, the Shares and the Exchange Shares being referred to
collectively as the "Securities") to the Holder has not been,
and, except as hereinafter set forth in Section 9, will not be,
registered under the Securities Act or any other domestic or
foreign securities or blue sky laws (the Securities Act and any
such other applicable securities or blue sky laws are hereinafter
collectively referred to herein as the "Securities Laws") in
reliance upon exemptions from the registration requirements
thereof; the Holder is acquiring the Securities solely for its
own account for investment and not with a view to, or for offer
or resale in connection with, a distribution thereof in violation
of any Securities Laws. The Securities shall be held by the
Holder unless the sale or transfer thereof is subsequently
registered under applicable Securities Laws or an exemption from
such registration is available at the time of the proposed sale
or transfer thereof. Except as hereinafter set forth in Section
9, the Company shall be under no obligation to file a
registration statement under the Securities Act covering the sale
or transfer of the Securities or otherwise to register the
Securities for sale under applicable Securities Laws.
(b) Prior to any sale, transfer or other
disposition of any of the Securities (so long as they have not
been registered under the Securities Act as contemplated in
Section 9 hereof or are not otherwise freely transferable under
the Securities Laws), the Holder shall give at least three
business days prior written notice to the Company of its
intention to effect such sale, transfer or other disposition and
to comply in all other respects with this Section 4(b). Each
such notice shall describe the manner and circumstances of the
proposed transfer in sufficient detail to enable counsel to
render the opinions required herein, and, if requested by the
Company, shall be accompanied by an opinion of counsel reasonably
acceptable to the Company (which shall include Holder's in-house
counsel), addressed to the Company and satisfactory in form and
substance to the Company, stating that, in the opinion of such
counsel, such transfer will be a transaction exempt from
registration under the Securities Laws and that all necessary
consents, approvals or authorizations to such transfer have been
obtained. Assuming the receipt by the Company of such
satisfactory opinion, the Holder shall thereupon be entitled to
transfer such Securities in accordance with the terms of the
notice delivered by the Holder to the Company. Each certificate
or other document issued representing the Securities shall bear
an appropriate legend suitably conformed, unless, in the opinion
of the respective counsel for the Holder and the Company, such
legend is not required in order to aid in assuring compliance
with applicable Securities Laws.
(c) The Holder shall not sell any Shares or
Exchange Shares included in a Registration Statement (as defined
in Section 9) filed by the Company and declared effective by the
Securities and Exchange Commission during the period from the
date it receives notice of the filing of any such Registration
Statement by the Company through the 90th day after the effective
date of such Registration Statement, to the public pursuant to
Rules 144 or 144A under the Securities Act or otherwise, without
the prior receipt of the written consent of the Company;
provided, however, that such restriction shall not be applicable
to the Holder unless the Registration Statement relates to an
underwritten public offering of the Company's securities;
provided, further, the Holder shall be bound by the terms of this
paragraph in connection with no more than one registration
statement in any six month period.
(d) In addition to any specific restrictive
legends that may be required by applicable Securities Laws or
agreements to which the Holder may be a party, the Holder shall
be bound by a restrictive legend which may be placed on the
certificates representing the Securities. The Company may place
and instruct any transfer agent for the Securities to place a
stop transfer notation in the stock records in respect of the
certificates representing the Securities, provided that such
securities may be transferred upon compliance with the provisions
of this Section 4 and Section 5 below.
5. Transfer of Warrants.
(a) The Warrants shall be transferable only on
the books of the Company maintained at the Company's principal
office upon delivery of this Certificate with the form of
assignment attached hereto duly completed and signed by the
Holder or by its duly authorized attorney or representative, or
accompanied by proper evidence of succession, assignment or
authority to transfer. The Company may, in its discretion,
require, as a condition to any transfer of Warrants, a signature
guarantee by a commercial bank or trust company, by a broker or
dealer which is a member of the National Association of
Securities Dealers, Inc. Upon any registration of transfer, the
Company shall deliver a new certificate or certificates of like
tenor and evidencing in the aggregate a like number of Warrants
to the person entitled thereto in exchange for this Certificate,
subject to the limitations provided herein, without any charge
except for any tax or other governmental charge imposed in
connection therewith.
(b) Notwithstanding anything in this
Certificate to the contrary, neither any of the Warrants nor any
of the Shares issuable upon exercise of any of the Warrants nor
the Exchange Shares shall be transferable, except upon compliance
by the Holder with (i) the provisions of Sections 4 and 5 hereof,
concerning such transfer as if the Holder were the initial
Holder, and (ii) any applicable provisions of the Securities Act
and any applicable state and foreign securities or blue sky laws.
Any transfer not made in such compliance shall be null and void,
and given no effect hereunder.
6. Exchange and Replacement of Warrant
Certificates; Loss or Mutilation of Warrant Certificates.
(a) This Certificate is exchangeable without
cost, upon the surrender hereof by the Holder at the principal
office of the Company, for new certificates of like tenor and
date representing in the aggregate the right to purchase the same
number of Shares in such denominations as shall be designated by
the Holder at the time of such surrender. In such case, the
reference to "this Certificate" in Section 11(a) shall refer to
all such certificates collectively.
(b) Upon receipt by the Company of evidence
reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Certificate and, in case of such loss, theft
or destruction, of indemnity and security reasonably satisfactory
to it, and reimbursement to the Company of all reasonable
expenses incidental thereto, and upon surrender and cancellation
of this Certificate, if mutilated, the Company will make and
deliver a new certificate of like tenor, in lieu thereof.
7. Initial Exercise Price; Adjustment of Number of
Shares.
(a) The Warrants initially are exercisable at
the Initial Exercise Price per Share, subject to adjustment from
time to time as provided herein. No adjustments will be made for
cash dividends, if any, paid to shareholders of record prior to
the date on which the Warrants are exercised.
(b) In case the Company shall at any time
after the date of this Certificate (i) declare a dividend on the
shares of Common Stock payable in shares of Common Stock, or (ii)
subdivide or split up the outstanding shares of Common Stock, the
amount of Shares to be delivered upon exercise of any Warrant
will be appropriately increased so that the Holder will be
entitled to receive the amount of Shares that such Holder would
have owned immediately following such actions had such Warrant
been exercised immediately prior thereto, and the Exercise Price
in effect immediately prior to the record date for such dividend
or the effective date for such subdivision shall be
proportionately decreased, all effective immediately after the
record date for such dividend or the effective date for such
subdivision or split up. Such adjustments shall be made
successively whenever any event listed above shall occur.
(c) In case the Company shall at any time
after the date of this Certificate combine the outstanding shares
of Common Stock into a smaller number of shares the amount of
Shares to be delivered upon exercise of any Warrant will be
appropriately decreased so that the Holder will be entitled to
receive the amount of Shares that such Holder would have owned
immediately following such action had such Warrant been exercised
immediately prior thereto, and the Exercise Price in effect
immediately prior to the record date for such combination shall
be proportionately increased, effective immediately after the
record date for such combination. Such adjustment shall be made
successively whenever any such combinations shall occur.
(d) In the event that the Company shall at any
time after the date of this Certificate (i) issue or sell any
shares of Common Stock (other than the Shares) or securities
convertible or exchangeable into Common Stock to all holders of
Common Stock without consideration or at a price per share (or
having a conversion price per share, if a security convertible
into Common Stock) less than the Market Value per share of Common
Stock (as defined in Section 7(f) hereof), or (ii) issue or sell
options, rights or warrants to subscribe for or purchase Common
Stock to all holders of Common Stock at a price per share less
than the Market Price per share of Common Stock (as defined in
Section 7(f) hereof), the Exercise Price to be in effect after
the date of such issuance shall be determined by multiplying the
Exercise Price in effect on the day immediately preceding the
relevant issuance or record date, as the case may be, used in
determining such Market Value or Market Price, by a fraction, the
numerator of which shall be the number of shares of Common Stock
outstanding on such issuance or record date plus the number of
shares of Common Stock which the aggregate offering price of the
total number of shares of Common Stock so to be issued or to be
offered for subscription or purchase (or the aggregate initial
conversion price of the convertible securities so to be offered)
would purchase at such Market Value or Market Price, as the case
may be, and the denominator of which shall be the number of
shares of Common Stock outstanding on such issuance or record
date plus the number of additional shares of Common Stock to be
issued or to be offered for subscription or purchase (or into
which the convertible securities so to be offered are initially
convertible); such adjustment shall become effective immediately
after the close of business on such issuance or record date;
provided, however, that no such adjustment shall be made for the
issuance of (s) options to purchase shares of Common Stock
granted pursuant to the Company's employee stock option plans
approved by shareholders of the Company (and the shares of Common
Stock issuable upon exercise of such options) (provided that
option exercise prices shall not be less than the Market Value of
the Common Stock (as defined in Section 7(f) hereof) on the date
of the grant of such options), (t) the Company's warrants to
purchase shares of Common Stock (and the shares of Common Stock
issuable upon exercise of such warrants), outstanding on the date
hereof, (u) the Company's shares of Amended Series A, Cumulative
Convertible Preferred Stock (and the shares of Common Stock
issuable upon conversion of such Preferred Stock), outstanding on
the date hereof, or (v) the Company's shares of Series B,
Cumulative Preferred Stock (and the shares of Common Stock
issuable in lieu of dividend and redemption payments thereunder),
outstanding on the date hereof. In case such subscription price
may be paid in a consideration, part or all of which shall be in
a form other than cash, the value of such consideration shall be
as determined reasonably and in good faith by the Board of
Directors of the Company. Shares of Common Stock owned by or
held for the account of the Company or any wholly-owned
subsidiary shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively
whenever the date of such issuance is fixed (which date of
issuance shall be the record date for such issuance if a record
date therefor is fixed); and, in the event that such shares or
options, rights or warrants are not so issued, the Exercise Price
shall again be adjusted to be the Exercise Price which would then
be in effect if the date of such issuance had not been fixed.
(e) In case the Company shall make a
distribution to all holders of Common Stock (including any such
distribution made in connection with a consolidation or merger in
which the Company is the continuing corporation) of evidences of
its indebtedness, securities other than Common Stock or assets
(other than cash dividends or cash distributions payable out of
consolidated earnings or earned surplus or dividends payable in
Common Stock), the Exercise Price to be in effect after such date
of distribution shall be determined by multiplying the Exercise
Price in effect on the date immediately preceding the record date
for the determination of the shareholders entitled to receive
such distribution by a fraction, the numerator of which shall be
the Market Price per share of Common Stock (as defined in Section
7(f) hereof) on such date, less the then-fair market value (as
determined reasonably and in good faith by the Board of Directors
of the Company of the portion of the assets, securities or
evidences of indebtedness so to be distributed applicable to one
share of Common Stock and the denominator of which shall be such
Market Price per share of Common Stock, such adjustment to be
effective immediately after the distribution resulting in such
adjustment. Such adjustment shall be made successively whenever
a date for such distribution is fixed (which date of distribution
shall be the record date for such distribution if a record date
therefor is fixed); and, if such distribution is not so made, the
Exercise Price shall again be adjusted to be the Exercise Price
which would then be in effect if such date of distribution had
not been fixed.
(f) For the purposes of any computation under
this Section 7, the "Market Price per share" of Common Stock on
any date shall be deemed to be the average of the closing bid
price for the 20 consecutive trading days ending on the record
date for the determination of the shareholders entitled to
receive any rights, dividends or distributions described in this
Section 7, and the "Market Value per share" of Common Stock on
any date shall be deemed to be the closing bid price on the date
of the issuance of the securities for which such computation is
being made, as reported on the principal United States securities
exchange on which the Common Stock is listed or admitted to
trading or if the Common Stock is not then listed on any United
States stock exchange, the average of the closing sales price on
each such day during such 20 day period, in the case of the
Market Price computation, or on such date of issuance, in the
case of the Market Value computation, in the over-the-counter
market as reported by the National Association of Securities
Dealers' Automated Quotation System ("NASDAQ"), or, if not so
reported, the average of the closing bid and asked prices on each
such day during such 20 day period in the case of the Market
Price computation, or on such date of issuance, in the case of
the Market Value computation, as reported in the "pink sheets"
published by the National Quotation Bureau, Inc. or any successor
thereof, or, if not so quoted, the average of the middle market
quotations for such 20 day period in the case of the Market Price
computation, or on such date of issuance, in the case of the
Market Value computation, as reported on the daily official list
of the prices of stock listed on The London Stock Exchange
Limited ("The Stock Exchange Daily Official List"). "Trading
day" means any day on which the Common Stock is available for
trading on the applicable securities exchange or in the
applicable securities market. In the case of Market Price or
Market Value computations based on The Stock Exchange Daily
Official List, the Market Price or Market Value shall be
converted into United States dollars at the then spot market
exchange rate of pounds sterling (UK) into United States dollars
as quoted by Chemical Bank or any successor bank thereto on the
date of determination. If a quotation of such exchange rate is
not so available, the exchange rate shall be the exchange rate of
pounds sterling in United States dollars as quoted in The Wall
Street Journal on the date of determination.
(g) No adjustment in the Exercise Price shall
be required unless such adjustment would require an increase or
decrease of at least 1% in such price; provided that any
adjustments which by reason of this Section 7(g) are not required
to be made shall be carried forward and taken into account in any
subsequent adjustment; provided, further that such adjustment
shall be made in all events (regardless of whether or not the
amount thereof or the cumulative amount thereof amounts to 1% (or
more) upon the happening of one or more of the events specified
in Sections 7(b), (c) or (i). All calculations under this
Section 7 shall be made to the nearest cent.
(h) If at any time, as a result of an
adjustment made pursuant to Section 7(b) or (c) hereof, the
Holder of any Warrant thereafter exercised shall become entitled
to receive any shares of the Company other than shares of Common
Stock, thereafter the number of such other shares so receivable
upon exercise of any Warrant shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Shares
contained in this Section 7, and the provisions of this
Certificate with respect to the Shares shall apply on like terms
to such other shares.
(i) In the case of (l) any capital
reorganization of the Company, or of (2) any reclassification of
the shares of Common Stock (other than a subdivision or
combination of outstanding shares of Common Stock), or (3) any
consolidation or merger of the Company, or (4) the sale, lease or
other transfer of all or substantially all of the properties and
assets of the Company as, or substantially as, an entirety to any
other person or entity, each Warrant shall after such capital
reorganization, reclassification of the shares of Common Stock,
consolidation, or sale be exercisable, upon the terms and
conditions specified in this Certificate, for the number of
shares of stock or other securities or assets to which a holder
of the number of Shares purchasable (immediately prior to the
effectiveness of such capital reorganization, reclassification of
shares of Common Stock, consolidation, or sale) upon exercise of
a Warrant would have been entitled upon such capital
reorganization, reclassification of shares of Common Stock,
consolidation, merger or sale; and in any such case, if
necessary, the provisions set forth in this Section 7 with
respect to the rights thereafter of the Holder shall be
appropriately adjusted (as determined reasonably and in good
faith by the Board of Directors of the Company) so as to be
applicable, as nearly as may reasonably be, to any shares of
stock or other securities or assets thereafter deliverable on the
exercise of a Warrant. The Company shall not effect any such
consolidation or sale, unless prior to or simultaneously with the
consummation thereof, the successor corporation, partnership or
other entity (if other than the Company) resulting from such
consolidation or the corporation, partnership or other entity
purchasing such assets or the appropriate entity shall assume, by
written instrument, the obligation to deliver to the Holder of
each Warrant the shares of stock, securities or assets to which,
in accordance with the foregoing provisions, such Holder may be
entitled and all other obligations of the Company under this
Certificate. For purposes of this Section 7(i) a merger to which
the Company is a party but in which the Common Stock outstanding
immediately prior thereto is changed into securities of another
corporation shall be deemed a consolidation with such other
corporation being the successor and resulting corporation.
(j) Irrespective of any adjustments in the
Exercise Price or the number or kind of shares purchasable upon
the exercise of the Warrant, Warrant Certificates theretofore or
thereafter issued may continue to express the same Exercise Price
per share and number and kind of Shares as are stated on the
Warrant Certificates initially issuable pursuant to this Warrant.
8. Required Notices to Warrant Holders. Nothing
contained in this Certificate shall be construed as conferring
upon the Holder the right to vote or to consent or to receive
notice as a shareholder in respect of any meetings of
shareholders for the election of directors or any other matter,
or as having any rights whatsoever as a shareholder of the
Company. If, however, at any time prior to the expiration of the
Warrants or their exercise, any of the following events shall
occur:
(i) the Company shall issue any rights to
subscribe for shares of Common Stock or any other
securities of the Company to all of the shareholders of
the Company; or
(ii) a dissolution, liquidation or winding-up
of the Company (other than in connection with a
consolidation, merger or statutory share exchange) or a
sale of all or substantially all of its property,
assets and business as an entirety shall be approved by
the Company's Board of Directors; or
(iii) there shall be any reclassification or a
change in the kind of the outstanding shares of Common
Stock into different securities (other than a change in
the number of outstanding shares or a change in par
value to no par value, or from no par value to par
value) or consolidation, merger or statutory share
exchange of the Company with another entity;
then, in any one or more of said events, the Company shall give
written notice of such event on or before the date the Company
gives notice to its shareholders of such event. Such notice
shall specify the applicable record date or the date of closing
the transfer books, as the case may be, if any. Failure to give
such notice or any defect therein shall not affect the validity
of any action taken in connection with the event.
9. Registration Rights.
(a) Piggyback Registration. If, at any time
during the five (5) years beginning on the initial issuance date
of the Warrants represented by this Certificate, the Company
proposes to prepare and file any new registration statement under
the Securities Act covering the public sale of Common Stock of
the Company for cash (in any case, other than in connection with
an employee benefit plan, a dividend reinvestment plan or
pursuant to a registration statement on Forms S-4 or S-8 or any
successor form) (collectively, a "Registration Statement"), it
will give written notice by certified or registered mail, at
least thirty (30) days prior to the filing of each such
Registration Statement, to the Holder of its intention to do so.
If the Holder notifies the Company within fifteen (15) days after
receipt of any such notice of such Holder's desire to include in
such proposed Registration Statement any shares of Common Stock
(i) issued or issuable to the Holder upon exercise of the
Holder's Warrants, and (ii) that are owned by the Holder (the
"Registrable Shares") (which notice shall specify the number of
Registrable Shares owned by the Holder and the number intended to
be disposed of by the Holder), the Company shall use reasonable
efforts to include, to the extent possible, in such Registration
Statement the number of Registrable Shares which the Company has
been so requested to register by the Holder, at the Company's
sole cost and expense and at no cost or expense to the Holder,
except that the Holder shall pay (i) all underwriters' broker-
dealers', placement agents' and similar selling discounts,
commissions and fees relating to the Holder's Registrable Shares,
(ii) all registration and filing fees imposed under the
Securities Act, by any stock exchange or under applicable state
securities or blue sky laws based on the Holder's Registrable
Shares, (iii) all transfer, franchise, capital stock and other
taxes, if any applicable to the Holder's Registrable Shares, and
(iv) the costs and expenses of legal counsel, accountants or
other advisors retained by the Holder in excess of $15,000
(collectively, the "Holder's Expenses"), provided that;
(i) anything in this Section 9 to the contrary
notwithstanding, if the Company's securities so
registered for sale are to be distributed in an
underwritten offering and the managing underwriter
shall advise the Company that, in its opinion, the
amount of securities to be offered should be limited in
order to assure a successful offering, the amount of
Registrable Shares to be included in such Registration
Statement shall be so limited and shall be allocated
among the persons selling such securities in the
following order of priority: (A) first to be
registered will be the securities the Company proposes
to sell, (B) next to be registered will be the
securities subject to any demand registration rights
granted by the Company, (C) next to be registered will
be securities subject to any piggyback registration
rights granted by the Company before the initial
issuance date of the Warrants, and (D) next to be
registered will be the Registrable Shares and any other
shares of Common Stock subject to similar piggyback
registration rights granted by the Company in
proportion, as nearly as practicable, to the number of
shares of Common Stock desired and eligible to be sold
by each holder of such shares of Common Stock; and
(ii) anything in this Section 9 to the
contrary notwithstanding, the Company shall not be
required to include any of the Holder's Registrable
Shares in a registration statement if in the written
opinion of legal counsel to the Company upon which
Holder is authorized to rely the securities for which
registration is requested may be sold publicly without
limitation or restriction without registration under
the Securities Act; and
(iii) if the securities or blue sky laws of
any jurisdiction in which the securities so registered
are proposed to be offered would require the Holder's
payment of greater registration expenses than those
otherwise required by this Section 9 and if the Company
shall determine, in good faith, that the offering of
such securities in such jurisdiction is necessary for
the successful consummation of the registered offering,
then the Holder shall either agree to pay the portion
of the registration expenses required by the securities
or blue sky laws of such jurisdiction to be paid by the
Holder or withdraw its request for inclusion of its
Registrable Shares in such registration; and
(iv) notwithstanding the provisions of this
Section 9(a), the Company shall have the right at any
time and for any reason or for no reason after it shall
have given written notice pursuant to this paragraph
(irrespective of whether a written request for
inclusion of any such securities shall have been made)
to elect not to file any such proposed Registration
Statement, or to withdraw the same after the filing but
prior to the effective date thereof and, thereupon,
shall be relieved from its obligation to proceed with
such registration.
If a Holder's Registrable Shares are included in a
Registration Statement, the Holder shall furnish the Company in
writing with such appropriate documents and agreements,
including, without limitation, indemnification and contribution
agreements, as well as such appropriate information in connection
with the sale of such Shares, including, without limitation,
information about the Holder, the Registrable Shares and the
Holder's plan of distribution thereof, and other securities of
the Company owned by the Holder, as the Company shall reasonably
request or as shall be reasonably required in connection with any
registration, qualification or compliance referred to in this
Agreement. In addition, if the offering is underwritten, the
Company shall have the exclusive right to select the underwriter.
The Holder shall execute and deliver all documents reasonably
requested by the Company and/or such underwriter and any other
documents customary in similar offerings, including, without
limitation, underwriting agreements, custody agreements, powers
of attorney, indemnification agreements, and agreements
restricting other sales of securities.
The rights and obligations under Sections 9(a) and
(b) shall terminate at the earlier of (i) five (5) years after
the initial issuance date of the Warrants, or (ii) the date all
of the Holder's Registrable Shares have been transferred by the
Holder, except for transfers in accordance with Section 5(b)
above.
(a) Covenants of the Company with Respect to
Registration. The Company covenants and agrees as follows:
(i) The Company shall pay all costs, fees and
expenses in connection with all Registration Statements
filed pursuant to paragraph (a) above, including,
without limitation, the Company's legal and accounting
fees, printing expenses, filing fees and other
expenses, except that the Holder shall pay all of the
Holder's Expenses (as defined in paragraph (a)).
(ii) The Company will use its reasonable
efforts to qualify or register the Registrable Shares
included in a Registration Statement for offering and
sale under the securities or blue sky laws of such
states of the United States as are reasonably
appropriate to the offering; provided, however, that
the Company shall not be required to (A) qualify or
register the Registrable Shares in any jurisdiction in
which the Company would be required to qualify as a
broker or dealer in securities under the securities or
blue sky laws of such jurisdictions, (B) qualify
generally to do business as a foreign corporation in
any jurisdiction wherein it is not already so
qualified, (C) subject itself to taxation in any such
jurisdiction, or (D) consent to general service of
process in any such jurisdiction.
10. Reservation and Listing of Securities.
(a) The Company covenants and agrees that at
all times during the period the Warrants are exercisable, the
Company shall reserve and keep available, free from preemptive
rights, out of its authorized and unissued shares of Common Stock
or out of its authorized and issued shares of Common Stock held
in its treasury, solely for the purpose of issuance upon exercise
of the Warrants, such number of Shares as shall be issuable upon
the exercise of the Warrants
(b) The Company covenants and agrees that,
upon exercise of the Warrants in accordance with their terms and
payment of the Purchase Price, all Shares issued or sold upon
such exercise shall not be subject to the preemptive rights of
any shareholder and when issued and delivered in accordance with
the terms of the Warrants shall be duly and validly issued, fully
paid and non-assessable, and the Holder shall receive good and
valid record title to such Shares free and clear from any adverse
claim (as defined in the applicable Uniform Commercial Code),
except such as have been created by the Holder.
11. Option to Exchange Warrants for Stock.
(a) The Company hereby agrees that at any time
or from time to time beginning on July 17, 2001, and until 5:00
p.m., New York time, on January 16, 2002 (the "Exchange
Expiration Date"), Holder shall have the right to exchange all,
but not less than all, of the Warrants represented by this
Certificate (or any replacement Certificates as provided for in
Section 6(a) hereof) and Warrant Certificate Nos. LM-3, and LM-5
issued on November 6, 1999 and January 15, 1999, respectively, to
Holder (all of the Certificates described above, together with
any other Certificates which may be issued in place thereof
representing the original number of Warrants provided for
therein, are sometimes hereinafter collectively referred to as
the "Certificates") for fully paid shares of Common Stock having
a market value on the day of the exchange (calculated in
accordance with Section 7(f) hereof) of $235,280 (the "Exchange
Shares") or at the option of the Company, all or a portion of
such $235,280 in cash.
(b) It is understood and agreed by Holder that
there can be no partial exchange under this Section 11, but that
all Certificates described above must be exchanged in order for
the exchange to be available to Holder. It is further understood
and agreed by Holder that if any of such Certificates are
exercised in part, the Holder shall no longer have the election
to exchange provided by this Section 11 and the election to
exchange contained in this Section 11 shall automatically and
without any further action by any party terminate and be of no
further force or effect, whether or not a new Certificate is
issued to Holder eliminating this Section 11 and other references
to Exchange Shares.
(c) The exchange of the Certificates
authorized by this Section 11 is subject to the conditions set
forth in Section 4, "Compliance with Securities Laws."
(d) Subject to compliance with all of the
conditions set forth herein, the Holder shall have the right to
receive from the Company the Exchange Shares, cash or part shares
and part cash at the option of the Company, upon surrender of the
Certificates to the Company at its principal office, together
with the form of election to exchange attached hereto duly
completed and signed by the Holder; provided, that if the date of
such exchange is not a Business Day, then such exchange shall
take place before 5:00 p.m. New York time on the next following
Business Day.
(e) The exchange of the Certificates may not
be exercised after 5:00 p.m., New York time, on the Exchange
Expiration Date, at which time all rights to exchange provided
for in this Section 11, unless exercised prior thereto, shall
thereafter be null and void and all further rights in respect
thereof under this Section 11 shall thereupon cease.
(f) Subject to compliance with all of the
conditions set forth herein, upon surrender of the Certificates
to the Company at its principal office, together with the form of
election to exchange attached hereto duly completed and signed by
the Holder, the Company shall cause to be delivered promptly to
or upon the written order of the Holder and in such name or names
as the Holder may designate, a certificate or certificates for
the Exchange Shares or all or a portion of such $235,280 in cash.
12. Survival. All agreements, covenants,
representations and warranties herein shall survive the execution
and delivery of this Certificate and any investigation at any
time made by or on behalf of any party hereto and the exercise,
sale and purchase of the Warrants and the Shares or the Exchange
Shares (and any other securities or properties) issuable on
exercise hereof.
13. Registered Holder. The Company may deem and
treat the registered Holder hereof as the absolute owner of this
Certificate and the Warrants represented hereby (notwithstanding
any notation of ownership or other writing hereon made by
anyone), for the purpose of any exercise of the Warrants, of any
notice, and of any distribution to the Holder hereof, and for all
other purposes, and the Company shall not be affected by any
notice to the contrary.
14. Manner of Notices. All notices and other
communications from the Company to the Holders of the Warrants
represented by this Certificate shall be in writing and shall be
deemed to have been duly given if and when personally delivered,
two (2) business days after being sent by overnight courier or
ten (10) days after mailed by certified, registered or
international recorded mail, postage prepaid and return receipt
requested, or when transmitted by telefax, telex or telegraph and
confirmed by sending a similar mailed writing, if to the Holder,
to the last address of such Holder as it shall appear on the
books of the Company maintained at the Company's principal office
or to such other address as the Holder may have specified to the
Company in writing.
15. Headings. The headings contained herein are
for convenience of reference only and are not part of this
Certificate.
16. Governing Law. This Certificate shall be
deemed to be a contract made under the laws of the State of
Delaware and for all purposes shall be governed by, and construed
in accordance with, the laws of said state, without regard to the
conflict of laws provisions thereof.
IN WITNESS WHEREOF, the Company has caused this
Certificate to be duly executed by its duly authorized officers.
Dated: _______________, 1999
XCL LTD.
By:______________________________
Name: Marsden W. Miller, Jr.
Title: Chairman and Chief Executive Officer
Attest:
___________________________
Secretary/Assistant Secretary
XCL LTD.
FORM OF ELECTION TO PURCHASE
(To be executed by the registered Holder
if such Holder desires to exercise Warrants)
The undersigned registered Holder hereby irrevocably
elects to exercise the right of purchase represented by this
Warrant Certificate for, and to purchase, ___________ Shares
hereunder, and herewith tenders in payment for such Shares cash,
a wire transfer, a certified check or a banker's draft payable to
the order of XCL LTD. in the amount of _____________________, all
in accordance with the terms hereof. The undersigned requests
that a certificate for such Shares be registered in the name of
and delivered to:
(Please Print Name and Address)
and, if said number of Shares shall not be all the Shares
purchasable hereunder, that a new Warrant Certificate for the
balance remaining of the Shares purchasable hereunder be
registered in the name of the undersigned Warrant Holder or his
Assignee as below indicated and delivered to the address stated
below.
DATED:
Name of Warrant Holder:
(Please Print)
Address:
Signature:
Note: The above signature must correspond in all
respects with the name of the Holder as specified on the face of
this Warrant Certificate, without alteration or enlargement or
any change whatsoever, unless the Warrants represented by this
Warrant Certificate have been assigned.
XCL LTD.
FORM OF ELECTION TO EXCHANGE
(To be executed by the registered Holder
if such Holder desires to exercise the election to exchange)
The undersigned registered Holder hereby irrevocably
elects to exercise the right to exchange Warrant Certificate Nos.
ALM-1, LM-3 and LM-5 for shares of Common Stock of XCL Ltd., par
value $.01 per share, having a market value on the date hereof of
$235,280 (the "Exchange Shares") or at the option of the Company,
all or a portion of such $235,280 in cash, all in accordance with
the terms hereof. The undersigned requests that a certificate
for such Exchange Shares (unless all of such $235,280 is to be
paid in cash) be registered in the name of and delivered to:
(Please Print Name and Address)
DATED:
Name of Warrant Holder:
(Please Print)
Address:
Signature:
Note: The above signature must correspond in all
respects with the name of the Holder as specified on the face of
this Warrant Certificate and Warrant Certificate Nos. LM-3 and LM-
5 , without alteration or enlargement or any change whatsoever,
unless the Warrants represented by this Warrant Certificate and
Warrant Certificate Nos. LM-3 and LM-5 have been assigned.
XCL LTD.
FORM OF ASSIGNMENT
(To be executed by the registered Holder if such Holder
desires to transfer the Warrant Certificate)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers to:
_________________________________________________________________
(Please Print Name and Address of Transferee)
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
Warrants to purchase up to ________ Shares represented by this
Warrant Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint
_____________________, Attorney, to transfer such Warrants on the
books of the Company, with full power of substitution in the
premises. The undersigned requests that if said number of Shares
shall not be all of the Shares purchasable under this Warrant
Certificate that a new Warrant Certificate for the balance
remaining of the Shares purchasable under this Warrant
Certificate be registered in the name of the undersigned Warrant
Holder and delivered to the registered address of said Warrant
Holder.
DATED:_______________
Signature of registered Holder:
_________________________________________
Note: The above signature must correspond in all respects
with the name of the Holder as specified on the face of this
Warrant Certificate, without alteration or enlargement or any
change whatsoever. The above signature of the registered Holder
must be guaranteed by a commercial bank or trust company, by a
broker or dealer which is a member of the National Association of
Securities Dealers, Inc. or by a member of a national securities
exchange, The Securities and Futures Authority Limited in the
United Kingdom or The London Stock Exchange Limited in London,
England. Notarized or witnessed signatures are not acceptable as
guaranteed signatures.
Signature Guaranteed:
_________________________________________
Authorized Officer
_________________________________________
Name of Institution
FIFTH WARRANT AMENDMENT AGREEMENT
This Fifth Warrant Amendment Agreement dated as of July 16,
1999 by and between XCL Ltd., a Delaware corporation ("XCL"), and
Estate of J. Edgar Monroe (the "Estate"), J. Edgar Monroe
Foundation (1976) (the "Foundation") and Construction
Specialists, Inc. d/b/a Con-Spec, Inc. ("Con-Spec") (the Estate,
the Foundation and Con-Spec are sometimes collectively referred
to herein as the "Warrantholders").
W I T N E S S E T H:
WHEREAS, each of the Warrantholders holds the number of
warrants ("Warrants") to purchase shares of common stock, par
value $0.01 per share, of XCL set forth opposite its name on
Schedule I attached hereto, the Warrants listed under Column A on
Schedule I having been originally issued pursuant to Warrant
Certificates each dated as of November 6, 1998 and reflecting an
exercise price of $3.50 per share of common stock (subject to
adjustment as therein provided) and the Warrants listed under
Column B on Schedule I having been issued pursuant to Warrant
Certificates each dated as of January 15, 1999 and reflecting an
exercise price of $2.00 of common stock (subject to adjustment as
therein provided) (collectively, the "Warrant Certificates"); and
WHEREAS, the Warrantholders acquired their Warrants in
connection with their purchase of $2,000,000 in aggregate
principal amount of Units issued by XCL and XCL Land Ltd., a
wholly owned subsidiary of XCL, each Unit consisting of $100,000
in principal amount of a promissory note of XCL Land
(collectively, the "Notes") and 21,705 Warrants; and
WHEREAS, the exercise price contained in the Warrant
Certificates dated as of November 6, 1998 has previously been
reduced by Warrant Amendment Agreement dated as of January 15,
1999 from $3.50 to $2.00 per share of common stock (subject to
adjustment as therein provided), further reduced by Second
Warrant Amendment Agreement dated as of March 19, 1999 (the
"Second Warrant Amendment Agreement") from $2.00 to $1.50 per
share of common stock (subject to adjustment as therein
provided), further reduced by Third Warrant Amendment Agreement
dated as of April 13, 1999 (the "Third Warrant Amendment
Agreement") from $1.50 to $1.325 per share of common stock
(subject to adjustment as therein provided) and further reduced
by Fourth Warrant Amendment Agreement dated as of May 21, 1999
(the "Fourth Warrant Amendment Agreement") from $1.3125 to $1.25
per share of common stock (subject to adjustment as therein
provided); and
WHEREAS, the exercise price contained in the Warrant
Certificates dated as of January 15, has also previously been
reduced by the Second Warrant Amendment Agreement from $2.00 to
$1.50 per share of common stock (subject to adjustment as therein
provided), further reduced by the Third Warrant Amendment
Agreement from $1.50 to $1.3125 per share of common stock
(subject to adjustment as therein provided) and further reduced
by the Fourth Warrant Amendment Agreement from $1.3125 to $1.25
per share of Common Stock (subject to adjustment as therein
provided); and
WHEREAS, the Subscription Agreements pursuant to which the
Warrantholders subscribed for the Units referenced above provide
that until the Warrantholders' Notes are paid in full, if the
terms of the Units (including the Notes and the Warrant
Agreements) are amended, no amendment shall be effective until it
is offered to the Warrantholders and either accepted or rejected
by them; and
WHEREAS, in order to induce the Estate and Con-Spec to
purchase an undivided interest in certain notes held by a
subsidiary of XCL, XCL agreed to reduce the exercise price of the
Warrants held by the Estate and Con-Spec from $1.25 to $0.10 per
share of common stock (subject to adjustment as therein
provided); and
WHEREAS, pursuant to its Subscription Agreements, the
Foundation was offered the same amendment and accepted it.
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged and confirmed, the parties hereto
hereby agree as follows:
1. The definition of "Initial Exercise Price" in the
first paragraph of each of the Warrant Certificate is hereby
amended to read as follows:
"' at the initial exercise price of U.S.
$0.10 per share (the "Initial Exercise
Price") '"
All other terms and provisions of the first paragraph of each
Warrant Certificate shall remain unchanged.
2. This Fifth Warrant Amendment Agreement shall not
constitute a waiver or amendment of any other provision of the
Warrant Certificates not expressly referred to herein and except
as expressly amended hereby, the provisions of the Warrant
Certificates are and shall remain in full force and effect.
3. Upon surrender of the original Warrant Certificates
issued to the Warrantholders, XCL shall issue new Warrant
Certificates of like tenor and an equivalent number of Warrants
to the Warrantholders reflecting the amendment set forth in
paragraph 1 above.
4. This Fifth Warrant Amendment Agreement sets forth the
entire understanding of the parties hereto with respect to the
subject mater hereof and may be executed in counterparts, each of
which when executed shall be deemed to be an original but all of
which taken together shall constitute one and the same agreement.
5. This Fifth Warrant Amendment Agreement shall be
governed by and construed in accordance with the internal laws of
the State of Delaware without regard to conflicts of laws.
IN WITNESS WHEREOF, the parties hereto have caused this
Fifth Warrant Amendment Agreement to be duly executed and
delivered as of the date and year first above written.
XCL LTD.
By:______________________________
Name:____________________________
Title:_____________________________
WARRANTHOLDERS:
Estate of J. Edgar Monroe
By:______________________________
Name: Robert J. Monroe
Title: Executor
J. Edgar Monroe Foundation (1976)
By:______________________________
Name: Robert J. Monroe
Title: President
Construction Specialists, Inc.
d/b/a Con-Spec, Inc.
By:______________________________
Name: Patrick A. Tesson
Title: President
WARRANT AMENDMENT AGREEMENT
This Warrant Amendment Agreement dated as of July 16,
1999 by and between XCL Ltd., a Delaware corporation
("XCL"), and Boland Machine & Mfg. Co., Inc. (the
"Warrantholder").
W I T N E S S E T H:
WHEREAS, the Warrantholder holds 65,116 warrants
("Warrants") to purchase shares of common stock, par value
$0.01 per share, of XCL (as adjusted for XCL's one-for-
fifteen reverse stock split (the "Reverse Stock Split")
effective December 17, 1997), such Warrants having been
originally issued pursuant to Warrant Certificate No. CNW-8
dated as of April 10, 1997 and reflecting an exercise price
of $0.15 (as adjusted for the Reverse Stock Split) per share
of common stock (subject to adjustment as therein provided)
(the "Warrant Certificate"); and
WHEREAS, in order to induce certain other
warrantholders to make additional loans to a subsidiary of
XCL, XCL agreed to make certain changes to the Warrants,
including an extension of the term, a reduction of the
exercise price and an option to exchange the Warrants under
certain circumstances; and
WHEREAS, the Warrantholder has agreed to the proposed
changes to the Warrants.
NOW, THEREFORE, in consideration of the premises and
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and confirmed,
the parties hereto hereby agree as follows:
1. The line immediately above the Certificate Number in
the Warrant Certificate is hereby amended to read:
"Void after 5:00 p.m. New York time, July 16,
2004."
2. The definitions of "Expiration Date" and
"Initial Exercise Price" in the first paragraph of the
Warrant Certificate are hereby amended to read as follows:
". and until 5:00 p.m., New York
time, on July 16, 2004 (the "Expiration
Date"), subject to the conditions set
forth herein, at the initial exercise
price of U.S. $0.01 per share (the
"Initial Exercise Price") ."
All other terms and provisions of the first paragraph of the
Warrant Certificate shall remain unchanged.
3. Paragraph 1(e) of the Warrant Certificate is
hereby amended to read as follows:
(e) The Warrants represented by this
Certificate are exercisable at the
option of the Holder in whole or in part
(but not as to fractional Shares), but
upon exercise in part, the election to
exchange provided for in Section 11
shall terminate. Upon the exercise of
less than all of the Warrants evidenced
by this Certificate, the Company shall
forthwith issue to the Holder a new
certificate of like tenor (but without
the election to exchange provided for in
Section 11 or any other references to
Exchange Shares) representing the number
of unexercised Warrants.
4. Paragraph 11 of the Warrant Certificate shall be
renumbered as paragraph 16 and the following new paragraph
11 shall be inserted:
11. Option to Exchange Warrants for Stock.
(a) The Company hereby agrees that
at any time or from time to time beginning on
July 17, 2001, and until 5:00 p.m., New York
time, on January 16, 2002 (the "Exchange
Expiration Date"), Holder shall have the
right to exchange all, but not less than all,
of the Warrants represented by this
Certificate for fully paid shares of Common
Stock having a market value on the day of the
exchange of $100,000 (the "Exchange Shares")
or at the option of the Company, all or a
portion of such $100,000 in cash.
(b) It is understood and agreed by
Holder that there can be no partial exchange
under this Section 11, but that all Warrants
represented by this Certificate must be
exchanged in order for the exchange to be
available to Holder. It is further
understood and agreed by Holder that if this
Certificate is exercised in part, the Holder
shall no longer have the election to exchange
provided by this Section 11 and the election
to exchange contained in this Section 11
shall automatically and without any further
action by any party terminate and be of no
further force or effect, whether or not a new
Certificate is issued to Holder eliminating
this Section 11 and other references to
Exchange Shares.
(c) The exchange authorized by this
Section 11 is subject to the conditions set
forth in Section 4, "Compliance with
Securities Laws."
(d) Subject to compliance with all
of the conditions set forth herein, the
Holder shall have the right to receive from
the Company the Exchange Shares, cash or part
shares and part cash at the option of the
Company, upon surrender of this Certificate
to the Company at its principal office,
together with the form of election to
exchange attached hereto duly completed and
signed by the Holder; provided, that if the
date of such exchange is not a Business Day,
then such exchange shall take place before
5:00 p.m. New York time on the next following
Business Day.
(e) The exchange of this Certificate may not be exercised
after 5:00 p.m., New York time, on the Exchange Expiration
Date, at which time all rights to exchange provided for in
this Section 11, unless exercised prior thereto, shall
thereafter be null and void and all further rights in
respect thereof under this Section 11 shall thereupon cease.
(f) Subject to compliance with all of the conditions set
forth herein, upon surrender of this Certificate to the
Company at its principal office, together with the form of
election to exchange attached hereto duly completed and
signed by the Holder, the Company shall cause to be
delivered promptly to or upon the written order of the
Holder and in such name or names as the Holder may
designate, a certificate or certificates for the Exchange
Shares or all or a portion of such $100,000 in cash.
(g) All references to "this Certificate" in this Section 11
refer to this Certificate or any replacement Certificates as
provided for in Sections 5(a) or 6(a) hereof.
(h) For purposes of this Section 11, the "market value" of
a share of Common Stock shall be deemed to be the closing
bid price on the date of the issuance of the securities for
which such computation is being made, as reported on the
principal United States securities exchange on which the
Common Stock is listed or admitted to trading or if the
Common Stock is not then listed on any United States stock
exchange, the average of the closing sales price on such
date of issuance in the over-the-counter market as reported
by the National Association of Securities Dealers' Automated
Quotation System ("NASDAQ") or, if not so reported, the
average of the closing bid and asked prices on such date of
issuance as reported in the "pink sheets" published by the
National Quotation Bureau, Inc. or any successor thereof or,
if not so quoted, the average of the middle market
quotations on such date of issuance as reported on the daily
official list of the prices of stock listed on The London
Stock Exchange Limited ("The Stock Exchange Daily Official
List"). In the case of market value computations based on
The Stock Exchange Daily Official List, the market value
shall be converted into United States dollars at the then
spot market exchange rate of pounds sterling (UK) into
United States dollars as quoted by Chemical Bank or any
successor bank thereto on the date of determination. If a
quotation of such exchange rate is not so available, the
exchange rate shall be the exchange rate of pounds sterling
in United States dollars as quoted in The Wall Street
Journal on the date of determination.
5. The references to "Shares" in paragraphs 2, 3, 4, 5, 6
and 16 and in the restrictive legend of the Warrant
Certificate shall refer to shares of Common Stock of the
Company issued by the Company upon exercise or exchange of
the Warrant Certificate.
6. The following form of election to exchange shall be
added to the back of the Warrant Certificate:
XCL LTD.
FORM OF ELECTION TO EXCHANGE
(To be executed by the registered Holder
if such Holder desires to exercise the election to
exchange)
The undersigned registered Holder hereby
irrevocably elects to exercise the right to exchange
this Warrant Certificate for shares of Common Stock of
XCL Ltd., par value $.01 per share, having a market
value on the date hereof of $100,000 (the "Exchange
Shares") or at the option of the Company, all or a
portion of such $100,000 in cash, all in accordance
with the terms hereof. The undersigned requests that a
certificate for such Exchange Shares (unless all of
such $100,000 is to be paid in cash) be registered in
the name of and delivered to:
_______________________________________
_______________________________________
_______________________________________
(Please Print Name and Address)
DATED:_________________________________________________
Name of Warrant
Holder:____________________________________________
(Please Print)
Address:_______________________________________________
_______________________________________________________
Signature:_____________________________________________
Note: The above signature must correspond in
all respects with the name of the Holder as specified
on the face of this Warrant Certificate, without
alteration or enlargement or any change whatsoever,
unless the Warrants represented by this Warrant
Certificate have been assigned.
7. This Warrant Amendment Agreement shall not constitute a
waiver or amendment of any other provision of the Warrant
Certificate not expressly referred to herein and except as
expressly amended hereby, the provisions of the Warrant
Certificate are and shall remain in full force and effect.
8. Upon surrender of the original Warrant Certificate
issued to the Warrantholder, XCL shall issue a new Warrant
Certificate of like tenor and an equivalent number of
Warrants to the Warrantholder reflecting the amendment set
forth herein.
9. This Warrant Amendment Agreement sets forth the entire
understanding of the parties hereto with respect to the
subject matter hereof and may be executed in counterparts,
each of which when executed shall be deemed to be an
original but all of which taken together shall constitute
one and the same agreement.
10. This Warrant Amendment Agreement shall be governed by
and construed in accordance with the internal laws of the
State of Delaware without regard to conflicts of laws.
IN WITNESS WHEREOF, the parties hereto have caused this
Warrant Amendment Agreement to be duly executed and
delivered as of the date and year first above written.
XCL LTD.
By:______________________________
Name:____________________________
Title:_____________________________
WARRANTHOLDER:
BOLAND MACHINE & MFG. CO., INC.
By:______________________________
Name:____________________________
Title:_____________________________
WARRANT AMENDMENT AGREEMENT
This Warrant Amendment Agreement dated as of July 16,
1999 by and between XCL Ltd., a Delaware corporation
("XCL"), and Estate of J. Edgar Monroe (the
"Warrantholder").
W I T N E S S E T H:
WHEREAS, the Warrantholder holds 65,116 warrants
("Warrants") to purchase shares of common stock, par value
$0.01 per share, of XCL (as adjusted for XCL's one-for-
fifteen reverse stock split (the "Reverse Stock Split")
effective December 17, 1997), such Warrants having been
originally issued pursuant to Warrant Certificate No. CNW-7
dated as of April 10, 1997 and reflecting an exercise price
of $0.15 (as adjusted for the Reverse Stock Split) per share
of common stock (subject to adjustment as therein provided)
(the "Warrant Certificate"); and
WHEREAS, in order to induce the Warrantholder to make
additional loans to a subsidiary of XCL, XCL agreed to make
certain changes to the Warrants, including an extension of
the term, a reduction of the exercise price and an option to
exchange the Warrants under certain circumstances; and
WHEREAS, the Warrantholder has agreed to the proposed
changes to the Warrants.
NOW, THEREFORE, in consideration of the premises and
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and confirmed,
the parties hereto hereby agree as follows:
1. The line immediately above the Certificate Number in
the Warrant Certificate is hereby amended to read:
"Void after 5:00 p.m. New York time, July 16,
2004."
2. The definitions of "Expiration Date" and
"Initial Exercise Price" in the first paragraph of the
Warrant Certificate are hereby amended to read as follows:
". and until 5:00 p.m., New York
time, on July 16, 2004 (the "Expiration
Date"), subject to the conditions set
forth herein, at the initial exercise
price of U.S. $0.01 per share (the
"Initial Exercise Price") ."
All other terms and provisions of the first paragraph of the
Warrant Certificate shall remain unchanged.
3. Paragraph 1(e) of the Warrant Certificate is
hereby amended to read as follows:
(e) The Warrants represented by this
Certificate are exercisable at the
option of the Holder in whole or in part
(but not as to fractional Shares), but
upon exercise in part, the election to
exchange provided for in Section 11
shall terminate. Upon the exercise of
less than all of the Warrants evidenced
by this Certificate, the Company shall
forthwith issue to the Holder a new
certificate of like tenor (but without
the election to exchange provided for in
Section 11 or any other references to
Exchange Shares) representing the number
of unexercised Warrants.
4. Paragraph 11 of the Warrant Certificate shall be
renumbered as paragraph 16 and the following new paragraph
11 shall be inserted:
11. Option to Exchange Warrants for Stock.
(a) The Company hereby agrees that
at any time or from time to time beginning on
July 17, 2001, and until 5:00 p.m., New York
time, on January 16, 2002 (the "Exchange
Expiration Date"), Holder shall have the
right to exchange all, but not less than all,
of the Warrants represented by this
Certificate for fully paid shares of Common
Stock having a market value on the day of the
exchange of $100,000 (the "Exchange Shares")
or at the option of the Company, all or a
portion of such $100,000 in cash.
(b) It is understood and agreed by
Holder that there can be no partial exchange
under this Section 11, but that all Warrants
represented by this Certificate must be
exchanged in order for the exchange to be
available to Holder. It is further
understood and agreed by Holder that if this
Certificate is exercised in part, the Holder
shall no longer have the election to exchange
provided by this Section 11 and the election
to exchange contained in this Section 11
shall automatically and without any further
action by any party terminate and be of no
further force or effect, whether or not a new
Certificate is issued to Holder eliminating
this Section 11 and other references to
Exchange Shares.
(c) The exchange authorized by this
Section 11 is subject to the conditions set
forth in Section 4, "Compliance with
Securities Laws."
(d) Subject to compliance with all
of the conditions set forth herein, the
Holder shall have the right to receive from
the Company the Exchange Shares, cash or part
shares and part cash at the option of the
Company, upon surrender of this Certificate
to the Company at its principal office,
together with the form of election to
exchange attached hereto duly completed and
signed by the Holder; provided, that if the
date of such exchange is not a Business Day,
then such exchange shall take place before
5:00 p.m. New York time on the next following
Business Day.
(e) The exchange of this Certificate may not be exercised
after 5:00 p.m., New York time, on the Exchange Expiration
Date, at which time all rights to exchange provided for in
this Section 11, unless exercised prior thereto, shall
thereafter be null and void and all further rights in
respect thereof under this Section 11 shall thereupon cease.
(f) Subject to compliance with all of the conditions set
forth herein, upon surrender of this Certificate to the
Company at its principal office, together with the form of
election to exchange attached hereto duly completed and
signed by the Holder, the Company shall cause to be
delivered promptly to or upon the written order of the
Holder and in such name or names as the Holder may
designate, a certificate or certificates for the Exchange
Shares or all or a portion of such $100,000 in cash.
(g) All references to "this Certificate" in this Section 11
refer to this Certificate or any replacement Certificates as
provided for in Sections 5(a) or 6(a) hereof.
(h) For purposes of this Section 11, the "market value" of
a share of Common Stock shall be deemed to be the closing
bid price on the date of the issuance of the securities for
which such computation is being made, as reported on the
principal United States securities exchange on which the
Common Stock is listed or admitted to trading or if the
Common Stock is not then listed on any United States stock
exchange, the average of the closing sales price on such
date of issuance in the over-the-counter market as reported
by the National Association of Securities Dealers' Automated
Quotation System ("NASDAQ") or, if not so reported, the
average of the closing bid and asked prices on such date of
issuance as reported in the "pink sheets" published by the
National Quotation Bureau, Inc. or any successor thereof or,
if not so quoted, the average of the middle market
quotations on such date of issuance as reported on the daily
official list of the prices of stock listed on The London
Stock Exchange Limited ("The Stock Exchange Daily Official
List"). In the case of market value computations based on
The Stock Exchange Daily Official List, the market value
shall be converted into United States dollars at the then
spot market exchange rate of pounds sterling (UK) into
United States dollars as quoted by Chemical Bank or any
successor bank thereto on the date of determination. If a
quotation of such exchange rate is not so available, the
exchange rate shall be the exchange rate of pounds sterling
in United States dollars as quoted in The Wall Street
Journal on the date of determination.
5. The references to "Shares" in paragraphs 2, 3, 4, 5, 6
and 16 and in the restrictive legend of the Warrant
Certificate shall refer to shares of Common Stock of the
Company issued by the Company upon exercise or exchange of
the Warrant Certificate.
6. The following form of election to exchange shall be
added to the back of the Warrant Certificate:
XCL LTD.
FORM OF ELECTION TO EXCHANGE
(To be executed by the registered Holder
if such Holder desires to exercise the election to
exchange)
The undersigned registered Holder hereby
irrevocably elects to exercise the right to exchange
this Warrant Certificate for shares of Common Stock of
XCL Ltd., par value $.01 per share, having a market
value on the date hereof of $100,000 (the "Exchange
Shares") or at the option of the Company, all or a
portion of such $100,000 in cash, all in accordance
with the terms hereof. The undersigned requests that a
certificate for such Exchange Shares (unless all of
such $100,000 is to be paid in cash) be registered in
the name of and delivered to:
_______________________________________
_______________________________________
_______________________________________
(Please Print Name and Address)
DATED:_________________________________________________
Name of Warrant
Holder:____________________________________________
(Please Print)
Address:_______________________________________________
_______________________________________________________
Signature:_____________________________________________
Note: The above signature must correspond in
all respects with the name of the Holder as specified
on the face of this Warrant Certificate, without
alteration or enlargement or any change whatsoever,
unless the Warrants represented by this Warrant
Certificate have been assigned.
7. This Warrant Amendment Agreement shall not constitute a
waiver or amendment of any other provision of the Warrant
Certificate not expressly referred to herein and except as
expressly amended hereby, the provisions of the Warrant
Certificate are and shall remain in full force and effect.
8. Upon surrender of the original Warrant Certificate
issued to the Warrantholder, XCL shall issue a new Warrant
Certificate of like tenor and an equivalent number of
Warrants to the Warrantholder reflecting the amendment set
forth herein.
9. This Warrant Amendment Agreement sets forth the entire
understanding of the parties hereto with respect to the
subject matter hereof and may be executed in counterparts,
each of which when executed shall be deemed to be an
original but all of which taken together shall constitute
one and the same agreement.
10. This Warrant Amendment Agreement shall be governed by
and construed in accordance with the internal laws of the
State of Delaware without regard to conflicts of laws.
IN WITNESS WHEREOF, the parties hereto have caused this
Warrant Amendment Agreement to be duly executed and
delivered as of the date and year first above written.
XCL LTD.
By:______________________________
Name:____________________________
Title:_____________________________
WARRANTHOLDER:
Estate of J. Edgar Monroe
By:______________________________
Robert J. Monroe
Executor
WARRANT AMENDMENT AGREEMENT
This Warrant Amendment Agreement dated as of July 16,
1999 by and between XCL Ltd., a Delaware corporation
("XCL"), and Construction Specialists, Inc. d/b/a Con-Spec,
Inc. (the "Warrantholder").
W I T N E S S E T H:
WHEREAS, the Warrantholder holds 108,526 warrants
("Warrants") to purchase shares of common stock, par value
$0.01 per share, of XCL (as adjusted for XCL's one-for-
fifteen reverse stock split (the "Reverse Stock Split")
effective December 17, 1997), such Warrants having been
originally issued pursuant to Warrant Certificate No. CNW-9
dated as of April 10, 1997 and reflecting an exercise price
of $0.15 (as adjusted for the Reverse Stock Split) per share
of common stock (subject to adjustment as therein provided)
(the "Warrant Certificate"); and
WHEREAS, in order to induce certain other
warrantholders to make additional loans to a subsidiary of
XCL, XCL agreed to make certain changes to the Warrants,
including an extension of the term, a reduction of the
exercise price and an option to exchange the Warrants under
certain circumstances; and
WHEREAS, the Warrantholder has agreed to the proposed
changes to the Warrants.
NOW, THEREFORE, in consideration of the premises and
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and confirmed,
the parties hereto hereby agree as follows:
1. The line immediately above the Certificate Number in
the Warrant Certificate is hereby amended to read:
"Void after 5:00 p.m. New York time, July 16,
2004."
2. The definitions of "Expiration Date" and
"Initial Exercise Price" in the first paragraph of the
Warrant Certificate are hereby amended to read as follows:
". and until 5:00 p.m., New York
time, on July 16, 2004 (the "Expiration
Date"), subject to the conditions set
forth herein, at the initial exercise
price of U.S. $0.01 per share (the
"Initial Exercise Price") ."
All other terms and provisions of the first paragraph of the
Warrant Certificate shall remain unchanged.
3. Paragraph 1(e) of the Warrant Certificate is
hereby amended to read as follows:
(e) The Warrants represented by this
Certificate are exercisable at the
option of the Holder in whole or in part
(but not as to fractional Shares), but
upon exercise in part, the election to
exchange provided for in Section 11
shall terminate. Upon the exercise of
less than all of the Warrants evidenced
by this Certificate, the Company shall
forthwith issue to the Holder a new
certificate of like tenor (but without
the election to exchange provided for in
Section 11 or any other references to
Exchange Shares) representing the number
of unexercised Warrants.
4. Paragraph 11 of the Warrant Certificate shall be
renumbered as paragraph 16 and the following new paragraph
11 shall be inserted:
11. Option to Exchange Warrants for Stock.
(a) The Company hereby agrees that
at any time or from time to time beginning on
July 17, 2001, and until 5:00 p.m., New York
time, on January 16, 2002 (the "Exchange
Expiration Date"), Holder shall have the
right to exchange all, but not less than all,
of the Warrants represented by this
Certificate for fully paid shares of Common
Stock having a market value on the day of the
exchange of $168,000 (the "Exchange Shares")
or at the option of the Company, all or a
portion of such $168,000 in cash.
(b) It is understood and agreed by
Holder that there can be no partial exchange
under this Section 11, but that all Warrants
represented by this Certificate must be
exchanged in order for the exchange to be
available to Holder. It is further
understood and agreed by Holder that if this
Certificate is exercised in part, the Holder
shall no longer have the election to exchange
provided by this Section 11 and the election
to exchange contained in this Section 11
shall automatically and without any further
action by any party terminate and be of no
further force or effect, whether or not a new
Certificate is issued to Holder eliminating
this Section 11 and other references to
Exchange Shares.
(c) The exchange authorized by this
Section 11 is subject to the conditions set
forth in Section 4, "Compliance with
Securities Laws."
(d) Subject to compliance with all
of the conditions set forth herein, the
Holder shall have the right to receive from
the Company the Exchange Shares, cash or part
shares and part cash at the option of the
Company, upon surrender of this Certificate
to the Company at its principal office,
together with the form of election to
exchange attached hereto duly completed and
signed by the Holder; provided, that if the
date of such exchange is not a Business Day,
then such exchange shall take place before
5:00 p.m. New York time on the next following
Business Day.
(e) The exchange of this Certificate may not be exercised
after 5:00 p.m., New York time, on the Exchange Expiration
Date, at which time all rights to exchange provided for in
this Section 11, unless exercised prior thereto, shall
thereafter be null and void and all further rights in
respect thereof under this Section 11 shall thereupon cease.
(f) Subject to compliance with all of the conditions set
forth herein, upon surrender of this Certificate to the
Company at its principal office, together with the form of
election to exchange attached hereto duly completed and
signed by the Holder, the Company shall cause to be
delivered promptly to or upon the written order of the
Holder and in such name or names as the Holder may
designate, a certificate or certificates for the Exchange
Shares or all or a portion of such $168,000 in cash.
(g) All references to "this Certificate" in this Section 11
refer to this Certificate or any replacement Certificates as
provided for in Sections 5(a) or 6(a) hereof.
(h) For purposes of this Section 11, the "market value" of
a share of Common Stock shall be deemed to be the closing
bid price on the date of the issuance of the securities for
which such computation is being made, as reported on the
principal United States securities exchange on which the
Common Stock is listed or admitted to trading or if the
Common Stock is not then listed on any United States stock
exchange, the average of the closing sales price on such
date of issuance in the over-the-counter market as reported
by the National Association of Securities Dealers' Automated
Quotation System ("NASDAQ") or, if not so reported, the
average of the closing bid and asked prices on such date of
issuance as reported in the "pink sheets" published by the
National Quotation Bureau, Inc. or any successor thereof or,
if not so quoted, the average of the middle market
quotations on such date of issuance as reported on the daily
official list of the prices of stock listed on The London
Stock Exchange Limited ("The Stock Exchange Daily Official
List"). In the case of market value computations based on
The Stock Exchange Daily Official List, the market value
shall be converted into United States dollars at the then
spot market exchange rate of pounds sterling (UK) into
United States dollars as quoted by Chemical Bank or any
successor bank thereto on the date of determination. If a
quotation of such exchange rate is not so available, the
exchange rate shall be the exchange rate of pounds sterling
in United States dollars as quoted in The Wall Street
Journal on the date of determination.
5. The references to "Shares" in paragraphs 2, 3, 4, 5, 6
and 16 and in the restrictive legend of the Warrant
Certificate shall refer to shares of Common Stock of the
Company issued by the Company upon exercise or exchange of
the Warrant Certificate.
6. The following form of election to exchange shall be
added to the back of the Warrant Certificate:
XCL LTD.
FORM OF ELECTION TO EXCHANGE
(To be executed by the registered Holder
if such Holder desires to exercise the election to
exchange)
The undersigned registered Holder hereby
irrevocably elects to exercise the right to exchange
this Warrant Certificate for shares of Common Stock of
XCL Ltd., par value $.01 per share, having a market
value on the date hereof of $168,000 (the "Exchange
Shares") or at the option of the Company, all or a
portion of such $168,000 in cash, all in accordance
with the terms hereof. The undersigned requests that a
certificate for such Exchange Shares (unless all of
such $168,000 is to be paid in cash) be registered in
the name of and delivered to:
_______________________________________
_______________________________________
_______________________________________
(Please Print Name and Address)
DATED:_________________________________________________
Name of Warrant
Holder:____________________________________________
(Please Print)
Address:_______________________________________________
_______________________________________________________
Signature:_____________________________________________
Note: The above signature must correspond in
all respects with the name of the Holder as specified
on the face of this Warrant Certificate, without
alteration or enlargement or any change whatsoever,
unless the Warrants represented by this Warrant
Certificate have been assigned.
7.
This Warrant Amendment Agreement shall not constitute a
waiver or amendment of any other provision of the Warrant
Certificate not expressly referred to herein and except as
expressly amended hereby, the provisions of the Warrant
Certificate are and shall remain in full force and effect.
8. Upon surrender of the original Warrant Certificate
issued to the Warrantholder, XCL shall issue a new Warrant
Certificate of like tenor and an equivalent number of
Warrants to the Warrantholder reflecting the amendment set
forth herein.
9. This Warrant Amendment Agreement sets forth the entire
understanding of the parties hereto with respect to the
subject matter hereof and may be executed in counterparts,
each of which when executed shall be deemed to be an
original but all of which taken together shall constitute
one and the same agreement.
10. This Warrant Amendment Agreement shall be governed by
and construed in accordance with the internal laws of the
State of Delaware without regard to conflicts of laws.
IN WITNESS WHEREOF, the parties hereto have caused this
Warrant Amendment Agreement to be duly executed and
delivered as of the date and year first above written.
XCL LTD.
By:______________________________
Name:____________________________
Title:_____________________________
WARRANTHOLDER:
Construction Specialists, Inc. d/b/a
Con-Spec, Inc.
By:______________________________
Name:____________________________
Title:_____________________________
WARRANT AMENDMENT AGREEMENT
This Warrant Amendment Agreement dated as of July 16,
1999 by and between XCL Ltd., a Delaware corporation
("XCL"), and J. Edgar Monroe Foundation (the
"Warrantholder").
W I T N E S S E T H:
WHEREAS, the Warrantholder holds 21,705 warrants
("Warrants") to purchase shares of common stock, par value
$0.01 per share, of XCL (as adjusted for XCL's one-for-
fifteen reverse stock split (the "Reverse Stock Split")
effective December 17, 1997), such Warrants having been
originally issued pursuant to Warrant Certificate No.
CNW-6 dated as of April 10, 1997 and reflecting an exercise
price of $0.15 (as adjusted for the Reverse Stock Split) per
share of common stock (subject to adjustment as therein
provided) (the "Warrant Certificate"); and
WHEREAS, in order to induce the Warrantholder to make
additional loans to a subsidiary of XCL, XCL agreed to make
certain changes to the Warrants, including an extension of
the term, a reduction of the exercise price and an option to
exchange the Warrants under certain circumstances; and
WHEREAS, the Warrantholder has agreed to the proposed
changes to the Warrants.
NOW, THEREFORE, in consideration of the premises and
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and confirmed,
the parties hereto hereby agree as follows:
1. The line immediately above the Certificate Number in
the Warrant Certificate is hereby amended to read:
"Void after 5:00 p.m. New York time, July 16,
2004."
2. The definitions of "Expiration Date" and
"Initial Exercise Price" in the first paragraph of the
Warrant Certificate are hereby amended to read as follows:
". and until 5:00 p.m., New York
time, on July 16, 2004 (the "Expiration
Date"), subject to the conditions set
forth herein, at the initial exercise
price of U.S. $0.01 per share (the
"Initial Exercise Price") ."
All other terms and provisions of the first paragraph of the
Warrant Certificate shall remain unchanged.
3. Paragraph 1(e) of the Warrant Certificate is
hereby amended to read as follows:
(e) The Warrants represented by this
Certificate are exercisable at the
option of the Holder in whole or in part
(but not as to fractional Shares), but
upon exercise in part, the election to
exchange provided for in Section 11
shall terminate. Upon the exercise of
less than all of the Warrants evidenced
by this Certificate, the Company shall
forthwith issue to the Holder a new
certificate of like tenor (but without
the election to exchange provided for in
Section 11 or any other references to
Exchange Shares) representing the number
of unexercised Warrants.
4. Paragraph 11 of the Warrant Certificate shall be
renumbered as paragraph 16 and the following new paragraph
11 shall be inserted:
11. Option to Exchange Warrants for Stock.
(a) The Company hereby agrees that
at any time or from time to time beginning on
July 17, 2001, and until 5:00 p.m., New York
time, on January 16, 2002 (the "Exchange
Expiration Date"), Holder shall have the
right to exchange all, but not less than all,
of the Warrants represented by this
Certificate for fully paid shares of Common
Stock having a market value on the day of the
exchange of $32,000 (the "Exchange Shares")
or at the option of the Company, all or a
portion of such $32,000 in cash.
(b) It is understood and agreed by
Holder that there can be no partial exchange
under this Section 11, but that all Warrants
represented by this Certificate must be
exchanged in order for the exchange to be
available to Holder. It is further
understood and agreed by Holder that if this
Certificate is exercised in part, the Holder
shall no longer have the election to exchange
provided by this Section 11 and the election
to exchange contained in this Section 11
shall automatically and without any further
action by any party terminate and be of no
further force or effect, whether or not a new
Certificate is issued to Holder eliminating
this Section 11 and other references to
Exchange Shares.
(c) The exchange authorized by this
Section 11 is subject to the conditions set
forth in Section 4, "Compliance with
Securities Laws."
(d) Subject to compliance with all
of the conditions set forth herein, the
Holder shall have the right to receive from
the Company the Exchange Shares, cash or part
shares and part cash at the option of the
Company, upon surrender of this Certificate
to the Company at its principal office,
together with the form of election to
exchange attached hereto duly completed and
signed by the Holder; provided, that if the
date of such exchange is not a Business Day,
then such exchange shall take place before
5:00 p.m. New York time on the next following
Business Day.
(e) The exchange of this Certificate may not be exercised
after 5:00 p.m., New York time, on the Exchange Expiration
Date, at which time all rights to exchange provided for in
this Section 11, unless exercised prior thereto, shall
thereafter be null and void and all further rights in
respect thereof under this Section 11 shall thereupon cease.
(f) Subject to compliance with all of the conditions set
forth herein, upon surrender of this Certificate to the
Company at its principal office, together with the form of
election to exchange attached hereto duly completed and
signed by the Holder, the Company shall cause to be
delivered promptly to or upon the written order of the
Holder and in such name or names as the Holder may
designate, a certificate or certificates for the Exchange
Shares or all or a portion of such $32,000 in cash.
(g) All references to "this Certificate" in this Section 11
refer to this Certificate or any replacement Certificates as
provided for in Sections 5(a) or 6(a) hereof.
(h) For purposes of this Section 11, the "market value" of
a share of Common Stock shall be deemed to be the closing
bid price on the date of the issuance of the securities for
which such computation is being made, as reported on the
principal United States securities exchange on which the
Common Stock is listed or admitted to trading or if the
Common Stock is not then listed on any United States stock
exchange, the average of the closing sales price on such
date of issuance in the over-the-counter market as reported
by the National Association of Securities Dealers' Automated
Quotation System ("NASDAQ") or, if not so reported, the
average of the closing bid and asked prices on such date of
issuance as reported in the "pink sheets" published by the
National Quotation Bureau, Inc. or any successor thereof or,
if not so quoted, the average of the middle market
quotations on such date of issuance as reported on the daily
official list of the prices of stock listed on The London
Stock Exchange Limited ("The Stock Exchange Daily Official
List"). In the case of market value computations based on
The Stock Exchange Daily Official List, the market value
shall be converted into United States dollars at the then
spot market exchange rate of pounds sterling (UK) into
United States dollars as quoted by Chemical Bank or any
successor bank thereto on the date of determination. If a
quotation of such exchange rate is not so available, the
exchange rate shall be the exchange rate of pounds sterling
in United States dollars as quoted in The Wall Street
Journal on the date of determination.
5. The references to "Shares" in paragraphs 2, 3, 4, 5, 6
and 16 and in the restrictive legend of the Warrant
Certificate shall refer to shares of Common Stock of the
Company issued by the Company upon exercise or exchange of
the Warrant Certificate.
6. The following form of election to exchange shall be
added to the back of the Warrant Certificate:
XCL LTD.
FORM OF ELECTION TO EXCHANGE
(To be executed by the registered Holder
if such Holder desires to exercise the election to
exchange)
The undersigned registered Holder hereby
irrevocably elects to exercise the right to exchange
this Warrant Certificate for shares of Common Stock of
XCL Ltd., par value $.01 per share, having a market
value on the date hereof of $32,000 (the "Exchange
Shares") or at the option of the Company, all or a
portion of such $32,000 in cash, all in accordance with
the terms hereof. The undersigned requests that a
certificate for such Exchange Shares (unless all of
such $32,000 is to be paid in cash) be registered in
the name of and delivered to:
_______________________________________
_______________________________________
_______________________________________
(Please Print Name and Address)
DATED:_________________________________________________
Name of Warrant
Holder:____________________________________________
(Please Print)
Address:_______________________________________________
_______________________________________________________
Signature:_____________________________________________
Note: The above signature must correspond in
all respects with the name of the Holder as specified
on the face of this Warrant Certificate, without
alteration or enlargement or any change whatsoever,
unless the Warrants represented by this Warrant
Certificate have been assigned.
7. This Warrant Amendment Agreement shall not constitute a
waiver or amendment of any other provision of the Warrant
Certificate not expressly referred to herein and except as
expressly amended hereby, the provisions of the Warrant
Certificate are and shall remain in full force and effect.
8. Upon surrender of the original Warrant Certificate
issued to the Warrantholder, XCL shall issue a new Warrant
Certificate of like tenor and an equivalent number of
Warrants to the Warrantholder reflecting the amendment set
forth herein.
9. This Warrant Amendment Agreement sets forth the entire
understanding of the parties hereto with respect to the
subject matter hereof and may be executed in counterparts,
each of which when executed shall be deemed to be an
original but all of which taken together shall constitute
one and the same agreement.
10. This Warrant Amendment Agreement shall be governed by
and construed in accordance with the internal laws of the
State of Delaware without regard to conflicts of laws.
IN WITNESS WHEREOF, the parties hereto have caused this
Warrant Amendment Agreement to be duly executed and
delivered as of the date and year first above written.
XCL LTD.
By:______________________________
Name:____________________________
Title:_____________________________
WARRANTHOLDER:
J. Edgar Monroe Foundation
(1976)
By:______________________________
Name:____________________________
Title:_____________________________
THIRD WARRANT AMENDMENT AGREEMENT
This Third Warrant Amendment Agreement dated as of July 16,
1999 by and between XCL Ltd., a Delaware corporation ("XCL"), and
Doug Ashy, Sr. (the "Warrantholder").
W I T N E S S E T H:
WHEREAS, the Warrantholder holds 21,705 warrants to purchase
shares of common stock, par value $0.01 per share, of XCL having
been originally issued pursuant to Warrant Certificate No. LM-6
dated March 22, 1999 and reflecting an exercise price of $1.50
per share of common stock (subject to adjustment as therein
provided) (the "Warrant Certificate"); and
WHEREAS, the Warrantholder acquired the Warrant Certificate
in connection with his purchase of one Unit in a private offering
by XCL Land Ltd., a wholly owned subsidiary of XCL and XCL Ltd.,
to a limited number of qualified investors of up to 62 Units each
Unit consisting of $100,000 in principal amount of a promissory
note of XCL Land (collectively the "Notes" and individually a
"Note") and 21,705 Warrants (the "Warrants"); and
WHEREAS, the exercise price contained in the Warrant
Certificate has previously been reduced by Warrant Amendment
Agreement dated as of April 13, 1999 from $1.50 to $1.325 per
share of common stock (subject to adjustment as therein provided)
and further reduced by Second Warrant Amendment Agreement dated
as of May 21, 1999 from $1.3125 to $1.25 per share of common
stock (subject to adjustment as therein provided); and
WHEREAS, the Subscription Agreement pursuant to which the
Warrantholder subscribed for the Unit referenced above provides
that until the Warrantholder's Note is paid in full, if the terms
of the Units (including the Notes and the Warrants) are amended,
no amendment shall be effective until it is offered to the other
Unit owners and either accepted or rejected by them; and
WHEREAS, in order to induce two of the Unitholders to
purchase an undivided interest in certain notes held by a
subsidiary of XCL, XCL agreed to reduce the exercise price of the
Warrants held by those Unitholders from $1.25 to $0.10 per share
of common stock (subject to adjustment as therein provided); and
WHEREAS, pursuant to his Subscription Agreement, the
Warrantholder was offered the same amendment and accepted it.
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged and confirmed, the parties hereto
hereby agree as follows:
1. The definition of AInitial Exercise Price@ in the
first paragraph of the Warrant Certificate is hereby amended to
read as follows:
"... at the initial exercise price
of U.S. $0.10 per share (the "Initial
Exercise Price") ..."
All other terms and provisions of the first paragraph of the
Warrant Certificate shall remain unchanged.
2. This Third Warrant Amendment Agreement shall not
constitute a waiver or amendment of any other provision of the
Warrant Certificate not expressly referred to herein and except
as expressly amended hereby, the provisions of the Warrant
Certificate are and shall remain in full force and effect.
3. Upon surrender of the original Warrant Certificate,
XCL shall issue a new Warrant Certificate of like tenor and an
equivalent number of Warrants to the Warrantholder reflecting the
amendment set forth in paragraph 1 above.
4. This Third Warrant Amendment Agreement sets forth the
entire understanding of the parties hereto with respect to the
subject mater hereof and may be executed in counterparts, each of
which when executed shall be deemed to be an original but all of
which taken together shall constitute one and the same agreement.
5. This Third Warrant Amendment Agreement shall be
governed by and construed in accordance with the internal laws of
the State of Delaware without regard to conflicts of laws.
IN WITNESS WHEREOF, the parties hereto have caused this
Third Warrant Amendment Agreement to be duly executed and
delivered as of the date and year first above written.
XCL LTD.
By:______________________________
Name:____________________________
Title:_____________________________
WARRANTHOLDER:
_________________________________
Doug Ashy, Sr.
WARRANT AMENDMENT AGREEMENT
This Warrant Amendment Agreement dated as of July 16, 1999,
by and between XCL Ltd., a Delaware corporation ("XCL"), and
Northern Securities Limited (the "Warrantholder").
W I T N E S S E T H:
WHEREAS, the Warrantholder holds 325,575 warrants to
purchase shares of common stock, par value $0.01 per share, of
XCL having been originally issued pursuant to Warrant Certificate
No. LM-10 dated May 17, 1999 and reflecting an exercise price of
$1.25 per share of common stock (subject to adjustment as therein
provided) (the "Warrant Certificate"); and
WHEREAS, the Warrantholder acquired the Warrant Certificate
in connection with his purchase of one Unit in a private offering
by XCL Land Ltd., a wholly owned subsidiary of XCL and XCL Ltd.,
to a limited number of qualified investors of up to 62 Units each
Unit consisting of $100,000 in principal amount of a promissory
note of XCL Land (collectively the "Notes" and individually a
"Note") and 21,705 Warrants (the "Warrants"); and
WHEREAS, the Subscription Agreement pursuant to which the
Warrantholder subscribed for the Unit referenced above provides
that until the Warrantholder's Note is paid in full, if the terms
of the Units (including the Notes and the Warrants) are amended,
no amendment shall be effective until it is offered to the other
Unit owners and either accepted or rejected by them; and
WHEREAS, in order to induce two of the Unitholders to
purchase an undivided interest in certain notes held by a
subsidiary of XCL, XCL agreed to reduce the exercise price of the
Warrants held by those Unitholders from $1.25 to $0.10 per share
of common stock (subject to adjustment as therein provided); and
WHEREAS, pursuant to his Subscription Agreement, the
Warrantholder was offered the same amendment and accepted it.
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged and confirmed, the parties hereto
hereby agree as follows:
1. The definition of "Initial Exercise Price" in the
first paragraph of the Warrant Certificate is hereby amended to
read as follows:
"... at the initial exercise price
of U.S. $0.10 per share (the "Initial
Exercise Price") ..."
All other terms and provisions of the first paragraph of the
Warrant Certificate shall remain unchanged.
2. This Warrant Amendment Agreement shall not constitute
a waiver or amendment of any other provision of the Warrant
Certificate not expressly referred to herein and except as
expressly amended hereby, the provisions of the Warrant
Certificate are and shall remain in full force and effect.
3. Upon surrender of the original Warrant Certificate,
XCL shall issue a new Warrant Certificate of like tenor and an
equivalent number of Warrants to the Warrantholder reflecting the
amendment set forth in paragraph 1 above.
4. This Warrant Amendment Agreement sets forth the
entire understanding of the parties hereto with respect to the
subject mater hereof and may be executed in counterparts, each of
which when executed shall be deemed to be an original but all of
which taken together shall constitute one and the same agreement.
5. This Warrant Amendment Agreement shall be governed by
and construed in accordance with the internal laws of the State
of Delaware without regard to conflicts of laws.
IN WITNESS WHEREOF, the parties hereto have caused this
Warrant Amendment Agreement to be duly executed and delivered as
of the date and year first above written.
XCL LTD.
By:______________________________
Name:____________________________
Title:_____________________________
WARRANTHOLDER:
NORTHERN SECURITIES LIMITED
By:______________________________
Name:____________________________
Title:_____________________________
WARRANT AMENDMENT AGREEMENT
This Warrant Amendment Agreement dated as of July 16, 1999
by and between XCL Ltd., a Delaware corporation ("XCL"), and
Mitch Leigh (the "Warrantholder").
W I T N E S S E T H:
WHEREAS, the Warrantholder holds 43,410 warrants to purchase
shares of common stock, par value $0.01 per share, of XCL having
been originally issued pursuant to Warrant Certificate No. LM-9
dated May 21, 1999 and reflecting an exercise price of $1.25 per
share of common stock (subject to adjustment as therein provided)
(the "Warrant Certificate"); and
WHEREAS, the Warrantholder acquired the Warrant Certificate
in connection with his purchase of one Unit in a private offering
by XCL Land Ltd., a wholly owned subsidiary of XCL and XCL Ltd.,
to a limited number of qualified investors of up to 62 Units each
Unit consisting of $100,000 in principal amount of a promissory
note of XCL Land (collectively the "Notes" and individually a
"Note") and 21,705 Warrants (the "Warrants"); and
WHEREAS, the Subscription Agreement pursuant to which the
Warrantholder subscribed for the Unit referenced above provides
that until the Warrantholder's Note is paid in full, if the terms
of the Units (including the Notes and the Warrants) are amended,
no amendment shall be effective until it is offered to the other
Unit owners and either accepted or rejected by them; and
WHEREAS, in order to induce two of the Unitholders to
purchase an undivided interest in certain notes held by a
subsidiary of XCL, XCL agreed to reduce the exercise price of the
Warrants held by those Unitholders from $1.25 to $0.10 per share
of common stock (subject to adjustment as therein provided); and
WHEREAS, pursuant to his Subscription Agreement, the
Warrantholder was offered the same amendment and accepted it.
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged and confirmed, the parties hereto
hereby agree as follows:
1. The definition of "Initial Exercise Price" in the
first paragraph of the Warrant Certificate is hereby amended to
read as follows:
"... at the initial exercise price
of U.S. $0.10 per share (the "Initial
Exercise Price") ..."
_
All other terms and provisions of the first paragraph of the
Warrant Certificate shall remain unchanged.
2. This Warrant Amendment Agreement shall not constitute
a waiver or amendment of any other provision of the Warrant
Certificate not expressly referred to herein and except as
expressly amended hereby, the provisions of the Warrant
Certificate are and shall remain in full force and effect.
3. Upon surrender of the original Warrant Certificate,
XCL shall issue a new Warrant Certificate of like tenor and an
equivalent number of Warrants to the Warrantholder reflecting the
amendment set forth in paragraph 1 above.
4. This Warrant Amendment Agreement sets forth the
entire understanding of the parties hereto with respect to the
subject mater hereof and may be executed in counterparts, each of
which when executed shall be deemed to be an original but all of
which taken together shall constitute one and the same agreement.
5. This Warrant Amendment Agreement shall be governed by
and construed in accordance with the internal laws of the State
of Delaware without regard to conflicts of laws.
IN WITNESS WHEREOF, the parties hereto have caused this
Warrant Amendment Agreement to be duly executed and delivered as
of the date and year first above written.
XCL LTD.
By:______________________________
Name:____________________________
Title:_____________________________
WARRANTHOLDER:
_________________________________
Mitch Leigh
SECURITY AGREEMENT
THIS SECURITY AGREEMENT ("Agreement") dated as of July 16,
1999, is made between XCL-Acquisitions, Inc. ("Grantor") and
Construction Specialists, Inc. d/b/a Con-Spec, Inc. ("Con-Spec")
and the Estate of J. Edgar Monroe (the "Estate" and, together
with Con-Spec, collectively, the "Lender"), who agree as follows:
Recitals
1. As an inducement for Lender to purchase an undivided
interest in the notes described on Exhibit "A" (the "Seller
Notes") from Grantor, a wholly owned subsidiary of XCL Ltd., and
to extend the maturity date on certain loans owed by XCL Land
Ltd., another wholly owned subsidiary of XCL Ltd., to Lender,
L.M. Holding Associates, L.P., a Louisiana Partnership in
Commendam (the "Partnership"), the general partner of which is
XCL Land Ltd. and the limited partner of which is The Exploration
Company of Louisiana, Inc., another wholly owned subsidiary of
XCL Ltd., and which Partnership is the owner of a tract of land
containing approximately 62,500 acres and located in St. James,
St. John the Baptist and Ascension Parishes, Louisiana (the
"Lutcher Moore Tract"), has agreed pursuant to terms of that
certain Assignment of Net Proceeds ("Assignment of Proceeds") to
pay Lender 7.5% [calculated by multiplying (4.1/6.8 x 100) by
12.5%] of any net proceeds received by the Partnership from any
activity on or from the Lutcher Moore Tract, except for payments
for rights-of-way and 7.35% of the net proceeds received from the
sale of the Lutcher Moore Tract less any commissions due upon the
sale of such tract and all other expenses incurred in selling
such tract, including but not limited to, attorneys' fees,
recordation fees, abstract costs and title insurance premiums.
2. The purchase of an undivided interest in the Seller
Notes
and the extension of the loans owed by XCL Land Ltd. will be of
substantial benefit to the Grantor, and, consequently, in order
to secure the full and punctual payment and performance of the
Partnership's obligations under the Assignment of Proceeds, the
Grantor has agreed to execute and deliver this Agreement and to
pledge, deliver and grant a continuing security interest in and
to the Collateral (as hereafter defined).
AGREEMENT
NOW, THEREFORE, in consideration of the premises, the
Grantor and the Lender agree as follows:
Section 2. Definitions.
1. The terms "Agreement," "Assignment of Proceeds,"
"Grantor,"
"Lender," "Lutcher Moore Tract," "Partnership," and "Seller
Notes," shall have the meanings indicated above.
2. As used in this Agreement, the following terms shall
have
the following meanings:
"Collateral" shall have the meaning defined in Section
2 hereof.
"Event of Default" shall have the meaning defined in
Section 17 hereof.
"General Intangibles" has the meaning given to it in
the UCC.
"Indebtedness" shall have the meaning defined in
Section 2 hereof.
"Lien" shall mean any interest in property securing an
obligation owed to, or a claim by, a Person other than the owner
of the property, whether such interest is based on jurisprudence,
statute or contract, and including but not limited to the lien or
security interest arising from a mortgage, encumbrance, pledge,
security agreement, conditional sale or trust receipt or a lease,
consignment or bailment for security purposes. The term "Lien"
shall include reservations, exceptions, encroachments, easements,
servitudes, usufructs, rights-of-way, covenants, conditions,
restrictions, leases and other title exceptions and encumbrances
affecting property. For the purposes of this Agreement, the
Grantor shall be deemed to be the owner of any property which it
has accrued or holds subject to a conditional sale agreement,
financing lease or other arrangement pursuant to which title to
the property has been retained by or vested in some other Person
for security purposes.
"Permitted Liens" means (i) the Security Interests and
any other Liens created, assumed or existing with respect to the
Collateral in favor of Lender and (ii) any other Liens permitted
by Lender in writing to be created or assumed or to exist with
respect the Collateral.
"Person" means any individual, corporation,
partnership, joint venture, association, joint stock company,
trust, unincorporated organization, government or any agency or
political subdivision thereof, or any other form of entity.
"Proceeds" has the meaning giving to it in the UCC.
"Security Interests" means the security interests in
the Collateral and Proceeds granted hereunder in favor of Lender
securing the Indebtedness.
"UCC" means the Uniform Commercial Code, Commercial
Laws - Secured Transactions (Louisiana Revised Statutes 10:9-101
through :9-605) in the State of Louisiana, as amended from time
to time; provided that if by reason of mandatory provisions of
law, the perfection or the effect of perfection or non-perfection
of the Security Interests in any Collateral is governed by the
Uniform Commercial Code as in effect in a jurisdiction other than
Louisiana, "UCC" means the Uniform Commercial Code as in effect
in such other jurisdiction for purposes of the provisions hereof
relating to such perfection or effect of perfection or
non-perfection.
Section 3. Security Interest.
1. To secure the full and punctual payment and performance
of
all present and future amounts, liabilities, obligations and
indebtedness of Grantor to the Lender pursuant to the terms of
the Assignment of Proceeds (collectively, the "Indebtedness"),
the Grantor hereby pledges, pawns, transfers and grants to the
Lender a continuing security interest in and to all of the
following property of the Grantor, whether now owned or existing
or hereafter acquired or arising (collectively the "Collateral"):
(1) a 17.67% [calculated by taking 60.3% (4.1/6.8) of 29.3%
(1,197,302.73/4,086,302.73)] undivided interest of the Seller
Notes;
(2) 17.67% [calculated by taking 60.3% (4.1/6.8) of 29.3%
(1,197,302.73/4,086,302.73)] undivided interest of any and all
monies and other distributions (cash or property), allocations or
payments made or to be made pursuant to the Seller Notes or
attributable to the Seller Notes;
(3) all General Intangibles related in any way to the collateral
described in clauses 1 or 2 above; and
(4) all Proceeds and products of all or any of the collateral
described in clauses 1-3 above.
2. The security interests are granted as security only and
shall not subject the Lender to, or transfer or in any way affect
or modify, any obligation or liability of the Grantor with
respect to any of the Collateral or any transaction in connection
therewith.
Section 4. Delivery of Collateral. The Grantor has
delivered
the Seller Notes to Con-Spec as agent for the Lender and all
other persons to whom a security interest in the Seller Notes is
now or hereafter granted and Con-Spec acknowledges the receipt of
such notes on its own behalf and on behalf of all other persons
to whom a security interest in the Seller Notes is now or
hereafter granted.
Section 5. No Liens. Other than financing statements or
other similar or equivalent documents or instruments with respect
to the Security Interests and Permitted Liens, no financing
statement, mortgage, security agreement or similar or equivalent
document or instrument covering all or any part of the Collateral
is on file or of record in any jurisdiction in which such filing
or recording would be effective to perfect a Lien on such
Collateral. No Collateral is in the possession of any Person
(other than Grantor) asserting any claim thereto or security
interest therein, except that Lender or its designee may have
possession of Collateral as contemplated hereby. Except with
respect to Permitted Liens, the Liens granted pursuant to this
Agreement constitute perfected first priority Liens on the
Collateral in favor of the Lender.
Section 6. No Conflict. The Grantor has not performed
any
acts or signed any agreements which might prevent the Lender from
enforcing any of the terms of this Agreement or which would limit
the Lender in any such enforcement.
Section 7. Name. The full name of Grantor is as it appears
on page 1 of this Agreement.
Section 8. Federal Taxpayer Number. The federal taxpayer
identification number of Grantor is as follows: 51-0311223.
Section 9. Chief Executive Office. The chief executive
office of Grantor is 110 Rue Jean Lafitte, Lafayette, Louisiana
70505.
Section 10. Location of Collateral. Grantor will keep and
maintain all books or records relating to any of the Collateral
at its chief executive office.
Section 11. Filing Location. When a UCC financing statement
has been filed in the offices of a Louisiana Clerk of Court of
any parish other than Orleans (or in the case of Orleans Parish,
with the Recorder of Mortgages), the Security Interests shall
constitute perfected security interests in the Collateral to the
extent that a security interest therein may be perfected by
filing pursuant to the UCC, prior to all other Liens except for
the Permitted Liens and rights of others therein to the extent
that such priority is afforded by the UCC.
Section 12. Title. Grantor has good and merchantable title to
the Collateral, free of Liens except Permitted Liens.
Furthermore, Grantor has not heretofore conveyed or agreed to
convey or encumber any of the Collateral in any way, except in
favor of Lender or other holders of Permitted Liens.
Section 13. Incorporation and Existence. Grantor is a
corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization and has
the corporate power and authority and the legal right to own and
operate the Collateral and to conduct the business in which it is
currently engaged.
Section 14. No Consents or Approvals. Except for those
filings and registrations required to perfect the Liens created
by this Agreement, the Grantor is not required to obtain any
order, consent, approval or authorization of, or required to make
any declaration or filing with, any governmental authority or any
other Person in connection with the execution and delivery of
this Agreement and the granting and perfection of the Security
Interests pursuant to this Agreement.
Section 15. Due Execution; Binding Obligation. This Agreement
has been duly executed and delivered on behalf of the Grantor,
and this Agreement constitutes a legal, valid and binding
obligation of Grantor, enforceable against Grantor in accordance
with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights
generally and except as enforceability may be subject to general
principles of equity, whether such principles are applied in a
court of equity or at law.
Section 16. No Conflicts. The execution, delivery and
performance of this Agreement will not (I) result in any
violation of or be in conflict with or constitute a default under
any terms of any agreement, contract, statute, regulation, law or
ordinance; (ii) have a material adverse effect on the Collateral;
(iii) materially adversely affect the ability of Grantor to
perform its obligations under this Agreement or the Assignment of
Proceeds, or (iv) result in the creation of any Lien upon any of
the properties or revenues of Grantor other than the Liens in
favor of the Lender created pursuant to this Agreement.
Section 17. Notice of Changes. Grantor will not change its
name, corporate identity or taxpayer identification number in any
manner unless it shall have given Lender at least five (5) days
prior written notice thereof.
Section 18. Events of Default. The term "Event of Default"
shall mean the occurrence of any one of the following events:
1. The failure of Grantor to pay punctually when due any amount
payable pursuant to the terms of the Assignment of Proceeds.
2. Any representation or warranty made by Grantor (or any of
its officers) under or in connection with this Agreement shall
prove to have been incorrect in any material respect on or as of
the date made.
3. The breach of any term, covenant or agreement made by
Grantor hereunder or under any other agreement between Grantor
and Lender (other than under clause (a), above), which breach is
not cured within 30 days after receipt by Grantor of notice
thereof.
4. Grantor shall admit in writing its inability to pay its
debts generally, or shall make a general assignment for the
benefit of creditors; or any case, proceeding or other action
under any existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency or relief of debtors,
shall be instituted by or against Grantor seeking to adjudicate
it a bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or
composition of its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver,
trustee, custodian or other similar official for it or for any
substantial part of its property and, in the case of any such
proceeding instituted against it (but not instituted by it), such
proceeding shall remain undismissed or unstayed for a period of
thirty (30) days; or Grantor shall take any corporate action to
authorize any of the actions set forth above in this subsection
(d) of Section 17.
5. Any judgment or order for the payment of money in excess of
$5,000,000 shall be rendered against Grantor and either
(i) enforcement proceedings shall have been commenced by any
creditor upon such judgment or order that have not been stayed
for a period of ten (10) consecutive days and are not stayed at
the time an action to enforce this Agreement or the Assignment of
Proceeds is commenced, or (ii) there shall be any period of ten
(10) consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise,
shall not be in effect.
6. Any non-monetary judgment or order shall be rendered against
Grantor that is reasonably likely to have a material adverse
effect on (i) the business, condition (financial or otherwise),
operations, performance, properties or prospects of Grantor, or
(ii) the ability of Grantor to perform its obligations under this
Agreement or the Assignment of Proceeds, and either
(x) enforcement proceedings shall have been commenced by any
person or entity upon such judgment or order that have not been
stayed for a period of ten (10) consecutive days and are not
stayed at the time an action to enforce this Agreement or the
Assignment of Proceeds is commenced, or (y) there shall be any
period of ten (10) consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect.
Section 19. Remedies upon Default.
1. Sale. Upon the occurrence of an Event of Default, Lender
may exercise all rights of a secured party under the UCC and
other applicable law (including the Uniform Commercial Code as in
effect in another applicable jurisdiction) and, in addition,
Lender may, without being required to give any notice, except as
herein provided or as may be required by mandatory provisions of
law, sell the Collateral or any part thereof at public or private
sale, for cash, upon credit or for future delivery, and at such
price or prices as Lender may deem satisfactory. Lender may be
the purchaser of any or all of the Collateral so sold at any
public sale (or, if the Collateral is of a type customarily sold
in a recognized market or is of a type which is the subject of
widely distributed standard price quotations, at any private
sale). Grantor will execute and deliver such documents and take
such other action as Lender deems necessary or advisable in order
that any such sale may be made in compliance with law. Upon any
such sale Lender shall have the right to deliver, assign and
transfer to the purchaser thereof the Collateral so sold. Each
purchaser at any such sale shall hold the Collateral so sold to
it absolutely and free from any claim or right of whatsoever
kind, including any equity or right of redemption of Grantor
which may be waived, and Grantor, to the extent permitted by law,
hereby specifically waives all rights of redemption, stay or
appraisal which it has or may have under any law now existing or
hereafter adopted. Grantor agrees that ten (10) days prior
written notice of the time and place of any sale or other
intended disposition of any of the Collateral constitutes
"reasonable notification" within the meaning of Section 9-504(3)
of the UCC, except that shorter notice or no notice shall be
reasonable as to any Collateral which is perishable or threatens
to decline speedily in value or is of a type customarily sold on
a recognized market. The notice (if any) of such sale shall
(1) in case of a public sale, state the time and place fixed for
such sale, and (2) in the case of a private sale, state the day
after which such sale may be consulted. Any such public sale
shall be held at such time or times within ordinary business
hours and at such place or places as Lender may fix in the notice
or such sale. At any such sale the Collateral may be sold in one
lot as an entirety or in separate parcels, as Lender may
determine. Lender shall not be obligated to make any such sale
pursuant to any such notice. Lender may, without notice or
publication, adjourn any public or private sale or cause the same
to be adjourned from time to time by announcement at the time and
place fixed for the sale, and such sale may be made at any time
or place to which the same may be so adjourned. In case of any
sale of all or any part of the Collateral on credit or for future
delivery, the Collateral so sold may be retained by Lender until
the selling price is paid by the purchaser thereof, but Lender
shall not incur any liability in case of the failure of such
purchaser to take up and pay for the Collateral so sold and, in
case of any such failure, such Collateral may again be sold upon
like notice.
2. Foreclosure. Instead of exercising the power of sale herein
conferred upon it, Lender may proceed by a suit or suits at law
or in equity to foreclose the Security Interests and sell the
Collateral, or any portion thereof, under a judgment or decree of
a court or courts of competent jurisdiction. FOR THE PURPOSES OF
LOUISIANA EXECUTORY PROCESS PROCEDURES, GRANTOR DOES HEREBY
CONFESS JUDGMENT IN FAVOR OF LENDER FOR THE FULL AMOUNT OF THE
INDEBTEDNESS. GRANTOR DOES BY THESE PRESENTS CONSENT, AGREE AND
STIPULATE THAT UPON THE OCCURRENCE OF AN EVENT OF DEFAULT IT
SHALL BE LAWFUL FOR LENDER, AND THE GRANTOR DOES HEREBY AUTHORIZE
LENDER, TO CAUSE ALL AND SINGULAR THE COLLATERAL TO BE SEIZED AND
SOLD UNDER EXECUTORY OR ORDINARY PROCESS, AT LENDER'S SOLE
OPTION, WITH OR WITHOUT APPRAISEMENT, APPRAISEMENT BEING HEREBY
EXPRESSLY WAIVED, IN ONE LOT AS AN ENTIRETY OR IN SEPARATE
PARCELS AS LENDER MAY DETERMINE, TO THE HIGHEST BIDDER, AND
OTHERWISE EXERCISE THE RIGHTS, POWERS AND REMEDIES AFFORDED
HEREIN AND UNDER APPLICATION LOUISIANA LAW. ANY AND ALL
DECLARATIONS OF FACT MADE BY AUTHENTIC ACT BEFORE A NOTARY PUBLIC
IN THE PRESENCE OF TWO WITNESSES BY A PERSON DECLARING THAT SUCH
FACTS LIE WITHIN HIS KNOWLEDGE SHALL CONSTITUTE AUTHENTIC
EVIDENCE OF SUCH FACTS FOR THE PURPOSE OF EXECUTORY PROCESS.
GRANTOR HEREBY WAIVES IN FAVOR OF LENDER: (A) THE BENEFIT OF
APPRAISEMENT AS PROVIDED IN LOUISIANA CODE OF CIVIL PROCEDURE
ARTICLES 2332, 2336, 2723 AND 2724, AND ALL OTHER LAWS CONFERRING
THE SAME; (B) THE DEMAND AND THREE DAYS DELAY ACCORDED BY
LOUISIANA CODE OF CIVIL PROCEDURE ARTICLES 2639 AND 2721; (C) THE
NOTICE OF SEIZURE REQUIRED BY LOUISIANA CODE OF CIVIL PROCEDURE
ARTICLES 2293 AND 2721; (D) THE THREE DAYS DELAY PROVIDED BY
LOUISIANA CODE OF CIVIL PROCEDURE ARTICLES 2331 AND 2722; AND
(E) THE BENEFIT OF THE OTHER PROVISIONS OF LOUISIANA CODE OF
CIVIL PROCEDURE ARTICLES 2331, 2722 AND 2723, NOT SPECIFICALLY
MENTIONED ABOVE.
3. Effect of Securities Laws. The Grantor recognizes that the
Lender may be unable to effect a public sale of all or part of
the Collateral by reason of certain prohibitions contained in the
Securities Act of 1933, as amended, and applicable state
securities laws but may be compelled to resort to one or more
private sales to a restricted group of purchasers who will be
obligated to agree, among other things, to acquire all or a part
of the Collateral for their own account, for investment, and not
with a view to the distribution or resale thereof. If the Lender
deems it advisable to do so for the foregoing or for other
reasons, the Lender is authorized to limit the prospective
bidders on or purchasers of any of the Collateral to such a
restricted group of purchasers and may cause to be placed on
certificates for any or all of the Collateral a legend to the
effect that such security has not been registered under the
Securities Act of 1933, as amended, and may not be disposed of in
violation of the provision of said act, and to impose such other
limitations or conditions in connection with any such sale as the
Lender deems necessary or advisable in order to comply with said
act or any other securities or other laws. The Grantor
acknowledges and agrees that any private sale so made may be at
prices and on other terms less favorable to the seller than if
such Collateral were sold at public sale and that the Lender has
no obligation to delay the sale of such Collateral for the period
of time necessary to permit the registration of such Collateral
for public sale under any securities laws. The Grantor agrees
that a private sale or sales made under the foregoing
circumstances shall be deemed to have been made in a commercially
reasonable manner. If any consent, approval, or authorization of
any federal, state, municipal or other governmental department,
agency or authority should be necessary to effectuate any sale or
other disposition of the Collateral, or any partial sale or other
disposition of the Collateral, the Grantor will execute all
applications and other instruments as may be required in
connection with securing any such consent, approval or
authorization and will otherwise use its best efforts to secure
same.
Section 20. Limitation on Duty of Lender. Beyond the exercise
of reasonable care in the custody thereof, the Lender shall have
no duty as to any Collateral in its possession or control or in
the possession or control of any agent or bailee or any income
thereon. The Lender shall be deemed to have exercised reasonable
care in the custody of the Collateral in its possession if the
Collateral is accorded treatment substantially equal to that
which it accords its own property, and shall not be liable or
responsible for any loss or damage to any of the Collateral, or
for any diminution in the value thereof, by reason of the act or
omission of any broker or other agent or bailee selected by the
Lender in good faith. The Lender shall be deemed to have
exercised reasonable care with respect to any of the Collateral
in its possession if the Lender takes such action for that
purpose as the Grantor shall reasonably request in writing; but
no failure to comply with any such request shall, of itself, be
deemed a failure to exercise reasonable care.
Section 21. Appointment of Agent. At any time or times, in
order to comply with any legal requirement in any jurisdiction,
the Lender may appoint a bank or trust company or one or more
other Persons with such power and authority as may be necessary
for the effectual operation of the provisions hereof and may be
specified in the instrument of appointment.
Section 22. Expenses. All sums incurred by the Lender in
enforcing or protecting any of the rights or remedies under this
Agreement shall be additional Indebtedness hereunder and the
Grantor agrees to pay all of the foregoing sums promptly on
demand.
Section 23. Termination. Upon the payment in full of the
Indebtedness, this Agreement shall terminate. Upon request of the
Grantor, Con-Spec or any other holder thereof shall deliver the
Seller Notes to the Grantor. Upon request of Grantor, Lender
shall execute and deliver to Grantor at Grantor's expense such
termination statements as Grantor may reasonably request to
evidence such termination.
Section 24. Notices. Whenever this Agreement requires or
permits any consent, approval, notice, request or demand from one
party to another, the consent, approval, notice, request or
demand must be in writing (including telecopies, telegraphic,
telex or cable communications) and mailed (prepaid postage),
telecopied, telegraphed, telexed, cabled or delivered as follows:
If to Grantor:
XCL-Acquisitions, Inc.
110 Rue Jean Lafitte
P. O. Box 53775
Lafayette, Louisiana 70505
Attn: Benjamin B. Blanchet
Telecopier: (318) 237-3316
If to Lender:
Construction Specialists, Inc. d/b/a Con-Spec, Inc.
901 Airport Boulevard, Suite 705
Houston, Texas 77061
and
Estate of J. Edgar Monroe
Mr. Robert J. Monroe, Executor
228 St. Charles Avenue, Suite 1402
New Orleans, LA 70130
Or, as to any party, at such other address as shall be designated
by such party in a written notice to the other parties. Unless
otherwise specified herein, all such notices and other
communications, shall, when mailed, telecopied, telegraphed,
telexed or cabled, be effective and deemed delivered and received
when deposited in the mails, telecopied, delivered to the
telegraph company, confirmed by telex answerback or delivered to
the cable company, respectively.
Section 25. Amendment. Neither this Agreement nor any
provisions hereof may be changed, waived, discharged or
terminated orally or in any manner other than by an instrument in
writing signed by the party against whom enforcement of the
change, waiver, discharge or termination is sought.
Section 26. Waivers. No course of dealing on the part of the
Lender, its officers, employees, consultants or agents, nor any
failure or delay by the Lender with respect to exercising any of
its rights, powers or privileges under this Agreement shall
operate as a waiver thereof.
Section 27. Cumulative Rights. The rights and remedies of the
Lender under this Agreement shall be cumulative and the exercise
or partial exercise of any such right or remedy shall not
preclude the exercise of any other right or remedy.
Section 28. Titles of Sections. All titles or headings to
sections of this Agreement are only for the convenience of the
parties and shall not be construed to have any effect or meaning
with respect to the other content of such sections, such other
content being controlling as to the agreement between the parties
hereto.
Section 29. Governing Law. This Agreement is a contract made
under and shall be construed in accordance with and governed by
the laws of the United States of America and the State of
Louisiana.
Section 30. Successors and Assigns. All covenants and
agreements made by or on behalf of the Grantor in this Agreement
shall bind Grantor's successors and assigns and shall inure to
the benefit of the Lender and its successors and assigns.
Section 31. Counterparts. This Agreement may be executed in
two or more counterparts, and it shall not be necessary that the
signatures of all parties hereto be contained on any one
counterpart hereof, each counterpart shall be deemed an original,
but all of which when taken together shall constitute one and the
same instrument.
IN WITNESS WHEREOF, the Grantor and the Lender have caused
this Agreement to be duly executed as of the date first above
written.
WITNESSES: XCL-ACQUISITIONS, INC.
_________________________
By:___________________________________
Name:____________________
Name:______________________________
(Please Print)
Title:______________________________
_________________________
Name:____________________
(Please Print)
LENDER:
CONSTRUCTION SPECIALISTS, INC.
d/b/a CON-SPEC, INC.
_________________________ By:________________________________________
Name:____________________ Name: Patrick A. Tesson
(Please Print) Title: President
_________________________
Name:____________________
(Please Print)
ESTATE OF J. EDGAR MONROE
_________________________ By:_______________________________________
Name:____________________ Robert J. Monroe
(Please Print) Executor
_________________________
Name:____________________
(Please Print)
PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT (this "Agreement") is made as
of the 16th day of July, 1999, by and between XCL-Acquisitions,
Inc. ("Acquisitions"), Construction Specialists d/b/a Con-Spec,
Inc. ("Con-Spec") and The Estate of J. Edgar Monroe (the
"Estate").
Recitals
WHEREAS, pursuant to that certain Notarial Act of Transfer
and Assignment of Partial Undivided Interest in Non-Negotiable
Promissory Notes, Related Rights and Collateral and Security
Documents and Delivery of Possession of Non-Negotiable Promissory
Notes dated as of July 16, 1999, Con-Spec and the Estate
purchased from Acquisitions a 55% undivided partial interest in
the notes described on Exhibit A attached hereto (the "Notes"),
which evidence a loan to L.M. Holding Associates, L.P., a
Louisiana Partnership in Commendam (the "Loan"), and the
collateral securing the Notes (the "Loan Documents").
WHEREAS, following the purchase of an undivided partial
interest in the Notes, the parties' percentage interests in the
Notes and the Loan Documents are as set forth on Exhibit B
attached hereto (the "Participation Percentage").
WHEREAS, Acquisitions may sell certain other interests in
the Notes and Loan Documents in accordance with the terms of that
certain letter agreement between XCL Ltd., Con-Spec and the
Estate dated as of July 16, 1999 (the "Letter Agreement") (Con-
Spec and the Estate and any other persons or entities who
purchase interests in the Notes and Loan Documents in accordance
with the terms of the Letter Agreement are sometimes collectively
referred to herein as "Assignees").
WHEREAS, the parties hereto wish to provide for certain
terms and conditions pursuant to which they hold their
Participation Percentage in the Notes and the Loan Documents and
pursuant to which other persons or entities who purchase
interests in the Notes and the Loan Documents in accordance with
the terms of the Letter Agreement may hold their interests,
including their agreement that the Assignees will be paid their
portion of the Notes prior to any payment to Acquisitions and
that Con-Spec shall hold the Notes and manage and control the
Loan for itself and the other parties hereto.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants contained herein, the parties hereto agree as
follows:
Section 1. Con-Spec To Hold the Notes. Con-Spec shall hold
the Notes and collect all payments due thereon for the benefit of
the Assignees and, once the Assignees have been paid in full for
the portion of the Notes owned by them and until Con-Spec
delivers the Notes to Acquisitions, for the benefit of
Acquisitions.
Section 2. Payments on the Notes. Any payments of principal
and/or interest on the Notes shall be paid first to the Assignees
in proportion to their Participation Percentage until they have
been paid in full for the portion of the Notes owned by them and
then to Acquisitions. If Acquisitions receives payments of
principal and/or interest on the Notes before Assignees have been
paid the portion of the Notes owned by them in full, it shall
promptly remit such payments to Con-Spec until the Assignees have
been paid in full for the portion of the Notes owned by them, and
all such funds shall constitute a trust for the benefit of the
Assignees hereto until they are properly remitted. In the event
that Acquisitions is required for any reason to refund or repay
the maker of the Notes or any other person not a party hereto all
or any portion of any principal, interest or other payment which
was remitted by Acquisitions to the Assignees pursuant to this
Agreement, Assignees hereto shall immediately remit to
Acquisitions, on demand, their pro rata share of all amounts
which were required to be so refunded or repaid. Once the
Assignees have been paid in full the principal amount of the
Notes represented by their Participation Percentage, late
charges, attorney fees and costs and accrued interest thereon,
all further payments shall be owed to Acquisitions, and any
Assignee who receives such payments shall promptly remit them to
Acquisitions.
Section 3. Management. (a) Being vested with the right of
management and control of the Loan, Con-Spec will handle all
transactions under the Notes and the Loan Documents. Con-Spec
shall not be liable to the other parties hereto for any action
taken or omitted by it in connection with the Notes or the Loan
Documents, except for losses sustained by the other parties
hereto as a result of Con-Spec's intentional and malicious
conduct. Without limitation of the foregoing, Con-Spec (i) may
consult with legal counsel, independent public accountants and
other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in accordance with the
advice of such expert; and (ii) shall incur no liability under or
with respect of any of the Notes or the Loan Documents by acting
upon any notice, consent, certificate or other instrument or
writing (which may be by telegram, facsimile or telex) thought to
be signed or sent by the proper party or parties, which shall be
presumed to be genuine. In connection therewith, Con-Spec's has
no duty to determine or to inquire into any happening,
occurrence, performance, or failure of performance of any party
with respect to any agreements or arrangements between or among
the parties hereto or to any other party; to have any affirmative
duty to investigate whether the individual who purports to have
the authority to act on behalf of any person or entity or to be
liable for any failure of any bank or financial institution in
which any portion of the funds collected by Con-Spec is deposited
into by it. All losses, if any ultimately are incurred in
connection with the administration and satisfaction of the Notes
shall be borne by the parties on a pro rata basis in accordance
with their respective Participation Percentage. Con-Spec will
endeavor to collect all payments due by the maker of the Notes
under the Notes. In connection therewith, Con-Spec may in its
sole and absolute discretion release or substitute collateral,
give or withhold waivers, consents, extensions, or compromises in
connection with the Notes and the Loan Documents, amend or refuse
to amend the Loan Documents, and take or refrain from taking
action in connection with the making, handling, collecting,
realizing upon, or enforcing the Notes and/or the Loan Documents,
except that Con-Spec shall not increase the principal amount of
the Loan without the consent of all the parties hereto. The
Assignees and Acquisitions shall have the right to inspect Con-
Spec's records with respect to all transactions under the Loan
Documents upon advance notice and at reasonable intervals during
Con-Spec's regular business hours.
(b) Unless otherwise specifically provided for in this
Agreement or in any amendment thereto, all costs of administering
and managing the Notes and the Loan Documents shall be borne by
the parties hereto on a proportionate basis in accordance with
their respective Participation Percentages. Con-Spec shall not
charge any fee to the other parties hereto for managing and
controlling the Loan.
(c) Neither Con-Spec nor any of its officers, directors,
employees, or agents shall be liable to the other parties hereto
for any action lawfully taken or any failure to act by it or them
or any error in judgment with respect to any transactions
relating to the Notes or the Loan Documents except for its or
their intentional and/or malicious omissions, or commissions and
any amounts due as a result thereof shall be borne by the parties
hereto on a proportionate basis in accordance with their
respective Participation Percentages. The parties hereto will
indemnify Con-Spec and hold Con-Spec harmless on a proportionate
basis in accordance with their respective Participation
Percentages for any losses or costs which are to be borne by the
parties hereto on a proportionate basis in accordance with their
respective Participation Percentages. Notwithstanding anything to
the contrary herein, except for intentional and/or malicious
omissions or commissions by Con-Spec, all the parties hereto
convenant they will not commence any action against Con-Spec as a
result of any such omission or action taken by it pursuant to
this Agreement. If Con-Spec becomes a party to any controversy or
legal action, the parties hereto agree to indemnify and hold Con-
Spec harmless from and against any and all liability in
connection with such controversy or legal action and to pay Con-
Spec all costs, charges, expenses, actual damages and attorneys
fees which it may incur in connection therewith in proportions to
their interest in the Loan.
(d) Con-Spec's control and management of the Loan shall
terminate (i) automatically upon the bankruptcy or liquidation of
Con-Spec, or (ii) at the election of the majority of the
Assignees hereto and the appointment by such parties of another
person or entity to control and manage the Loan, which person or
entity shall thereafter have all of the rights and
responsibilities that Con-Spec had pursuant to this Agreement
prior to such termination, and Con-Spec shall have only the
rights and responsibilities which the other Assignees had prior
to such termination, or (iii) upon payment in full to the
Assignees of the principal amount of the Notes represented by
their Participation Percentage, attorneys fees, costs and late
charges and accrued interest thereon, at which time the Notes
shall be delivered to Acquisitions and this Agreement shall
terminate, or (iv) if Con-Spec elects to terminate its management
and control of the Loan and provides the other parties hereto
with written notice of such termination 30 days prior to the
effective date of such termination (following which the other
Assignees may appoint another person or entity to manage and
control the Loan, or, if the Assignees cannot agree upon a person
or entity who is willing to manage and control the Loan before
the effective date of Con-Spec's termination, Acquisitions shall
manage and control the Loan and Con-Spec shall deliver the Notes,
Loan Documentation, records of payment and any other documents or
information in its possession as a result of managing and
controlling the Loan to its successor for that purpose).
Section 4. Collection of the Notes. If the Notes are placed
in the hands of an attorney for collection or to take other
appropriate proceedings to enforce the Notes or the Loan
Documents, all payments thereafter received by Con-Spec or the
other parties hereto in connection with the Notes or the Loan
Documents shall be applied (i) first, to all costs and expenses
of any nature whatsoever incurred for the maintenance,
preservation, defense, protection, sale, other disposition,
collection, and enforcement of the Notes, the Loan Documents and
any collateral for the Notes, including, without limitation,
attorneys' fees, expenses, and disbursements and court costs and
(ii) second, to accrued and unpaid interest and principal on the
Notes. Acquisitions agrees to execute all additional documents,
instruments and agreements that Con-Spec, its successors or
assigns may reasonably deem to be necessary to effectuate the
intent of this Agreement. If Con-Spec, its successors or assigns
so requests, Acquisitions will appoint such person as its true
and lawful attorney-in-fact, irrevocably, with full power of
substitution, to demand, collect, receive, receipt for, sue and
recover all sums of money or other property which may now or
hereafter become due, owing or payable under the Notes and to
file any claim or claims or to take any action or institute or
take part in any proceedings which in the reasonable discretion
of Agent seem necessary or advisable to effectuate the foregoing.
Section 5. Notices. Any notice or demand which, by provision
of this Agreement, is required or permitted to be given or served
by a party hereto to or on another party hereto shall be deemed
to have been sufficiently given and served for all purposes (if
mailed) three calendar days after being deposited, postage
prepaid, in the United States mail, registered or certified mail,
or (if delivered by express courier) one business day after being
delivered to such courier, or (if delivered in person) the same
day as delivery, in each case addressed (until another address or
addresses is given in writing pursuant to this provision) as
follows:
If to Con-Spec:
Construction Specialists d/b/a Con-Spec, Inc.
901 Airport Blvd.
Suite 705
Houston, TX 77061
Attn: Mr. Patrick A. Tesson
If to the Estate:
The Estate of J. Edgar Monroe
c/o Mr. Robert J. Monroe, Executor
228 St. Charles Ave.
Suite 1402
New Orleans, LA 70130
If to Acquisitions:
XCL-Acquisitions, Inc.
110 Rue Jean Lafitte
Second Floor
Lafayette, LA 70505
Attn: Mr. Benjamin B. Blanchet
Section 6. Representations and Warranties of Acquisitions.
(a) Acquisitions is a corporation duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its organization and has the corporate power and
authority and the legal right to own the Notes, and to transfer
an undivided interest in and to the Note and the right to manage
and control the Loan and to conduct the business in which it is
currently engaged.
(b) Acquisitions is not required to obtain any order,
consent, approval or authorization of, or required to make any
declaration or filing with, any governmental authority or any
other person, other than those that have been made or obtained,
in connection with the execution and delivery of this Agreement.
(c) This Agreement has been duly executed and delivered
on behalf of Acquisitions, and this Agreement constitutes a
legal, valid and binding obligation of Acquisitions, enforceable
against Acquisitions in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
the enforcement of creditors' rights generally and except as
enforceability may be subject to general principles of equity,
whether such principles are applied in a court of equity or at
law.
Section 7. Miscellaneous. Neither the execution of this
Agreement nor the sharing in the ownership of the Notes is
intended to be, nor shall it be construed to be, the formation of
a partnership or joint venture between the parties hereto, or the
creation of an agency relationship. Neither this Agreement nor
any provisions hereof may be changed, waived, discharged or
terminated orally or in any manner other than by an instrument in
writing signed by the party against whom enforcement of the
change, waiver, discharge or termination is sought. Additional
Assignees may be added to this Agreement by the attachment to
this Agreement of a revised Exhibit B listing such Assignees and
showing their Participation Percentage. In the event that any
one or more of the provisions contained in this Agreement shall,
for any reason, be held invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall
not affect any other provision of this Agreement. This Agreement
is a contract made under and shall be construed in accordance
with and governed by the laws of the United States of America and
the State of Louisiana. This Agreement may be executed in two or
more counterparts, and it shall not be necessary that the
signatures of all parties hereto be contained on any one
counterpart hereof, each counterpart shall be deemed an original,
but all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have each caused this
Agreement to be executed as of the day and year first written
above.
WITNESSES: XCL-ACQUISITIONS, INC.
_________________________ By:___________________________________
Name:____________________ Name:______________________________
(Please Print) Title:_______________________________
_________________________
Name:____________________
(Please Print)
CONSTRUCTION SPECIALISTS, INC.
d/b/a CON-SPEC, INC.
_________________________ By:________________________________________
Name:____________________ Patrick A. Tesson
(Please Print) President
_________________________
Name:____________________
(Please Print)
THE ESTATE OF J. EDGAR MONROE
_________________________ By:________________________________________
Name:____________________ Robert J. Monroe
(Please Print) Executor
_________________________
Name:____________________
(Please Print)
NOTE MODIFICATION AND AMENDMENT AGREEMENT
This Note Modification and Amendment Agreement (the
"Agreement") is entered into as of the 16th day of July, 1999 by
and between XCL Land Ltd. ("XCL Land") and _____________________
("Lender").
WHEREAS, XCL Land executed a certain promissory note
dated November 6, 1998 in the principal amount of $_______ in
favor of Lender (the "Note"), which Note has been extended so
that it is due on August 3, 1999;
WHEREAS, Lender has agreed to extend the maturity of
the Note through and until November 30, 1999;
WHEREAS, XCL Land and Lender wish to amend the Note to
reflect the revised maturity date.
NOW, THEREFORE, the parties hereto hereby agree as
follows:
1. Section III (1) of the Note is hereby amended by deleting
the current Section III (1) and substituting in its place the
following:
All principal and interest accrued and unpaid
under this Note is due and payable in full on
November 30, 1999.
2. Except as expressly modified in this Agreement, all terms
and provisions of the Note shall be and shall remain in full
force and effect, enforceable in accordance with their terms.
3. Nothing in this Agreement shall constitute the
satisfaction or extinguishment of the amounts owed under the
Note, nor shall it be a novation of the amounts owed under
the Note.
Executed on the day, month and year first above
written.
WITNESSES: XCL LAND LTD.
_________________________ By:________________________________
Name:____________________ Name:__________________________
(Please Print) Title:__________________________
_________________________
Name:____________________
(Please Print)
LENDER
By:________________________________
Name:______________________________
Title:_____________________________
ASSIGNMENT OF NET PROCEEDS
BY: L.M. HOLDING ASSOCIATES, L.P. STATE OF LOUISIANA
TO: CONSTRUCTION SPECIALISTS, INC. PARISHES OF ST. JAMES,
d/b/a CON-SPEC, INC. AND ST. JOHN THE BAPTIST and
ESTATE OF J. EDGAR MONROE ASCENSION
- -----------------------------------------------------------------
BEFORE the undersigned Notaries Public, duly
commissioned and qualified, in and for their respective
Parishes/Counties and States, and in the presence of the
competent witnesses hereinafter named and undersigned, PERSONALLY
CAME AND APPEARED:
L.M. Holding Associates, L.P., a Louisiana
Partnership in Commendam, the general partner
of which is XCL Land Ltd. and the limited
partner of which is The Exploration Company
of Louisiana, Inc., whose address is 110 Rue
Jean Lafitte, P.O. Box 53775, Lafayette,
Louisiana, hereinafter referred to as
"Assignor";
who declared that it does by these presents grant, bargain, sell,
convey, transfer, assign, set over, abandon and deliver without
warranty but with full substitution and subrogation in and to all
the rights of actions of warranties which it has or may have
against all preceding owners and vendors, unto:
Construction Specialists, Inc. d/b/a Con-
Spec, Inc., whose address is 901 Airport
Boulevard, Suite 705, Houston, Texas, 77061;
and
Estate of J. Edgar Monroe, whose address is
228 St. Charles Avenue, Suite 1402, New
Orleans, LA 70130;
(hereinafter collectively referred to as "Assignee"), here
present accepting, and purchasing for themselves, their
successors and assigns, and acknowledging due delivery and
possession thereof, all and singular the following described
property, to-wit:
A Net Proceeds Interest equal to 7.5% (calculated by
multiplying (4.1/6.8 x 100) by 12.5%) of any net proceeds
received by Assignor from any activity on or from that one
certain tract or parcel of land containing approximately 62,500
acres of land located in St. James, St. John The Baptist and
Ascension Parishes, Louisiana (the "Lutcher Moore Tract"), less
any and all expenses incurred in such activity, and except for
payments for rights-of-way, and 7.5% of the net proceeds received
from the sale of the Lutcher Moore Tract less any customary and
usual commissions due upon the sale of such tract and all other
customary and usual expenses incurred in selling such tract,
including but not limited to, attorneys' fees, recordation fees,
abstract costs and title insurance premiums.
The Lutcher Moore Tract is specifically described in
Exhibit "A" to the Act of Sale of Movable and Immovable Property
and Vendor's Lien and Mortgage ("Act of Sale") executed by and
between Lutcher & Moore Cypress Lumber Company as "Vendor" and
L.M. Holding Associates, L.P. as "Vendee", dated effective as of
February 28, 1990, recorded in the Parish of St. James in COB 311
and in MOB 181 under Entry No. 82844, and in the Parish of St.
John The Baptist in COB 282 at page 17 and in MOB 269 at page 646
under Entry No. 137957, and in the Parish of Ascension in COB 479
and in MOB 491 under Entry No. 290251. Exhibit "A" to the Act
of Sale is incorporated herein and made a part hereof just as if
same were attached hereto for purposes of fully and accurately
describing the Lutcher Moore Tract.
TO HAVE AND TO HOLD the above described property unto
the said Assignee, their successors and assigns forever.
This Assignment is made and accepted for and in
consideration of the price and sum of ONE THOUSAND DOLLARS Cash
and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged.
All certificates and the production thereof, which may
be required or provided for by State or Federal laws are waived
by the parties who agree to hold the notaries harmless and free
from any and all liability and responsibility and to defend the
notaries for non-production thereof.
The parties further declared that they have not
requested an abstract, title policy, title opinion or survey from
any notary, on the property and that no title opinion or survey
has been furnished, and they do hereby relieve and release the
notaries, of all responsibility and liability for such non-
production.
THUS DONE AND PASSED, in _____________, Louisiana in
duplicate originals on the _____ day of ___________, 1999, in
the presence of the two undersigned competent witnesses, who
hereunto sign their names together with the said appearers and
me, Notary, after due reading of the whole.
WITNESSES: ASSIGNOR:
L.M. Holding Associates, L.P.
By: XCL Land Ltd.
Its General Partner
_________________________ By:________________________________
Name:____________________ Name:____________________________
(Please Print) Title:_____________________________
_________________________
Name:____________________
(Please Print)
________________________________________
NOTARY PUBLIC
THUS DONE AND PASSED, in _____________, Louisiana in
duplicate originals on the _______ day of ____________, 1999, in
the presence of the two undersigned competent witnesses, who
hereunto sign their names together with the said appearers and
me, Notary, after due reading of the whole.
WITNESSES: ASSIGNEE:
Construction Specialists, Inc.
d/b/a
Con-Spec, Inc.
_________________________ By:________________________________
Name:____________________ Patrick A. Tesson
(Please Print) President
_________________________
Name:____________________
(Please Print)
Estate of J. Edgar Monroe
By:________________________________
Robert J. Monroe
Executor
__________________________________
NOTARY PUBLIC
FIRST AMENDMENT TO AND ASSUMPTION OF SECURITY AGREEMENT
THIS FIRST AMENDMENT TO AND ASSUMPTION OF SECURITY
AGREEMENT ("First Amendment") dated as of September 30, 1999, is
made between XCL-Texas, Inc. ("XCL-Texas") and Mitch Leigh
("Lender"), who agree as follows:
Recitals
WHEREAS, XCL Land, Ltd. ("XCL Land") and the Lender
entered into that certain Security Agreement dated May 21, 1999
(the "Security Agreement") in order to secure the full and
punctual payment and performance of the indebtedness described
therein (capitalized terms used but not defined herein shall have
the meaning given to them in the Security Agreement); and
WHEREAS, pursuant to Section 11 of the Security
Agreement, the Lender agreed that in the event additional Units
were sold or additional New Funds were provided to XCL Land by
persons other than Lender and secured by partnership interests in
the Partnership, Lender would immediately upon demand (one or
more times, as appropriate) execute further amendments to the
Security Agreement releasing a percentage of XCL Land's
Partnership Interest sufficient to allocate the security
interests in the partnership interest of the Partnership among
the Unit holders or other providers of New Funds on a
proportionate basis (provided that no reduction in such security
interest need be made with respect to amounts of New Funds in
excess of an aggregate of $6,200,000 principal outstanding); and
WHEREAS, an additional $1,500,000 in New Funds was
provided to XCL Land, thereby making the aggregate principal
amount of New Funds outstanding as of September 30, 1999 equal to
$4,200,000 with Lender having contributed $200,000 of such funds;
and
WHEREAS, XCL-Texas requested that Lender execute this
First Amendment to release a portion of its security interest and
amend the Security Agreement to reflect the Lender's revised
security interest; and
WHEREAS, XCL Land assigned a 1% general partnership
interest in the Partnership to XCL-Texas and withdrew as general
partner of the Partnership; and
WHEREAS, XCL Land's remaining partnership interest was
converted to a limited partnership interest and, thereafter, XCL
Land merged with and into The Exploration Company of Louisiana,
Inc. ("TECLI"); and
WHEREAS, as a result of the merger, TECLI succeeded by
operation of law to all of the assets and liabilities of XCL
Land, including but not limited to the Note; and
WHEREAS, as a further result of the merger, TECLI owns
a 99% limited partnership interest in the Partnership and has
acknowledged and agreed that Lender's security interest in
TECLI's partnership interest covers Lender's applicable
percentage of TECLI's entire 99% limited partnership interest;
and
WHEREAS, XCL-Texas wishes to acknowledge Lender's
security interest in Lender's applicable percentage of XCL-Texas'
1% general partnership interest and assume all of XCL-Land's
obligations under the Security Agreement.
NOW, THEREFORE, in consideration of the foregoing
premises and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties
hereto agree as follows:
Section 1. Substitution of Parties. Lender and
XCL-Texas hereby agree that the Security Agreement, as amended
hereby, is now between Lender and XCL-Texas and XCL-Texas hereby
assumes all of XCL Land's obligations under the Security
Agreement.
Section 2. Partial Release of Collateral. Lender
hereby releases the following collateral:
(1) 2.65% of XCL-Texas' now owned or hereafter acquired
Partnership Interest in the Partnership;
(2) 2.65% of any and all monies and other distributions (cash or
property), allocations or payments made or to be made to
XCL-Texas pursuant to the Partnership Agreement or attributable
to the Partnership Interest;
(3) all General Intangibles related in any way to the collateral
described in clauses 1 or 2 above;
(4) all Proceeds and products of all or any of the collateral
described in clauses 1-3 above.
Section 3. Amendments to Security Agreement. The
Security Agreement is hereby amended as follows:
(a) The reference to "XCL Land, Ltd. ("Borrower")" in
the first sentence of the Security Agreement is hereby changed to
"XCL-Texas, Inc. ("XCL-Texas")."
(b) The references to "The Borrower," "the Borrower"
and "Borrower" in Recital paragraph A, in the definition of "New
Funds," in the definition of "Permitted Liens," in the definition
of "Subscription Agreement," in the first two places those terms
appear in Section 2(A), and in the first two places those terms
appear in the sentence in Section 11 that begins "Lender further
agrees and acknowledges" are hereby changed to "The Exploration
Company of Louisiana, Inc."
(c) The references to "The Borrower," "the Borrower"
and "Borrower" in all other places in the Security Agreement are
hereby changed to "XCL-Texas."
(d) The reference to "7.41%" in Section 2(A)(1) and
2(A)(2) is hereby deleted and the phrase "4.76%" is substituted
in its place.
(e) The federal taxpayer identification number listed
in Section 7 of the Security Agreement is hereby changed to
74-2027391.
(f) The address in Section 8 is hereby amended to read
3639 Ambassador Caffrey Parkway, Suite 400, Lafayette, Louisiana
70503.
Section 4. Effect of Amendment. Except as expressly
amended hereby and except as to the collateral released pursuant
hereto, the Security Agreement shall remain in full force and
effect.
Section 5. Titles of Sections. All titles or headings
to sections of this First Amendment are only for the convenience
of the parties and shall not be construed to have any effect or
meaning with respect to the other content of such sections, such
other content being controlling as to the agreement between the
parties hereto.
Section 6. Governing Law. This First Amendment is a
contract made under and shall be construed in accordance with and
governed by the laws of the United States of America and the
State of Louisiana.
Section 7. Counterparts. This First Amendment may be
executed in two or more counterparts, and it shall not be
necessary that the signatures of all parties hereto be contained
on any one counterpart hereof, each counterpart shall be deemed
an original, but all of which when taken together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, XCL-Texas and the Lender have
caused this First Amendment to be duly executed as of the date
first above written.
WITNESSES: XCL-TEXAS, INC.
_________________________ By:________________________________
Name:____________________ Name:___________________________
(Please Print) Title:__________________________
_________________________
Name:____________________
(Please Print)
LENDER:
_________________________ ________________________________
Name:____________________ Mitch Leigh
(Please Print)
_________________________
Name:____________________
(Please Print)
FIRST AMENDMENT TO SECURITY AGREEMENT
THIS FIRST AMENDMENT TO SECURITY AGREEMENT ("First
Amendment") dated as of September 30, 1999, is made between The
Exploration Company of Louisiana, Inc. ("Grantor") and Mitch
Leigh ("Lender") who agree as follows:
Recitals
WHEREAS, Grantor and the Lender entered into that
certain Security Agreement dated May 21, 1999 (the "Security
Agreement") in order to secure the full and punctual payment and
performance of the indebtedness described therein (capitalized
terms used but not defined herein shall have the meaning given to
them in the Security Agreement); and
WHEREAS, pursuant to Section 11 of the Security
Agreement, the Lender agreed that in the event additional Units
were sold or additional New Funds were provided to XCL Land by
persons other than Lender and secured by partnership interests in
the Partnership, Lender would immediately upon demand (one or
more times, as appropriate) execute further amendments to the
Security Agreement releasing a percentage of the Grantor's
Partnership Interest sufficient to allocate the security
interests in the partnership interest of the Partnership among
the Unit holders or other providers of New Funds on a
proportionate basis (provided that no reduction in such security
interest need be made with respect to amounts of New Funds in
excess of an aggregate of $6,200,000 principal outstanding); and
WHEREAS, an additional $1,500,000 in New Funds was
provided to XCL Land, thereby making the aggregate principal
amount of New Funds outstanding as of September 30, 1999 equal to
$4,200,000 with Lender having contributed $200,000 of such funds;
and
WHEREAS, Grantor has requested that Lender execute this
First Amendment to release a portion of its security interest and
amend the Security Agreement to reflect the Lender's revised
security interest; and
WHEREAS, XCL Land, Ltd. ("XCL Land") (formerly the
general partner of the Partnership) assigned a 1% general
partnership interest in the Partnership to XCL-Texas, Inc. and
withdrew as general partner of the Partnership; and
WHEREAS, XCL Land=s remaining partnership interest was
converted to a limited partnership interest and, thereafter, XCL
Land merged with and into Grantor; and
WHEREAS, as a result of the merger, Grantor succeeded
by operation of law to all of the assets and liabilities of XCL
Land, including but not limited to the Note; and
WHEREAS, as a further result of the merger, Grantor
owns a 99% limited partnership interest in the Partnership and
Grantor acknowledges and agrees that Lender=s security interest
pursuant to the Security Agreement covers Lender=s applicable
percentage of Grantor=s entire 99% limited partnership interest.
NOW, THEREFORE, in consideration of the foregoing
premises and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties
hereto agree as follows:
Section 1. Partial Release of Collateral. Lender
hereby releases the following collateral:
(1) 2.65% of Grantor's now owned or hereafter acquired
Partnership Interest in the Partnership;
(2) 2.65% of any and all monies and other distributions (cash or
property), allocations or payments made or to be made to Grantor
pursuant to the Partnership Agreement or attributable to the
Partnership Interest;
(3) all General Intangibles related in any way to the collateral
described in clauses 1 or 2 above;
(4) all Proceeds and products of all or any of the collateral
described in clauses 1-3 above.
Section 2. Amendments to Security Agreement. The
Security Agreement is hereby amended as follows:
(a) The phrase "XCL Land, Ltd. ("XCL Land")" is
hereby replaced with the word "Grantor."
(b) All other references to "XCL Land" are hereby
replaced with "Grantor."
(c) The reference to "7.41%" in Section 2(A)(1) and
2(A)(2) is hereby deleted and the phrase "4.76%" is substituted
in its place.
(d) The address in Section 8 is hereby amended to
read 3639 Ambassador Caffrey Parkway, Suite 400, Lafayette,
Louisiana 70503.
Section 3. Effect of Amendment. Except as expressly
amended hereby and except as to the collateral released pursuant
hereto, the Security Agreement shall remain in full force and
effect.
Section 4. Titles of Sections. All titles or headings
to sections of this First Amendment are only for the convenience
of the parties and shall not be construed to have any effect or
meaning with respect to the other content of such sections, such
other content being controlling as to the agreement between the
parties hereto.
Section 5. Governing Law. This First Amendment is a
contract made under and shall be construed in accordance with and
governed by the laws of the United States of America and the
State of Louisiana.
Section 6. Counterparts. This First Amendment may be
executed in two or more counterparts, and it shall not be
necessary that the signatures of all parties hereto be contained
on any one counterpart hereof, each counterpart shall be deemed
an original, but all of which when taken together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the Grantor and the Lender have
caused this First Amendment to be duly executed as of the date
first above written.
WITNESSES: GRANTOR:
THE EXPLORATION COMPANY
OF LOUISIANA, INC.
_________________________ By:________________________________
Name:____________________ Name:___________________________
(Please Print) Title:__________________________
_________________________
Name:____________________
(Please Print)
LENDER:
_________________________ ________________________________
Name:____________________ Mitch Leigh
(Please Print)
_________________________
Name:____________________
(Please Print)
FOURTH AMENDMENT TO SECURITY AGREEMENT
THIS FOURTH AMENDMENT TO SECURITY AGREEMENT ("Fourth
Amendment") dated as of September 30, 1999, is made between The
Exploration Company of Louisiana, Inc. ("Grantor") and
Construction Specialists, Inc. d/b/a Con-Spec, Inc. ("Lender"),
who agree as follows:
Recitals
WHEREAS, the Grantor and the Lender entered into that
certain Security Agreement dated November 6, 1998, as amended by
that certain First Amendment to Security Agreement dated January
15, 1999, as amended by that certain Second Amendment to Security
Agreement dated as of April 13, 1999, as amended by that certain
Third Amendment to Security Agreement dated as of May 21, 1999
(the "Security Agreement") in order to secure the full and
punctual payment and performance of the indebtedness described
therein (capitalized terms used but not defined herein shall have
the meaning given to them in the Security Agreement); and
WHEREAS, pursuant to Section 11 of the Security
Agreement, the Lender agreed that in the event additional Units
were sold or additional New Funds were provided to XCL Land by
persons other than Lender and secured by partnership interests in
the Partnership, Lender would immediately upon demand (one or
more times, as appropriate) execute further amendments to the
Security Agreement releasing a percentage of the Grantor's
Partnership Interest sufficient to allocate the security
interests in the partnership interest of the Partnership among
the Unit holders or other providers of New Funds on a
proportionate basis (provided that no reduction in such security
interest need be made with respect to amounts of New Funds in
excess of an aggregate of $6,200,000 principal outstanding); and
WHEREAS, an additional $1,500,000 in New Funds has been
provided to XCL Land thereby making the aggregate principal
amount of New Funds outstanding as of September 30, 1999 equal to
$4,200,000 with Lender having contributed $950,000 of such funds;
and
WHEREAS, Grantor has requested that Lender execute this
Fourth Amendment to release a portion of its security interest
and amend the Security Agreement to reflect the Lender's revised
security interest; and
WHEREAS, XCL Land, Ltd. ("XCL Land") (formerly the
general partner of the Partnership) assigned a 1% general
partnership interest in the Partnership to XCL-Texas, Inc. and
withdrew as general partner of the Partnership; and
WHEREAS, XCL Land=s remaining partnership interest was
converted to a limited partnership interest and, thereafter, XCL
Land merged with and into Grantor; and
WHEREAS, as a result of the merger, Grantor succeeded
by operation of law to all of the assets and liabilities of XCL
Land, including but not limited to the Note; and
WHEREAS, as a further result of the merger, Grantor
owns a 99% limited partnership interest in the Partnership and
Grantor acknowledges and agrees that Lender=s security interest
pursuant to the Security Agreement covers Lender=s applicable
percentage of Grantor=s entire 99% limited partnership interest.
NOW, THEREFORE, in consideration of the foregoing
premises and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties
hereto agree as follows:
Section 1. Partial Release of Collateral. Lender
hereby releases the following collateral:
(1) 12.58% of Grantor's now owned or hereafter acquired
Partnership Interest in the Partnership;
(2) 12.58% of any and all monies and other distributions (cash
or property), allocations or payments made or to be made to
Grantor pursuant to the Partnership Agreement or attributable to
the Partnership Interest;
(3) all General Intangibles related in any way to the collateral
described in clauses 1 or 2 above;
(4) all Proceeds and products of all or any of the collateral
described in clauses 1-3 above.
Section 2. Amendments to Security Agreement. The
Security Agreement is hereby amended as follows:
(a) The phrase "XCL Land, Ltd. ("XCL Land")" is
hereby replaced with the word "Grantor."
(b) All other references to "XCL Land" are hereby
replaced with "Grantor."
(c) The reference to "35.2%" in Section 2(A)(1) and
2(A)(2) is hereby deleted and the phrase "22.62%" is substituted
in its place.
(d) The address in Section 8 is hereby amended to
read 3639 Ambassador Caffrey Parkway, Suite 400, Lafayette,
Louisiana 70503.
Section 3. Effect of Amendment. Except as expressly
amended hereby and except as to the collateral released pursuant
hereto, the Security Agreement shall remain in full force and
effect.
Section 4. Titles of Sections. All titles or headings
to sections of this Fourth Amendment are only for the convenience
of the parties and shall not be construed to have any effect or
meaning with respect to the other content of such sections, such
other content being controlling as to the agreement between the
parties hereto.
Section 5. Governing Law. This Fourth Amendment is a
contract made under and shall be construed in accordance with and
governed by the laws of the United States of America and the
State of Louisiana.
Section 6. Counterparts. This Fourth Amendment may be
executed in two or more counterparts, and it shall not be
necessary that the signatures of all parties hereto be contained
on any one counterpart hereof, each counterpart shall be deemed
an original, but all of which when taken together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the Grantor and the Lender have
caused this Fourth Amendment to be duly executed as of the date
first above written.
WITNESSES: GRANTOR:
THE EXPLORATION COMPANY
OF LOUISIANA, INC.
_________________________ By:________________________________
Name:____________________ Name:___________________________
(Please Print) Title:__________________________
_________________________
Name:____________________
(Please Print)
LENDER:
CONSTRUCTION SPECIALISTS, INC.
d/b/a
CON-SPEC, INC.
_________________________ By:________________________________
Name:____________________ Name:___________________________
(Please Print) Title:__________________________
_________________________
Name:____________________
(Please Print)
FOURTH AMENDMENT TO AND ASSUMPTION OF SECURITY AGREEMENT
THIS FOURTH AMENDMENT TO AND ASSUMPTION OF SECURITY
AGREEMENT ("Fourth Amendment") dated as of September 30, 1999, is
made between XCL-Texas, Inc. ("XCL-Texas") and Construction
Specialists, Inc. d/b/a Con-Spec, Inc. ("Lender"), who agree as
follows:
Recitals
WHEREAS, XCL Land, Ltd. ("XCL Land") and the Lender
entered into that certain Security Agreement dated November 6,
1998, as amended by that certain First Amendment to Security
Agreement dated January 15, 1999, as amended by that certain
Second Amendment to Security Agreement dated as of April 13,
1999, as amended by that certain Third Amendment to Security
Agreement dated as of May 21, 1999 (the "Security Agreement") in
order to secure the full and punctual payment and performance of
the indebtedness described therein (capitalized terms used but
not defined herein shall have the meaning given to them in the
Security Agreement); and
WHEREAS, pursuant to Section 11 of the Security
Agreement, the Lender agreed that in the event additional Units
were sold or additional New Funds were provided to XCL Land by
persons other than Lender and secured by partnership interests in
the Partnership, Lender would immediately upon demand (one or
more times, as appropriate) execute further amendments to the
Security Agreement releasing a percentage of XCL Land's
Partnership Interest sufficient to allocate the security
interests in the partnership interest of the Partnership among
the Unit holders or other providers of New Funds on a
proportionate basis (provided that no reduction in such security
interest need be made with respect to amounts of New Funds in
excess of an aggregate of $6,200,000 principal outstanding); and
WHEREAS, an additional $1,500,000 in New Funds has been
provided to XCL Land thereby making the aggregate principal
amount of New Funds outstanding as of September 30, 1999 equal to
$4,200,000 with Lender having contributed $950,000 of such funds;
and
WHEREAS, XCL-Texas has requested that Lender execute
this Fourth Amendment to release a portion of its security
interest and amend the Security Agreement to reflect the Lender's
revised security interest; and
WHEREAS, XCL Land assigned a 1% general partnership
interest in the Partnership to XCL-Texas and withdrew as general
partner of the Partnership; and
WHEREAS, XCL Land's remaining partnership interest was
converted to a limited partnership interest and, thereafter, XCL
Land merged with and into The Exploration Company of Louisiana,
Inc. ("TECLI"); and
WHEREAS, as a result of the merger, TECLI succeeded by
operation of law to all of the assets and liabilities of XCL
Land, including but not limited to the Note; and
WHEREAS, as a further result of the merger, TECLI owns
a 99% limited partnership interest in the Partnership and has
acknowledged and agreed that Lender's security interest in
TECLI's partnership interest covers Lender's applicable
percentage of TECLI's entire 99% limited partnership interest;
and
WHEREAS, XCL-Texas wishes to acknowledge Lender's
security interest in Lender's applicable percentage of XCL-Texas'
1% general partnership interest and assume all of XCL-Land's
obligations under the Security Agreement.
NOW, THEREFORE, in consideration of the foregoing
premises and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties
hereto agree as follows:
Section 1. Substitution of Parties. Lender and
XCL-Texas hereby agree that the Security Agreement, as amended
hereby, is now between Lender and XCL-Texas and XCL-Texas hereby
assumes all of XCL Land's obligations under the Security
Agreement.
Section 2. Partial Release of Collateral. Lender
hereby releases the following collateral:
(1) 12.58% of XCL-Texas' now owned or hereafter acquired
Partnership Interest in the Partnership;
(2) 12.58% of any and all monies and other distributions (cash
or property), allocations or payments made or to be made to XCL-
Texas pursuant to the Partnership Agreement or attributable to
the Partnership Interest;
(3) all General Intangibles related in any way to the collateral
described in clauses 1 or 2 above;
(4) all Proceeds and products of all or any of the collateral
described in clauses 1-3 above.
Section 3. Amendments to Security Agreement. The
Security Agreement is hereby amended as follows:
(a) The reference to "XCL Land, Ltd. ("Borrower")"
in the first sentence of the Security Agreement is hereby changed
to "XCL-Texas, Inc. ("XCL-Texas")."
(b) The references to "The Borrower," "the
Borrower" and "Borrower" in Recital paragraph A, in the
definition of "New Funds," in the definition of "Permitted
Liens," in the definition of "Subscription Agreement," in the
first two places those terms appear in Section 2(A), and in the
first two places those terms appear in the sentence in Section 11
that begins "Lender further agrees and acknowledges" are hereby
changed to "The Exploration Company of Louisiana, Inc."
(c) The references to "The Borrower," "the
Borrower" and "Borrower" in all other places in the Security
Agreement are hereby changed to "XCL-Texas."
(d) The reference to "35.2%" in Section 2(A)(1) and
2(A)(2) is hereby deleted and the phrase "22.62%" is substituted
in its place.
(e) The federal taxpayer identification number
listed in Section 7 of the Security Agreement is hereby changed
to 74-2027391.
(f) The address in Section 8 is hereby amended to
read 3639 Ambassador Caffery Parkway, Suite 400, Lafayette,
Louisiana 70503.
Section 4. Effect of Amendment. Except as expressly
amended hereby and except as to the collateral released pursuant
hereto, the Security Agreement shall remain in full force and
effect.
Section 5. Titles of Sections. All titles or headings
to sections of this Fourth Amendment are only for the convenience
of the parties and shall not be construed to have any effect or
meaning with respect to the other content of such sections, such
other content being controlling as to the agreement between the
parties hereto.
Section 6. Governing Law. This Fourth Amendment is a
contract made under and shall be construed in accordance with and
governed by the laws of the United States of America and the
State of Louisiana.
Section 7. Counterparts. This Fourth Amendment may be
executed in two or more counterparts, and it shall not be
necessary that the signatures of all parties hereto be contained
on any one counterpart hereof, each counterpart shall be deemed
an original, but all of which when taken together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, XCL-Texas and the Lender have
caused this Fourth Amendment to be duly executed as of the date
first above written.
WITNESSES: XCL-TEXAS, INC.
_________________________ By:________________________________
Name:____________________ Name:___________________________
(Please Print) Title:__________________________
_________________________
Name:____________________
(Please Print)
LENDER:
CONSTRUCTION SPECIALISTS, INC.
D/B/A CON-SPEC, INC.
_________________________ By:________________________________
Name:____________________ Name:___________________________
(Please Print) Title:__________________________
_________________________
Name:____________________
(Please Print)
FIRST AMENDMENT TO AND ASSUMPTION OF SECURITY AGREEMENT
THIS FIRST AMENDMENT TO AND ASSUMPTION OF SECURITY
AGREEMENT ("Second Amendment") dated as of September 30, 1999, is
made between XCL-Texas, Inc. ("XCL-Texas") and Northern
Securities Limited ("Lender"), who agree as follows:
Recitals
WHEREAS, XCL Land, Ltd. ("XCL Land") and the Lender
entered into that certain Security Agreement dated May 17, 1999
(the "Security Agreement") in order to secure the full and
punctual payment and performance of the indebtedness described
therein (capitalized terms used but not defined herein shall have
the meaning given to them in the Security Agreement); and
WHEREAS, XCL Land assigned a 1% general partnership
interest in the Partnership to XCL-Texas and withdrew as general
partner of the Partnership; and
WHEREAS, XCL Land's remaining partnership interest was
converted to a limited partnership interest and, thereafter, XCL
Land merged with and into The Exploration Company of Louisiana,
Inc. (ATECLI@); and
WHEREAS, as a result of the merger, TECLI succeeded by
operation of law to all of the assets and liabilities of XCL
Land, including but not limited to the Note; and
WHEREAS, as a further result of the merger, TECLI owns
a 99% limited partnership interest in the Partnership and has
acknowledged and agreed that Lender's security interest in
TECLI's partnership interest covers Lender's applicable
percentage of TECLI's entire 99% limited partnership interest;
and
WHEREAS, XCL-Texas wishes to acknowledge Lender's
security interest in Lender's applicable percentage of XCL-Texas'
1% general partnership interest and assume all of XCL-Land's
obligations under the Security Agreement.
NOW, THEREFORE, in consideration of the foregoing
premises and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties
hereto agree as follows:
Section 1. Substitution of Parties. Lender and
XCL-Texas hereby agree that the Security Agreement, as amended
hereby, is now between Lender and XCL-Texas and XCL-Texas hereby
assumes all of XCL Land's obligations under the Security
Agreement.
Section 2. Amendments to Security Agreement. The
Security Agreement is hereby amended as follows:
(a) The reference to "XCL Land, Ltd. ("Borrower")"
in the first sentence of the Security Agreement is hereby changed
to "XCL-Texas, Inc. ("XCL-Texas")."
(b) The references to "The Borrower," "the
Borrower" and "Borrower" in Recital paragraph A, in the
definition of "New Funds," in the definition of "Permitted
Liens," in the definition of "Subscription Agreement," in the
first two places those terms appear in Section 2(A), and in the
first two places those terms appear in the sentence in Section 11
that begins "Lender further agrees and acknowledges" are hereby
changed to "The Exploration Company of Louisiana, Inc."
(c) The references to "The Borrower," "the
Borrower" and "Borrower" in all other places in the Security
Agreement are hereby changed to "XCL-Texas."
(d) The federal taxpayer identification number
listed in Section 7 of the Security Agreement is hereby changed
to 74-2027391.
(e) The address in Section 8 is hereby amended to
read 3639 Ambassador Caffery Parkway, Suite 400, Lafayette,
Louisiana 70503.
Section 3. Effect of Amendment. Except as expressly
amended hereby and except as to the collateral released pursuant
hereto, the Security Agreement shall remain in full force and
effect.
Section 4. Titles of Sections. All titles or headings
to sections of this First Amendment are only for the convenience
of the parties and shall not be construed to have any effect or
meaning with respect to the other content of such sections, such
other content being controlling as to the agreement between the
parties hereto.
Section 5. Governing Law. This First Amendment is a
contract made under and shall be construed in accordance with and
governed by the laws of the United States of America and the
State of Louisiana.
Section 6. Counterparts. This First Amendment may be
executed in two or more counterparts, and it shall not be
necessary that the signatures of all parties hereto be contained
on any one counterpart hereof, each counterpart shall be deemed
an original, but all of which when taken together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, XCL-Texas and the Lender have
caused this First Amendment to be duly executed as of the date
first above written.
WITNESSES: XCL-TEXAS, INC.
_________________________ By:________________________________
Name:____________________ Name:___________________________
(Please Print) Title:__________________________
_________________________
Name:____________________
(Please Print)
LENDER:
NORTHERN SECURITIES LIMITED
_________________________ By:________________________________
Name:____________________ Name:___________________________
(Please Print) Title:__________________________
_________________________
Name:____________________
(Please Print)
FIRST AMENDMENT TO SECURITY AGREEMENT
THIS FIRST AMENDMENT TO SECURITY AGREEMENT ("First
Amendment") dated as of September 30, 1999, is made between The
Exploration Company of Louisiana, Inc. ("Grantor") and Northern
Securities Limited ("Lender"), who agree as follows:
Recitals
WHEREAS, the Grantor and the Lender entered into that
certain Security Agreement dated as of May 17, 1999 (the
"Security Agreement") in order to secure the full and punctual
payment and performance of the indebtedness described therein
(capitalized terms used but not defined herein shall have the
meaning given to them in the Security Agreement); and
WHEREAS, XCL Land, Ltd. ("XCL Land") (formerly the
general partner of the Partnership) assigned a 1% general
partnership interest in the Partnership to XCL-Texas, Inc. and
withdrew as general partner of the Partnership; and
WHEREAS, XCL Land's remaining partnership interest was
converted to a limited partnership interest and, thereafter, XCL
Land merged with and into Grantor; and
WHEREAS, as a result of the merger, Grantor succeeded
by operation of law to all of the assets and liabilities of XCL
Land, including but not limited to the Note; and
WHEREAS, as a further result of the merger, Grantor
owns a 99% limited partnership interest in the Partnership and
Grantor acknowledges and agrees that Lender's security interest
pursuant to the Security Agreement covers Lender's applicable
percentage of Grantor's entire 99% limited partnership interest.
NOW, THEREFORE, in consideration of the foregoing
premises and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties
hereto agree as follows:
Section 1. Amendments to Security Agreement. The
Security Agreement is hereby amended as follows:
(a) The phrase "XCL Land, Ltd. ("XCL Land")" is
hereby replaced with the word "Grantor."
(b) All other references to "XCL Land" are hereby
replaced with "Grantor."
(c) The address in Section 8 is hereby amended to
read 3639 Ambassador Caffery Parkway, Suite 400, Lafayette,
Louisiana 70503.
Section 2. Effect of Amendment. Except as expressly
amended hereby and except as to the collateral released pursuant
hereto, the Security Agreement shall remain in full force and
effect.
Section 3. Titles of Sections. All titles or headings
to sections of this First Amendment are only for the convenience
of the parties and shall not be construed to have any effect or
meaning with respect to the other content of such sections, such
other content being controlling as to the agreement between the
parties hereto.
Section 4. Governing Law. This First Amendment is a
contract made under and shall be construed in accordance with and
governed by the laws of the United States of America and the
State of Louisiana.
Section 5. Counterparts. This First Amendment may be
executed in two or more counterparts, and it shall not be
necessary that the signatures of all parties hereto be contained
on any one counterpart hereof, each counterpart shall be deemed
an original, but all of which when taken together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the Grantor and the Lender have
caused this First Amendment to be duly executed as of the date
first above written.
WITNESSES: GRANTOR:
THE EXPLORATION COMPANY
OF LOUISIANA, INC.
_________________________ By:________________________________
Name:____________________ Name:___________________________
(Please Print) Title:__________________________
_________________________
Name:____________________
(Please Print)
LENDER:
NORTHERN SECURITIES LIMITED
_________________________ By:________________________________
Name:____________________ Name:___________________________
(Please Print) Title:__________________________
_________________________
Name:____________________
(Please Print)
TERMINATION OF SECURITY AGREEMENTS
THIS TERMINATION OF SECURITY AGREEMENTS ("Termination"),
dated October ___, 1999, is made by Doug Ashy, Sr. ("Secured
Party"):
RECITALS
A. The Exploration Company of Louisiana, Inc. and XCL
Land, Ltd. each executed and delivered a Security Agreement in
favor of Secured Party dated March 22, 1999 (collectively, the
"Security Agreements") in order to secure the full and punctual
payment and performance of the indebtedness and/or obligations
described therein.
B. The indebtedness and obligations described in the
Security Agreements have been satisfied.
AGREEMENT
NOW, THEREFORE, in consideration of the premises, the
Secured Party hereby agrees as follows:
Section 1. Termination of Security Agreements. The Security
Agreements are hereby terminated and the security interests
created thereby are released.
IN WITNESS WHEREOF, the undersigned has caused this
Termination to be duly executed as of the date first above
written.
___________________________________
Doug Ashy, Sr.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted
from the
consolidated financial statements of XCL Ltd. and Subsidiaries for
the nine
months ended September 30, 1999, and is qualified in its entirety
by reference
to such financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 597
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,350
<PP&E> 102,757
<DEPRECIATION> 803
<TOTAL-ASSETS> 129,565
<CURRENT-LIABILITIES> 101,933
<BONDS> 0
0
1,342
<COMMON> 233
<OTHER-SE> 20,696
<TOTAL-LIABILITY-AND-EQUITY> 129,565
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 3,359
<OTHER-EXPENSES> (1,000)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,703
<INCOME-PRETAX> (6,062)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,062)
<EPS-BASIC> (0.51)
<EPS-DILUTED> (0.51)
</TABLE>
GLOSSARY OF TERMS
The following glossary of commonly used terms in the
oil and gas industry is being provided for ease of reference
and convenience purposes only.
"area of mutual interest" or "AMI" - An agreement by which
parties attempt to describe a geographical area within which
they agree to share certain existing and additional leases
acquired by any of them in the future.
"APO/BPO" - After payout/before payout.
"Btu/MMBtu" - British Thermal Units, a measure of the
heating value of fuel. MMBtu stands for one million Btu.
"Bbls/MBbls" - A Bbl. or barrel is 42 U.S. gallons of crude
oil or condensate measured at 60 degrees Fahrenheit. MBbls
stands for one thousand Bbls.
"carried interest" - A fractional working interest in an oil
and gas lease, the holder of which is carried and has no
liability for a portion or all of the attributable
development and operating costs. The person advancing the
costs is the carrying party; the other is the carried party.
"casing point" - The time when the operator recommends that
a completion attempt be made, or when the well is plugged
and abandoned without a completion attempt being made.
"choke/choke size" - A pipe section having an orifice for
restricting and controlling the flow of oil and gas. Choke
size is the orifice diameter and is commonly expressed in
64ths of an inch.
"continuous drilling" - A lease clause providing that
drilling of another well be commenced within a specified
time after completion of the preceding well. As a general
rule, if this is not done, all undeveloped acreage must be
released.
"development" - The drilling of a well within the productive
area of an oil or gas reservoir, as indicated by reasonable
interpretation of available data, with the object of
completing the well in that reservoir.
"exploration" - Operations conducted in search of
undiscovered oil, gas and/or condensate.
"farmout/farmin" - An agreement providing for assignment of
a lease. A typical characteristic of a farmout is the
obligation of the assignee to conduct drilling operations on
the assigned acreage as a pre-requisite to completion of the
assignment. The assignor will usually reserve some type of
interest in the lease. The transaction is characterized as
a farmout to the assignor and farmin to the assignee.
"field" - An area within a lease or leases where production
of oil, gas and/or condensate has been established and which
has been so designated by the appropriate regulatory
authority.
"gathering facilities" - Pipelines and other facilities used
to collect gas from various wells and bring it by separate
and individual lines to a central point where it is
delivered into a single line.
"gathering gas" - The first taking or the first retaining of
possession of gas for transmission through a pipeline, after
the severance of such gas, and after the passage of such gas
through any separator, drip, trap or meter that may be
located at or near the well. The act of collecting gas after
it has been brought from the earth.
"gathering line" - Pipes used to transport oil or gas from
the lease to the main pipeline in the area. In the case of
oil, the lines run from the lease tanks to a central pump
station at the beginning of the main pipeline. In the case
of gas, the flow is continuous from the well head to the
ultimate consumer, since gas cannot be stored. Gathering
lines collect gas under fluctuating pressures which are then
regulated by regulating stations before the gas is
introduced into trunk or transmission lines.
"gathering system" - The gathering lines, pumps, auxiliary
tanks (in the case of oil), and other equipment used to move
oil or gas from the well site to the main pipeline for
eventual delivery to the refinery or consumer, as the case
may be. In the case of gas, the gathering system includes
the processing plant (if any) in which the gas is prepared
for the market.
"gross/net" - The term "gross" is used when reference is
made, for example, to the total acreage of a lease. The
term "net" is used when reference is made to the working
interest or net revenue interest in a lease of one
particular leaseholder. The same term may be applied to a
leaseholder's interest in reserves and/or production from a
lease.
"held by production" or "HBP" - A provision in a lease to
the effect that such lease will be kept in force as long as
there is production from the lease in paying quantities.
"lease bonus" - A cash payment by the lessee for the
execution of an oil and gas lease by the mineral owner.
"lease" or "leasehold" - An interest for a specified term in
property allowing for the exploration for and production of
oil, gas and/or condensate.
"log" - A record of the formations penetrated by a well,
from which their depth, thickness, rock properties and (if
possible) contents may be obtained.
"Mcf/MMcf/Bcf" - Mcf stands for one thousand cubic feet of
gas, measured at 60 degrees Fahrenheit and at atmospheric
pressure of 14.7 pounds per square inch. MMcf stands for one
million cubic feet of gas. Bcf stands for one million Mcf.
"net revenue interest" or "NRI" - The share of revenues to
which the holder of a working interest is entitled upon
fulfilling the obligations, after deduction of all
royalties, overriding royalties or similar burdens,
attributable to his working interest.
"operator" - The person or company having the operational
management responsibility for the drilling of or production
from any oil, gas and/or condensate well.
"overriding royalty" - A form of royalty, entitling the
holder to receive a percentage of oil, gas and/or condensate
produced from the wells on a specified lease, or the
revenues arising from the sale thereof, free of all expenses
arising therefrom, save for production taxes. Generally,
the rights accruing to working interest holders are subject
to the rights of overriding royalty holders and any rights
of overriding royalty holders terminate upon cancellation or
reversion of the underlying lease.
"pay" - The geological deposit in which oil, gas and/or
condensate is found in commercial quantities.
"payout" - Generally, that point in time, determined by
agreement, when a person has recouped his investment in the
drilling, development, equipping and operating of a well or
wells.
"permeability" - A measure of the resistance offered by rock
to the movement of fluids through it.
"porosity" - The volume of the pore spaces between mineral
grains as compared to the total rock volume. Porosity is a
measure of the capacity of rock to hold oil, gas and water.
"prospect" - One lease comprising, or several leases which
together comprise, a geographical area believed to contain
commercial quantities of oil, gas and/or condensate.
"prospective" - A geographical area or structure believed to
contain commercial quantities of oil, gas and/or condensate.
"proved developed reserves" - Reserves that can be expected
to be recovered through existing wells with existing
equipment and operating methods and those reserves that
exist behind the casing of existing wells when the cost of
making such reserves available is relatively small compared
to the cost of a new well.
"proved reserves" - Estimated quantities of crude oil,
condensate, natural gas, and natural gas liquids that
geological and engineering data demonstrate with reasonable
certainty to be recoverable in future years from known
reservoirs under existing economic and operating conditions,
i.e., prices and costs as of the date the estimate is made.
Prices include consideration of changes in existing prices
provided only by contractual arrangements, but not on
escalations based upon future conditions.
"proved undeveloped reserves" - Reserves that are expected
to be recovered from new wells on undrilled acreage, or from
existing wells where a relatively major expenditure is
required for recompletion. Reserves on undrilled acreage
shall be limited to those drilling units offsetting
productive units that are reasonably certain of production
when drilled. Proved reserves for other undrilled units can
be claimed only where it can be demonstrated with certainty
that there is continuity of production from the existing
productive formation. Under no circumstances should
estimates for proved undeveloped reserves be attributable to
any acreage for which an application of fluid injection or
other improved recovery technique is contemplated, unless
such techniques have been proved effective by actual tests
in the areas and in the same reservoir.
"psig" - Pounds per square inch, gauge.
"rental payment" - A sum of money payable to the lessor by
the lessee for the privilege of deferring the commencement
of drilling operations or the commencement of production
during the primary term of the lease.
"reserves" - The estimated value of oil, gas and/or
condensate which is economically recoverable. Reserves may
be categorized as proved, proved developed or proved
undeveloped.
"reservoir" - A porous, permeable, sedimentary rock
containing commercial quantities of oil, gas and/or
condensate.
"salt dome" - A mass or plug of salt which has pushed or
domed up sedimentary beds around it; this type structure is
favorable to oil and gas accumulation.
"sand" - A sedimentary rock consisting mostly of sand
grains.
"shut-in royalty" - A payment made when a gas well, capable
of producing in paying quantities, is shut-in for lack of a
market for the gas.
"structure" - A configuration of subsurface rock formations
considered, on the basis of geological or geographical
interpretation, to be capable of containing a reservoir.
"target depth" - The primary geological formation or depth
identified in an agreement applicable to the relevant well
or wells.
"test well" - An exploratory well.
"tight formation" - A zone of relatively low permeability
and thus low well productivity. Wells in such zones usually
require fracturing or other stimulation. Typically, the
productive capacity of a new well completed in a tight zone
declines rapidly for several months or longer after
completion.
"working interest" or "WI" - An interest in a lease carrying
the obligation to bear a proportion of drilling and
operating costs and the right to receive a proportion of the
production or gross revenues attributable thereto.
"workover" - Remedial operations on a well with the
intention of restoring or increasing production.
