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 June 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)
110 Rue Jean Lafitte, Lafayette, LA 70508
(Address of principal executive offices) (Zip Code)
318-237-0325
(Registrant's telephone number, including area code)
N/A
(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 August 13, 1999.
<PAGE>
XCL LTD.
TABLE OF CONTENTS
Page
PART I
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market
Risk
PART II
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Default Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 6. Exhibits and Reports on Form 8-K.
<PAGE>
XCL Ltd. and Subsidiaries
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED BALANCE SHEETS
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
A S S E T S 1999 1998
----------- ------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 37 $ 83
Cash held in escrow (restricted) 161 205
Other 721 443
------- -------
Total current assets 919 731
------- -------
Property and equipment:
Oil and gas (full cost method):
Proved undeveloped properties, not
being amortized 30,571 28,274
Unevaluated properties 66,141 58,403
------- -------
96,712 86,677
Other 1,346 1,344
------- -------
98,058 88,021
Accumulated depreciation, depletion
and amortization (790) (761)
------- -------
97,268 87,260
------- -------
Investments 4,096 4,078
Investment in land 12,200 12,200
Oil and gas properties held for sale 5,073 5,099
Debt issue costs, less amortization 3,455 3,763
Other assets 1,601 1,542
------- -------
Total assets $ 124,612 $ 114,673
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable and accrued expenses $ 2,771 $ 1,465
Accrued interest 8,014 2,049
Due to joint venture partner (Note 4) 10,341 8,168
Dividends payable 1,735 1,658
Notes payable 5,299 2,974
------- -------
28,160 16,314
Senior secured notes reclassification 64,531 63,457
------- -------
Total current liabilities 92,691 79,771
------- -------
Long-term debt, net of current maturities -- --
Other liabilities 5,384 5,428
Commitments and contingencies (Note 7)
Shareholders' equity:
Preferred stock-$1.00 par value;
authorized 2.4 million shares; issued
shares of 1,342,109 at June 30, 1999 and
1,282,745 at December 31, 1998 -
liquidation preference of $115 million
at June 30, 1999 1,342 1,283
Preferred stock held in treasury -
$1.00 par value; 9,681 shares at
June 30, 1999 (10) --
Common stock-$.01 par value; authorized
500 million shares; issued shares of
23,377,971 at June 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 300,658 296,373
Accumulated deficit (267,424) (260,215)
Unearned compensation (8,262) (8,200)
------- -------
Total shareholders' equity 26,537 29,474
------- -------
Total liabilities and
shareholders' equity $ 124,612 $ 114,673
======= =======
</TABLE>
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)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ -----------------
1999 1998 1999 1998
------ ------ ------ ------
<S> <C> <C> <C> <C>
Costs and operating expenses:
General and administrative $ 1,146 $ 1,305 $ 2,175 $ 2,915
Other, net 36 29 70 72
----- ----- ----- -----
1,182 1,334 2,245 2,987
----- ----- ----- -----
Operating loss (1,182) (1,334) (2,245) (2,987)
----- ----- ----- -----
Other income (expense):
Interest income 2 309 4 718
Interest expense, net of
amounts capitalized (1,234) (1,090) (2,504) (1,852)
Other, net (10) 10 334 1
----- ----- ----- -----
(1,242) (771) (2,166) (1,133)
----- ----- ----- -----
Net loss (2,424) (2,105) (4,411) (4,120)
Preferred stock dividends 5 (218) (2,798) (2,645)
----- ----- ----- -----
Net loss attributable to common stock $(2,419) $(2,323) $(7,209) $(6,765)
===== ===== ===== =====
Net loss per common share (basic) $ (0.11) $ (0.10) $ (0.31) $ (0.30)
===== ===== ===== =====
Net loss per common share (diluted) $ (0.11) $ (0.10) $ (0.31) $ (0.30)
===== ===== ===== =====
Weighted average number of common
shares outstanding:
Basic 23,373 22,922 23,373 22,622
Diluted 23,373 22,922 23,373 22,622
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
XCL Ltd. and Subsidiaries
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(In Thousands)
(Unaudited)
<TABLE>
<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 -- -- -- -- -- (4,411) -- (4,411)
Dividends -- -- -- -- 486 (2,798) -- (2,312)
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 -- -- -- -- 62 -- (62) --
Earned compensation -
stock options -- -- -- -- 394 -- -- 394
----- --- ---- ---- ------- -------- ------- --------
Balance, June 30, 1999 $ 1,342 $ (10) $ 233 $ -- $ 300,658 $ (267,424) $ (8,262) $ 26,537
===== === ==== ==== ======= ======== ======= ========
</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)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
---------------
1999 1998
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (4,411) $ (4,120)
------ ------
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation, depletion and amortization 57 50
Amortization of discount on senior secured
notes and land notes 2,334 1,074
Stock compensation programs 394 732
Stock issued for outside professional services -- 223
Change in operating assets and liabilities:
Accounts receivable -- (87)
Refundable deposits -- 1,200
Accounts payable and accrued expenses 1,306 15
Accrued interest (7) 129
Other, net (381) (162)
------ ------
Total adjustments 3,703 3,174
------ ------
Net cash used in operating activities (708) (946)
------ ------
Cash flows from investing activities:
Change in cash held in escrow (restricted) 44 5,024
Note receivable -- (362)
Capital expenditures (1,893) (13,424)
Investments (18) (551)
------ ------
Net cash used in investing activities (1,867) (9,313)
------ ------
Cash flows from financing activities:
Proceeds from issuance of debt 2,700 --
Proceeds from exercise of warrants and options -- 331
Payment of long-term debt (94) (450)
Other (77) (205)
------ ------
Net cash provided by (used in)
financing activities 2,529 (324)
------ ------
Net decrease in cash and cash equivalents (46) (10,583)
Cash and cash equivalents at beginning of period 83 21,952
------ ------
Cash and cash equivalents at end of period $ 37 $ 11,369
====== ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
XCL Ltd. and Subsidiaries
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1999
(1) Basis of Presentation
The consolidated financial statements at June 30, 1999,
and for the six 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 June 30, 1999,
and the results of its operations for the six months ended
June 30, 1999 and 1998, have been included. The 1998
dividends on the Amended Series A Preferred Stock for the
six and three months ended June 30, 1998 have been restated
by $2.2 million 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 $0.40 per share to $0.30 per share for the six
months ended June 30, 1998 and from $0.20 per share to $0.10
per share for the three months ended June 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 $37,000 as of June 30, 1999,
and a working capital deficit of $91.8 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 $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 possible results include
the Company's loss of the stock of XCL-China and/or its
interest in the Contract. The Company is in negotiations
with the holders of the Notes regarding this matter and is
exploring other options for meeting its obligations under
the Notes and expects to arrive at a satisfactory
resolution. There can be no assurance, however, 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 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. 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 7, 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 six-month
periods ended June 30, 1999 and 1998.
Capitalized interest for the three- and six-month
periods ended June 30, 1999 was $3.0 million and $6.0
million respectively, as compared to $2.8 million and $5.5
million, respectively, for the same period in 1998.
Interest paid during the three- and six-month periods ended
June 30, 1999 amounted to approximately $20,000 and $41,000,
respectively, as compared to $5.7 million and $5.8 million,
respectively, for the same periods in 1998.
(4) Disputed Amounts
As disclosed in Note 2, arbitration proceedings have
been commenced contesting this amount. See Part II - "Item
1. Legal Proceedings."
(5) Debt
Debt consists of the following (000's):
June 30, December 31,
1999 1998
-------- -----------
Senior secured notes, net of
unamortized discount of $10,469 and
$11,543, respectively $ 64,531 $ 63,457
====== ======
Notes payable:
Lutcher Moore Group Limited
Recourse Debt 1,380 1,474
XCL Land, Ltd. secured notes, net
of unamortized discount
of $281 and $0, respectively 3,919 1,500
------ ------
$ 5,299 $ 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 $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.
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 prices 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 June 30, 1999, the unamortized
discount is approximately $281,000. 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.
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 will
purchase 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
purchase of the Seller's Notes will be funded in three
payments of $0.7 million each, the first on or before July
20, 1999, the second on or before August 12, 1999, and the
third on or before September 1, 1999. 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, as received, are being 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.
(6) Preferred Stock and Common Stock
As of June 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
- --------------------------------
On May 3, 1999, the Company paid approximately $4.9
million in dividends on the Amended Series A Preferred
Stock, payable in kind through the issuance of 56,950
shares.
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.
Amended Series B Preferred Stock
- --------------------------------
On June 30, 1999, the Company paid approximately $0.2
million in dividends on the Amended Series B Preferred
Stock, payable in kind through the issuance of 2,414 shares.
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):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
__________________ _________________
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Number of shares on which
basic loss per share is
calculated: 23,373 22,922 23,373 22,622
Number of shares on which
diluted loss per share is
calculated: 23,373 22,922 23,373 22,622
Net loss attributable to
common shareholders $(2,419) $(2,323) $(7,209) $(6,765)
Basic loss per share $ (0.11) $ (0.10) $ (0.31) $ (0.30)
Diluted loss per share $ (0.11) $ (0.10) $ (0.31) $ (0.30)
</TABLE>
The effect of 37,757,548 and 34,627,207 shares of
potential common stock were anti-dilutive in the six months
ended June 30, 1999 and 1998, respectively, due to the
losses in both periods.
(7) Commitments and Contingencies
Other commitments and contingencies include:
o 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.
o 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.
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.
o As previously reported, the Company has not paid
certain cash calls to Apache totaling approximately $7.7
million through August 1999 (approximately $7.5 million at
June 30, 1999), including amounts in dispute. 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."
o 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.
o The Company is in dispute over a 1992 tax assessment
(including penalties and interest through June 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 June 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 $3.4 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.
o 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.
o 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.
(8) 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):
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
ASSETS -------- ------------
------
<S> <C> <C>
Current assets $ 452 $ 174
Oil and gas properties (full cost method):
Proved undeveloped properties, not
being amortized 30,570 28,274
Unevaluated properties 63,479 56,708
------ ------
94,049 84,982
Other 418 416
------ ------
94,467 85,398
Accumulated depreciation (11) (5)
------ ------
94,456 85,393
Other assets 396 359
------ ------
$ 95,304 $ 85,926
====== ======
LIABILITIES AND SHAREHOLDER'S DEFICIT
----------------------------------------
Total current liabilities $ 10,987 $ 8,397
Due to parent 87,307 80,425
Accumulated deficit (2,990) (2,896)
------ ------
$ 95,304 $ 85,926
====== ======
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
1999 1998 1999 1998
---- ----- ---- ----
<S> <C> <C> <C> <C>
Costs and expenses $ 53 $ 356 $ 94 $ 618
---- ---- --- ----
Net loss $ (53) $ (356) $ (94) $ (618)
==== ==== === ====
</TABLE>
<PAGE>
XCL LTD. AND SUBSIDIARIES
June 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 June 30, 1999, the Company had a net working capital
deficit of $91.8 million. The Company does not have, as of
August 14, 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 the interest
payment on the Senior Secured Notes (in the approximate
amount of $5.6 million) due on May 3, 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 possible results include
the Company's loss of the stock of XCL-China and/or its
interest in the Contract. The Company is in negotiations
with the holders of the Notes regarding this matter, and is
exploring other options for meeting its obligations under
the Notes and expects to arrive at a satisfactory
resolution. However, 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 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. 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 will 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.
New Accounting Pronouncements
- -----------------------------
In June 1998, FASB issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities." The
statement requires companies to report the fair market value
of derivatives on the balance sheet and record in income or
other comprehensive income, as appropriate, any changes in
the fair value of the derivative. SFAS No. 133 will become
effective with respect to the Company on January 1, 2001.
The Company is currently evaluating the impact of the
statement.
Results of Operations
- ---------------------
During the six-month periods ended June 30, 1999 and
1998, the Company incurred net losses of $7.2 million and
$6.8 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 six-month periods ended June 30, 1999 was
approximately $1.2 million and $2.5 million compared to
approximately $1.1 million and $1.9 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 $0.7 million during the
six-month period ended June 30, 1999.
Preferred stock dividends were $2.8 million for the six
months ended June 30, 1999, as compared to $2.6, 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 were paid in additional shares
of preferred stock at the option of the Company.
General and administrative expenses for the three- and
six-month periods ended June 30, 1999 were $1.1 million and
$2.2 million, respectively, as compared to $1.3 million and
$2.9 million, respectively, for the same periods in 1998.
The decrease was primarily attributable to reduction in
compensation expense of approximately $0.5 million,
reduction in public company costs of approximately $0.1
million and reduction in legal and professional fees 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 estimates that it has completed more
than 95 percent of 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 90 percent of the remediation phase.
The Company has to date spent approximately $161,000 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 $49,000 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 85 percent of the testing phase
has been completed, and expects to be substantially
completed by the end of September 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 85 percent of the implementation
phase, and expects to be substantially completed by the end
of September 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 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
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 is currently set for August 17,
1999.
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.
o During May 1999, the Company, through XCL Land, Ltd., a
wholly owned subsidiary, issued 17 additional units, on the
same terms as the units issued in November 1998, January
1999, March 1999 and April 1999, except that the exercise
price of the warrants was $1.25 per share. In connection
with the additional subscriptions in May 1999, and pursuant
to the terms of the subscription agreements, the exercise
price for the warrants issued in the November 1998, January
1999, March 1999 and April 1999, offerings was reduced to
$1.25 per share. XCL Land, Ltd. received $1.7 million in
proceeds, of which approximately $308,000 was allocated to
the warrants. The value allocated to the warrants is being
amortized to interest expense over the term of the notes.
All of the proceeds were used to reduce intercompany debt.
o 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 will
purchase an aggregate of $2.1 million in principal of
seller's notes secured by the Lutcher Moore Tract and will
receive notes ("Seller's Notes") representing an aggregate
of $2.247 million in principal. The purchase price of the
Seller's Notes will be funded in three payments of $0.7
million each, the first on or before July 20, 1999, the
second on or before August 12, 1999, and the third on or
before September 1, 1999. 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, as received, are
being 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.
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 filed on June 28, 1999, to
report that the Company had notified Apache Corporation that
(i) it will seek the removal of Apache China LDC, as
operator of the companies' joint venture project in the Zhao
Dong Block, and (ii) had initiated a $17 million arbitration
proceeding against Apache.
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.
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: August 16, 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. *
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. *
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. *
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. *
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. *
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. *
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. *
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. *
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. *
10.63 Form of Security Agreement by and between The
Exploration Company of Louisiana, Inc. and
T. Jerald Hanchey dated April 13, 1999. *
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. *
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. *
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. *
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. *
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. *
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. *
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. *
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. *
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. *
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. *
10.74 Form of Security Agreement dated May 17, 1999,
between XCL Land, Ltd. and Northern Securities Limited. *
10.75 Form of Security Agreement dated May 17, 1999,
between The Exploration Company of Louisiana, Inc. and
Northern Securities Limited. *
10.76 Form of Security Agreement dated May 21, 1999
between XCL Land, Ltd. and Mitch Leigh. *
10.77 Form of Security Agreement dated May 21, 1999
between The Exploration Company of Louisiana, Inc. and
Mitch Leigh. *
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.
*
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. *
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. *
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. *
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. *
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. *
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. *
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. *
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. *
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. *
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. *
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. *
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.
THIRD WARRANT AMENDMENT AGREEMENT
This Third Warrant Amendment Agreement dated as of April 13,
1999 by and between XCL Ltd., a Delaware corporation ("XCL"), and
Estate of J. Edgar Monroe, J. Edgar Monroe Foundation (1976) and
Construction Specialists, Inc. d/b/a Con-Spec, Inc. (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 Land Ltd., a wholly owned
subsidiary of XCL and XCL Ltd., 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) and 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); 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); 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 a new purchaser to subscribe for
additional Units, XCL agreed to reduce the exercise price of the
Warrants from $1.50 to $1.3125 per share of common stock (subject
to adjustment as therein provided), which price was the closing
bid price of the common stock of XCL on April 13, 1999, the date
on which the new purchaser agreed to purchase Units if the
exercise price of the Warrants was so reduced; and
WHEREAS, pursuant to their Subscription Agreements, the
Warrantholders were 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 Certificates is hereby
amended to read as follows:
"... at the initial exercise price
of U.S. $1.3125 per share (the "Initial
Exercise Price") ..."
All other terms and provisions of the first paragraph of each
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 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 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:______________________________
Title:_____________________________
WARRANTHOLDERS:
Estate of J. Edgar Monroe
By:______________________________
Title:_____________________________
J. Edgar Monroe Foundation (1976)
By:______________________________
Title:_____________________________
Construction Specialists, Inc.
d/b/a Con-Spec, Inc.
By:______________________________
Title:_____________________________
SCHEDULE I
Warrant Holders Warrants Held
Column A Column B
Estate of J. Edgar Monroe 151,935 54,262
J. Edgar Monroe Foundation (1976) 21,705 --
Construction Specialists, Inc. 151,935 54,262
d/b/a Con-Spec, Inc.
WARRANT AMENDMENT AGREEMENT
This Warrant Amendment Agreement dated as of April 13, 1999
by and between XCL Ltd., a Delaware corporation ("XCL"), and
Edgar D. Daigle (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-7
dated March 25, 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 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 a new purchaser to subscribe for
additional Units, XCL agreed to reduce the exercise price of the
Warrants from $1.50 to $1.3125 per share of common stock (subject
to adjustment as therein provided), which price was the closing
bid price of the common stock of XCL on April 13, 1999, the date
on which the new purchaser agreed to purchase Units if the
exercise price of the Warrants was so reduced; 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. $1.3125 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
Third Warrant Amendment Agreement to be duly executed and
delivered as of the date and year first above written.
XCL LTD.
By:______________________________
Title:_____________________________
WARRANTHOLDER:
_________________________________
Edgar D. Daigle
WARRANT AMENDMENT AGREEMENT
This Warrant Amendment Agreement dated as of April 13, 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 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 a new purchaser to subscribe for
additional Units, XCL agreed to reduce the exercise price of the
Warrants from $1.50 to $1.3125 per share of common stock (subject
to adjustment as therein provided), which price was the closing
bid price of the common stock of XCL on April 13, 1999, the date
on which the new purchaser agreed to purchase Units if the
exercise price of the Warrants was so reduced; 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. $1.3125 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
Third Warrant Amendment Agreement to be duly executed and
delivered as of the date and year first above written.
XCL LTD.
By:______________________________
Title:_____________________________
WARRANTHOLDER:
_________________________________
Doug Ashy, Sr.
FOURTH WARRANT AMENDMENT AGREEMENT
This Fourth Warrant Amendment Agreement dated as of May 21,
1999 by and between XCL Ltd., a Delaware corporation ("XCL"), and
Estate of J. Edgar Monroe, J. Edgar Monroe Foundation (1976) and
Construction Specialists, Inc. d/b/a Con-Spec, Inc. (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 Land Ltd., a wholly owned
subsidiary of XCL and XCL Ltd., 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)
and 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
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) and 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
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 a new purchaser to subscribe for
additional Units, XCL agreed to reduce the exercise price of the
Warrants from $1.3125 to $1.25 per share of common stock (subject
to adjustment as therein provided), which was the price agreed to
on April 21, 1999, the date on which the new purchaser agreed to
purchase two Units if the exercise price of the Warrants was so
reduced and which price is higher than the closing price of the
common stock of XCL on that date; and
WHEREAS, pursuant to their Subscription Agreements, the
Warrantholders were 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 Certificates is hereby
amended to read as follows:
"... at the initial exercise price
of U.S. $1.25 per share (the "Initial
Exercise Price") ..."
All other terms and provisions of the first paragraph of each
Warrant Certificate shall remain unchanged.
2. This Fourth 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 Fourth 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 Fourth 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
Fourth Warrant Amendment Agreement to be duly executed and
delivered as of the date and year first above written.
XCL LTD.
By:______________________________
Title:_____________________________
WARRANTHOLDERS:
Estate of J. Edgar Monroe
By:______________________________
Title:_____________________________
J. Edgar Monroe Foundation (1976)
By:______________________________
Title:_____________________________
Construction Specialists, Inc.
d/b/a Con-Spec, Inc.
By:______________________________
Title:_____________________________
SCHEDULE I
Warrant Holders Warrants Held
Column A Column B
Estate of J. Edgar Monroe 151, 935 54,262
J. Edgar Monroe Foundation (1976) 21,705 --
Construction Specialists, Inc. 151,935 54,262
d/b/a Con-Spec, Inc.
SECOND WARRANT AMENDMENT AGREEMENT
This Second Warrant Amendment Agreement dated as of May 21,
1999 by and between XCL Ltd., a Delaware corporation ("XCL"), and
Edgar D. Daigle (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-7
dated March 25, 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 $1.3125 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 a new purchaser to subscribe for
additional Units, XCL agreed to reduce the exercise price of the
Warrants from $1.3125 to $1.25 per share of common stock (subject
to adjustment as therein provided), which was the price agreed to
on April 21, 1999, the date on which the new purchaser agreed to
purchase two Units if the exercise price of the Warrants was so
reduced and which price is higher than the closing price of the
common stock of XCL on that date; 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. $1.25 per share (the "Initial
Exercise Price") ..."
All other terms and provisions of the first paragraph of the
Warrant Certificate shall remain unchanged.
2. This Second 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 Second 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 Second 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
Second Warrant Amendment Agreement to be duly executed and
delivered as of the date and year first above written.
XCL LTD.
By:______________________________
Title:_____________________________
WARRANTHOLDER:
_________________________________
Edgar D. Daigle
SECOND WARRANT AMENDMENT AGREEMENT
This Second Warrant Amendment Agreement dated as of May 21,
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
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 a new purchaser to subscribe for
additional Units, XCL agreed to reduce the exercise price of the
Warrants from $1.3125 to $1.25 per share of common stock (subject
to adjustment as therein provided), which was the price agreed to
on April 21, 1999, the date on which the new purchaser agreed to
purchase two Units if the exercise price of the Warrants was so
reduced and which price is higher than the closing price of the
common stock of XCL on that date; 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. $1.25 per share (the "Initial
Exercise Price") ..."
All other terms and provisions of the first paragraph of the
Warrant Certificate shall remain unchanged.
2. This Second 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 Second 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 Second 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
Second Warrant Amendment Agreement to be duly executed and
delivered as of the date and year first above written.
XCL LTD.
By:______________________________
Title:_____________________________
WARRANTHOLDER:
_________________________________
Doug Ashy, Sr.
WARRANT AMENDMENT AGREEMENT
This Warrant Amendment Agreement dated as of May 21, 1999
by and between XCL Ltd., a Delaware corporation (AXCL@), and T.
Jerald Hanchey (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-8
dated April 13, 1999 and reflecting an exercise price of $1.325
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 two Units 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 Units 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 a new purchaser to subscribe for
additional Units, XCL agreed to reduce the exercise price of the
Warrants from $1.325 to $1.25 per share of common stock (subject
to adjustment as therein provided), which was the price agreed to
on April 21, 1999, the date on which the new purchaser agreed to
purchase two Units if the exercise price of the Warrants was so
reduced and which price is higher than the closing price of the
common stock of XCL on that date; 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. $1.25 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:______________________________
Title:_____________________________
WARRANTHOLDER:
_________________________________
T. Jerald Hanchey
WARRANT AMENDMENT AGREEMENT
This Warrant Amendment Agreement dated as of May 21,
1999, by and between XCL Ltd., a Delaware corporation
("XCL"), and Mitch Leigh, Abby Leigh, Trustee Under
Indenture of Mitch Leigh F/B/O Andrew Leigh, Arthur
Rosenbloom, Trustee Under Indenture of Mitch Leigh F/B/O
Rebecca Millicent Leigh, and Arthur Rosenbloom, Trustee
Under Indenture of Mitch Leigh F/B/O David George Leigh
(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 which were originally
issued pursuant to Warrant Agreements each dated as set
forth on Schedule I (the "Warrant Agreements; and
WHEREAS, Mitch Leigh (the "Purchaser") has this day
subscribed for 2 Units (the "Units") being offered by XCL
and XCL Land, Ltd. ("Land"), a wholly owned subsidiary of
XCL, consisting in the aggregate of a secured promissory
note of Land in the principal amount of $200,000 and
warrants to purchase 43,410 shares of Common Stock of CL at
an exercise price of $1.25 per share; and
WHEREAS, in order to induce the Purchaser to subscribe
for the Units, XCL agreed to reduce the exercise price of
the warrants held by Mitch Leigh, individually, and in trust
for the benefit of his son, Andrew Leigh, from $3.50 to
$1.25 per share of Common Stock, subject to adjustment as
therein provided, and to extend the expiration of such
warrants from December 31, 2001 to December 31, 2004; and
WHEREAS, in order to further induce the Purchaser to
subscribe for the Units, XCL agreed to reduce the exercise
price of the warrants held in trust for the benefit of
Rebecca M. Leigh and David G. Leigh, children of Mitch
Leigh, from $7.50 to $1.25 per share of Common Stock,
subject to adjustment as therein provided, and to extend the
expiration of such warrants from January 2, 2001 to December
31, 2004; and
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 Warrant Agreement dated
September 18, 1995, is hereby amended to read as follows:
". at the initial exercise price of
U.S. $1.25 per share (the "Initial
Exercise Price") ."
2. The definition of "Expiration Date" in the first
paragraph of each Warrant Agreement dated September 18,
1995, is hereby amended to read as follows:
"... and until 5:00 p.m., local
time, on December 31, 2004 (the
"Expiration Date") ...
3. The definition of "Exercise Price" in the first
paragraph of each Warrant Agreement dated January 3, 1996,
is hereby amended to read as follows:
"... at the initial exercise price
of U.S. $1.25 per share (the "Exercise
Price") ..."
4. The definition of "Expiration Date" in the first
paragraph of each Warrant Agreement dated January 3, 1996,
is hereby amended to read as follows:
"... and until 5:00 p.m., New York
time, on December 31, 2004, or the next
Business Day (as hereinafter defined) if
such Date is not a Business Day (the
"Expiration Date") ..."
5. This Warrant Amendment Agreement shall not
constitute a waiver or amendment of any other provision of
the Warrant Agreements not expressly referred to herein and
except as expressly amended hereby, the provisions of the
Warrant Agreement are and shall remain in full force and
effect.
6. Upon surrender of the original Warrant
Agreements issued to the Warrantholders, XCL shall issue new
Warrant Agreements of like tenor and an equivalent number of
Warrants to the Warrantholders reflecting the amendments set
forth in the above paragraphs.
7. 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.
8. 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:______________________________
Title:_____________________________
WARRANTHOLDERS:
__________________________________
Mitch Leigh
___________________________________
Abby Leigh, Trustee Under
Indenture of Trust of Mitch Leigh F/B/O
Andrew Leigh
___________________________________
Arthur Rosenbloom, Trustee, Under
Indenture of Trust of Mitch Leigh
F/B/O Rebecca Millicent Leigh
____________________________________
Arthur Rosenbloom, Trustee, Under
Indenture of Trust of Mitch Leigh
F/B/O David George Leigh
SCHEDULE I
Number of Date of
Warrantholder Warrants Warrant Agreement
Mitch Leigh 100,000 September 18, 1995
Abby Leigh, Trustee Under
Indenture of Trust of Mitch Leigh
F/B/O Andrew Leigh 100,000 September 18, 1995
Arthur Rosenbloom, Trustee
Under Indenture of Trust of
Mitch Leigh F/B/O Rebecca
Millicent Leigh 14,444 January 3, 1996
Arthur Rosenbloom, Trustee
Under Indenture of Trust of
Mitch Leigh F/B/O David
George Leigh 14,444 January 3, 1996
SECURITY AGREEMENT
THIS SECURITY AGREEMENT ("Agreement") dated April 13, 1999,
is made between XCL Land, Ltd. ("Borrower") and T. Jerald Hanchey
("Lender"), who agree as follows:
Recitals
1. The Borrower is or will be indebted unto the Lender for
loans made or to be made and evidenced by certain notes,
including, but not limited to that certain Promissory Note by
Borrower payable to the order of Lender dated of even date
herewith (the "Note").
2. In order to secure the full and punctual payment and
performance of the Indebtedness as defined herein, the Borrower
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
Borrower and the Lender agree as follows:
Section 2. Definitions.
1. The terms "Agreement," "Borrower," "Lender" and "Note" shall
have the meanings indicated above.
2. As used in this Agreement, the following terms shall have
the following meaning:
"Event of Default" shall have the meaning defined in
the Note.
"General Intangibles" has the meaning given to it in
the UCC.
"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
Borrower 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.
"New Funds" means funds advanced to Borrower on or
after November 6, 1998 through the purchase of Units or otherwise
up to the aggregate outstanding principal amount of $6,200,000.
"Permitted Liens" means (i) the Security Interests and
any other Liens created, assumed or existing with respect to the
Collateral in favor of Lender or in favor of any other purchaser
of Units or other provider of New Funds to Borrower (provided
that the Liens in favor of such other persons do not cause the
percentage stated in Sections 2(A)(1) and 2(A)(2) hereof to be
less than the percentage of total New Funds provided by 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.
"Subscription Agreement" means that certain
Subscription Agreement dated April 13, 1999 by and between
Borrower, Lender and XCL Ltd. and any subsequent subscription
agreements for additional Units entered into between the same
parties.
"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.
"Units" has the meaning defined in the Subscription
Agreement.
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 Borrower to the Lender, including, without
limitation all promissory notes (including, but not limited to
the Note) heretofore or hereafter executed by the Borrower, in
principal, interest, deferral and delinquency charges as therein
stipulated, whether such amounts, liabilities, obligations and
indebtedness be liquidated or unliquidated, now existing or
hereafter arising (collectively, the "Indebtedness"), the
Borrower hereby pledges, pawns, transfers and grants to the
Lender a continuing security interest in and to all of the
following property of the Borrower, whether now owned or existing
or hereafter acquired or arising (collectively the "Collateral"):
(1) 8.0% of Borrower's now owned or hereafter acquired
partnership interest (the "Partnership Interest") (which
Partnership Interest is currently a general partner interest) in
L.M. Holding Associates, L.P., a Louisiana Partnership in
Commendam (the "Partnership"), which Partnership was created by
that certain Agreement of Limited Partnership dated May 27, 1991,
as amended by amendments filed with the Louisiana Secretary of
State on February 25, 1993, August 19, 1994, September 1, 1994,
October 7, 1994 and January 8, 1997 (the "Partnership
Agreement");
(2) 8.0% of any and all monies and other distributions (cash or
property), allocations or payments made or to be made to Borrower
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; 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 Borrower with
respect to any of the Collateral or any transaction in connection
therewith.
Section 4. Delivery of Collateral if Ever Represented by
Certificates. If the Partnership Interest is ever represented by
a certificate of interest or any similar document, the Borrower
will immediately deliver such certificate or document to the
Lender or to an agent that Lender and all other holders of
security interests in Borrower's Partnership Interest have agreed
shall hold the certificate or document on their behalf.
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 Borrower) 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 Borrower 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 Borrower is as it appears
on page 1 of this Agreement.
Section 8. Federal Taxpayer Number. The federal taxpayer
identification number of Borrower is as follows: 51-0334575.
Section 9. Chief Executive Office. The chief executive
office of Borrower is 110 Rue Jean Lafitte, Lafayette, Louisiana
70505.
Section 10. Location of Collateral. Borrower 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. Borrower has good and merchantable title
to the Collateral, free of Liens except Permitted Liens.
Furthermore, Borrower has not heretofore conveyed or agreed to
convey or encumber any Collateral in any way, except in favor of
Lender or other holders of Permitted Liens. Lender understands
and agrees, however, that Borrower has granted a security
interest in all of its Partnership Interest in the Partnership
(other than the percentage of its Partnership Interest covered
hereby) to those persons or entities who have previously
purchased Units or provided other New Funds. Lender further
agrees and acknowledges that in the event that additional Units
are sold or additional New Funds are provided to Borrower after
the date hereof by persons other than Lender and secured by
partnership interests in L.M. Holding, Lender will immediately
upon demand by Borrower (one or more times, as appropriate)
execute amendments to this Agreement releasing a percentage of
the Borrower's Partnership Interest sufficient to allocate the
security interests in the partnership interest of L.M. Holding
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).
Section 13. Incorporation and Existence. Borrower 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 Borrower 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 Borrower,
and this Agreement constitutes a legal, valid and binding
obligation of Borrower, enforceable against Borrower 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 Borrower to
perform its obligations under this Agreement or the Note, or
(iv) result in the creation of any Lien upon any of the
properties or revenues of Borrower other than the Liens in favor
of the Lender created pursuant to this Agreement.
Section 17. Voting Rights. Notwithstanding the security
interest granted hereby and whether or not an Event of Default
(as defined in the Note) shall have occurred, the Borrower shall
have the exclusive right to exercise all voting and other rights
under the Partnership Agreement until such time (if and when)
Lender forecloses on the Collateral and becomes the owner
thereof.
Section 18. Notice of Changes. Borrower 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 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). Borrower 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 Borrower
which may be waived, and Borrower, 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. Borrower 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, BORROWER DOES HEREBY
CONFESS JUDGMENT IN FAVOR OF LENDER FOR THE FULL AMOUNT OF THE
INDEBTEDNESS. BORROWER 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 BORROWER 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.
BORROWER 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 Borrower 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 Borrower
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 Borrower 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 Borrower 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 Borrower 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, together with interest thereon until paid at the rate
equal the then highest rate of interest charged on the principal
of any of the Indebtedness plus one percent (1%), shall be
additional Indebtedness hereunder and the Borrower 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
Borrower, the Lender shall deliver the remaining Collateral (if
any) to the Borrower. Upon request of Borrower, Lender shall
execute and deliver to Borrower at Borrower's expense such
termination statements as Borrower may reasonably request to
evidence such termination.
Section 24. Notices. Any notice or demand which, by provision
of this Agreement, is required or permitted to be given or served
to the Borrower and the Lender shall be deemed to have been
sufficiently given and served for all purposes if made in
accordance with the Note.
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 Borrower in this Agreement
shall bind Borrower'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 Borrower and the Lender have caused
this Agreement to be duly executed as of the date first above
written.
WITNESSES: XCL LAND, LTD.
_________________________
By:___________________________________
Name:____________________ Name:______________________________
(Please Print) Title:_______________________________
_________________________
Name:____________________
(Please Print)
LENDER:
_________________________
_________________________
Name:____________________ T. Jerald Hanchey
(Please Print)
_________________________
Name:____________________
(Please Print)
SECURITY AGREEMENT
THIS SECURITY AGREEMENT ("Agreement") dated April 13, 1999,
is made between The Exploration Company of Louisiana, Inc.
("Grantor") and T. Jerald Hanchey ("Lender"), who agree as
follows:
Recitals
1. XCL Land, Ltd. ("XCL Land") is or will be indebted unto the
Lender for loans made or to be made and evidenced by certain
notes, including, but not limited to that certain Promissory Note
by XCL Land payable to the order of Lender dated of even date
herewith (the "Note").
2. The making of such loans will be of substantial benefit to
the Grantor, and, consequently, in order to secure the full and
punctual payment and performance of the Indebtedness as defined
herein, 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," "Grantor," "Lender," "Note," and "XCL
Land" shall have the meanings indicated above.
2. As used in this Agreement, the following terms shall have
the following meaning:
"Event of Default" shall have the meaning defined in
the Note.
"General Intangibles" has the meaning given to it in
the UCC.
"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.
"New Funds" means funds advanced to Borrower on or
after November 6, 1998 through the purchase of Units or otherwise
up to the aggregate outstanding principal amount of $6,200,000.
"Permitted Liens" means (i) the Security Interests and
any other Liens created, assumed or existing with respect to the
Collateral in favor of Lender or in favor of any other purchaser
of Units or other provider of New Funds to XCL Land (provided
that the Liens in favor of such other persons do not cause the
percentage stated in Sections 2(A)(1) and 2(A)(2) hereof to be
less than the percentage of total New Funds provided by 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.
"Subscription Agreement" means that certain
Subscription Agreement dated April 13, 1999 by and between XCL
Land, Lender and XCL Ltd. and any subsequent subscription
agreement for additional Units entered into between the same
parties.
"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.
"Units" has the meaning defined in the Subscription
Agreement.
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 XCL Land to the Lender, including, without
limitation all promissory notes (including, but not limited to
the Note) heretofore or hereafter executed by XCL Land, in
principal, interest, deferral and delinquency charges as therein
stipulated, whether such amounts, liabilities, obligations and
indebtedness be liquidated or unliquidated, now existing or
hereafter arising (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) 8.0% of Grantor's now owned or hereafter acquired
partnership interest (the "Partnership Interest") (which
Partnership Interest is currently a limited partner interest) in
L.M. Holding Associates, L.P., a Louisiana Partnership in
Commendam (the "Partnership"), which Partnership was created by
that certain Agreement of Limited Partnership dated May 27, 1991,
as amended by amendments filed with the Louisiana Secretary of
State on February 25, 1993, August 19, 1994, September 1, 1994,
October 7, 1994 and January 8, 1997 (the "Partnership
Agreement");
(2) 8.0% 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; 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 if Ever Represented by
Certificates. If the Partnership Interest is ever represented by
a certificate of interest or any similar document, the Borrower
will immediately deliver such certificate or document to the
Lender or to an agent that Lender and all other holders of
security interests in Grantor's Partnership Interest have agreed
shall hold the certificate or document on their behalf.
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: 72-1123077.
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 Collateral in any way, except in favor of
Lender or other holders of Permitted Liens. Lender understands
and agrees, however, that Grantor has granted a security interest
in all of its Partnership Interest in the Partnership (other than
the percentage of its Partnership Interest covered hereby) to
those persons or entities who have previously purchased Units or
provided other New Funds. Lender further agrees and acknowledges
that in the event that additional Units are sold or additional
New Funds are provided to XCL Land after the date hereof by
persons other than Lender and secured by partnership interests in
L.M. Holding, Lender will immediately upon demand by XCL Land
(one or more times, as appropriate) execute amendments to this
Agreement releasing a percentage of the Grantor's Partnership
Interest sufficient to allocate the security interests in the
partnership interest of L.M. Holding 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).
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 Note, 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. Voting Rights. Notwithstanding the security
interest granted hereby and whether or not an Event of Default
(as defined in the Note) shall have occurred, the Grantor shall
have the exclusive right to exercise all voting and other rights
under the Partnership Agreement until such time (if and when)
Lender forecloses on the Collateral and becomes the owner
thereof.
Section 18. 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 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, together with interest thereon until paid at the rate
equal the then highest rate of interest charged on the principal
of any of the Indebtedness plus one percent (1%), 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, the Lender shall deliver the remaining Collateral (if
any) 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. Any notice or demand which, by provision
of this Agreement, is required or permitted to be given or served
to the Grantor and the Lender shall be deemed to have been
sufficiently given and served for all purposes if made in
accordance with the Note.
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: THE EXPLORATION COMPANY OF
LOUISIANA, INC.
_____________________
By:___________________________________
Name:____________________ Name:______________________________
(Please Print) Title:_______________________________
_________________________
Name:____________________
(Please Print)
LENDER:
_________________________
_________________________
Name:____________________ T. Jerald Hanchey
(Please Print)
_________________________
Name:____________________
(Please Print)
SECOND AMENDMENT TO SECURITY AGREEMENT
THIS SECOND AMENDMENT TO SECURITY AGREEMENT ("First
Amendment") dated as of April 13, 1999, is made between XCL Land,
Ltd. ("Borrower") and Estate of J. Edgar Monroe ("Lender"), who
agree as follows:
Recitals
WHEREAS, the Borrower 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 (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 Borrower by
persons other than Lender and secured by partnership interests in
the Partnership, Lender would immediately upon demand by Borrower
(one or more times, as appropriate) execute further amendments to
the Security Agreement releasing a percentage of the Borrower'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 $200,000 in New Funds has been
provided to Borrower thereby making the aggregate principal
amount of New Funds outstanding equal to $2,500,000 with Lender
having contributed $950,000 of such funds; and
WHEREAS, Borrower has requested that Lender execute
this Second Amendment to release a portion of its security
interest and amend the Security Agreement to reflect the Lender's
revised security 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) 3.03% of Grantor's now owned or hereafter acquired
Partnership Interest in the Partnership;
(2) 3.03% 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 reference to "41.3%" in Section 2(A)(1) and
2(A)(2) is hereby deleted and the phrase "38.0%" is substituted
in its place.
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 Second 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 Second 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 Second 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 Borrower and the Lender have
caused this Second Amendment to be duly executed as of the date
first above written.
WITNESSES: BORROWER:
XCL LAND, LTD.
_________________________ By:________________________________
Name:____________________ Name:___________________________
(Please Print) Title:__________________________
_________________________
Name:____________________
(Please Print)
LENDER:
ESTATE OF J. EDGAR MONROE
_________________________ By:________________________________
Name:____________________ Name:___________________________
(Please Print) Title:__________________________
_________________________
Name:____________________
(Please Print)
SECOND AMENDMENT TO SECURITY AGREEMENT
THIS SECOND AMENDMENT TO SECURITY AGREEMENT ("First
Amendment") dated as of April 13, 1999, is made between XCL Land,
Ltd. ("Borrower") and J. Edgar Monroe Foundation (1976)
("Lender"), who agree as follows:
Recitals
WHEREAS, the Borrower 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 (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 Borrower by
persons other than Lender and secured by partnership interests in
the Partnership, Lender would immediately upon demand by Borrower
(one or more times, as appropriate) execute further amendments to
the Security Agreement releasing a percentage of the Borrower'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 $200,000 in New Funds has been
provided to Borrower thereby making the aggregate principal
amount of New Funds outstanding equal to $2,500,000 with Lender
having contributed $100,000 of such funds; and
WHEREAS, Borrower has requested that Lender execute
this Second Amendment to release a portion of its security
interest and amend the Security Agreement to reflect the Lender's
revised security 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) .3% of Grantor's now owned or hereafter acquired Partnership
Interest in the Partnership;
(2) .3% 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 reference to "4.3%" in Section 2(A)(1) and
2(A)(2) is hereby deleted and the phrase "4.0%" is substituted in
its place.
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 Second 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 Second 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 Second 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 Borrower and the Lender have
caused this Second Amendment to be duly executed as of the date
first above written.
WITNESSES: BORROWER:
XCL LAND, LTD.
_________________________ By:________________________________
Name:____________________ Name:___________________________
(Please Print) Title:__________________________
_________________________
Name:____________________
(Please Print)
LENDER:
J. EDGAR MONROE FOUNDATION (1976)
_________________________ By:________________________________
Name:____________________ Name:___________________________
(Please Print) Title:__________________________
_________________________
Name:____________________
(Please Print)
SECOND AMENDMENT TO SECURITY AGREEMENT
THIS SECOND AMENDMENT TO SECURITY AGREEMENT ("First
Amendment") dated as of April 13, 1999, is made between XCL Land,
Ltd. ("Borrower") and Construction Specialists, Inc. d/b/a Con-
Spec, Inc. ("Lender"), who agree as follows:
Recitals
WHEREAS, the Borrower 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 (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 Borrower by
persons other than Lender and secured by partnership interests in
the Partnership, Lender would immediately upon demand by Borrower
(one or more times, as appropriate) execute further amendments to
the Security Agreement releasing a percentage of the Borrower'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 $200,000 in New Funds has been
provided to Borrower thereby making the aggregate principal
amount of New Funds outstanding equal to $2,500,000 with Lender
having contributed $950,000 of such funds; and
WHEREAS, Borrower has requested that Lender execute
this Second Amendment to release a portion of its security
interest and amend the Security Agreement to reflect the Lender's
revised security 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) 3.03% of Grantor's now owned or hereafter acquired
Partnership Interest in the Partnership;
(2) 3.03% 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 reference to "41.3%" in Section 2(A)(1) and
2(A)(2) is hereby deleted and the phrase "38.0%" is substituted
in its place.
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 Second 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 Second 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 Second 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 Borrower and the Lender have
caused this Second Amendment to be duly executed as of the date
first above written.
WITNESSES: BORROWER:
XCL LAND, LTD.
_________________________ 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 SECURITY AGREEMENT
THIS FIRST AMENDMENT TO SECURITY AGREEMENT ("First
Amendment") dated as of April 13, 1999, is made between XCL Land,
Ltd. ("Borrower") and Edgar D. Daigle ("Lender"), who agree as
follows:
Recitals
WHEREAS, the Borrower and the Lender entered into that
certain Security Agreement dated March 25, 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 Borrower by
persons other than Lender and secured by partnership interests in
the Partnership, Lender would immediately upon demand by Borrower
(one or more times, as appropriate) execute further amendments to
the Security Agreement releasing a percentage of the Borrower'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 $200,000 in New Funds has been
provided to Borrower thereby making the aggregate principal
amount of New Funds outstanding equal to $2,500,000 with Lender
having contributed $100,000 of such funds; and
WHEREAS, Borrower 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.
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) .3% of Grantor's now owned or hereafter acquired Partnership
Interest in the Partnership;
(2) .3% 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 reference to "4.3%" in Section 2(A)(1) and
2(A)(2) is hereby deleted and the phrase "4.0%" is substituted in
its place.
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 Borrower and the Lender have
caused this First Amendment to be duly executed as of the date
first above written.
WITNESSES: BORROWER:
XCL LAND, LTD.
_________________________ By:________________________________
Name:____________________ Name:___________________________
(Please Print) Title:__________________________
_________________________
Name:____________________
(Please Print)
LENDER:
_________________________ ________________________________
Name:____________________ Edgar D. Daigle
(Please Print)
_________________________
Name:____________________
(Please Print)
FIRST AMENDMENT TO SECURITY AGREEMENT
THIS FIRST AMENDMENT TO SECURITY AGREEMENT ("First
Amendment") dated as of April 13, 1999, is made between XCL Land,
Ltd. ("Borrower") and Doug Ashy, Sr. ("Lender"), who agree as
follows:
Recitals
WHEREAS, the Borrower and the Lender entered into that
certain Security Agreement dated March 22, 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 Borrower by
persons other than Lender and secured by partnership interests in
the Partnership, Lender would immediately upon demand by Borrower
(one or more times, as appropriate) execute further amendments to
the Security Agreement releasing a percentage of the Borrower'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 $200,000 in New Funds has been
provided to Borrower thereby making the aggregate principal
amount of New Funds outstanding equal to $2,500,000 with Lender
having contributed $100,000 of such funds; and
WHEREAS, Borrower 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.
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) .3% of Grantor's now owned or hereafter acquired Partnership
Interest in the Partnership;
(2) .3% 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 reference to "4.3%" in Section 2(A)(1) and
2(A)(2) is hereby deleted and the phrase "4.0%" is substituted in
its place.
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 Borrower and the Lender have
caused this First Amendment to be duly executed as of the date
first above written.
WITNESSES: BORROWER:
XCL LAND, LTD.
_________________________ By:________________________________
Name:____________________ Name:___________________________
(Please Print) Title:__________________________
_________________________
Name:____________________
(Please Print)
LENDER:
_________________________ ________________________________
Name:____________________ Doug Ashy, Sr.
(Please Print)
_________________________
Name:____________________
(Please Print)
SECOND AMENDMENT TO SECURITY AGREEMENT
THIS SECOND AMENDMENT TO SECURITY AGREEMENT ("Second
Amendment") dated as of April 13, 1999, is made between The
Exploration Company of Louisiana, Inc. ("Grantor") and Estate of
J. Edgar Monroe ("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 (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 by XCL Land
(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 $200,000 in New Funds has been
provided to XCL Land thereby making the aggregate principal
amount of New Funds outstanding equal to $2,500,000 with Lender
having contributed $950,000 of such funds; and
WHEREAS, XCL Land has requested that Lender execute
this Second Amendment to release a portion of its security
interest and amend the Security Agreement to reflect the Lender's
revised security 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) 3.03% of Grantor's now owned or hereafter acquired
Partnership Interest in the Partnership;
(2) 3.03% 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 reference to "41.3%" in Section 2(A)(1) and
2(A)(2) is hereby deleted and the phrase "38.0%" is substituted
in its place.
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 Second 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 Second 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 Second 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 Second 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:
ESTATE OF J. EDGAR MONROE
_________________________ By:________________________________
Name:____________________ Name:___________________________
(Please Print) Title:__________________________
_________________________
Name:____________________
(Please Print)
SECOND AMENDMENT TO SECURITY AGREEMENT
THIS SECOND AMENDMENT TO SECURITY AGREEMENT ("First
Amendment") dated as of April 13, 1999, is made between The
Exploration Company of Louisiana, Inc. ("Grantor") and J. Edgar
Monroe Foundation (1976) ("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 (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 by XCL Land
(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 $200,000 in New Funds has been
provided to XCL Land thereby making the aggregate principal
amount of New Funds outstanding equal to $2,500,000 with Lender
having contributed $100,000 of such funds; and
WHEREAS, XCL Land has requested that Lender execute
this Second Amendment to release a portion of its security
interest and amend the Security Agreement to reflect the Lender's
revised security 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) .3% of Grantor's now owned or hereafter acquired Partnership
Interest in the Partnership;
(2) .3% 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 reference to "4.3%" in Section 2(A)(1) and
2(A)(2) is hereby deleted and the phrase "4.0%" is substituted in
its place.
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 Second 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 Second 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 Second 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 Second 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:
J. EDGAR MONROE FOUNDATION (1976)
_________________________ By:________________________________
Name:____________________ Name:___________________________
(Please Print) Title:__________________________
_________________________
Name:____________________
(Please Print)
SECOND AMENDMENT TO SECURITY AGREEMENT
THIS SECOND AMENDMENT TO SECURITY AGREEMENT ("Second
Amendment") dated as of April 13, 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 (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 by XCL Land
(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 $200,000 in New Funds has been
provided to XCL Land thereby making the aggregate principal
amount of New Funds outstanding equal to $2,500,000 with Lender
having contributed $950,000 of such funds; and
WHEREAS, XCL Land has requested that Lender execute
this Second Amendment to release a portion of its security
interest and amend the Security Agreement to reflect the Lender's
revised security 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) 3.03% of Grantor's now owned or hereafter acquired
Partnership Interest in the Partnership;
(2) 3.03% 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 reference to "41.3%" in Section 2(A)(1) and
2(A)(2) is hereby deleted and the phrase "38.0%" is substituted
in its place.
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 Second 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 Second 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 Second 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 Second 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)
FIRST AMENDMENT TO SECURITY AGREEMENT
THIS FIRST AMENDMENT TO SECURITY AGREEMENT ("First
Amendment") dated as of April 13, 1999, is made between The
Exploration Company of Louisiana, Inc. ("Grantor") and Edgar D.
Daigle ("Lender"), who agree as follows:
Recitals
WHEREAS, the Grantor and the Lender entered into that
certain Security Agreement dated March 25, 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 by XCL Land
(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 $200,000 in New Funds has been
provided to XCL Land thereby making the aggregate principal
amount of New Funds outstanding equal to $2,500,000 with Lender
having contributed $100,000 of such funds; and
WHEREAS, XCL Land 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.
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) .3% of Grantor's now owned or hereafter acquired Partnership
Interest in the Partnership;
(2) .3% 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 reference to "4.3%" in Section 2(A)(1) and
2(A)(2) is hereby deleted and the phrase "4.0%" is substituted in
its place.
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:____________________ Edgar D. Daigle
(Please Print)
_________________________
Name:____________________
(Please Print)
FIRST AMENDMENT TO SECURITY AGREEMENT
THIS FIRST AMENDMENT TO SECURITY AGREEMENT ("First
Amendment") dated as of April 13, 1999, is made between The
Exploration Company of Louisiana, Inc. ("Grantor") and Doug Ashy,
Sr.("Lender"), who agree as follows:
Recitals
WHEREAS, the Grantor and the Lender entered into that
certain Security Agreement dated March 22, 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 by XCL Land
(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 $200,000 in New Funds has been
provided to XCL Land thereby making the aggregate principal
amount of New Funds outstanding equal to $2,500,000 with Lender
having contributed $100,000 of such funds; and
WHEREAS, XCL Land 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.
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) .3% of Grantor's now owned or hereafter acquired Partnership
Interest in the Partnership;
(2) .3% 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 reference to "4.3%" in Section 2(A)(1) and
2(A)(2) is hereby deleted and the phrase "4.0%" is substituted in
its place.
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:____________________ Doug Ashy, Sr.
(Please Print)
_________________________
Name:____________________
(Please Print)
SECURITY AGREEMENT
THIS SECURITY AGREEMENT ("Agreement") dated May 17, 1999, is
made between XCL Land, Ltd. ("Borrower") and Northern Securities
Limited ("Lender"), who agree as follows:
Recitals
1. The Borrower is or will be indebted unto the Lender for
loans made or to be made and evidenced by certain notes,
including, but not limited to that certain Promissory Note by
Borrower payable to the order of Lender dated of even date
herewith (the "Note").
2. In order to secure the full and punctual payment and
performance of the Indebtedness as defined herein, the Borrower
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
Borrower and the Lender agree as follows:
Section 2. Definitions.
1. The terms "Agreement," "Borrower," "Lender" and "Note" shall
have the meanings indicated above.
2. As used in this Agreement, the following terms shall have
the following meaning:
"Event of Default" shall have the meaning defined in
the Note.
"General Intangibles" has the meaning given to it in
the UCC.
"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
Borrower 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.
"New Funds" means funds advanced to Borrower on or
after November 6, 1998 through the purchase of Units or otherwise
up to the aggregate outstanding principal amount of $6,200,000.
"Permitted Liens" means (i) the Security Interests and
any other Liens created, assumed or existing with respect to the
Collateral in favor of Lender or in favor of any other purchaser
of Units or other provider of New Funds to Borrower (provided
that the Liens in favor of such other persons do not cause the
percentage stated in Sections 2(A)(1) and 2(A)(2) hereof to be
less than the percentage of total New Funds provided by 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.
"Subscription Agreement" means that certain
Subscription Agreement dated May 17, 1999 by and between
Borrower, Lender and XCL Ltd. and any subsequent subscription
agreements for additional Units entered into between the same
parties.
"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.
"Units" has the meaning defined in the Subscription
Agreement.
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 Borrower to the Lender, including, without
limitation all promissory notes (including, but not limited to
the Note) heretofore or hereafter executed by the Borrower, in
principal, interest, deferral and delinquency charges as therein
stipulated, whether such amounts, liabilities, obligations and
indebtedness be liquidated or unliquidated, now existing or
hereafter arising (collectively, the "Indebtedness"), the
Borrower hereby pledges, pawns, transfers and grants to the
Lender a continuing security interest in and to all of the
following property of the Borrower, whether now owned or existing
or hereafter acquired or arising (collectively the "Collateral"):
(1) 35.71% of Borrower's now owned or hereafter acquired
partnership interest (the "Partnership Interest") (which
Partnership Interest is currently a general partner interest) in
L.M. Holding Associates, L.P., a Louisiana Partnership in
Commendam (the "Partnership"), which Partnership was created by
that certain Agreement of Limited Partnership dated May 27, 1991,
as amended by amendments filed with the Louisiana Secretary of
State on February 25, 1993, August 19, 1994, September 1, 1994,
October 7, 1994 and January 8, 1997 (the "Partnership
Agreement");
(2) 35.71% of any and all monies and other distributions (cash
or property), allocations or payments made or to be made to
Borrower 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; 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 Borrower with
respect to any of the Collateral or any transaction in connection
therewith.
Section 4. Delivery of Collateral if Ever Represented by
Certificates. If the Partnership Interest is ever represented by
a certificate of interest or any similar document, the Borrower
will immediately deliver such certificate or document to the
Lender or to an agent that Lender and all other holders of
security interests in Borrower's Partnership Interest have agreed
shall hold the certificate or document on their behalf.
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 Borrower) 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 Borrower 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 Borrower is as it appears
on page 1 of this Agreement.
Section 8. Federal Taxpayer Number. The federal taxpayer
identification number of Borrower is as follows: 51-0334575.
Section 9. Chief Executive Office. The chief executive
office of Borrower is 110 Rue Jean Lafitte, Lafayette, Louisiana
70505.
Section 10. Location of Collateral. Borrower 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. Borrower has good and merchantable title
to the Collateral, free of Liens except Permitted Liens.
Furthermore, Borrower has not heretofore conveyed or agreed to
convey or encumber any Collateral in any way, except in favor of
Lender or other holders of Permitted Liens. Lender understands
and agrees, however, that Borrower has granted a security
interest in all of its Partnership Interest in the Partnership
(other than the percentage of its Partnership Interest covered
hereby) to those persons or entities who have previously
purchased Units or provided other New Funds. Lender further
agrees and acknowledges that in the event that additional Units
are sold or additional New Funds are provided to Borrower after
the date hereof by persons other than Lender and secured by
partnership interests in L.M. Holding, Lender will immediately
upon demand by Borrower (one or more times, as appropriate)
execute amendments to this Agreement releasing a percentage of
the Borrower's Partnership Interest sufficient to allocate the
security interests in the partnership interest of L.M. Holding
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).
Section 13. Incorporation and Existence. Borrower 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 Borrower 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 Borrower,
and this Agreement constitutes a legal, valid and binding
obligation of Borrower, enforceable against Borrower 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 Borrower to
perform its obligations under this Agreement or the Note, or
(iv) result in the creation of any Lien upon any of the
properties or revenues of Borrower other than the Liens in favor
of the Lender created pursuant to this Agreement.
Section 17. Voting Rights. Notwithstanding the security
interest granted hereby and whether or not an Event of Default
(as defined in the Note) shall have occurred, the Borrower shall
have the exclusive right to exercise all voting and other rights
under the Partnership Agreement until such time (if and when)
Lender forecloses on the Collateral and becomes the owner
thereof.
Section 18. Notice of Changes. Borrower 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 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). Borrower 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 Borrower
which may be waived, and Borrower, 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. Borrower 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, BORROWER DOES HEREBY
CONFESS JUDGMENT IN FAVOR OF LENDER FOR THE FULL AMOUNT OF THE
INDEBTEDNESS. BORROWER 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 BORROWER 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.
BORROWER 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 Borrower 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 Borrower
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 Borrower 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 Borrower 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 Borrower 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, together with interest thereon until paid at the rate
equal the then highest rate of interest charged on the principal
of any of the Indebtedness plus one percent (1%), shall be
additional Indebtedness hereunder and the Borrower 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
Borrower, the Lender shall deliver the remaining Collateral (if
any) to the Borrower. Upon request of Borrower, Lender shall
execute and deliver to Borrower at Borrower's expense such
termination statements as Borrower may reasonably request to
evidence such termination.
Section 24. Notices. Any notice or demand which, by provision
of this Agreement, is required or permitted to be given or served
to the Borrower and the Lender shall be deemed to have been
sufficiently given and served for all purposes if made in
accordance with the Note.
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 Borrower in this Agreement
shall bind Borrower'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 Borrower and the Lender have caused
this Agreement to be duly executed as of the date first above
written.
WITNESSES: XCL LAND, LTD.
_________________________
By:___________________________________
Name:____________________ Name:______________________________
(Please Print) Title:_______________________________
_________________________
Name:____________________
(Please Print)
LENDER:
NORTHERN SECURITIES LIMITED
_________________________ By:______________________________________
Name:____________________ Name:____________________________
(Please Print) Title:____________________________
_________________________
Name:____________________
(Please Print)
SECURITY AGREEMENT
THIS SECURITY AGREEMENT ("Agreement") dated May 17, 1999, is
made between The Exploration Company of Louisiana, Inc.
("Grantor") and Northern Securities Limited ("Lender"), who agree
as follows:
Recitals
1. XCL Land, Ltd. ("XCL Land") is or will be indebted unto the
Lender for loans made or to be made and evidenced by certain
notes, including, but not limited to that certain Promissory Note
by XCL Land payable to the order of Lender dated of even date
herewith (the "Note").
2. The making of such loans will be of substantial benefit to
the Grantor, and, consequently, in order to secure the full and
punctual payment and performance of the Indebtedness as defined
herein, 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," "Grantor," "Lender," "Note," and "XCL
Land" shall have the meanings indicated above.
2. As used in this Agreement, the following terms shall have
the following meaning:
"Event of Default" shall have the meaning defined in
the Note.
"General Intangibles" has the meaning given to it in
the UCC.
"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.
"New Funds" means funds advanced to Borrower on or
after November 6, 1998 through the purchase of Units or otherwise
up to the aggregate outstanding principal amount of $6,200,000.
"Permitted Liens" means (i) the Security Interests and
any other Liens created, assumed or existing with respect to the
Collateral in favor of Lender or in favor of any other purchaser
of Units or other provider of New Funds to XCL Land (provided
that the Liens in favor of such other persons do not cause the
percentage stated in Sections 2(A)(1) and 2(A)(2) hereof to be
less than the percentage of total New Funds provided by 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.
"Subscription Agreement" means that certain
Subscription Agreement dated May 17, 1999 by and between XCL
Land, Lender and XCL Ltd. and any subsequent subscription
agreement for additional Units entered into between the same
parties.
"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.
"Units" has the meaning defined in the Subscription
Agreement.
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 XCL Land to the Lender, including, without
limitation all promissory notes (including, but not limited to
the Note) heretofore or hereafter executed by XCL Land, in
principal, interest, deferral and delinquency charges as therein
stipulated, whether such amounts, liabilities, obligations and
indebtedness be liquidated or unliquidated, now existing or
hereafter arising (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) 35.71% of Grantor's now owned or hereafter acquired
partnership interest (the "Partnership Interest") (which
Partnership Interest is currently a limited partner interest) in
L.M. Holding Associates, L.P., a Louisiana Partnership in
Commendam (the "Partnership"), which Partnership was created by
that certain Agreement of Limited Partnership dated May 27, 1991,
as amended by amendments filed with the Louisiana Secretary of
State on February 25, 1993, August 19, 1994, September 1, 1994,
October 7, 1994 and January 8, 1997 (the "Partnership
Agreement");
(2) 35.71% 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; 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 if Ever Represented by
Certificates. If the Partnership Interest is ever represented by
a certificate of interest or any similar document, the Borrower
will immediately deliver such certificate or document to the
Lender or to an agent that Lender and all other holders of
security interests in Grantor's Partnership Interest have agreed
shall hold the certificate or document on their behalf.
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: 72-1123077.
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 Collateral in any way, except in favor of
Lender or other holders of Permitted Liens. Lender understands
and agrees, however, that Grantor has granted a security interest
in all of its Partnership Interest in the Partnership (other than
the percentage of its Partnership Interest covered hereby) to
those persons or entities who have previously purchased Units or
provided other New Funds. Lender further agrees and acknowledges
that in the event that additional Units are sold or additional
New Funds are provided to XCL Land after the date hereof by
persons other than Lender and secured by partnership interests in
L.M. Holding, Lender will immediately upon demand by XCL Land
(one or more times, as appropriate) execute amendments to this
Agreement releasing a percentage of the Grantor's Partnership
Interest sufficient to allocate the security interests in the
partnership interest of L.M. Holding 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).
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 Note, 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. Voting Rights. Notwithstanding the security
interest granted hereby and whether or not an Event of Default
(as defined in the Note) shall have occurred, the Grantor shall
have the exclusive right to exercise all voting and other rights
under the Partnership Agreement until such time (if and when)
Lender forecloses on the Collateral and becomes the owner
thereof.
Section 18. 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 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 1.
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, together with interest thereon until paid at the rate
equal the then highest rate of interest charged on the principal
of any of the Indebtedness plus one percent (1%), 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, the Lender shall deliver the remaining Collateral (if
any) 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. Any notice or demand which, by provision
of this Agreement, is required or permitted to be given or served
to the Grantor and the Lender shall be deemed to have been
sufficiently given and served for all purposes if made in
accordance with the Note.
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: 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)
SECURITY AGREEMENT
THIS SECURITY AGREEMENT ("Agreement") dated May 21, 1999, is
made between XCL Land, Ltd. ("Borrower") and Mitch Leigh
("Lender"), who agree as follows:
Recitals
1. The Borrower is or will be indebted unto the Lender for
loans made or to be made and evidenced by certain notes,
including, but not limited to that certain Promissory Note by
Borrower payable to the order of Lender dated of even date
herewith (the "Note").
2. In order to secure the full and punctual payment and
performance of the Indebtedness as defined herein, the Borrower
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
Borrower and the Lender agree as follows:
Section 2. Definitions.
1. The terms "Agreement," "Borrower," "Lender" and "Note" shall
have the meanings indicated above.
2. As used in this Agreement, the following terms shall have
the following meaning:
"Event of Default" shall have the meaning defined in
the Note.
"General Intangibles" has the meaning given to it in
the UCC.
"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
Borrower 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.
"New Funds" means funds advanced to Borrower on or
after November 6, 1998 through the purchase of Units or otherwise
up to the aggregate outstanding principal amount of $6,200,000.
"Permitted Liens" means (i) the Security Interests and
any other Liens created, assumed or existing with respect to the
Collateral in favor of Lender or in favor of any other purchaser
of Units or other provider of New Funds to Borrower (provided
that the Liens in favor of such other persons do not cause the
percentage stated in Sections 2(A)(1) and 2(A)(2) hereof to be
less than the percentage of total New Funds provided by 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.
"Subscription Agreement" means that certain
Subscription Agreement dated May 21, 1999 by and between
Borrower, Lender and XCL Ltd. and any subsequent subscription
agreements for additional Units entered into between the same
parties.
"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.
"Units" has the meaning defined in the Subscription
Agreement.
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 Borrower to the Lender, including, without
limitation all promissory notes (including, but not limited to
the Note) heretofore or hereafter executed by the Borrower, in
principal, interest, deferral and delinquency charges as therein
stipulated, whether such amounts, liabilities, obligations and
indebtedness be liquidated or unliquidated, now existing or
hereafter arising (collectively, the "Indebtedness"), the
Borrower hereby pledges, pawns, transfers and grants to the
Lender a continuing security interest in and to all of the
following property of the Borrower, whether now owned or existing
or hereafter acquired or arising (collectively the "Collateral"):
(1) 7.41% of Borrower's now owned or hereafter acquired
partnership interest (the "Partnership Interest") (which
Partnership Interest is currently a general partner interest) in
L.M. Holding Associates, L.P., a Louisiana Partnership in
Commendam (the "Partnership"), which Partnership was created by
that certain Agreement of Limited Partnership dated May 27, 1991,
as amended by amendments filed with the Louisiana Secretary of
State on February 25, 1993, August 19, 1994, September 1, 1994,
October 7, 1994 and January 8, 1997 (the "Partnership
Agreement");
(2) 7.41% of any and all monies and other distributions (cash or
property), allocations or payments made or to be made to Borrower
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; 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 Borrower with
respect to any of the Collateral or any transaction in connection
therewith.
Section 4. Delivery of Collateral if Ever Represented by
Certificates. If the Partnership Interest is ever represented by
a certificate of interest or any similar document, the Borrower
will immediately deliver such certificate or document to the
Lender or to an agent that Lender and all other holders of
security interests in Borrower's Partnership Interest have agreed
shall hold the certificate or document on their behalf.
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 Borrower) 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 Borrower 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 Borrower is as it appears
on page 1 of this Agreement.
Section 8. Federal Taxpayer Number. The federal taxpayer
identification number of Borrower is as follows: 51-0334575.
Section 9. Chief Executive Office. The chief executive
office of Borrower is 110 Rue Jean Lafitte, Lafayette, Louisiana
70505.
Section 10. Location of Collateral. Borrower 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. Borrower has good and merchantable title
to the Collateral, free of Liens except Permitted Liens.
Furthermore, Borrower has not heretofore conveyed or agreed to
convey or encumber any Collateral in any way, except in favor of
Lender or other holders of Permitted Liens. Lender understands
and agrees, however, that Borrower has granted a security
interest in all of its Partnership Interest in the Partnership
(other than the percentage of its Partnership Interest covered
hereby) to those persons or entities who have previously
purchased Units or provided other New Funds. Lender further
agrees and acknowledges that in the event that additional Units
are sold or additional New Funds are provided to Borrower after
the date hereof by persons other than Lender and secured by
partnership interests in L.M. Holding, Lender will immediately
upon demand by Borrower (one or more times, as appropriate)
execute amendments to this Agreement releasing a percentage of
the Borrower's Partnership Interest sufficient to allocate the
security interests in the partnership interest of L.M. Holding
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).
Section 13. Incorporation and Existence. Borrower 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 Borrower 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 Borrower,
and this Agreement constitutes a legal, valid and binding
obligation of Borrower, enforceable against Borrower 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 Borrower to
perform its obligations under this Agreement or the Note, or
(iv) result in the creation of any Lien upon any of the
properties or revenues of Borrower other than the Liens in favor
of the Lender created pursuant to this Agreement.
Section 17. Voting Rights. Notwithstanding the security
interest granted hereby and whether or not an Event of Default
(as defined in the Note) shall have occurred, the Borrower shall
have the exclusive right to exercise all voting and other rights
under the Partnership Agreement until such time (if and when)
Lender forecloses on the Collateral and becomes the owner
thereof.
Section 18. Notice of Changes. Borrower 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 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). Borrower 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 Borrower
which may be waived, and Borrower, 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. Borrower 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, BORROWER DOES HEREBY
CONFESS JUDGMENT IN FAVOR OF LENDER FOR THE FULL AMOUNT OF THE
INDEBTEDNESS. BORROWER 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 BORROWER 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.
BORROWER 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 Borrower 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 Borrower
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 Borrower 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 Borrower 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 Borrower 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, together with interest thereon until paid at the rate
equal the then highest rate of interest charged on the principal
of any of the Indebtedness plus one percent (1%), shall be
additional Indebtedness hereunder and the Borrower 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
Borrower, the Lender shall deliver the remaining Collateral (if
any) to the Borrower. Upon request of Borrower, Lender shall
execute and deliver to Borrower at Borrower's expense such
termination statements as Borrower may reasonably request to
evidence such termination.
Section 24. Notices. Any notice or demand which, by provision
of this Agreement, is required or permitted to be given or served
to the Borrower and the Lender shall be deemed to have been
sufficiently given and served for all purposes if made in
accordance with the Note.
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 Borrower in this Agreement
shall bind Borrower'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 Borrower and the Lender have caused
this Agreement to be duly executed as of the date first above
written.
WITNESSES: XCL LAND, LTD.
_________________________ By:___________________________________
Name:____________________ Name:______________________________
(Please Print) Title:_______________________________
_________________________
Name:____________________
(Please Print)
LENDER:
_________________________ ______________________________________
Name:____________________ Mitch Leigh
(Please Print)
_________________________
Name:____________________
(Please Print)
SECURITY AGREEMENT
THIS SECURITY AGREEMENT ("Agreement") dated May 21, 1999, is
made between The Exploration Company of Louisiana, Inc.
("Grantor") and Mitch Leigh ("Lender"), who agree as follows:
Recitals
1. XCL Land, Ltd. ("XCL Land") is or will be indebted unto the
Lender for loans made or to be made and evidenced by certain
notes, including, but not limited to that certain Promissory Note
by XCL Land payable to the order of Lender dated of even date
herewith (the "Note").
2. The making of such loans will be of substantial benefit to
the Grantor, and, consequently, in order to secure the full and
punctual payment and performance of the Indebtedness as defined
herein, 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," "Grantor," "Lender," "Note," and "XCL
Land" shall have the meanings indicated above.
2. As used in this Agreement, the following terms shall have
the following meaning:
"Event of Default" shall have the meaning defined in
the Note.
"General Intangibles" has the meaning given to it in
the UCC.
"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.
"New Funds" means funds advanced to Borrower on or
after November 6, 1998 through the purchase of Units or otherwise
up to the aggregate outstanding principal amount of $6,200,000.
"Permitted Liens" means (i) the Security Interests and
any other Liens created, assumed or existing with respect to the
Collateral in favor of Lender or in favor of any other purchaser
of Units or other provider of New Funds to XCL Land (provided
that the Liens in favor of such other persons do not cause the
percentage stated in Sections 2(A)(1) and 2(A)(2) hereof to be
less than the percentage of total New Funds provided by 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.
"Subscription Agreement" means that certain
Subscription Agreement dated May 21, 1999 by and between XCL
Land, Lender and XCL Ltd. and any subsequent subscription
agreement for additional Units entered into between the same
parties.
"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.
"Units" has the meaning defined in the Subscription
Agreement.
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 XCL Land to the Lender, including, without
limitation all promissory notes (including, but not limited to
the Note) heretofore or hereafter executed by XCL Land, in
principal, interest, deferral and delinquency charges as therein
stipulated, whether such amounts, liabilities, obligations and
indebtedness be liquidated or unliquidated, now existing or
hereafter arising (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) 7.41% of Grantor's now owned or hereafter acquired
partnership interest (the "Partnership Interest") (which
Partnership Interest is currently a limited partner interest) in
L.M. Holding Associates, L.P., a Louisiana Partnership in
Commendam (the "Partnership"), which Partnership was created by
that certain Agreement of Limited Partnership dated May 27, 1991,
as amended by amendments filed with the Louisiana Secretary of
State on February 25, 1993, August 19, 1994, September 1, 1994,
October 7, 1994 and January 8, 1997 (the "Partnership
Agreement");
(2) 7.41% 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; 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 if Ever Represented by
Certificates. If the Partnership Interest is ever represented by
a certificate of interest or any similar document, the Borrower
will immediately deliver such certificate or document to the
Lender or to an agent that Lender and all other holders of
security interests in Grantor's Partnership Interest have agreed
shall hold the certificate or document on their behalf.
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: 72-1123077.
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 Collateral in any way, except in favor of
Lender or other holders of Permitted Liens. Lender understands
and agrees, however, that Grantor has granted a security interest
in all of its Partnership Interest in the Partnership (other than
the percentage of its Partnership Interest covered hereby) to
those persons or entities who have previously purchased Units or
provided other New Funds. Lender further agrees and acknowledges
that in the event that additional Units are sold or additional
New Funds are provided to XCL Land after the date hereof by
persons other than Lender and secured by partnership interests in
L.M. Holding, Lender will immediately upon demand by XCL Land
(one or more times, as appropriate) execute amendments to this
Agreement releasing a percentage of the Grantor's Partnership
Interest sufficient to allocate the security interests in the
partnership interest of L.M. Holding 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).
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 Note, 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. Voting Rights. Notwithstanding the security
interest granted hereby and whether or not an Event of Default
(as defined in the Note) shall have occurred, the Grantor shall
have the exclusive right to exercise all voting and other rights
under the Partnership Agreement until such time (if and when)
Lender forecloses on the Collateral and becomes the owner
thereof.
Section 18. 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 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 1.
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, together with interest thereon until paid at the rate
equal the then highest rate of interest charged on the principal
of any of the Indebtedness plus one percent (1%), 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, the Lender shall deliver the remaining Collateral (if
any) 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. Any notice or demand which, by provision
of this Agreement, is required or permitted to be given or served
to the Grantor and the Lender shall be deemed to have been
sufficiently given and served for all purposes if made in
accordance with the Note.
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: THE EXPLORATION COMPANY OF
LOUISIANA, INC.
_________________________ By:___________________________________
Name:____________________ Name:______________________________
(Please Print) Title:_______________________________
_________________________
Name:____________________
(Please Print)
LENDER:
_________________________ ______________________________________
Name:____________________ Mitch Leigh
(Please Print)
_________________________
Name:____________________
(Please Print)
THIRD AMENDMENT TO SECURITY AGREEMENT
THIS THIRD AMENDMENT TO SECURITY AGREEMENT ("Third
Amendment") dated as of May 21, 1999, is made between XCL Land,
Ltd. ("Borrower") and Construction Specialists, Inc. d/b/a Con-
Spec, Inc. ("Lender"), who agree as follows:
Recitals
WHEREAS, the Borrower 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 (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 Borrower by
persons other than Lender and secured by partnership interests in
the Partnership, Lender would immediately upon demand by Borrower
(one or more times, as appropriate) execute further amendments to
the Security Agreement releasing a percentage of the Borrower'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 $200,000 in New Funds has been
provided to Borrower thereby making the aggregate principal
amount of New Funds outstanding equal to $2,700,000 with Lender
having contributed $950,000 of such funds; and
WHEREAS, Borrower has requested that Lender execute
this Third Amendment to release a portion of its security
interest and amend the Security Agreement to reflect the Lender's
revised security 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) 2.8% of Grantor's now owned or hereafter acquired
Partnership Interest in the Partnership;
(2) 2.8% 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 reference to "38.0%" in Section 2(A)(1) and
2(A)(2) is hereby deleted and the phrase "35.2%" is substituted
in its place.
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 Third 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 Third 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 Third 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 Borrower and the Lender have
caused this Third Amendment to be duly executed as of the date
first above written.
WITNESSES: BORROWER:
XCL LAND, LTD.
_________________________ 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)
THIRD AMENDMENT TO SECURITY AGREEMENT
THIS THIRD AMENDMENT TO SECURITY AGREEMENT ("Third
Amendment") dated as of May 21, 1999, is made between XCL Land,
Ltd. ("Borrower") and Estate of J. Edgar Monroe ("Lender"), who
agree as follows:
Recitals
WHEREAS, the Borrower 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 (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 Borrower by
persons other than Lender and secured by partnership interests in
the Partnership, Lender would immediately upon demand by Borrower
(one or more times, as appropriate) execute further amendments to
the Security Agreement releasing a percentage of the Borrower'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 $200,000 in New Funds has been
provided to Borrower thereby making the aggregate principal
amount of New Funds outstanding equal to $2,700,000 with Lender
having contributed $950,000 of such funds; and
WHEREAS, Borrower has requested that Lender execute
this Second Amendment to release a portion of its security
interest and amend the Security Agreement to reflect the Lender's
revised security 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) 2.8% of Grantor's now owned or hereafter acquired
Partnership Interest in the Partnership;
(2) 2.8% 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 reference to "38.0%" in Section 2(A)(1) and
2(A)(2) is hereby deleted and the phrase "35.2%" is substituted
in its place.
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 Third 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 Third 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 Third 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 Borrower and the Lender have
caused this Third Amendment to be duly executed as of the date
first above written.
WITNESSES: BORROWER:
XCL LAND, LTD.
_________________________ By:________________________________
Name:____________________ Name:___________________________
(Please Print) Title:__________________________
_________________________
Name:____________________
(Please Print)
LENDER:
ESTATE OF J. EDGAR MONROE
_________________________ By:________________________________
Name:____________________ Name:___________________________
(Please Print) Title:__________________________
_________________________
Name:____________________
(Please Print)
THIRD AMENDMENT TO SECURITY AGREEMENT
THIS THIRD AMENDMENT TO SECURITY AGREEMENT ("Third
Amendment") dated as of May 21, 1999, is made between XCL Land,
Ltd. ("Borrower") and J. Edgar Monroe Foundation (1976)
("Lender"), who agree as follows:
Recitals
WHEREAS, the Borrower 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 (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 Borrower by
persons other than Lender and secured by partnership interests in
the Partnership, Lender would immediately upon demand by Borrower
(one or more times, as appropriate) execute further amendments to
the Security Agreement releasing a percentage of the Borrower'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 $200,000 in New Funds has been
provided to Borrower thereby making the aggregate principal
amount of New Funds outstanding equal to $2,700,000 with Lender
having contributed $100,000 of such funds; and
WHEREAS, Borrower has requested that Lender execute
this Third Amendment to release a portion of its security
interest and amend the Security Agreement to reflect the Lender's
revised security 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) .3% of Grantor's now owned or hereafter acquired Partnership
Interest in the Partnership;
(2) .3% 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 reference to "4.0%" in Section 2(A)(1) and
2(A)(2) is hereby deleted and the phrase "3.7%" is substituted in
its place.
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 Third 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 Third 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 Third 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 Borrower and the Lender have
caused this Third Amendment to be duly executed as of the date
first above written.
WITNESSES: BORROWER:
XCL LAND, LTD.
_________________________ By:________________________________
Name:____________________ Name:___________________________
(Please Print) Title:__________________________
_________________________
Name:____________________
(Please Print)
LENDER:
J. EDGAR MONROE FOUNDATION (1976)
_________________________ By:________________________________
Name:____________________ Name:___________________________
(Please Print) Title:__________________________
_________________________
Name:____________________
(Please Print)
THIRD AMENDMENT TO SECURITY AGREEMENT
THIS THIRD AMENDMENT TO SECURITY AGREEMENT ("Third
Amendment") dated as of May 21, 1999, is made between The
Exploration Company of Louisiana, Inc. ("Grantor") and Estate of
J. Edgar Monroe ("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 (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 by XCL Land
(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 $200,000 in New Funds has been
provided to XCL Land thereby making the aggregate principal
amount of New Funds outstanding equal to $2,700,000 with Lender
having contributed $950,000 of such funds; and
WHEREAS, XCL Land has requested that Lender execute
this Third Amendment to release a portion of its security
interest and amend the Security Agreement to reflect the Lender's
revised security 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) 2.8% of Grantor's now owned or hereafter acquired
Partnership Interest in the Partnership;
(2) 2.8% 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 reference to "38.0%" in Section 2(A)(1) and
2(A)(2) is hereby deleted and the phrase "35.2%" is substituted
in its place.
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 Third 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 Third 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 Third 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 Third 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:
ESTATE OF J. EDGAR MONROE
_________________________ By:________________________________
Name:____________________ Name:___________________________
(Please Print) Title:__________________________
_________________________
Name:____________________
(Please Print)
THIRD AMENDMENT TO SECURITY AGREEMENT
THIS THIRD AMENDMENT TO SECURITY AGREEMENT ("Third
Amendment") dated as of May 21, 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 (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 by XCL Land
(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 $200,000 in New Funds has been
provided to XCL Land thereby making the aggregate principal
amount of New Funds outstanding equal to $2,700,000 with Lender
having contributed $950,000 of such funds; and
WHEREAS, XCL Land has requested that Lender execute
this Third Amendment to release a portion of its security
interest and amend the Security Agreement to reflect the Lender's
revised security 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) 2.8% of Grantor's now owned or hereafter acquired
Partnership Interest in the Partnership;
(2) 2.8% 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 reference to "38.0%" in Section 2(A)(1) and
2(A)(2) is hereby deleted and the phrase "35.2%" is substituted
in its place.
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 Third 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 Third 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 Third 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 Third 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)
THIRD AMENDMENT TO SECURITY AGREEMENT
THIS THIRD AMENDMENT TO SECURITY AGREEMENT ("Third
Amendment") dated as of May 21, 1999, is made between The
Exploration Company of Louisiana, Inc. ("Grantor") and J. Edgar
Monroe Foundation (1976) ("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 Secured Amendment to
Agreement dated as of April 13, 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 by XCL Land
(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 $200,000 in New Funds has been
provided to XCL Land thereby making the aggregate principal
amount of New Funds outstanding equal to $2,700,000 with Lender
having contributed $100,000 of such funds; and
WHEREAS, XCL Land has requested that Lender execute
this Third Amendment to release a portion of its security
interest and amend the Security Agreement to reflect the Lender's
revised security 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) .3% of Grantor's now owned or hereafter acquired Partnership
Interest in the Partnership;
(2) .3% 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 reference to "4.0%" in Section 2(A)(1) and
2(A)(2) is hereby deleted and the phrase "3.7%" is substituted in
its place.
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 Third 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 Third 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 Third 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 Third 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:
J. EDGAR MONROE FOUNDATION (1976)
_________________________ By:________________________________
Name:____________________ Name:___________________________
(Please Print) Title:__________________________
_________________________
Name:____________________
(Please Print)
SECOND AMENDMENT TO SECURITY AGREEMENT
THIS SECOND AMENDMENT TO SECURITY AGREEMENT ("Second
Amendment") dated as of May 21, 1999, is made between The
Exploration Company of Louisiana, Inc. ("Grantor") and Edgar D.
Daigle ("Lender"), who agree as follows:
Recitals
WHEREAS, the Grantor and the Lender entered into that
certain Security Agreement dated March 25, 1999, as amended by
that certain First Amendment to Security Agreement dated as of
April 13, 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 by XCL Land
(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 $200,000 in New Funds has been
provided to XCL Land thereby making the aggregate principal
amount of New Funds outstanding equal to $2,700,000 with Lender
having contributed $100,000 of such funds; and
WHEREAS, XCL Land has requested that Lender execute
this Second Amendment to release a portion of its security
interest and amend the Security Agreement to reflect the Lender's
revised security 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) .3% of Grantor's now owned or hereafter acquired Partnership
Interest in the Partnership;
(2) .3% 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 reference to "4.0%" in Section 2(A)(1) and
2(A)(2) is hereby deleted and the phrase "3.7%" is substituted in
its place.
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 Second 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 Second 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 Second 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 Second 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:____________________ Edgar D. Daigle
(Please Print)
_________________________
Name:____________________
(Please Print)
SECOND AMENDMENT TO SECURITY AGREEMENT
THIS SECOND AMENDMENT TO SECURITY AGREEMENT ("Second
Amendment") dated as of May 21, 1999, is made between XCL Land,
Ltd. ("Borrower") and Edgar D. Daigle ("Lender"), who agree as
follows:
Recitals
WHEREAS, the Borrower and the Lender entered into that
certain Security Agreement dated March 25, 1999, as amended by
that certain First Amendment to Security Agreement dated as of
April 13, 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 Borrower by
persons other than Lender and secured by partnership interests in
the Partnership, Lender would immediately upon demand by Borrower
(one or more times, as appropriate) execute further amendments to
the Security Agreement releasing a percentage of the Borrower'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 $200,000 in New Funds has been
provided to Borrower thereby making the aggregate principal
amount of New Funds outstanding equal to $2,700,000 with Lender
having contributed $100,000 of such funds; and
WHEREAS, Borrower has requested that Lender execute
this Second Amendment to release a portion of its security
interest and amend the Security Agreement to reflect the Lender's
revised security 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) .3% of Grantor's now owned or hereafter acquired Partnership
Interest in the Partnership;
(2) .3% 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 reference to "4.0%" in Section 2(A)(1) and
2(A)(2) is hereby deleted and the phrase "3.7%" is substituted in
its place.
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 Second 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 Second 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 Second 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 Borrower and the Lender have
caused this Second Amendment to be duly executed as of the date
first above written.
WITNESSES: BORROWER:
XCL LAND, LTD.
_________________________ By:________________________________
Name:____________________ Name:___________________________
(Please Print) Title:__________________________
_________________________
Name:____________________
(Please Print)
LENDER:
_________________________ ________________________________
Name:____________________ Edgar D. Daigle
(Please Print)
_________________________
Name:____________________
(Please Print)
SECOND AMENDMENT TO SECURITY AGREEMENT
THIS SECOND AMENDMENT TO SECURITY AGREEMENT ("Second
Amendment") dated as of May 21, 1999, is made between The
Exploration Company of Louisiana, Inc. ("Grantor") and Doug Ashy,
Sr.("Lender"), who agree as follows:
Recitals
WHEREAS, the Grantor and the Lender entered into that
certain Security Agreement dated March 22, 1999, as amended by
that certain First Amendment to Security Agreement dated as of
April 13, 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 by XCL Land
(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 $200,000 in New Funds has been
provided to XCL Land thereby making the aggregate principal
amount of New Funds outstanding equal to $2,700,000 with Lender
having contributed $100,000 of such funds; and
WHEREAS, XCL Land has requested that Lender execute
this Second Amendment to release a portion of its security
interest and amend the Security Agreement to reflect the Lender's
revised security 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) .3% of Grantor's now owned or hereafter acquired Partnership
Interest in the Partnership;
(2) .3% 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 reference to "4.0%" in Section 2(A)(1) and
2(A)(2) is hereby deleted and the phrase "3.7%" is substituted in
its place.
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 Second 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 Second 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 Second 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 Second 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:____________________ Doug Ashy, Sr.
(Please Print)
_________________________
Name:____________________
(Please Print)
SECOND AMENDMENT TO SECURITY AGREEMENT
THIS SECOND AMENDMENT TO SECURITY AGREEMENT ("Second
Amendment") dated as of May 21, 1999, is made between XCL Land,
Ltd. ("Borrower") and Doug Ashy, Sr. ("Lender"), who agree as
follows:
Recitals
WHEREAS, the Borrower and the Lender entered into that
certain Security Agreement dated March 22, 1999, as amended by
that certain First Amendment to Security Agreement dated as of
April 13, 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 Borrower by
persons other than Lender and secured by partnership interests in
the Partnership, Lender would immediately upon demand by Borrower
(one or more times, as appropriate) execute further amendments to
the Security Agreement releasing a percentage of the Borrower'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 $200,000 in New Funds has been
provided to Borrower thereby making the aggregate principal
amount of New Funds outstanding equal to $2,700,000 with Lender
having contributed $100,000 of such funds; and
WHEREAS, Borrower has requested that Lender execute
this Second Amendment to release a portion of its security
interest and amend the Security Agreement to reflect the Lender's
revised security 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) .3% of Grantor's now owned or hereafter acquired Partnership
Interest in the Partnership;
(2) .3% 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 reference to "4.0%" in Section 2(A)(1) and
2(A)(2) is hereby deleted and the phrase "3.7%" is substituted in
its place.
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 Second 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 Second 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 Second 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 Borrower and the Lender have
caused this Second Amendment to be duly executed as of the date
first above written.
WITNESSES: BORROWER:
XCL LAND, LTD.
_________________________ By:________________________________
Name:____________________ Name:___________________________
(Please Print) Title:__________________________
_________________________
Name:____________________
(Please Print)
LENDER:
_________________________ ________________________________
Name:____________________ Doug Ashy, Sr.
(Please Print)
_________________________
Name:____________________
(Please Print)
FIRST AMENDMENT TO SECURITY AGREEMENT
THIS FIRST AMENDMENT TO SECURITY AGREEMENT ("First
Amendment") dated as of May 21, 1999, is made between The
Exploration Company of Louisiana, Inc. ("Grantor") and T. Jerald
Hanchey ("Lender"), who agree as follows:
Recitals
WHEREAS, the Grantor and the Lender entered into that
certain Security Agreement dated April 13, 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 by XCL Land
(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 $200,000 in New Funds has been
provided to XCL Land thereby making the aggregate principal
amount of New Funds outstanding equal to $2,700,000 with Lender
having contributed $200,000 of such funds; and
WHEREAS, XCL Land 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.
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) .6% of Grantor's now owned or hereafter acquired Partnership
Interest in the Partnership;
(2) .6% 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 reference to "8.0%" in Section 2(A)(1) and
2(A)(2) is hereby deleted and the phrase "7.4%" is substituted in
its place.
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:____________________ T. Jerald Hanchey
(Please Print)
_________________________
Name:____________________
(Please Print)
FIRST AMENDMENT TO SECURITY AGREEMENT
THIS FIRST AMENDMENT TO SECURITY AGREEMENT ("First Amendment") dated as of
May 21, 1999, is made between XCL Land, Ltd. ("Borrower") and T. Jerald Hanchey
("Lender"), who agree as follows:
Recitals
WHEREAS, the Borrower and the Lender entered into that certain Security
Agreement dated April 13, 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 Borrower by persons other than Lender and secured by
partnership interests in the Partnership, Lender would immediately upon
demand by Borrower (one or more times, as appropriate) execute further
amendments to the Security Agreement releasing a percentage of the Borrower's
Partnership Interest sufficient to allocate the security interests in 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 $200,000 in New Funds has been provided to Borrower
thereby making the aggregate principal amount of New Funds outstanding equal
to $2,700,000 with Lender having contributed $200,000 of such funds; and
WHEREAS, Borrower 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.
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) .6% of Grantor's now owned or hereafter acquired Partnership Interest
in the Partnership;
(2) .6% 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 reference to "8.0%" in Section 2(A)(1) and 2(A)(2) is hereby
deleted and the phrase "7.4%" is substituted in its place.
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 Borrower and the Lender have caused this First
Amendment to be duly executed as of the date first above written.
WITNESSES: BORROWER:
XCL LAND, LTD.
_________________________ By:________________________________
Name:____________________ Name:___________________________
(Please Print) Title:__________________________
_________________________
Name:____________________
(Please Print)
LENDER:
_________________________ ________________________________
Name:____________________ T. Jerald Hanchey
(Please Print)
_________________________
Name:____________________
(Please Print)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consoidated financial statements of XCL Ltd. and Subsidiaries for the six months
ended June 30, 1999, and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 198
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 919
<PP&E> 98,058
<DEPRECIATION> 790
<TOTAL-ASSETS> 124,612
<CURRENT-LIABILITIES> 92,691
<BONDS> 0
0
1,342
<COMMON> 233
<OTHER-SE> 24,962
<TOTAL-LIABILITY-AND-EQUITY> 124,612
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 2,245
<OTHER-EXPENSES> (338)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,504
<INCOME-PRETAX> (4,411)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,411)
<EPS-BASIC> (0.31)
<EPS-DILUTED> (0.31)
</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.
