WARRANT AGREEMENT
Dated as of May 20, 1997
Of
XCL LTD.
Warrants to Purchase Shares of Common Stock,
Par Value $0.01 Per Share
TABLE OF CONTENTS
Page
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ARTICLE I ISSUANCE, FORM, EXECUTION, DELIVERY AND
REGISTRATION OF WARRANT CERTIFICATES 1
SECTION 1.01. Issuance of Warrants 1
SECTION 1.02. Form of Warrant Certificates 2
SECTION 1.03. Execution of Warrant Certificates 2
SECTION 1.04. Authentication and Delivery 2
SECTION 1.05. Temporary Warrant Certificates 3
SECTION 1.06. Separation of Note Warrants and Notes 3
SECTION 1.07. Registration 3
SECTION 1.08. Registration of Transfers and
Exchanges 4
SECTION 1.09. Lost, Stolen, Destroyed, Defaced or
Mutilated Warrant Certificates 10
SECTION 1.10. Offices for Exercise, etc. 11
ARTICLE II DURATION, EXERCISE OF WARRANTS AND EXERCISE
PRICE 11
SECTION 2.01. Duration of Warrants 11
SECTION 2.02. Exercise, Exercise Price, Settlement
and Delivery 12
SECTION 2.03. Cancellation of Warrant Certificates 13
ARTICLE III OTHER PROVISIONS RELATING TO RIGHTS OF
HOLDERS OF WARRANTS 14
SECTION 3.01. Enforcement of Rights 14
ARTICLE IV CERTAIN COVENANTS OF THE COMPANY 14
SECTION 4.01. Payment of Taxes 14
SECTION 4.02 Notice of Expiration Date 14
ARTICLE V ADJUSTMENTS 15
SECTION 5.01. Adjustment of Exercise Price and
Number of Shares Issuable 15
SECTION 5.02. Fractional Interest 22
SECTION 5.03. When Adjustment Not Required 22
SECTION 5.04. Challenge to Good Faith
Determination 22
SECTION 5.05. Treasury Stock 23
SECTION 5.06. Notices to Warrant Holders 23
ARTICLE VI CONCERNING THE WARRANT AGENT 24
SECTION 6.01. Warrant Agent 24
SECTION 6.02. Conditions of Warrant Agent's
Obligations 24
SECTION 6.03. Resignation and Appointment of
Successor 27
ARTICLE VII
MISCELLANEOUS 29
SECTION 7.01. Amendment 29
SECTION 7.02. Notices and Demands to the Company
and Warrant Agent 29
SECTION 7.03. Address for Notices to the Company
and for Transmission of Documents 29
SECTION 7.04. Notices to Holders 30
SECTION 7.05. APPLICABLE LAW 30
SECTION 7.06. Obtaining of Governmental Approvals 30
SECTION 7.07. Persons Having Rights Under
Agreement 30
SECTION 7.08. Headings 30
SECTION 7.09. Counterparts 30
SECTION 7.10. Inspection of Agreement 31
EXHIBIT A - Form of Warrant Certificate
EXHIBIT B - Certificate to be Delivered Upon Exchange or
Registration of Transfer of Warrants
EXHIBIT C - Transferee Letter of Representation
This paragraph is to be included only if the Warrant
Certificate is in global form.
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES
OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT
ASSET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER
(1)REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER"
(AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS
AN INSTITUTIONAL "ACCREDITED INVESTOR" ( AS DEFINED IN RULE
501(a)(l), (2), (3) OR (7) UNDER THE SECURITIES ACT)(AN
"ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS
ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE
WITH RULE 903 OR 904 UNDER THE SECURITIES ACT, (2) AGREES THAT IT
WILL NOT WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS
SECURITY RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO
XCL LTD. (THE "COMPANY") OR ANY SUBSIDIARY THEREOF, (B) INSIDE
THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN
COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE
THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT,
PRIOR TO SUCH TRANSFER, FURNISHES (OR FURNISHES ON ITS BEHALF BY
A U.S. BROKER-DEALER) TO THE COMPANY AND THE WARRANT AGENT A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS SECURITY, (D)
OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT
TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE), OR (F) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES
THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
IN CONNECTION WITH ANY TRANSFER OF THIS SECURITY WITHIN TWO YEARS
AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY, IF THE PROPOSED
TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER
MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE WARRANT AGENT AND
THE COMPANY SUCH CERTIFICATIONS, WRITTEN LEGAL OPINIONS OR OTHER
INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM
THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANING
GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THIS
LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE
RESALE RESTRICTION TERMINATION DATE.
THIS SECURITY IS SUBJECT TO A REGISTRATION RIGHTS AGREEMENT
DATED AS OF MAY 20, 1997 BETWEEN THE COMPANY AND XXXXXXXXX &
COMPANY, INC., A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF
THE COMPANY.
CUSIP #[ ]
No. [ ] [ ] Warrants
WARRANT CERTIFICATE
XCL LTD.
This Warrant Certificate certifies that [ ], or
registered assigns, is the registered holder of [ ] Warrants
(the "Warrants") to purchase shares of Common Stock, par value
$0.01 per share (the "Common Stock"), of XCL Ltd., a Delaware
corporation (the "Company"). Each Warrant entitles the holder to
purchase from the Company at any time on or after the later of
May 20, 1998 or such date on which the Company has reserved or
has available a sufficient number of shares of its Common Stock
to permit exercise of all outstanding Warrants and until 5:00
p.m., New York City time, on May 20, 2004 (the "Expiration
Date"), 1,280 fully paid and non-assessable shares of Common
Stock (as such number may be adjusted from time to time, the
"Shares", which may also include any other securities or property
purchasable upon exercise of a Warrant, such adjustment and
inclusion each as provided in the Warrant Agreement) at the
exercise price (the "Exercise Price") of $0.2063 per Share upon
surrender of this Warrant Certificate and payment of the Exercise
Price at any office or agency maintained for that purpose by the
Company (the "Warrant Agent Office"), subject to the conditions
set forth herein and in the Warrant Agreement.
The Exercise Price shall be payable in cash or by certified
or official bank check in the lawful currency of the United
States of America which as of the time of payment is legal tender
for payment of public or private debts. The Company has
initially designated its principal executive offices in
Lafayette, Louisiana, as the initial Warrant Agent Office. The
number of Shares issuable upon exercise of the Warrants
("Exercise Rate") is subject to adjustment upon the occurrence of
certain events set forth in the Warrant Agreement.
Any Warrants not exercised on or prior to 5:00 p.m., New
York City time, on May 20, 2004 shall thereafter be void.
Reference is hereby made to the further provisions on the
reverse hereof, which provisions shall for all purposes have the
same effect as though fully set forth at this place. Capitalized
terms used in this Warrant Certificate but not defined herein
shall have the meanings ascribed thereto in the Warrant
Agreement.
This Warrant Certificate shall not be valid unless
authenticated by the Warrant Agent, as such term is used in the
Warrant Agreement. Initially, the Company shall act as its own
Warrant Agent.
THE WARRANTS REPRESENTED BY THIS WARRANT CERTIFICATE SHALL
BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
WITNESS the corporate seal of the Company and the signatures
of its duly authorized officers.
Dated: _________________, 19__
XCL LTD.
By:_____________________
Name:_____________________
Title:_____________________
Attest:
By:_______________________________
Name:______________________
Title:_______________________
Certificate of Authentication:
This is one of the Warrants
referred to in the within-
mentioned Warrant Agreement:
XCL LTD.,
as Warrant Agent
By:_____________________________
Authorized Signatory
[FORM OF WARRANT CERTIFICATE]
[REVERSE]
XCL LTD.
The Warrants evidenced by this Warrant Certificate are part
of a duly authorized issue of Warrants, each of which represents
the right to purchase at any time on or after the later of May
20, 1998, or such date on which the Company has reserved or has
available a sufficient number of shares of its Common Stock to
permit exercise of all outstanding Warrants and until 5:00 p.m.,
New York City time, on May 20, 2004, 1,280 Shares, subject to
adjustment as set forth in the Warrant Agreement. The Warrants
are issued pursuant to a Warrant Agreement dated as of May 20,
1997 (the "Warrant Agreement"), duly executed and delivered by
the Company for the benefit of the holders from time to time of
the Warrant Certificates, which Warrant Agreement is hereby
incorporated by reference in and made a part of this instrument
and is hereby referred to for a description of the rights,
limitation of rights, obligations, duties and immunities
thereunder of the Warrant Agent, the Company and the holders (the
words "holders" or holder" meaning the registered holders or
registered holder) of the Warrant Certificates. Warrants may be
exercised by (i) surrendering at any Warrant Agent Office this
Warrant Certificate with the form of Election to Exercise set
forth hereon duly completed and executed and (ii) paying in full
the Warrant Exercise Price for each such Warrant exercised and
any other amounts required to be paid pursuant to the Warrant
Agreement.
If all of the items referred to in the last sentence of the
preceding paragraph are received by the Warrant Agent at or prior
to 2:00 p.m., New York City time, on a Business Day, the exercise
of the Warrant to which such items relate will be effective on
such Business Day. If any items referred to in the last sentence
of the preceding paragraph are received after 2:00 p.m., New York
City time, on a Business Day, the exercise of the Warrants to
which such item relates will be deemed to be effective on the
next succeeding Business Day. Notwithstanding the foregoing, in
the case of an exercise of Warrants on the Expiration Date, if
all of the items referred to in the last sentence of the
preceding paragraph are received by the Warrant Agent at or prior
to 5:00 p.m., New York City time, on such Expiration Date, the
exercise of the Warrants to which such items relate will be
effective on the Expiration Date.
Subject to the terms of the Warrant Agreement, as soon as
practicable after the exercise of any Warrant or Warrants, the
Company shall issue or cause to be issued to or upon the written
order of the registered holder of this Warrant Certificate, a
certificate or certificates evidencing the Share or Shares to
which such holder is entitled, in fully registered form,
registered in such name or names as may be directed by such
holder pursuant to the Election to Exercise, as set forth on the
reverse of this Warrant Certificate. Such certificate or
certificates evidencing the Share or Shares shall be deemed to
have been issued and any persons who are designated to be named
therein shall be deemed to have become the holder of record of
such Share or Shares as of the close of business on the date upon
which the exercise of this Warrant was deemed to be effective as
provided in the preceding paragraph.
The Company will not be required to issue fractional shares
of Common Stock upon exercise of the Warrants or distribute Share
certificates that evidence fractional shares of Common Stock. In
lieu of fractional shares of Common Stock, there shall be paid to
the registered Holder of this Warrant Certificate at the time
such Warrant Certificate is exercised an amount in cash equal to
the same fraction of the current market price per share of Common
Stock as determined in accordance with the Warrant Agreement.
Warrant Certificates, when surrendered at any Warrant Agent
Office by the holder thereof in person or by legal representative
or attorney duly authorized in writing, may be exchanged for a
new Warrant Certificate or new Warrant Certificates evidencing in
the aggregate a like number of Warrants, in the manner and
subject to the limitations provided in the Warrant Agreement,
without charge except for any tax or other governmental charge
imposed in connection therewith.
Upon due presentment for registration of transfer of this
Warrant Certificate at any office or agency maintained by the
Company for that purpose, a new Warrant Certificate evidencing in
the aggregate a like number of Warrants shall be issued to the
transferee in exchange for this Warrant Certificate, subject to
the limitations provided in the Warrant Agreement, without charge
except for any tax or other governmental charge imposed in
connection therewith.
The Company and the Warrant Agent may deem and treat the
registered holder hereof as the absolute owner of this Warrant
Certificate (notwithstanding any notation of ownership or other
writing hereon made by anyone) for the purpose of any exercise
hereof and for all other purposes, and neither the Company nor
the Warrant Agent shall be affected by any notice to the
contrary.
The term "Business Day" shall mean any day on which (i)
banks in New Orleans, (ii) the principal national securities
exchange or market on which the Common Stock is listed or
admitted to trading and (iii) the principal national securities
exchange or market, if any, on which the Warrants are listed or
admitted to trading are open for business.
ELECTION TO EXERCISE
(To be executed upon exercise of Warrants on the Exercise Date)
The undersigned hereby irrevocably elects to exercise
_______________ of the Warrants represented by this Warrant
Certificate and purchase the whole number of Shares issuable upon
the exercise of such Warrants and herewith tenders payment for
such Shares in the amount of $_____in cash or by certified or
official bank check, in accordance with the terms hereof. The
undersigned requests that a certificate representing such Shares
be registered in the name of _________________, whose address is
_____________, and that such certificate be delivered to
____________, whose address is ____________________. Any cash
payments to be paid in lieu of a fractional Share should be made
to __________, whose address is _____________________, and the
check representing payment thereof should be delivered to
_______________, whose address is _______________________.
Name of holder of
Warrant Certificate: _________________________________
(Please Print)
Tax Identification or
Social Security Number: _____________________________
Signature: _________________________________________
Note: The above signature must
correspond with the name as written
upon the face of this Warrant
Certificate in every particular,
without alteration or enlargement
or any change whatever.
Dated ______________ , ___
ASSIGNMENT
For value received, _________________________________ hereby
sells, assigns and transfers unto
_________________________________ the within Warrant Certificate,
together with all right, title and interest therein, and does
hereby irrevocably constitute and appoint
_________________________________ attorney, to transfer said
Warrant Certificate on the books of the within-named Company,
with full power of substitution in the premises.
Dated _________________ , ____
Signature:_________________________________
Note: The above signature must
correspond with the name as written
upon the face of this Warrant
Certificate in every particular,
without alteration or enlargement
or any change whatever.
SCHEDULE OF EXCHANGES OF DEFINITIVE WARRANTS
The following exchanges of a part of this Global Warrant for
Definitive Warrants have been made:
Number of
Warrants of
Amount of Amount of this Global Signature of
decrease in increase in Warrant authorized
Number of Number of following signatory of
Date of Warrants of this Warrants of this such decrease Warrant Agent
Exchange Global Warrant Global Warrant (or increase) or Depositary
-------- ---------------- ---------------- ------------- -------------
__________________
This is to be included only if the Warrant Certificate is
in global form.
EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF WARRANTS
Re: Warrants to Purchase Common Stock (the "Warrants") of XCL
Ltd.
This Certificate relates to _____ Warrants held in* _____
book-entry or *_____ certificated form by _________________ (the
"Transferor").
The Transferor:*
has requested the Warrant Agent by written order to
deliver in exchange for its beneficial interest in the Global
Warrant held by the Depositary a Warrant or Warrants in
definitive, registered form of authorized denominations and an
aggregate number equal to its beneficial interest in such Global
Warrant (or the portion thereof indicated above) or
has requested the Warrant Agent by written order to
exchange or register the transfer of a Warrant or Warrants.
In connection with such request and in respect of each such
Warrant, the Transferor does hereby certify that the Transferor
is familiar with the Warrant Agreement relating to the above
captioned Warrants and the restrictions on transfers thereof as
provided in Section 1.08 of such Warrant Agreement, and that the
transfer of this Warrant does not require registration under the
Securities Act of 1933, as amended (the "Act") because[*]:
Such Warrant is being acquired for the Transferor's
own account, without transfer (in satisfaction of Section
1.08(a)(ii)(y)(A) or Section 1.08(d)(i)(A) of the Warrant
Agreement).
Such Warrant is being transferred to a qualified
institutional buyer (as defined in Rule 144A under the Act), in
reliance on Rule 144A or in accordance with Regulation S under
the Act.
Such Warrant is being transferred in accordance with
Rule 144 under the Act.
Such Warrant is being transferred in reliance on and
in compliance with an exemption from the registration
requirements of the Act, other than Rule 144A or Rule 144 or
Regulation S under the Act. An opinion of counsel to the effect
that such transfer does not require registration under the Act
accompanies this Certificate.
[INSERT NAME OF TRANSFEROR]
By:__________________________
Date: _________________
*Check applicable box.
EXHIBIT C
Transferee Letter of Representation
XCL Ltd.
000 Xxx Xxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Ladies and Gentlemen:
In connection with our proposed purchase of warrants
("Warrants") to purchase Common Stock, par value $0.01 per share
(the "Common Stock"; together with the Warrants, the
"Securities"), of XCL Ltd. (the "Company") we confirm that:
1. We understand that the Securities have not been
registered under the Securities Act of 1933, as amended (the
"Securities Act"), and, unless so registered, may not be
sold except as permitted in the following sentence. We
agree on our own behalf and on behalf of any investor
account for which we are purchasing Securities to offer,
sell or otherwise transfer such Securities prior to the date
which is two years after the later of the date of original
issue and the last date on which the Company or any
affiliate of the Company was the owner of such Securities,
or any predecessor thereto (the "Resale Restriction
Termination Date") only (a) to the Company, (b) pursuant to
a registration statement which has been declared effective
under the Securities Act, (c) so long as the Securities are
eligible for resale pursuant to Rule 144A, under the
Securities Act, to a person we reasonably believe is a
qualified institutional buyer under Rule 144A (a "QIB") that
purchases for its own account or for the account of a QIB
and to whom notice is given that the transfer is being made
in reliance on Rule 144A, (d) pursuant to offers and sales
that occur outside the United States within the meaning of
Regulation S under the Securities Act, (e) to an
institutional "accredited investor" within the meaning of
subparagraph (a)(l), (2), (3) or (7) of Rule 501 under the
Securities Act that is purchasing for his own account or for
the account of such an institutional "accredited investor,"
or (f) pursuant to any other available exemption from the
registration requirements of the Securities Act, subject in
each of the foregoing cases to any requirement of law that
the disposition of our property or the property of such
investor account or accounts be at all times within our or
their control and to compliance with any applicable state
securities laws. The foregoing restrictions on resale will
not apply subsequent to the Resale Restriction Termination
Date. If any resale or other transfer of the Securities is
proposed to be made pursuant to clause (e) above prior to
the Resale Restriction Termination Date, the transferor
shall deliver a letter from the transferee substantially in
the form of this letter to the warrant agent under the
Warrant Agreement pursuant to which the Securities were
issued (the "Warrant Agent") which shall provide, among
other things, that the transferee is an institutional
"accredited investor" within the meaning of subparagraph
(a)(l), (2), (3) or (7) of Rule 501 under the Securities Act
and that it is acquiring such Securities for investment
purposes and not for distribution in violation of the
Securities Act. The Warrant Agent and the Company reserve
the right prior to any offer, sale or other transfer prior
to the Resale Restriction Termination Date of the Securities
pursuant to clause (e) or (f) above to require the delivery
of a written opinion of counsel, certifications, and or
other information satisfactory to the Company and the
Warrant Agent.
2. We are an institutional "accredited investor"
(as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation
D under the Securities Act) purchasing for our own account
or for the account of such an institutional "accredited
investor," and we are acquiring the Securities for
investment purposes and not with a view to, or for offer or
sale in connection with, any distribution in violation of
the Securities Act and we have such knowledge and experience
in financial and business matters as to be capable of
evaluating the merits and risks of our investment in the
Securities, and we and any accounts for which we are acting
are each able to bear the economic risk of our or its
investment for an indefinite period.
3. We are acquiring the Securities purchased by us
for our own account or for one or more accounts as to each
of which we exercise sole investment discretion.
4. You, the Warrant Agent and your respective
counsel are entitled to rely upon this letter and you are
irrevocably authorized to produce this letter or a copy
hereof to any interested party in any administrative or
legal proceeding or official inquiry with respect to the
matters covered hereby.
Very truly yours,
________________________
(Name of Purchaser)
By:____________________________
Date:__________________________
Upon transfer the Securities would be registered in the name
of the new beneficial owner as follows:
Name: _____________________________
Address: ___________________________
Taxpayer ID Number: ________________
