SUBSCRIPTION AGREEMENT
SUBSCRIPTION AGREEMENT dated as of April 10, 1997 by and
between (a) XCL-China, Ltd.("XCL"), a company organized under
the laws of the British Virgin Islands and wholly owned
subsidiary of XCL, Ltd., (b) XCL Ltd., a Delaware company and
(c) the other parties to this Agreement named on the signature
page hereof (collectively, the "Subscriber").
XCL, XCL Ltd. and the Subscriber, each in reliance upon the
representations, warranties and covenants contained in this
Agreement, agree as follows with respect to the issuance and
sale by XCL and the purchase by the Subscriber of the number of
units (the "Units") which the Subscriber has inserted in Section
12 hereof at the purchase price set forth by the Subscriber in
Section 12 hereof, each Unit being comprised of (a) $100,000 in
principal amount of a promissory note of XCL ("Note"); and (b)
325,580 warrants ("Warrants") to purchase 325,580 shares of XCL
Ltd.'s common stock, par value $.01 per share ("Common Stock"),
at $.01 per share (subject to adjustment)or, under certain
limited conditions described in the Warrant Agreement, preferred
stock.
1. Sale and Purchase of Units. This Agreement is being
executed and delivered in connection with the sale and purchase
of up to an aggregate of 31 Units offered by XCL and XCL Ltd. to
a limited number of qualified investors (the "Offering"). By
executing and delivering this Agreement, the Subscriber hereby
irrevocably agrees to subscribe for the number of Units, and at
the purchase price, which the Subscriber has set forth in
Section 12 hereof, subject to the terms and conditions contained
in this Agreement. The purchase and sale of such Units shall
take place at a closing (the "Closing") commencing at 10:00
a.m., Central Daylight Time, on April 10, 1997 at the offices of
Gordon, Arata, XxXxxxxx & Xxxxxxxxx, L.L.P. or on such other
date and at such other time and place as shall be mutually
agreed upon by the parties hereto. The date on which the
Closing occurs is referred to herein as the "Closing Date". The
purchase and sale of such Units shall be subject to the
following terms and conditions.
(a) At closing, the Subscriber shall wire transfer,
or shall cause to be wire transferred, immediately available
United States Funds to First Bank of Minneapolis, ABA Number:
091-000022, Account Number: 1702-00000000 for the account of
Apache China Corporation; For Deposit to Apache China Joint
Venture, in payment of the purchase price for the Units. As
used herein the term "United States Funds" shall mean the freely
transferable or external currency of the United States of
America.
(b) Payment of the purchase price of the Units shall
be deemed by XCL to constitute a confirmation by the Subscriber
of the accuracy and completeness of its representations and
warranties set forth herein as of the date such payment is made.
(c) Simultaneously with the Subscriber's subscription
payment for the Units, XCL shall issue and deliver, or cause to
be issued and delivered to the Subscriber a promissory note
substantially in the form set forth as Schedule I evidencing the
aggregate principal amount of all Notes subscribed for, and XCL
Ltd. shall issue and deliver, or cause to be issued and
delivered, a single certificate representing the Warrants, in
each case registered in the name of the Subscriber and bearing a
suitably conformed version of the legend set forth in subsection
3(e) hereof.
(d) XCL reserves the unilateral right to withdraw, cancel
or modify the Offering and to reject, in whole or in part, any
subscription for Units, which need not be accepted in the order
received. In the event the Offering is withdrawn, cancelled or
modified, prior to the issuance of the Units, XCL shall notify
the Subscriber and give it the opportunity to cancel its
subscription and shall return to the Subscriber its subscription
moneys (without interest) and the original copies of all
subscription materials.
2. Representations and Warranties by XCL and XCL Ltd. XCL
and XCL Ltd. hereby represent and warrant to the Subscriber
that, except as set forth in the draft confidential offering
memorandum (the "Memorandum") for the sale of Senior Secured
Discount Notes by XCL Ltd., a copy of which is attached as
Exhibit "A":
(i) Organization and Good Standing. XCL and XCL Ltd. each
is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization,
has corporate power and authority to carry on its business as
now being conducted and is not required to qualify to do
business as a foreign corporation in any other jurisdiction
where the failure so to qualify would have a material adverse
effect on the business or assets of XCL or XCL Ltd. and its
subsidiaries, taken as a whole.
(ii) Capitalization. XCL's authorized capital stock
consists of 500,000,000 shares of Common Stock, of which
293,357,340 shares of Common Stock were validly issued and
outstanding as of April 4, 1997 and are fully paid and non-
assessable, and 2,400,000 shares of preferred stock,
par value $1.00 per share, to be issued in series with such rights and
preferences as the Board may designate from time to time of
which 641,359 shares designated the Series A, Cumulative
Convertible Preferred Stock; 44,954 shares designated the Series
B, Cumulative Preferred Stock; 48,982 shares designated the
Series E, Cumulative convertible Preferred Stock; and 21,057
shares designated the Series F, Cumulative Convertible Preferred
Stock are validly issued and outstanding on the date of this
Agreement and are fully paid and non-assessable. The Warrants,
when executed and delivered on behalf of XCL Ltd. and issued and
sold as set forth in this Agreement and the Warrant Agreement
annexed hereto as Schedule II, will have been duly executed,
issued and delivered and will be valid and legally binding
obligations of XCL Ltd. and the shares of Common Stock or
Preferred Stock issuable upon exercise of the Warrants ("Warrant
Stock") will, following such exercise in the manner provided for
in the Warrant Agreement, be duly authorized, validly issued,
fully paid and non-assessable.
(iii) Corporate Authority. XCL and XCL Ltd. each has full
power and authority to enter into this Agreement, and, as to XCL
Ltd., the Warrant Agreement, and to issue, sell and deliver the
Warrants and Warrant Stock and to incur and perform the
obligations provided for herein and under the Warrant Agreement
and Notes, which have been or will be duly authorized by all
necessary corporate or other action of XCL and XCL Ltd. (as
applicable). The execution, delivery and performance of this
Agreement, the Warrant Agreement and the Notes and the issuance
and sale of the Warrants, Warrant Stock and Notes to the
Subscriber, in the manner contemplated by this Agreement, the
Warrant Agreement and the Notes, do not require the approval or
consent of the stockholders of XCL or XCL Ltd. or other holders
of securities or indebtedness of XCL or XCL Ltd. (other than as
has been obtained), do not violate any provision of any law of
the United States, or the Certificate of Incorporation or By-
Laws of XCL or XCL Ltd., or any material agreement or instrument by
which XCL or XCL Ltd., or any of its properties are bound and
(except as contemplated thereunder) will not result in the
creation of any encumbrance or charge upon any asset of XCL or
XCL Ltd. This Agreement, the Warrant Agreement, and the Notes
constitute valid and binding obligations of XCL or XCL Ltd. (as
appropriate) in accordance with their terms.
(iv) Governmental Consents. All consents, authorizations
and approvals (if any) of any governmental agency or other
regulatory body within the United States required by XCL or XCL
Ltd. for the execution and delivery of this Agreement, the
Warrant Agreement, and Notes and the issuance of the Warrants
and Notes in the manner contemplated in the Warrant Agreement
and this Agreement, respectively, and the performance of its
obligations hereunder and thereunder have been or, in the case
of certain state securities regulatory agencies with
jurisdiction, will be obtained.
(v) Financial Statements. Attached as Exhibits "B" and
"C" are the audited financial statements of XCL Ltd. and its
consolidated subsidiaries for the fiscal year ended December 31,
1995 and the unaudited financial statements of XCL and its
consolidated subsidiaries for the twelve-month period ended
December 31, 1996, respectively. Such financial statements
present fairly the financial position of XCL and XCL Ltd. on the
dates and for the periods specified therein in all material
respects.
(vi) Absence of Certain Material Changes and Events. Since
December 31, 1996, there has been no material adverse change in
the financial condition, assets, liabilities or business of XCL
and its subsidiaries, taken as a whole or of XCL Ltd. and its
subsidiaries, taken as a whole.
(vii) Contracts. Except as set forth in the Memorandum,
neither XCL nor XCL Ltd. is in material violation of or in
material default under any material contract to which it is a
party or by which it is bound. To the best of the knowledge of
XCL and XCL Ltd., all such contracts are valid and effective in
accordance with their terms and XCL and XCL Ltd. know of no
material default by any third party that would materially impair
its ability to perform hereunder or under the Notes.
(viii) Litigation. There is no material litigation,
proceeding or investigation of any nature pending or, to the
knowledge of XCL or XCL Ltd., threatened against or relating to
XCL or XCL Ltd. or any of its properties or business. Neither
XCL nor XCL Ltd. is subject to any judgment, decree or order of
any court or any other governmental or administrative body or
agency. There is no action pending, or, to the best of XCL's
knowledge, threatened against XCL, XCL Ltd. or any of their
respective subsidiaries which either (a) involves the
transactions contemplated by this Agreement or (b) is likely to
have a material adverse effect on the ability of XCL or XCL Ltd.
to perform their obligations under this Agreement, the Warrant
Agreement, or the Notes.
(ix) Absence of Undisclosed Liabilities. To the best
knowledge of XCL and XCL Ltd., none of XCL, XCL Ltd. or any of
their respective subsidiaries has any material liabilities or
obligations (whether accrued, absolute, contingent or otherwise)
exclusive of those (1) arising hereunder or under the Warrant
Agreement and Notes, (2) described herein or in the Schedules
hereto, (3) reflected in the financial statements referred to in
paragraph (v) of this Section 2 or the Memorandum or (4)
liabilities and obligations arising under its leases and under
contracts relating to the exploration, operations, production
and sales of hydrocarbons from those leases, which, in the
aggregate, are in general conformance with industry practice and
standards.
(x) Memorandum. The Memorandum does not contain
any untrue statement of a material fact nor does it omit to
state a material fact necessary in order to make the statements
contained therein not misleading.
(xi) Compliance with Laws. Each of XCL, XCL Ltd.
and their respective subsidiaries has all required governmental
approvals, authorizations, consents, licenses, orders,
registrations and permits necessary for the operation of its
business as presently conducted and the absence of which would
have a material adverse effect.
(xii) Labor Matters.
(a) None of XCL, XCL Ltd. or their respective subsidiaries
has entered into any collective bargaining agreement and, to the
best of the knowledge of XCL and XCL Ltd., no labor union or
similar organization or any representative thereof has made any
attempt to organize or represent employees of any of XCL, XCL
Ltd. or their respective subsidiaries.
(b) To the best knowledge of XCL and XCL Ltd., there are
no controversies pending or threatened between any of XCL, XCL
Ltd. or their respective subsidiaries, on the one hand, and its
employees or any contractor or subcontractor thereof which
reasonably would be expected to have a material adverse effect.
(xiii) Taxes Each of XCL and XCL Ltd. have filed
all tax returns required to be filed by law and has paid all
taxes shown thereon to be due, including interest and penalties.
Neither XCL or XCL Ltd. is a party to any action or proceeding
by any governmental authority for the assessment or collection
of taxes, nor has any claim for assessment or collection of
taxes been asserted against either XCL or XCL Ltd., except for a
pending Louisiana income and franchise tax case described in the
Memorandum. There is no audit pending of any tax return filed
by either XCL or XCL Ltd. or with respect to any consolidated
group of which either XCL or XCL Ltd. was a member in the
applicable year. XCL Ltd. has received notice that the State of
Louisiana intends to conduct an income and franchise tax audit
of it, but that audit has not commenced.
(xiv) Title to Property. XCL, XCL Ltd. and their
respective subsidiaries have good and valid title to all their
plants, structures and equipment and such plants, structures and
equipment are in good operating condition and repair, except
where a defect in title or the failure of such plants,
structures and equipment to be in such good operating condition
and repair would not, individually or in the aggregate, have a
material adverse effect.
(xv) Environmental Matters.
(A) For purposes of this Agreement,
(x) "Environmental Laws" shall mean any federal,
state, local or common law or any foreign law, and any rules and
regulations under any thereof, relating to (I) releases or
threatened releases of Hazardous Substances or materials
containing Hazardous Substances, (II) the manufacture, handling,
transport, import, export, use, treatment, storage or disposal
of Hazardous Substances or materials containing Hazardous
Substances or (III) otherwise relating to pollution of the
environment or the protection of human health; and
(y) "Hazardous Substances" shall mean (I) substances
which are or which contain substances defined in or regulated
under the following federal statutes and their state
counterparts, as well as any similar foreign statutes and each
such statute's implementing regulations as amended from time to
time; the Hazardous Materials Transportation Act, the Resource
Conservation and Recovery Act, the Comprehensive Environmental
Response, Compensation and Liability Act, the Clean Water Act,
and Safe Drinking Water Act, the Atomic Energy Act, the Toxic
Substances Control Act, the Federal Insecticide, Fungicide and
Rodenticide Act, the Federal Food, Drug and Cosmetics Act and
the Clean Air Act, (II) petroleum and petroleum products
including crude oil and any fractions thereof, (III) natural
gas, synthetic gas and any mixtures thereof, (IV) radon, (V) any
other contaminant and (VI) any substances with respect to which
a federal, state, local or foreign agency requires environmental
investigation, monitoring, reporting or remediation.
(B) (x) Each of XCL and XCL Ltd. have obtained or caused
to have been obtained all material permits, licenses and other
authorizations which are required under Environmental Laws
relating to the oil and gas properties and leases and other
assets of XCL and XCL Ltd. and their respective subsidiaries
(collectively, the "Environmental Assets");
(y) XCL, XCL Ltd. and their respective subsidiaries
and the Environmental Assets are in compliance in all material
respects with all Environmental Laws and all terms and
conditions of such permits, licenses and authorizations; and
(z) None of XCL, XCL Ltd. or their respective
subsidiaries has received written notice of (I) any material
claims of present or past non-compliance with Environmental
Laws, (II) any material claims for damages, fines, penalties,
environmental investigation or remediation, or administrative,
injunctive or other relief arising under Environmental Laws or
(III) any past, present or future events, conditions,
circumstances, activities, practices, incidents, actions or
plans which are reasonably likely to interfere with or prevent
continued compliance, or which are reasonably likely to give
rise to any material liability, or otherwise form the basis of
any material claim, action, suit, proceeding, hearing or
investigation arising under Environmental Laws.
3. Representations, Warranties and Agreements by the
Subscriber. The Subscriber hereby represents and warrants to
and agrees with XCL and XCL Ltd. as follows:
(a) Memorandum. The Subscriber hereby acknowledges to XCL
and XCL, Ltd. that (i) any estimates, plans, projections etc.
which are incorporated in the Memorandum or which have been
furnished to it with respect to the activities undertaken
originally or to be undertaken by XCL or XCL Ltd. are based on
certain assumptions made by XCL and XCL Ltd. regarding such
factors as estimated values of the properties, prices of oil and
gas, future revenues, proved, probable and potential reserve
values, degrees of success of disposition transactions and
exploration and development activities and other factors, (ii)
actual experience may vary from such assumptions, (iii) such
estimates, plans and projections may never be achieved, (iv) the
Subscriber has not relied upon the achievement of any such
estimates and projections in making its investment decision to
acquire the Units, (v) the Subscriber has carefully reviewed the
Memorandum and the Exhibits thereto, in particular, the "Risk
Factors" section thereof, and (vi) the Subscriber is aware of
the current conditions existing in the United States and
international oil and gas industry which affect the business of
XCL and XCL Ltd.
(b) Independent Investigation. The Subscriber has relied
solely upon the independent investigations made by it and its
representatives in making a decision to purchase the Units and
has a full understanding and appreciation of the risks inherent
in such a speculative investment. In connection with such
investigation, the Subscriber and its attorneys, accountants and
other representatives and advisers, if any, (i) have been given
an opportunity to ask, and have to the extent the Subscriber
considered necessary, asked questions of, and have received
answers from, officers of XCL and XCL Ltd. concerning the terms
of the Offering and the affairs of XCL and XCL Ltd. and its
proposed activities and (ii) have been given or afforded access
to all documents, records, books and additional information
which the Subscriber has requested regarding such matters.
(c) Unregistered Shares. The Subscriber recognizes that
the offer and sale by XCL and XCL Ltd. of the Notes and the
Warrants (and Warrant Stock) and the offer and sale of the
Units have not been and (except to the extent set forth herein
and in the Warrant Agreement) will not be registered under the
United States Securities Act of 1933, as amended (the "Act"),
and have not been and will not be registered under any other
applicable domestic or foreign securities laws (the Act and any
such other applicable securities laws are hereinafter
collectively referred to herein as the "Securities Laws") in
reliance upon exemptions from the registration requirements
thereof; the Subscriber is acquiring the Units and the Notes,
Warrants, and Warrant Stock (collectively referred to herein as
the "Securities") solely for its account for investment and not
with a view to, or for offer or resale in connection with, a
distribution thereof in violation of any Securities Laws; the
investment will not constitute more than one fifth of the
Subscriber's consolidated net worth; and the Subscriber is an
"accredited investor" as defined in Rule 501 promulgated under
the Act. The Subscriber hereby covenants and agrees that it
will not sell the Units or any of the Securities until such
time as XCL Ltd. has effectively registered such securities
under the Act or counsel reasonably acceptable to XCL Ltd.
(which shall include in-house counsel) shall have furnished an
opinion, in form and substance reasonably acceptable to XCL Ltd.
to the effect that the transaction contemplated by Subscriber
would be in compliance with the Act. The Subscriber understands
that the effect of such representation and warranty is that the
Units and Securities must be held unless the sale or transfer
thereof is subsequently registered under the Securities Laws or
an exemption from such registration is available at the time of
any proposed sale or other transfer thereof. Except to the
extent hereinafter set forth and in the Warrant Agreement
neither XCL nor XCL Ltd. is under any obligation either to file
a registration statement under the Act covering the sale or
transfer of such securities or otherwise to register such
securities for sale under the Securities Laws. The Subscriber
is familiar with, or has been advised by its counsel regarding,
(i) the applicable limitations upon the resales of the Units
and the Securities, (ii) the circumstances under which the
Subscriber is required to hold such securities and (iii) the
limitations upon the transfer or other disposition thereof. The
Subscriber acknowledges that XCL and XCL Ltd. are and will be
relying upon the truth and accuracy of the foregoing
representations and warranties in offering and selling the Units and
the Securities to the Subscriber without first registering them under the
Securities Laws.
(d) Transfer Conditions. Except as to any Securities that
(i) are then effectively registered under the Act, or (ii) are
represented by certificates that, with the consent of XCL Ltd.,
no longer bear restrictive legends and are otherwise freely
tradeable under the Act, prior to any sale, transfer or other
disposition of any of the Subscriber's Units and the Securities
the Subscriber agrees to give at least three days prior written
notice to XCL Ltd. of its intention to effect such transfer and
to comply in all other respects with this subsection 3(d). Each
such notice shall describe the identity of the transferee and
the manner and circumstances of the proposed transfer in
sufficient detail to enable counsel to render the opinions
required herein, and shall be accompanied by an opinion of
counsel acceptable to XCL Ltd., addressed to XCL Ltd. and
satisfactory in form and substance to XCL Ltd., stating that, in
the opinion of such counsel, such transfer will be a transaction
exempt from registration under the Securities Laws and that all
consents, approvals or authorizations to such transfer have been
obtained. Assuming the receipt by XCL Ltd. of such satisfactory
opinion, the Subscriber shall thereupon be entitled to transfer
such shares in accordance with the terms of the notice delivered
by the Subscriber to XCL Ltd. and this Agreement. Each
certificate or other document issued representing the Securities
shall bear the legend set forth in subsection 3(e) hereof,
suitably conformed, unless, in the opinion of the respective
counsel for the Subscriber and XCL Ltd., such legend is not
required in order to aid in assuring compliance with applicable
Securities Laws.
The Subscriber agrees that it will not sell, transfer or
otherwise dispose of any of its Units or Securities, and XCL
and XCL Ltd. will not be required to recognize any such sale,
transfer or disposition, unless such sale, transfer or
disposition complies with this subsection 3(d).
(e) Restrictive Legends and Stop Order. In addition to
any specific restrictive legends that may be required by
applicable Securities Laws or agreements to which the Subscriber
may be a party, as to any Securities that are not effectively
registered under the Act, the Subscriber agrees to be bound by a
restrictive legend in substantially the following form which may
be placed on the certificates or other documents representing
the Securities:
THE SECURITIES [NOTE] REPRESENTED BY THIS [INSTRUMENT]
[CERTIFICATE] HAVE [HAS] NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE
SECURITIES OR BLUE SKY LAWS OF ANY OTHER DOMESTIC OR
FOREIGN JURISDICTION. SUCH SECURITIES [NOTE] MAY NOT
BE SOLD, OFFERED FOR SALE, OR OTHERWISE TRANSFERRED
EXCEPT IN COMPLIANCE WITH SUCH LAWS AND THE RULES AND
REGULATIONS PROMULGATED THEREUNDER. SUCH SECURITIES
[NOTE] ARE [IS] ALSO SUBJECT TO CERTAIN RESTRICTIONS
ON TRANSFER CONTAINED IN THAT CERTAIN SUBSCRIPTION
AGREEMENT DATED AS OF APRIL ___, 1997 BETWEEN THE
ISSUER AND THE INITIAL HOLDER OF THE SECURITIES [NOTE]
NAMED THEREIN. A COPY OF SUCH AGREEMENT IS AVAILABLE
FOR INSPECTION AT THE PRINCIPAL OFFICE OF THE ISSUER
AND WILL BE FURNISHED WITHOUT CHARGE TO THE HOLDER
THEREOF UPON WRITTEN REQUEST TO THE SECRETARY OF THE
ISSUER AND THE HOLDER OF THE SECURITIES [NOTE] AGREES
TO BE BOUND THEREBY.
The Subscriber understands and agrees that XCL Ltd.
may place and instruct any transfer agent for the Securities, to
place a stop transfer notation in the records in respect of the
certificates representing such securities, provided that such
securities may be transferred upon compliance with the
provisions of this Section 3.
4. Survival of Representations and Warranties. The
representations and warranties of XCL and XCL Ltd. set forth in
this Agreement or in any certificate or other document or
instrument furnished to the Subscriber by or on behalf of XCL
and XCL Ltd. in connection with the transactions contemplated
hereby, which shall be deemed to be effective as of the date
made, and the representations and warranties of the Subscriber
set forth in Section 3 shall survive the execution, delivery and
termination of this Agreement and the consummation of the
transactions contemplated hereby.
5. Conditions Precedent to Obligations of Subscriber.
(a) Representations True at Closing; Performance. The
representations and warranties of XCL and XCL Ltd. contained in
Section 2 hereof shall be deemed to have been made again at and
as of the Closing Date, and shall then be true and correct in
all material respects, and XCL and XCL Ltd. shall have performed
and complied in all material respects with all agreements and
conditions required by this Agreement to be performed or
complied with by it on or before the Closing Date.
(b) Legal Opinions. The Subscriber shall have
received opinion of counsel, dated the Closing Date, from Xxxxx
X. Xxxxxx, Esq., General Counsel of XCL, in substantially the
form attached as Exhibit "D".
(c) Units. There shall have been delivered to the
Subscriber the following instruments and documents evidencing
the Units subscribed for by the Subscriber:
(i) a promissory note evidencing the aggregate
principal amount of all Notes so subscribed for;
(ii) a certificate representing the aggregate
number of Warrants included as a component of such Units;
and
(iii) a copy of a fully executed Intercompany
Subordination Agreement substantially in the form attached
as Exhibit "E".
(d) No Withdrawal, Cancellation or Modification. XCL
or XCL Ltd. shall not have withdrawn, canceled or modified the
Offering, and shall have taken such action as is contemplated
thereby.
(e) Minimum Subscriptions. XCL and XCL Ltd. shall
have obtained executed agreements in substantially the form
hereof constituting subscriptions for such number of Units
which, when aggregated with the Units subscribed for by the
Subscriber hereunder, equal at least 31 Units.
(f) Certificates. XCL and XCL Ltd. shall deliver
other customary closing certificates.
6. Notices. Any notice, claim, request, demand or other
communication required or permitted to be given under this
Agreement shall be given in writing and shall be deemed to have
been duly given if delivered or mailed, first class postage
prepaid, to the party for whom intended at the following
addresses:
The Subscriber The address set forth on the
signature page hereof
XCL or XCL Ltd. 000 Xxx Xxxx Xxxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx, Esq.
or at such other address, as to any party, as such party shall
specify by like notice to the other parties.
7. Covenants of XCL and XCL LTD. XCL Ltd. hereby
covenants and agrees that:
(a) XCL Ltd. shall be obligated to register the Warrant
Stock at the time and on the terms and conditions set forth in
Article 9 of the Warrant Agreement.
(b) XCL and XCL Ltd. shall issue no more than 31 Units and
shall not issue any securities convertible into or exchangeable
for Units.
8. Rights of Parties to Terminate. Notwithstanding
anything to the contrary set forth herein, this Agreement and
the transactions contemplated hereby may be terminated:
(a) at any time by the written agreement of the parties
hereto; or
(b) by either XCL or the Subscriber, by written notice to
the other, if the Closing shall not have occurred prior to or on
April 10, 1997; provided, however, that such right to terminate
shall not be available to a party which has breached this
Agreement if such breach shall have prevented such Closing from
occurring prior to or on April 10, 1997.
9. Entire Agreement; etc. This Agreement together with
the Schedules hereto, the Notes, the Warrant Agreement and the
Intercompany Subordination Agreement sets forth the entire
understanding and agreement between XCL, XCL Ltd. and the
Subscriber pertaining to the subject matter hereof and thereof
superseding any and all prior agreements, proposals,
understandings and arrangements among the parties hereto, all of
which shall be deemed terminated, cancelled and of no further
force and effect. No prior or contemporaneous understanding or
agreement shall alter or constitute a waiver of any term,
condition, obligation, covenant, representation or warranty
contained in this Agreement, nor shall any waiver, understanding
or agreement purportedly amending or waiving any provision
hereof be effective unless and until it shall be reduced to
writing and signed by the parties hereto. Any other agreements
pursuant to which a limited number of qualified investors agree
to subscribe for Units shall be identical in form and content
(except as to the identity of the Subscriber and the number of
Units subscribed for) as this Agreement, and although each such
agreement (including this Agreement) may be executed in
counterparts with each counterpart being deemed an original and
all such counterparts being deemed as one single instrument,
each such agreement shall constitute an individual, several
agreement with XCL and XCL Ltd. and no partnership, joint
venture, agency or other relationship, expressed or implied,
shall be created by and among the Subscriber and other
purchasers of the Units. Further, XCL and XCL Ltd. covenant
with and warrant each Subscriber that, until such Subscriber's
Note is paid in full, if the terms of any of the Units or any
Subscriber's investment in the Units (including the Notes and
the Warrant Agreements) are amended either directly or
indirectly, then no such amendment shall be effective until and
unless each Subscriber is offered and either expressly accepts
or rejects the same amendment; and no benefit or inducement for
such amendment will be offered to any Subscriber unless the same
is offered to all Subscribers. The headings in this Agreement
have been inserted for convenience of reference only and shall
not affect the interpretation or enforcement of any provision
hereof. XCL and XCL Ltd. further covenant and agree that it is
the intent of the parties to this Agreement that the Subscriber
herein will purchase and hold the Units on the same terms and
conditions as the Kayne, Xxxxxxxx investors unless said
Subscriber explicitly elects otherwise after being offered the
opportunity to so elect.
10. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY
AND BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
DELAWARE FOR ALL PURPOSES WITHOUT REGARD TO ITS PRINCIPLES OF
CONFLICTS OF LAW.
11. Special Federal and State Securities Laws Notices.
(a) The undersigned understands and acknowledges
that:
THE UNITS AND SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), WILL
BE ACQUIRED FOR INVESTMENT ONLY AND MAY NOT BE SOLD, OFFERED FOR
SALE OR TRANSFERRED FOR VALUE IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION UNDER THE ACT OR AN EXEMPTION THEREFROM.
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY
ON THEIR OWN EXAMINATION OF THE ISSUER AND THE TERMS OF THE
OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THESE
SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE
SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE
FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR
DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD
EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO
REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE
THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS
INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
(b) Investors in the following jurisdictions must
review the following legends required by each jurisdiction and
be aware of their contents.
CALIFORNIA SUPPLEMENT
TO THE MEMORANDUM
THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA
DOES NOT RECOMMEND OR ENDORSE THE PURCHASE OF THESE SECURITIES.
IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THESE
SECURITIES, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY
CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE
COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT
AS PERMITTED IN THE COMMISSIONER'S RULES.
FLORIDA SUPPLEMENT
TO THE MEMORANDUM
THE SECURITIES REFERRED TO HEREIN WILL BE SOLD TO, AND
ACQUIRED BY, THE HOLDER IN A TRANSACTION EXEMPT UNDER 517.061
OF THE FLORIDA SECURITIES ACT. THE SECURITIES HAVE NOT BEEN
REGISTERED UNDER SAID ACT IN THE STATE OF FLORIDA. IN ADDITION,
ALL FLORIDA RESIDENTS SHALL HAVE THE PRIVILEGE OF VOIDING THE
PURCHASE WITHIN THREE (3) DAYS AFTER THE FIRST TENDER OF
CONSIDERATION IS MADE BY SUCH PURCHASER TO THE ISSUER, AN AGENT
OF THE ISSUER, OR AN ESCROW AGENT OR WITHIN 3 DAYS AFTER THE
AVAILABILITY OF THAT PRIVILEGE IS COMMUNICATED TO SUCH
PURCHASER, WHICHEVER OCCURS LATER.
MARYLAND SUPPLEMENT
TO THE MEMORANDUM
THE SECURITIES REPRESENTED BY THIS CERTIFICATE (OR OTHER
DOCUMENT) HAVE BEEN ISSUED PURSUANT TO A CLAIM OF EXEMPTION FROM
THE REGISTRATION OR QUALIFICATION PROVISIONS OF FEDERAL AND
STATE SECURITIES LAWS AND MAY NOT BE SOLD OR TRANSFERRED WITHOUT
COMPLIANCE WITH THE REGISTRATION OR QUALIFICATION PROVISIONS OF
APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR APPLICABLE
EXEMPTIONS THEREFROM.
PENNSYLVANIA SUPPLEMENT
TO THE MEMORANDUM
UNDER PROVISIONS OF THE PENNSYLVANIA SECURITIES ACT OF
1972, EACH PENNSYLVANIA RESIDENT SHALL HAVE THE RIGHT TO
WITHDRAW HIS ACCEPTANCE WITHOUT INCURRING ANY LIABILITY TO THE
SELLER, UNDERWRITER (IF ANY), OR ANY PERSON, WITHIN TWO (2)
BUSINESS DAYS FROM THE DATE OF RECEIPT BY THE ISSUER OF HIS
WRITTEN BINDING CONTRACT OF PURCHASE OR IN THE CASE OF A
TRANSACTION IN WHICH THERE IS NO WRITTEN BINDING CONTRACT OF
PURCHASE, WITHIN TWO BUSINESS DAYS AFTER HE MAKES THE INITIAL
PAYMENT FOR THE SECURITIES BEING OFFERED.
EACH PENNSYLVANIA RESIDENT WHO SUBSCRIBES FOR THE
SECURITIES BEING OFFERED HEREBY AGREES NOT TO SELL THESE
SECURITIES FOR A PERIOD OF TWELVE MONTHS AFTER THE DATE OF
PURCHASE. UNDER PROVISIONS OF THE PENNSYLVANIA SECURITIES ACT
OF 1972 (THE "1972 ACT"), EACH PENNSYLVANIA RESIDENT SHALL HAVE
THE RIGHT TO WITHDRAW HIS ACCEPTANCE WITHOUT INCURRING ANY
LIABILITY TO THE SELLER, UNDERWRITER (IF ANY) OR ANY OTHER
PERSON, WITHIN TWO BUSINESS DAYS FROM THE DATE OF RECEIPT BY THE
ISSUER OF HIS WRITTEN BINDING CONTRACT OF PURCHASE OR IN THE
CASE OF A TRANSACTION IN WHICH THERE IS NO WRITTEN BINDING
CONTRACT OF PURCHASE, WITHIN TWO BUSINESS DAYS AFTER HE MAKES
THE INITIAL PAYMENT FOR THE SECURITIES BEING OFFERED. TO
ACCOMPLISH THIS WITHDRAWAL, A SUBSCRIBER NEED ONLY SEND A LETTER
OR TELEGRAM TO THE SELLING AGENT AT THE ADDRESS SET FORTH IN THE
TEXT OF THE MEMORANDUM, INDICATING HIS OR HER INTENTION TO
WITHDRAW. SUCH LETTER OR TELEGRAM SHOULD BE SENT AND POSTMARKED
PRIOR TO THE END OF THE AFOREMENTIONED SECOND BUSINESS DAY. IT
IS PRUDENT TO SEND SUCH LETTER BY CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, TO ENSURE THAT IT IS RECEIVED AND ALSO TO EVIDENCE
THE TIME WHEN IT WAS MAILED. IF THE REQUEST IS MADE ORALLY (IN
PERSON OR BY TELEPHONE, TO THE SELLING AGENT AT THE NUMBER
LISTED IN THE TEXT OF THE MEMORANDUM), A WRITTEN CONFIRMATION
THAT THE REQUEST HAS BEEN RECEIVED SHOULD BE REQUESTED.
12. Subscription. The undersigned hereby subscribes for
the following number of Units:
Number of Units
to be purchased __________
(minimum purchase one Unit)
Total Purchase Price:
U.S. $__________
(Number of Units x $100,000)
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement effective on the date
first above written. TYPE OF OWNERSHIP
(Check One)
_________ Individual (one signature required)
_________ Joint Tenants with right of survivorship (each
must sign)
_________ Tenants in Common (each must sign)
_________ Tenants by the Entirety (both husband and wife
must sign)
_________ Community Property (one signature required if
interest held in one name, i.e., managing spouse;
signatures of both spouses required if interest
is held in both names)
_________ Corporation (include resolution authorizing this
investment)
_________ Partnership (include partnership agreement)
_________ Trust (include instrument creating the trust)
_________ Estate (include certified copy of letters
testamentary or letters of administration)
__________________________________________________________________________
Please print here the exact name in which Unit(s) are to be
registered.
