SUBSCRIPTION AGREEMENT
SUBSCRIPTION AGREEMENT dated as of _______________, ____ by
and between (a) XCL Land, Ltd. ("XCL Land"), a company organized
under the laws of the State of Delaware and a 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 Land, 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 Land and the purchase by the Subscriber of the number of
units (the "Units") which the Subscriber has inserted in Section
13 hereof at the purchase price set forth by the Subscriber in
Section 13 hereof, each Unit being comprised of (a) $100,000 in
principal amount of a promissory note of XCL Land ("Note"); and
(b) 21,705 warrants ("Warrants") to purchase 21,705 shares of XCL
Ltd.'s common stock, par value $.01 per share ("Common Stock"),
at $1.50 per share (subject to adjustment). Half Units may be
purchased hereunder after the minimum purchase of 1 Unit has been
made.
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 62 Units (issuable in one or
more tranches) offered by XCL Land 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 13 hereof,
subject to the terms and conditions contained in this Agreement.
The purchase and sale of the Units listed in Section 13 hereof
shall take place at a closing (the "Initial Closing") commencing
at 10:00 a.m., Central Daylight Time, on _______________, ____ at
the offices of Xxxxxx, Arata, McCollam, Xxxxxxxxx & Xxxxx, 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 Initial 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.
(1) At closing, the Subscriber shall wire transfer,
or shall cause to be wire transferred, immediately available
United States Funds to Bank One, Louisiana, ABA Number: 065-
400137, Account Number: 711-0000000 for the account of XCL Land,
Ltd. 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.
(2) Payment of the purchase price of the Units
shall be deemed by XCL Land and XCL Ltd. 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.
(3) Simultaneously with the Subscriber's
subscription payment for the Units, XCL Land 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 hereunder on this date, and XCL Ltd. shall issue and deliver,
or cause to be issued and delivered, a single certificate
representing the Warrants subscribed for hereunder on this date,
in each case registered in the name of the Subscriber and bearing
a suitably conformed version of the legend set forth in
subsection 4(e) hereof.
(4) XCL Land 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 Land 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. Commitment to Subscribe for Additional Units. In
addition to Subscriber's subscription to the number of Units set
forth in Section 13 hereof, Subscriber hereby agrees to subscribe
for an additional number of Units up to the number specified in
Section 13 on the same terms and conditions as set forth herein
upon the written request of XCL Land. The closing of such
transaction shall be held on the date and at the place reasonably
designated by XCL Land.
3. Representations and Warranties by XCL Land and XCL
Ltd. XCL Ltd. has filed a Preliminary Prospectus (a copy of
which is attached hereto as Exhibit "A") (the "Preliminary
Prospectus") with the Securities and Exchange Commission on
October 23, 1998 as part of Amendment No. 2 to a Registration
Statement on Form S-1 registering certain securities of XCL Ltd.
described therein. (The Subscriber understands and acknowledges
that the Preliminary Prospectus is not final and is subject to
further amendment. Subscriber further understands and
acknowledges that there are outstanding comments on the
Preliminary Prospectus from the Securities and Exchange
Commission and that responses to those comments have not been
incorporated into the Preliminary Prospectus.) XCL Land and XCL
Ltd. hereby represent and warrant to the Subscriber that except
as set forth in the Preliminary Prospectus or in this
Subscription Agreement or the Schedules hereto:
(1) Organization and Good Standing. XCL Land 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 Land or XCL Ltd. and its
subsidiaries, taken as a whole.
(2) Capitalization. XCL Ltd.'s authorized capital
stock consists of 500,000,000 shares of Common Stock, par value
$0.01 per share of which 23,377,971 shares of Common Stock were
validly issued and outstanding as of December 31, 1998 excluding
69,470 shares held in treasury, and are fully paid and non-
assessable, and 2,400,000 shares of preferred stock, par value
$1.00 per share, 70,000 of which have been designated Amended
Series B, Cumulative Converted Preferred Stock with 50,848 of
such shares outstanding as of December 31, 1998 and 2,085,000 of
which have been designated Amended Series A, Cumulative
Convertible Preferred Stock with 1,231,897 of such shares
outstanding as of December 31, 1998. The Warrants, when executed
and delivered on behalf of XCL Ltd. and issued and sold as set
forth in this Agreement and the Warrant Certificate annexed
hereto as Schedule II (the "Warrant Agreement"), 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
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.
(3) Corporate Authority. XCL Land 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, as to XCL Land, the Notes, which have been or will
be duly authorized by all necessary corporate or other action of
XCL Land (as to this Agreement and the Notes) and XCL Ltd. (as to
this Agreement and the Warrant Agreement). 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 Land
or XCL Ltd. or other holders of securities or indebtedness of XCL
Land 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 Land or XCL Ltd.,
or any material agreement or instrument by which XCL Land 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 Land or XCL Ltd.
This Agreement, the Warrant Agreement, and the Notes constitute
valid and binding obligations of XCL Land or XCL Ltd. (as
appropriate) in accordance with their terms.
(4) Governmental Consents. All consents,
authorizations and approvals (if any) of any governmental agency
or other regulatory body within the United States required by XCL
Land 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.
(5) Financial Statements. Included in the
Preliminary Prospectus are the audited financial statements of
XCL Ltd. and its consolidated subsidiaries for the fiscal year
ended December 31, 1997 and the unaudited financial statements of
XCL Ltd. and its consolidated subsidiaries for the six-month
period ended June 30, 1998, respectively. Attached as Exhibit B
to this Subscription Agreement are the unaudited financial
statements of XCL Ltd. and its consolidated subsidiaries for the
nine-month period ended September 30, 1998. Such financial
statements present fairly the financial position of XCL Land and
XCL Ltd. on the dates and for the periods specified therein in
all material respects.
(6) Absence of Certain Material Changes and Events.
Since September 30, 1998, except as described on Exhibit B-1 to
this Subscription Agreement, there has been no material adverse
change in the financial condition, assets, liabilities or
business of XCL Land and its subsidiaries, taken as a whole or of
XCL Ltd. and its subsidiaries, taken as a whole.
(7) Contracts. Except as set forth in the
Preliminary Prospectus and herein (including the Exhibits
hereto), and except for XCL Ltd.'s failure to pay certain cash
calls to Apache, neither XCL Land 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 Land and XCL Ltd., all such contracts are
valid and effective in accordance with their terms and XCL Land
and XCL Ltd. know of no material default by any third party that
would materially impair its ability to perform hereunder or XCL
Land's ability to perform under the Notes.
(8) Litigation. Except as disclosed in XCL Ltd.'s
public filings (and certain additional lawsuits related to the
income and franchise tax disputes and disputes with Apache
disclosed in those filings and in the Exhibits hereto) there is
no material litigation, proceeding or investigation of any nature
pending or, to the knowledge of XCL Land or XCL Ltd., threatened
against or relating to XCL Land or XCL Ltd. or any of its
properties or business. Neither XCL Land 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 Land's or XCL Ltd.'s
knowledge, threatened against XCL Land, 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 Land to
perform its obligations under this Agreement or the Notes or on
the ability of XCL Ltd. to perform its obligations under this
Agreement or the Warrant Agreement.
(9) Absence of Undisclosed Liabilities. To the
best knowledge of XCL Land and XCL Ltd., none of XCL Land, 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 Units, the Warrant Agreements and Notes, (2) described herein
or in the Exhibits hereto, (3) reflected in the financial
statements referred to in paragraph (e) of this Section 3 or the
Preliminary Prospectus or (4) arising in connection with a
promissory note of XCL outstanding in the principal amount of
$100,000 and 10,000 warrants to purchase 10,000 shares of XCL
Ltd. common stock comprising 1 of up to 10 Units that are
currently being offered by XCL Land and XCL Ltd. to a limited
number of qualified investors in another offering (it being
understood that the remaining 9 Units in that offering may also
be sold) or (5) 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.
(10) Preliminary Prospectus. The Preliminary
Prospectus 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 as of the date thereof
not misleading; however, it should be read only in conjunction
with this Subscription Agreement and the Exhibits hereto and with
the understanding and acknowledgment by Subscriber that (i) the
Preliminary Prospectus is not final and is subject to further
amendment and (ii) there are outstanding comments on the
Preliminary Prospectus from the Securities and Exchange
Commission and responses to those comments have not been
incorporated into the Preliminary Prospectus.
(11) Compliance with Laws. Each of XCL Land, 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.
(12) Labor Matters.
(1) None of XCL Land, XCL Ltd. or their
respective subsidiaries has entered into any collective
bargaining agreement and, to the best of the knowledge of XCL
Land 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 Land, XCL Ltd. or their
respective subsidiaries.
(2) To the best knowledge of XCL Land and XCL
Ltd., there are no controversies pending or threatened between
any of XCL Land, 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.
(13) Taxes. Each of XCL Land 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 Land 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 Land or XCL
Ltd., except for a pending Louisiana income and franchise tax
case described in the Preliminary Prospectus and additional
lawsuits filed in connection therewith. There is no audit
pending of any tax return filed by either XCL Land or XCL Ltd. or
with respect to any consolidated group of which either XCL Land
or XCL Ltd. was a member in the applicable year, although notices
of proposed deficiencies are outstanding as described in the
Preliminary Prospectus.
(14) Title to Property. XCL Land, 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.
(15) 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 as hazardous 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 Land 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 Land and XCL Ltd. and their
respective subsidiaries (collectively, the "Environmental
Assets");
(y) XCL Land, 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 Land, 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 against them for
damages, fines, penalties, environmental investigation or
remediation, or administrative, injunctive or other relief
arising under Environmental Laws or (III) other than in
connection with the XxXxxxx litigation as described in the
Preliminary Prospectus, 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.
4. Representations, Warranties and Agreements by the
Subscriber. The Subscriber hereby represents and warrants to and
agrees with XCL Land and XCL Ltd. as follows:
(1) Preliminary Prospectus. The Subscriber hereby
acknowledges to XCL Land and XCL Ltd. that (i) any estimates,
plans, projections etc. which are incorporated in the Preliminary
Prospectus or which have been furnished to it with respect to the
activities undertaken originally or to be undertaken by XCL Land
or XCL Ltd. are based on certain assumptions made by XCL Land 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 Preliminary Prospectus and
the Exhibits thereto, in particular, the "Risk Factors" section
thereof and this Subscription Agreement and the Exhibits hereto,
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 Land and XCL Ltd.
(2) 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 Land and XCL Ltd.
concerning the terms of the Offering and the affairs of XCL Land
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.
(3) Unregistered Shares. The Subscriber recognizes
that the offer and sale by XCL Land 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 either
(a) a "qualified institutional buyer" (as defined in Rule 144A
promulgated under the Act) or (b) an institutional "accredited
investor" (as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7)
or (a)(8) 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. or XCL Land, as
applicable, has effectively registered such securities under the
Act or counsel reasonably acceptable to XCL Ltd. or XCL Land, as
applicable (which shall include in-house counsel) shall have
furnished an opinion, in form and substance reasonably acceptable
to XCL Ltd. or XCL Land, as applicable, 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 Land 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 is either (a) a "qualified
institutional buyer" (as defined in Rule 144A promulgated under
the Securities Act) or (b) an institutional "accredited
institutional buyer" (as defined in Rule 501(a)(1), (a)(2),
(a)(3), (a)(7) or (a)(8) under the Securities Act). The
Subscriber acknowledges that XCL Land 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.
(4) 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. or XCL Land, as applicable, no longer bear
restrictive legends and are otherwise freely tradable 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. or
XCL Land, as applicable, of its intention to effect such transfer
and to comply in all other respects with this subsection 4(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. or XCL Land, as applicable,
addressed to XCL Ltd. or XCL Land, as applicable, and
satisfactory in form and substance to XCL Ltd. or XCL Land, as
applicable, 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. or XCL Land, as applicable, 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. or XCL Land, as
applicable, and this Agreement. Each certificate or other
document issued representing the Securities shall bear the legend
set forth in subsection 4(e) hereof, suitably conformed, unless,
in the opinion of the respective counsel for the Subscriber and
XCL Ltd. or XCL Land, as applicable, 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
Land 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 4(d).
(5) 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
_______________, 1999 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 Land or
XCL Ltd., as applicable, 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 4.
(6) Notes are Obligations of XCL Land Only. IT IS
EXPRESSLY UNDERSTOOD AND AGREED BY SUBSCRIBER THAT THE NOTE IS
INDEBTEDNESS OF XCL LAND AND NOT INDEBTEDNESS OF ANY OF ITS
AFFILIATES, INCLUDING BUT NOT LIMITED TO XCL LTD. OR XCL-CHINA
LTD., AND SUBSCRIBER HEREBY EXPRESSLY ACKNOWLEDGES AND AGREES
THAT EXCEPT WITH RESPECT TO THE SECURITY INTERESTS GRANTED TO IT
PURSUANT TO THE SECURITY AGREEMENTS REFERENCED IN SECTION
6(c)(iii) HEREOF, IT SHALL HAVE NO RECOURSE AGAINST ANY OF XCL
LAND'S AFFILIATES, INCLUDING BUT NOT LIMITED TO XCL LTD. OR XCL-
CHINA LTD., OR ANY OF THEIR ASSETS AND THAT SUBSCRIBER SHALL LOOK
SOLELY TO XCL LAND, ITS ASSETS AND THE COLLATERAL IN WHICH A
SECURITY INTEREST HAS BEEN GRANTED BY THE SECURITY AGREEMENTS
DESCRIBED HEREIN, FOR REPAYMENT OF ANY AND ALL AMOUNTS DUE UNDER
THE NOTE.
(7) Tax Advisor. Subscriber acknowledges that XCL
Land has advised Subscriber that Subscriber should consult with
its own tax advisor as to the possible tax consequences of
original issue discount for federal income tax purposes.
5. Survival of Representations and Warranties. The
representations and warranties of XCL Land 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
Land 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 4 shall survive the execution,
delivery and termination of this Agreement and the consummation
of the transactions contemplated hereby.
6. Conditions Precedent to Obligations of Subscriber.
(1) Representations True at Closing; Performance.
The representations and warranties of XCL Land and XCL Ltd.
contained in Section 3 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 Land 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.
(2) Legal Opinions. The Subscriber shall have
received an opinion of counsel, dated the Closing Date, from
Xxxxxx, Arata, McCollam, Xxxxxxxxx & Xxxxx, L.L.P., in
substantially the form attached as Exhibit "C."
(3) Units. There shall have been delivered to the
Subscriber the following instruments and documents evidencing the
Units subscribed for by the Subscriber:
(1) a promissory note evidencing the aggregate
principal amount of all Notes subscribed for hereunder;
(2) a certificate representing the aggregate
number of Warrants included as a component of such Units
subscribed for hereunder;
(3) two fully executed Security Agreements
substantially in the form attached as Exhibit "D," one executed
by XCL Land and one executed by The Exploration Company of
Louisiana, Inc. granting a security interest as described in
Section 14 hereof and two related Louisiana UCC-1 Financing
Statements.
(4) No Withdrawal, Cancellation or Modification.
XCL Land or XCL Ltd. shall not have withdrawn, canceled or
modified the Offering, and shall have taken such action as is
contemplated thereby.
(5) Certificates. XCL Land and XCL Ltd. shall
deliver other customary closing certificates.
7. 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 Land
or XCL Ltd.:
000 Xxx Xxxx Xxxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxxxxx
or at such other address, as to any party, as such party shall
specify by like notice to the other parties.
8. Covenants of XCL Land and XCL Ltd. XCL Land and XCL
Ltd. hereby covenant and agree that:
(1) 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.
(2) XCL Land and XCL Ltd. shall issue no more than
62 Units and shall not issue any securities convertible into or
exchangeable for Units.
9. Rights of Parties to Terminate. Notwithstanding
anything to the contrary set forth herein, this Agreement and the
transactions contemplated hereby may be terminated at any time by
the written agreement of the parties hereto.
10. Entire Agreement; etc. This Agreement together with
the Schedules hereto, the Notes, the Warrant Agreement and the
Security Agreement set forth the entire understanding and
agreement between XCL Land, XCL Ltd. and the Subscriber
pertaining to the subscription which is the subject of this
Agreement and superseding any and all prior agreements,
proposals, understandings and arrangements among the parties
hereto with respect to the subscription which is the subject of
this Agreement, 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
substantially 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 Land 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 Land 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 Land 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 other
investors in the Units unless said Subscriber explicitly elects
otherwise after being offered the opportunity to so elect.
11. 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.
12. Special Federal and State Securities Laws Notices.
(1) 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.
(2) Investors in the following jurisdictions must
review the following legends required by each jurisdiction and be
aware of their contents.
CALIFORNIA SUPPLEMENT
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
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
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
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 ISSUER AT THE ADDRESS SET FORTH HEREIN, 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 ISSUER, A WRITTEN
CONFIRMATION THAT THE REQUEST HAS BEEN RECEIVED SHOULD BE
REQUESTED.
13. Subscription. The undersigned hereby subscribes
for the following number of Units:
Number of Units
to be purchased
(minimum purchase one Unit)
Total Unit Purchase Price:
U.S. $
(Number of Units x $100,000)
Number of Additional
Units to be purchased
upon request of XCL Land
14. Subscriber further acknowledges that persons or
entities providing new funds to XCL Land on or after November 6,
1998, up to the aggregate outstanding principal amount of
$6,200,000 (the "New Funds"), will hold security interests in
100% of the partnership interest of XCL Land and The Exploration
Company of Louisiana, Inc. in LM Holding Associates, L.P. ("LM
Holding"), such security interests to be allocated pro rata among
the providers of New Funds. Subscriber further acknowledges that
Subscriber's security interest will change from time to time as
Subscriber or others purchase additional Units or provide other
New Funds (but only up to $6,200,000 principal outstanding) to
XCL Land. Subscriber acknowledges that Units have previously
been sold and other New Funds have been provided. Subscriber
acknowledges and agrees 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 Subscriber and secured by
partnership interests in LM Holding, Subscriber will immediately
upon demand by XCL Land execute (one or more times, as
appropriate) amendments to each of the Security Agreements (and
the related Financing Statements) releasing a percentage of the
partnership interest of LM Holding in which it has a security
interest sufficient to allocate the security interests in the
partnership interest of LM 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).
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.
INDIVIDUALS ONLY
SIGNATURE PAGE
FOR INDIVIDUALS INVESTORS
Name of Individual Investor (please print or type)
By:______________________________________________________________
_______________
(Signature of individual investor)
Social Security No.:
Residence Address:
_________________________________________________________________
Mailing Address, if different:
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
Telephone Number:
______________________________________________________________
Facsimile Number:
_______________________________________________________________
Executed at _______________,____________, on this ______ day of
________________, 1999.
STATE OF )
.ss:
COUNTY OF )
On this _____ day of ____________, in the year of 1999,
before me, the undersigned, a Notary Public of said State, duly
commissioned and sworn, personally appeared
, known to me to be the person whose name is subscribed to the
within instrument, and acknowledged that he (or she) executed the
same.
IN WITNESS WHEREOF, I have hereunto set my hand and
affixed my official seal the day and year in this certificate
first above written.
[SEAL]
____________________________________________
Notary Public in and for said State
My commission expires:
SUBSCRIPTION ACCEPTED:
XCL LAND, LTD.
By:____________________________
Name:________________________
Title:_________________________
Date:__________________________
XCL LTD.
By:____________________________
Name:________________________
Title:_________________________
Date:__________________________
