XCL LTD.
294,118 Units
Consisting of
Amended Series A, Cumulative Convertible Preferred Stock
with
Common Stock Purchase Warrants
PURCHASE AGREEMENT
------------------
May 13, 1997
JEFFERIES & COMPANY, INC.
Two Houston Center
909 Fannin St., Suite 3100
Houston, Texas 77010
Ladies and Gentlemen:
XCL Ltd., a Delaware corporation (the "Company"), and XCL-
China Ltd., a Delaware corporation ("XCL-China"), hereby confirm
their agreement with you (the "Initial Purchaser"), as set forth
below.
1. The Securities. Subject to the terms and conditions
herein contained, the Company shall issue and sell to the Initial
Purchaser 294,118 Units (each a "Unit" and collectively, the
"Units"), each consisting of one share of Amended Series A,
Cumulative Convertible Preferred Stock, par value $1.00 per
share, of the Company ("Amended Series A Preferred Stock") and
one warrant (collectively, the "Warrants") to purchase initially
327 shares of the Company's Common Stock, par value $0.01 per
share (the "Common Stock"), at an initial purchase price of
$0.2063 per share. The terms of the Amended Series A Preferred
Stock are set forth in the certificate of the Company (the "151
Certificate") to be filed with the Secretary of State of Delaware
pursuant to Section 151 of the Delaware General Corporation Law.
A copy of the 151 Certificate, in substantially final form, has
been delivered to the Initial Purchaser. The shares of Common
Stock issuable upon conversion of the Amended Series A Preferred
Stock are herein referred to as the "Conversion Stock." The
Warrants are to be issued under a Warrant Agreement to be dated
as of the Closing Date (the "Warrant Agreement") of the Company
for the benefit of the holders from time to time of the
certificates evidencing the Warrants. The shares of Common Stock
issuable upon exercise of the Warrants are herein referred to as
the "Warrant Shares." The Amended Series A Preferred Stock, the
Warrants and the Units are collectively referred to herein as the
"Securities."
The Securities will be offered and sold to the Initial
Purchaser without being registered under the Securities Act of
1933, as amended (the "Act"), in reliance on exemptions
therefrom.
In connection with the sale of the Securities, the Company
has prepared a preliminary offering memorandum dated May 7, 1997
(the "Preliminary Memorandum"), and a final offering memorandum
dated May 13, 1997 (the "Final Memorandum"; the Preliminary
Memorandum and the Final Memorandum each herein being referred to
as a "Memorandum"), setting forth a description of the terms of
the Securities, the terms of the offering of the Securities, and
a description of the business of the Company and XCL-China.
The Initial Purchaser and its direct and indirect
transferees of the Securities will be entitled to the benefits of
the Registration Rights Agreement, substantially in the form
attached hereto as Exhibit A (the "Registration Rights
Agreement"), pursuant to which the Company shall agree, among
other things, (i) to file a shelf registration statement (the
"Registration Statement") with the Securities and Exchange
Commission (the "Commission") registering the resale of the
Amended Series A Preferred Stock included in the Units, the
Conversion Stock and the Warrant Shares and (ii) to grant certain
"piggy-back" registration rights to the holders of the Conversion
Stock and the Warrant Shares.
2. Representations and Warranties. The Company and XCL-
China, jointly and severally, represent and warrant to and agree
with the Initial Purchaser that:
(a) Neither the Final Memorandum nor any amendment or
supplement thereto as of the date thereof and at all times
subsequent thereto up to the Closing Date contained or contains
any untrue statement of a material fact or omitted or omits to
state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading, except that the representations and warranties set
forth in this Section 2(a) do not apply to statements or
omissions made in reliance upon and in conformity with
information relating to the Initial Purchaser furnished to the
Company or XCL-China in writing by the Initial Purchaser
expressly for use in the Final Memorandum or any amendment or
supplement thereto.
(b) As of the Closing Date, the Company will have the
authorized capitalization set forth in the Final Memorandum; all
of the outstanding shares of capital stock of the Company and XCL-
China have been, and as of the Closing Date will be, duly
authorized and validly issued, are fully paid and nonassessable
and were not issued in violation of any preemptive or similar
rights; except as set forth in the Final Memorandum, all of the
outstanding shares of capital stock of XCL-China are, and as of
the Closing Date will be, owned, directly or indirectly, by the
Company, free and clear of all liens, encumbrances, equities and
claims or restrictions on transferability (other than those
imposed by the Act and the securities or "Blue Sky" laws of
certain jurisdictions) or voting; except as set forth in the
Final Memorandum, there are no outstanding (i) options, warrants
or other rights to purchase from the Company or XCL-China, (ii)
agreements or other obligations of the Company or XCL-China to
issue or (iii) other rights to convert any obligation into, or
exchange any securities for, in the case of each clause (i)
through (iii) shares of capital stock of the Company or XCL-
China. The Company does not have any Subsidiaries (as defined in
the Indenture) except for XCL-China and the other corporations
identified in Exhibit B hereto; except for the capital stock of
the Subsidiaries identified in Exhibit B hereto and as otherwise
disclosed in the Final Memorandum, the Company does not own,
directly or indirectly, any shares of capital stock or any other
equity or long-term debt securities or have any equity interest
in any firm, partnership, joint venture or other entity.
(c) Each of the Company and its Subsidiaries has been
duly incorporated, is validly existing and is in good standing as
a corporation under the laws of its jurisdiction of
incorporation, with all requisite corporate power and authority
to own its properties and conduct its business as now conducted,
and as described in the Preliminary Memorandum and the Final
Memorandum; each of the Company and its Subsidiaries is duly
qualified to do business as a foreign corporation in good
standing in all other jurisdictions where the ownership or
leasing of its properties or the conduct of its business requires
such qualification, except where the failure to be so qualified
would not, individually or in the aggregate, have a material
adverse effect on the general affairs, management, business,
condition (financial or otherwise), prospects or results of
operations of the Company and its Subsidiaries, taken as a whole
(any such event, a "Material Adverse Effect").
(d) The Company has all requisite corporate power and
authority to make, execute, authenticate and file with the
Secretary of State of Delaware the 151 Certificate, whereupon the
Amended Series A Preferred Stock will be duly created as a series
of preferred stock, par value $1.00 per share (the "Preferred
Stock"), of the Company. The shares of Amended Series A
Preferred Stock included in the Units have been duly and validly
authorized for issuance by the Company and, when issued and paid
for by the Initial Purchaser in accordance with the terms of this
Agreement, will be duly authorized, validly issued, fully paid
and non-assessable, will not be subject to any preemptive or
similar rights and the holders thereof will be entitled to the
benefits of the preferences and other rights set forth in the 151
Certificate.
(e) [Intentionally Omitted]
(f) The Company has all requisite corporate power and
authority to execute, deliver and perform its obligations under
the Registration Rights Agreement. The Registration Rights
Agreement has been duly and validly authorized by the Company
and, when executed and delivered by the Company (assuming the due
authorization, execution and delivery by the Initial Purchaser),
will constitute a valid and legally binding agreement of the
Company, enforceable against the Company in accordance with its
terms, except that (A) the enforcement thereof may be subject to
(i) bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws now or hereafter in
effect relating to creditors' rights generally and (ii) general
principles of equity and the discretion of the court before which
any proceeding therefor may be brought and (B) any rights to
indemnity or contribution thereunder may be limited by federal
and state securities laws and public policy considerations.
(g) Subject to the availability of a sufficient number
of authorized but unissued or treasury shares to permit the
exercise of the oustanding Warrants, the Company has all
requisite corporate power and authority to execute, deliver and
perform each of its obligations under the Warrant Agreement. The
Warrant Agreement has been duly and validly authorized by the
Company and, subject to the availability of a sufficient number
of authorized but unissued or treasury shares to permit the
exercise of the outstanding Warrants, when executed and delivered
by the Company, will constitute a valid and legally binding
agreement of the Company, enforceable against the Company in
accordance with its terms, except that the enforcement thereof
may be subject to (i) bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws now or
hereafter in effect relating to creditors' rights generally and
(ii) general principles of equity and the discretion of the court
before which any proceeding therefor may be brought, and (iii)
federal or state securities laws or principles of public policy
affecting enforcement of rights to indemnity or contribution.
(h) Subject to the availability of a sufficient number
of authorized but unissued or treasury shares to permit the
exercise of the outstanding Warrants, the Company has all
requisite corporate power and authority to execute, deliver and
perform each of its obligations under the Warrants). The
Warrants have been duly and validly authorized by the Company
and, when executed by the Company and countersigned by the
Warrant Agent in accordance with the provisions of the Warrant
Agreement and when delivered to and paid for by the Initial
Purchaser in accordance with the terms of this Agreement, will
have been duly executed, issued and delivered and subject to the
availability of a sufficient number of authorized but unissued or
treasury shares to permit the exercise of the outstanding
Warrants, will constitute valid and legally binding obligations
of the Company, entitled to the benefits of the Warrant Agreement
and enforceable against the Company in accordance with their
terms, except that the enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general
principles of equity and the discretion of the court before which
any proceeding therefor may be brought, and (iii) federal or
state securities laws or principles of public policy affecting
enforcement rights to indemnity or contribution.
(i) The Warrant Shares, upon becoming available for
issuance upon the exercise of the Warrants in accordnace with
their terms, will have been, and the Conversion Stock have been
duly and validly authorized for issuance by the Company and, when
issued in accordance with the terms and conditions contained in
the Warrant Agreement upon exercise of the Warrants and upon
conversion of the Amended Series A Preferred Stock, as the case
may be, the Warrant Shares and the Conversion Stock, as the case
may be, will be duly authorized, validly issued, fully paid and
non-assessable and will not be subject to any preemptive or
similar rights. The Warrant Shares, upon becoming available for
issuance upon the exercise of the Warrants in accordance with
their terms, will have been duly reserved for issuance in
accordance with the terms of the Warrants and the Warrant
Agreement.
(j) The Company and XCL-China have all requisite
corporate power and authority to execute, deliver and perform
each of their obligations under this Agreement and to consummate
the transactions contemplated hereby. This Agreement has been
duly and validly authorized, executed and delivered by the
Company and XCL-China. No consent, approval, authorization or
order of any court or governmental agency or body, or third party
is required for the performance of this Agreement by the Company
or XCL-China or the consummation by the Company or XCL-China of
the transactions contemplated hereby, except such as have been
(or will be, upon execution and delivery of the Intercreditor
Agreement) obtained and other than such as may be required under
state securities or "Blue Sky" laws in connection with the
purchase and resale of the Securities by the Initial Purchaser.
Neither the Company nor XCL-China is (i) in violation of its
certificate of incorporation or bylaws, (ii) in breach or
violation of any statute (including, without limitation, the
Foreign Corrupt Practices Act), judgment, decree, order, rule or
regulation applicable to either of them or any of their
respective properties or assets, except as disclosed in the Final
Memorandum or except for any such breach or violation which would
not, individually or in the aggregate, have a Material Adverse
Effect, or (iii) except as disclosed in the Final Memorandum, in
breach of or default under (nor has any event occurred which,
with notice or passage of time or both, would constitute a
default under) or in violation of any of the terms or provisions
of any indenture, mortgage, deed of trust, loan agreement, note,
lease, license, franchise agreement, permit, certificate,
contract or other agreement or instrument to which either of them
is a party or to which either of them or their respective
properties or assets is subject, except for any such breach,
default, violation or event which would not, individually or in
the aggregate, have a Material Adverse Effect.
(k) The execution, delivery and performance by the
Company and XCL-China of this Agreement and the consummation by
the Company and XCL-China of the transactions contemplated
hereby, and the fulfillment of the terms hereof, will not
conflict with or constitute or result in a breach of or a default
under (or an event which with notice or passage of time or both
would constitute as a default under) or violation of any of (i)
the terms or provisions of any indenture, mortgage, deed of
trust, loan agreement, note, lease, license, franchise agreement,
permit, certificate, contract or other agreement or instrument to
which the Company or XCL-China is a party or to which either of
them or their respective properties or assets is subject, (ii)
the respective certificate of incorporation or bylaws or
Memorandum or Articles of Association of the Company or XCL-
China, as the case may be, or (iii) (assuming compliance with all
applicable state securities or "Blue Sky" laws) any statute,
judgment, decree, order, rule or regulation applicable to the
Company or XCL-China or any of their respective properties or
assets.
(l) The audited consolidated financial statements of the
Company and its subsidiaries included in the Final Memorandum
present fairly in all material respects the consolidated
financial position, the consolidated results of their operations
and their cash flows at the dates and for the periods to which
they relate and have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis,
except as otherwise stated therein. The summary and selected
consolidated historical financial data in the Final Memorandum
present fairly in all material respects the financial information
shown therein and have been prepared and compiled on a basis
consistent with the audited financial statements included
therein, except as otherwise stated therein. Coopers & Lybrand
L.L.P. (the "Independent Accountants") is an independent public
accounting firm within the meaning of the Act and the rules and
regulations promulgated thereunder.
(m) Except as described in the Final Memorandum, there
is not pending or, to the knowledge of the Company or XCL-China,
threatened, any action, suit, proceeding, inquiry or
investigation to which the Company or any Subsidiary is a party,
or to which the property or assets of the Company or any
Subsidiary are subject, before or brought by any court or
governmental agency or body which, if determined adversely to the
Company or such Subsidiary, would have, individually or in the
aggregate, a Material Adverse Effect or which seeks to restrain,
enjoin, prevent the consummation of or otherwise challenge the
issuance or sale of the Securities to be sold hereunder or the
consummation of the other transactions described in the Final
Memorandum.
(n) Each of the Company and XCL-China owns or possesses
adequate licenses or other rights to use all trademarks, service
marks, trade names and know-how necessary to conduct the
businesses now or proposed to be operated by it as described in
the Final Memorandum, and neither the Company nor XCL-China has
received any notice of conflict with (or knows of any such
conflict with) asserted rights of others with respect to any
trademarks, service marks, trade names or know-how which, if such
assertion of conflict were sustained, would, individually or in
the aggregate, have a Material Adverse Effect.
(o) Each of the Company and XCL-China possesses all
licenses, permits, certificates, consents, orders, approvals and
other authorizations from, and has made all declarations and
filings with, all federal, state, local and foreign governmental
authorities (including, without limitation, the Ministry of
Foreign Trade and Economic Cooperation of the People's Republic
of China ("MOFTEC")), all self-regulatory organizations and all
courts and other tribunals, presently required or necessary to
own or lease, as the case may be, and to operate its properties
and to carry on its business as now or proposed to be conducted
as set forth in the Final Memorandum, except for MOFTEC's (or any
other requisite Chinese governmental authority's) approval of the
ODP (as defined in the Memorandum) and except where the failure
to obtain such licenses, permits, certificates, consents, orders,
approvals and other authorizations, or to make all declarations
and filings, would not, individually or in the aggregate, have a
Material Adverse Effect, and neither the Company nor XCL-China
has received any notice of any proceeding relating to revocation
or modification of any such license, permit, certificate,
consent, order, approval or other authorization, except as
described in the Final Memorandum and except where such
revocation or modification would not, individually or in the
aggregate, have a Material Adverse Effect.
(p) Since the respective dates as of which information
is given in the Final Memorandum, except as described therein,
(i) neither the Company nor any Subsidiary has incurred any
liabilities or obligations, direct or contingent, or entered into
or agreed to enter into any transactions or contracts (written or
oral) not in the ordinary course of business and (ii) neither the
Company nor XCL-China has purchased any of its outstanding
capital stock, nor declared, paid or otherwise made any dividend
or distribution of any kind on its capital stock.
(q) Each of the Company and its Subsidiaries has filed
all necessary federal, state and foreign income and franchise tax
returns, except where the failure to so file such returns would
not, individually or in the aggregate, have a Material Adverse
Effect, and, except as set forth in the Final Memorandum, has
paid all taxes shown as due thereon; and other than tax
deficiencies which the Company or any Subsidiary is contesting in
good faith and for which the Company or such Subsidiary has
provided adequate reserves, there is no tax deficiency that has
been asserted against the Company or any Subsidiary that would
have, individually or in the aggregate, a Material Adverse
Effect.
(r) Subject to the Cautionary Statements (as defined in
the Final Memorandum) and other qualifications set forth in the
Final Memorandum, the projected fianncial, reserve and operating
data included in the Final Memorandum are based on or derived
from sources or assumptions which the Company and XCL-China
believe to be reliabel and reasonable. Subject to the Cautionary
Statements and the assumptions and qualifications set forth in
the Gruy Report (as defined in the Final Memorandum), the
projected financial, reserve and operating data included in the
Final Memorandum by incoporation by reference to the Gruy Report
are based on or derived from sources or assumptions which the
Company and XCL-China believe to be reliable and reasonable.
(s) None of the Company, XCL-China or any agent acting
on their behalf has taken or will take any action that might
cause the transactions contemplated by this Agreement (including,
without limitation, any pledge of the capital stock of XCL-China
pursuant to the Pledge Agreement) or the sale of the Securities
to violate Regulation G, T, U or X of the Board of Governors of
the Federal Reserve System, in each case as in effect, or as the
same may hereafter be in effect, on the Closing Date.
(t) Each of the Company and XCL-China has good and
defensible title to all real property and good title to all
personal property described in the Final Memorandum as being
owned by it and good and defensible title to a leasehold estate
in the real and personal property described in the Final
Memorandum as being leased by it free and clear of all liens,
charges, encumbrances or restrictions, except as described in the
Final Memorandum or to the extent the failure to have such title
or the existence of such liens, charges, encumbrances or
restrictions would not, individually or in the aggregate, have a
Material Adverse Effect.
(u) There are no legal or governmental proceedings
involving or affecting the Company or any Subsidiary or any of
their respective properties or assets which would be required to
be described in a prospectus pursuant to the Act that are not
described in the Final Memorandum, nor are there any material
contracts or other documents which would be required to be
described in a prospectus pursuant to the Act that are not
described in the Final Memorandum.
(v) Except as described in the Final Memorandum, each of
the Company and its Subsidiaries is in compliance in all respects
with all existing and applicable domestic and foreign laws, rules
or regulations relating to pollution or protection of public or
employee health or the environment ("Environmental Law") and with
the terms and conditions of any permit, license or approval
issued to the Compny or its Subsidiaries thereunder in connection
with the ownership, operation or use of its business, property
and assets, except where the failure to be in such compliance
would not, individually or in the aggregate, have a Material
Adverse Effect; except as disclosed in the Final Memorandum, none
of the Company or its Subsidiaries is subject to any known
liability, absolute or contingent, under any Environmental Law
except for any such liability which would not, individually or in
the aggregate, have a Material Adverse Effect; except as
disclosed in the Final Memorandum, there is no civil, criminal or
administrative action, suit, demand, hearing, notice of violation
or deficiency, investigation, proceeding or notice of potential
responsibility or demand letter or request for information
pending or, to the knowledge of the Company or XCL-China,
threatened against the Company or any of its Subsidiaries under
any Environmental Law which, if determined adversely to the
Company or any such Subsidiary would, individually or in the
aggregate, result in a Material Adverse Effect.
(w) Except as disclosed in the Final Memorandum, each of
the Company or its Subsidiaries carries insurance (including self
insurance) in such amounts and covering such risks as in its
reasonable determination is adequate for the conduct of its
business and the value of its properties.
(x) None of the Company or its Subsidiaries has any
liability for any prohibited transaction or funding deficiency or
any complete or partial withdrawal liability with respect to any
pension, profit sharing, 401(k) plan or other plan which is
subject to the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), to which the Company or any Subsidiary
makes or ever has made a contribution and in which any employee
of the Company or any Subsidiary is or has ever been a
participant. With respect to such plans, the Company and each
Subsidiary is in compliance in all material respects with all
applicable provisions of ERISA.
(y) After giving effect to the offering and sale of the
Securities, neither the Company nor XCL-China will be an
"investment company" or "promoter" or "principal underwriter" for
an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended, and the rules and
regulations thereunder.
(z) The Amended Series A Preferred Stock the Warrants,
the Warrant Shares, the Common Stock, the Preferred Stock, the
Units, the Warrant Agreement, and the Registration Rights
Agreement will, and this Agreement does, conform in all material
respects to the descriptions thereof in the Final Memorandum.
(aa) Except as disclosed in the Final Memorandum, no
holder of securities of the Company or any Subsidiary will be
entitled to have such securities registered under the
registration statements required to be filed by the Company
pursuant to the Registration Rights Agreement other than as
expressly permitted thereby.
(bb) Immediately after the consummation of the
transactions contemplated by this Agreement, the fair value and
current fair saleable value of the assets of the Company (on a
consolidated basis) will exceed the sum of its stated liabilities
and identified contingent liabilities; the Company (on a
consolidated basis) is not, nor will the Company (on a
consolidated basis) be, after giving effect to the execution,
delivery and performance of this Agreement, and the consummation
of the transactions contemplated hereby, (a) left with
unreasonably small capital with which to carry on its business as
it is proposed to be conducted, (b) unable to pay its debts
(contingent or otherwise) as they mature or (c) otherwise
insolvent.
(cc) Neither the Company nor any person acting on its
behalf has offered or sold the Securities by means of any general
solicitation or general advertising within the meaning of Rule
502(c) under the Act or, with respect to Securities sold outside
the United States to non-U.S. persons (as defined in Rule 902
under the Act), by means of any directed selling efforts within
the meaning of Rule 902 under the Act, and the Company, any
affiliate of the Company and any person acting on its or their
behalf (other than the Initial Purchaser) have complied with and
will implement the "offering restriction" within the meaning of
such Rule 902.
(dd) Except as diclosed in the Final Memorandum, within
the six months preceding the date hereof, neither the Company nor
any other person acting on behalf of the Company (other than the
Initial Purchaser) has offered or sold to any person any
Securities, or any securities of the same or a similar class as
the Securities, other than Securities offered or sold to the
Initial Purchaser hereunder or securities included in the
Concurrent Debt Offering (as such term is defined in the
Memorandum); and the Company will take reasonable precautions
designed to insure that any offer or sale, direct or indirect, in
the United States or to any U.S. person (as defined in Rule 902
under the Act) of any Securities or any substantially similar
security issued by the Company, within six months subsequent to
the date on which the distribution of the Securities has been
completed (as notified to the Company by the Initial Purchaser),
is made under restrictions and other circumstances reasonably
designed not to affect the status of the offer and sale of the
Securities in the United States and to U.S. persons contemplated
by this Agreement as transactions exempt from the registration
provisions of the Act;
(ee) Neither the Company nor any of its affiliates does
business with the government of Cuba or with any person or
affiliate located in Cuba within the meaning of Section 517.075,
Florida Statutes.
(ff) Assuming the accuracy of the representations and
warranties of the Initial Purchaser in Section 8 hereof, it is
not necessary in connection with the offer, sale and delivery of
the Securities to the Initial Purchaser in the manner
contemplated by this Agreement to register any of the Securities
under the Act.
(gg) No securities of the Company or XCL-China are of
the same class (within the meaning of Rule 144A under the Act) as
the Securities and listed on a national securities exchange
registered under Section 6 of the Exchange Act, or quoted in a
U.S. automated inter-dealer quotation system.
(hh) None of the Company or its Subsidiaries has taken,
nor will any of them take, directly or indirectly, any action
designed to, or that might be reasonably expected to, cause or
result in stabilization or manipulation of the price of the
Securities.
(ii) [Intentionally omitted.]
(jj) Neither the Company nor any of its Subsidiaries is
a "holding company" or a "subsidiary company" of a "holding
company" or an "affiliate" of a "holding company," within the
meaning of the Public Utility Holding Company Act of 1935, as
amended.
Any certificate signed by any officer of the Company or XCL-
China and delivered to the Initial Purchaser or to counsel for
the Initial Purchaser shall be deemed a joint and several
representation and warranty by the Company and XCL-China to the
Initial Purchaser as to the matters covered thereby.
3. Purchase, Sale and Delivery of the Securities. On the
basis of the representations, warranties, agreements and
covenants herein contained and subject to the terms and
conditions herein set forth, the Company agrees to issue and sell
to the Initial Purchaser, and the Initial Purchaser agrees to
purchase from the Company, 294,118 Units at a purchase price of
$79.90 per Unit. One or more certificates in definitive form for
the Securities that the Initial Purchaser has agreed to purchase
hereunder, and in such denomination or denominations and
registered in such name or names as the Initial Purchaser
requests upon notice to the Company at least 24 hours prior to
the Closing Date, shall be delivered by or on behalf of the
Company to the Initial Purchaser, against payment by or on behalf
of the Initial Purchaser of the purchase price therefor, by wire
transfer (same day funds) to such account or accounts as the
Company shall specify prior to the Closing Date. Such delivery
of and payment for the Securities shall be made at 10:00 a.m.,
New York time, on May 20, 1997, or at such other place, time or
date as the Initial Purchaser, on the one hand, and the Company,
on the other hand, may agree upon, such time and date of delivery
against payment being herein referred to as the "Closing Date."
The Company has requested that the Closing Date be scheduled to
occur five business days after the date of this Agreement in
order to provide sufficient time to satisfy the conditions for
closing set forth in Section 7 below. With respect to Securities
to be delivered in definitive certificated form, the Company will
make certificates for such Securities available for checking and
packaging by the Initial Purchaser at the offices of Jefferies &
Company, Inc. in New York, New York, or at such other place as
the Initial Purchaser may designate, at least 24 hours prior to
the Closing Date. Securities to be represented by one or more
definitive global Securities in book-entry form will be deposited
on the Closing Date, by or on behalf of the Company, with The
Depository Trust Company ("DTC") or its designated custodian, and
registered in the name of Cede & Co.
4. Offering by the Initial Purchaser. The Initial Purchaser
proposes to make an offering of the Securities at the price and
upon the terms set forth in the Final Memorandum, as soon as
practicable after this Agreement is entered into and as in the
judgment of the Initial Purchaser is advisable.
5. Covenants of the Company and XCL-China. Each of the
Company and XCL-China jointly and severally covenants and agrees
with the Initial Purchaser that:
(a) The Company and XCL-China shall not make any
amendment or supplement the Final Memorandum of which the Initial
Purchaser shall not previously have been advised and furnished a
copy for a reasonable period of time prior to the proposed
amendment or supplement and as to which the Initial Purchaser
shall not have given its consent. The Company and XCL-China will
promptly, upon the reasonable request of the Initial Purchaser,
make any amendments or supplements to the Preliminary Memorandum
or the Final Memorandum that may be necessary or advisable in
connection with the resale of the Securities by the Initial
Purchaser.
(b) The Company and XCL-China will cooperate with the
Initial Purchaser in arranging for the qualification of the
Securities for offering and sale under the securities or "Blue
Sky" laws of such jurisdictions as the Initial Purchaser may
designate and shall continue such qualifications in effect for as
long as may be necessary to complete the resale of the
Securities; provided, however, that in connection therewith,
neither of the Company nor XCL-China shall be required to qualify
as a foreign corporation or to execute a general consent to
service of process in any jurisdiction or subject itself to
taxation in excess of a nominal dollar amount in any such
jurisdiction where it is not then so subject.
(c) If, at any time prior to the completion of the
initial resale by the Initial Purchaser of the Securities to
persons other than affiliates of the Initial Purchaser (as
determined by the Initial Purchaser), any event occurs as a
result of which the Final Memorandum as then amended or
supplemented would include any untrue statement of a material
fact, or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which
they were made, not misleading, or if for any other reason it is
necessary at any time to amend or supplement the Final Memorandum
to comply with applicable law, the Company and XCL-China will
promptly notify the Initial Purchaser thereof and will prepare,
at the expense of the Company and XCL-China, an amendment or
supplement to the Final Memorandum that corrects such statement
or omission or effects such compliance.
(d) The Company will, without charge, provide to the
Initial Purchaser and to counsel for the Initial Purchaser as
many copies of the Preliminary Memorandum and the Final
Memorandum or any amendment or supplement thereto as the Initial
Purchaser may reasonable request.
(e) The Company will apply the proceeds from the sale of
the Securities as set forth under "Use of Proceeds" in the Final
Memorandum.
(f) For and during the period ending on the fifth
anniversary of the Closing Date, the Company will furnish to the
Initial Purchaser copies of all reports and other communications
(financial or otherwise) furnished by the Company or XCL-China to
the Trustee, the Warrant Agent or the holders of the Securities
and, as soon as available, copies of any reports or financial
statements furnished to or filed by the Company or XCL-China with
the Commission or any national securities exchange on which any
class of securities of the Company or XCL-China may be listed.
(g) Prior to the Closing Date, the Company will furnish
to the Initial Purchaser, as soon as they have been prepared, if
at all, a copy of any unaudited interim financial statements of
the Company for any period subsequent to the period covered by
the most recent financial statements appearing in the Final
Memorandum.
(h) Except as disclosed in the Final Memorandum, none of
the Company or any of its affiliates will sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any
"security" (as defined in the Act) which could be integrated with
the sale of the Securities in a manner which would require the
registration under the Act of the Securities.
(i) The Company and XCL-China will not solicit any offer
to buy or offer to sell the Securities by means of any form of
general solicitation or general advertising (as those terms are
used in Regulation D under the Act) or in any manner involving a
public offering within the meaning of Section 4(2) of the Act.
(j) For so long as any of the Securities remain
outstanding, the Company and XCL-China will make available, upon
request, to any seller or prospective purchaser of such
Securities the information specified in Rule 144A(d)(4) under the
Act, unless the Company is then subject to Section 13 or 15(d) of
the Exchange Act.
(k) Each of the Company and XCL-China will use its best
efforts to (i) permit the Securities to be designated PORTAL
securities in accordance with the rules and regulations adopted
by the NASD relating to trading in the Private Offering, Resales
and Trading through Automated Linkages market (the "PORTAL
Market") and (ii) permit the Securities to be eligible for
clearance and settlement through DTC.
(l) (i) During the period beginning from the date hereof
and continuing until the date 90 days after the Closing Date,
neither the Company nor XCL-China will offer, sell, contract to
sell or otherwise dispose of, except as provided hereunder, any
securities that are substantially similar to the Securities or
the Common Stock, including, but not limited to, any securities
that are convertible into or exchangeable for, or that represent
the right to receive, Common Stock or any such substantially
similar securities, except that the Company may, without such
consent (A) issue shares of Common Stock upon conversion of
preferred stock or warrants outstanding on the Closing Date, (B)
issue units consisting of notes and warrants to purchase Common
Stock upon consummation of the Concurrent Debt Offering (C) issue
shares of Common Stock pursuant to options or similar rights
granted to directors, officers or employees, (D) issue shares of
Common Stock pursuant to any long-term incentive or employee
benefit plan of the Company, (E) issue shares of Common Stock and
Preferred Stofck in payment of dividends on Preferred Stock, (F)
issue shares of Common Stock in redemption of Preferred Stock,
(G) issue shares of Amended Preferred Stock in payment of
interest on the Subordinated Debt (as defined in the Final
Memorandum), (H) issue securities to Patrick Collins valued at
$500,000, after the Closing Date, comparable to the Units and (I)
grant options or other derivative securities pursuant to existing
stock option plans of the Company; and provided, that, the
Company shall not offer, sell, contract to sell or otherwise
dispose of securities of the Company after such 90 day period if
such transaction would cause the initial offer and sale by the
Company and resale by the Initial Purchaser of the Securities not
to be exempt from the registration requirements of the Act, and
(ii) the Company it will use its best efforts to cause each
person who has entered into a Lock-up Agreement (as herein
defined) to comply therewith, will not grant any waivers or
consents to noncompliance therewith and will enforce its rights
under each such agreement, in each case unless and to the extent
that it shall have obtained the Initial Purchaser's prior written
consent.
(m) During the period of two years after the Closing
Date (or such shorter period as may be provided for in Rule
144(k) under the Act, as the same may be in effect from time to
time), the Company will not, and will not permit any of its
affiliates (as defined in Rule 144 under the Act) to, resell any
of the Securities which constitute "restricted securities" under
Rule 144 that have been reacquired by any of them, except
pursuant to an effective registration statement under the Act.
(n) The Company shall pay all stamp and other duties, if
any, which may be imposed by the United Sates or the United
Kingdom or any political subdivision thereof or taxing authority
thereof or therein with respect to the issuance of the
Securities; provided, however, the Company shall not be required
to make any payment with respect to any other tax, assessment or
government charge imposed by any government or any political
subdivision therefore taxing authority.
6. Expenses. The Company and XCL-China agree, jointly and
severally, to pay all costs and expenses incident to the
performance of their obligations under this Agreement, whether or
not the transactions contemplated herein are consummated or this
Agreement is terminated pursuant to Section 11 hereof, including
all costs and expenses incident to (i) the printing, word
processing or other production of documents with respect to the
transactions contemplated hereby, including any costs of printing
the Preliminary Memorandum and the Final Memorandum and any
amendment or supplement thereto, (ii) all arrangements relating
to the delivery to the Initial Purchaser of copies of the
foregoing documents, (iii) the fees and disbursements of the
counsel, the accountants and any other experts or advisors
retained by the Company, (iv) preparation, issuance and delivery
to the Initial Purchaser of the Securities, (v) the qualification
of the Securities under state securities and "Blue Sky" laws,
including filing fees and fees and disbursements of counsel for
the Initial Purchaser relating thereto, (vi) the reasonable fees,
disbursements and charges of Vinson & Elkins L.L.P., counsel to
the Initial Purchaser, in connection with the transactions
contemplated hereby, (vii) expenses in connection with any
meetings with prospective investors in the Securities, (viii)
fees and expenses of the Trustee, the Warrant Agent and the
transfer agents for the Common Stock and the Preferred Stock
including fees and expenses of their respective counsel, (ix) all
expenses and listing fees incurred in connection with the
application for quotation of the Securities on the PORTAL Market
and (x) any fees charged by investment rating agencies for the
rating of the Securities. If the sale of the Securities provided
for herein is not consummated because any condition to the
obligations of the Initial Purchaser set forth in Section 7
hereof is not satisfied, because this Agreement is terminated or
because of any failure, refusal or inability on the part of the
Company or XCL-China to perform all obligations and satisfy all
conditions on their part to be performed or satisfied hereunder
(other than solely by reason of a default by the Initial
Purchaser on its obligations hereunder after all conditions
hereunder have been satisfied in accordance herewith), the
Company and XCL-China, jointly and severally, agree to promptly
reimburse the Initial Purchaser upon demand for all out-of-pocket
expenses (including reasonable fees, disbursements and charges of
Vinson & Elkins L.L.P., counsel for the Initial Purchaser) that
shall have been incurred by the Initial Purchaser in connection
with the proposed purchase and sale of the Securities. The
Company and XCL-China shall not be liable to the Initial
Purchaser for loss of contemplated profits from the transactions
covered by this Agreement.
7. Conditions of the Initial Purchaser's Obligations. The
obligation of the Initial Purchaser to purchase and pay for the
Securities shall, in its sole discretion, be subject to the
satisfaction or waiver of the following conditions on or prior to
the Closing Date:
(a) On the Closing Date, the Initial Purchaser shall
have received the opinion, dated as of the Closing Date and
addressed to the Initial Purchaser, of Satterlee Stephens Burke &
Burke LLP, counsel for the Company and XCL-China, in form and
substance satisfactory to counsel for the Initial Purchaser, to
the effect that:
(i) Each of the Company and XCL-China is duly
incorporated, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate
power and authority to own, lease and operate its properties and
to conduct its business as described in the Final Memorandum.
The Company is duly qualified as a foreign corporation and in
good standing under the laws of the State of Louisiana.
(ii) To the knowledge of such counsel, all of the
outstanding shares of capital stock of XCL-China are owned,
directly or indirectly, by the Company, free and clear of all
liens, encumbrances, equities and claims or restrictions on
transferability or voting, except for those arising under the
Participation Agreement or under the applicable laws, reulse and
regulations (including interpretations thereof) of the People's
Republic of China or securing the Existing Secured Debt (as such
terms are defined in the Final Memorandum).
(iii) Except as set forth in the Final Memorandum,
to the knowledge of such counsel (A) no options, warrants or
other rights to purchase from the Company or XCL-China shares of
capital stock in the Company or XCL-China are outstanding, (B) no
agreements or other obligations of the Company or XCL-China to
issue, or other rights to cause the Company or XCL-China to
convert, any obligation into, or exchange any securities for,
shares of capital stock in the Company or XCL-China are
outstanding and (C) no holder of securities of the Company or XCL-
China is entitled to have such securities registered under a
registration statement filed by the Company or XCL-China under
the Act with respect to the Securities or the Warrant Shares.
(iv) The 151 Certificate has been filed in the
State of Delaware in the manner provided by the Delaware General
Corporation Law; and the shares of Amended Series A Preferred
Stock included in the Units have been duly and validly authorized
for issuance by the Company and, when issued and paid for by the
Initial Purchaser in accordance with the terms of this Agreement,
will be duly authorized, validly issued, fully paid and non-
assessable, will not be subject to any preemptive or similar
rights and the holders thereof will be entitled to the benefits
of the preferences and other rights set forth in the 151
Certificate.
(v) [Intentionally omitted.]
(vi) The Company has all requisite corporate power
and authority to execute, deliver and perform its obligations
under the Registration Rights Agreement; the Registration Rights
Agreement has been duly and validly authorized, executed and
delivered by the Company and (assuming the due authorization,
execution and delivery thereof by the Initial Purchaser),
constitutes the valid and legally binding agreement of the
Company, enforceable against the Company in accordance with its
terms, except that (A) the enforcement thereof may be subject to
(i) bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws now or hereafter in
effect relating to creditors' rights generally and (ii) general
principles of equity and the discretion of the court before which
any proceeding therefor may be brought and (B) any rights to
indemnity or contribution thereunder may be limited by federal
and state securities laws and public policy considerations.
(vii) Subject to the availability of a sufficient
number of authorized but unissued or treasury shares to permit
the exercise of the outstanding Warrants, the Company has all
requisite corporate power and authority to execute, deliver and
perform its obligations under the Warrant Agreement. The Warrant
Agreement has been duly and validly authorized, executed and
delivered by the Company and, subject to the availability of a
sufficient number of authorized but unissued or treasury shares
to permit the exercise of the outstanding Warrants, constitutes
the valid and legally binding agreement of the Company,
enforceable against the Company in accordance with its terms,
except that the enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general
principles of equity and the discretion of the court before which
any proceeding therefor may be brought and (iii) Federal or state
securities laws or principles of public policy affecting
enforcement of rights to indemnity or contribution.
(viii) Subject to the availability of a sufficient
number of authorized but unissued or treasury shares to permit
the exercise of the outstanding Warrants, the Company has all
requisite corporate power and authority to execute, deliver and
perform its obligations under the Warrants. The Warrants have
been duly and validly authorized and executed by the Company and,
when countersigned by the Warrant Agent in accordance with the
provisions of the Warrant Agreement and delivered to and paid for
by the Initial Purchaser in accordance with the terms of this
Agreement, will have been duly issued and delivered and, subject
to the availability of a sufficient number of authorized but
unissued or treasury shares to permit the exercise of the
outstanding Warrants, will constitute the valid and legally
binding obligations of the Company, entitled to the benefits of
the Warrant Agreement, and enforceable against the Company in
accordance with their terms, except that the enforcement thereof
may be subject to (i) bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws now or
hereafter in effect relating to creditors' rights generally and
(ii) general principles of equity and the discretion of the court
before which any proceeding therefor may be brought and (iii)
Federal or state securities laws or principles of public policy
affecting enforcement of rights to indemnity or contribution..
(ix) Subject to the availability of a sufficient
number of authorized but unissued or treasury shares to permit
the execise of the outstanding Warrants, when issued upon
exercise of the Warrants and upon conversion of the Amended
Series A Preferred Stock, the Warrant Shares and the Conversion
Stock, respectively, will be duly authorized, validly issued,
fully paid and non-assessable and will not be subject to any
preemptive or similar rights.
(x) Each of the Company and XCL-China has all
requisite corporate power and authority to execute, deliver and
perform its obligations under this Agreement and to consummate
the transactions contemplated hereby; the execution, delivery and
performance of this Agreement by the Company and XCL-China and
the consummation by the Company and XCL-China of the transactions
contemplated hereby have been duly and validly authorized by all
necessary corporate action on the part of the Company and XCL-
China. This Agreement has been duly executed and delivered by
the Company and XCL-China.
(xi) The Amended Series A Preferred Stock, the
Warrants, the Warrant Shares, the Common Stock, the Preferred
Stock, the Registration Rights Agreement and the Warrant
Agreement conform in all material respects to the descriptions
thereof contained in the Final Memorandum.
(xii) To the knowledge of such counsel, no legal or
governmental proceedings are pending or threatened to which any
of the Company or any of its Subsidiaries is a party or to which
the property or assets of the Company or any Subsidiary is
subject which, if determined adversely to the Company or the
Subsidiary, would result, individually or in the aggregate, in a
Material Adverse Effect, or which seeks to restrain, enjoin,
prevent the consummation of or otherwise challenge the issuance
or sale of the Securities to be sold hereunder or the
consummation of the other transactions described in the Final
Memorandum under the caption "Use of Proceeds."
(xiii) [Intentionally omitted]
(xiv) The execution and delivery of this Agreement,
the Warrant Agreement and the Registration Rights Agreement and
the consummation of the transactions contemplated hereby and
thereby (including, without limitation, the issuance and sale of
the Securities to the Initial Purchaser) will not conflict with
or constitute or result in a breach or violation of or a default
under (or an event which with notice or passage of time or both
would constitute a default under) any of (i) to such counsel's
knowledge, any of the terms or provisions of any indenture,
mortgage, deed of trust, loan agreement, note, lease, license,
franchise agreement, permit, certificate, contract or other
agreement or instrument (including in any event any of the
foregoing which have been filed by the Company with the
Commission) to which the Company or XCL-China is a party or to
which either of them or their respective properties or assets is
subject, except for any such conflict, breach, violation, default
or event which would not, individually or in the aggregate, have
a Material Adverse Effect, (ii) the certificate of incorporation
or bylaws of the Company or the Memorandum and Articles of
Association of XCL-China, or (iii) to such counsel's knowledge,
any statute, judgment, decree, order, rule or regulation known to
such counsel to be applicable to the Company or XCL-China or any
of their respective properties or assets, except for any
securities or antifraud law.
(xv) To the knowledge of such counsel, no consent,
approval, authorization or order of any governmental authority is
required for the issuance and sale by the Company and XCL-China
of the Securities to the Initial Purchaser or the other
transactions contemplated hereby, except such as may be required
under applicable securities laws, as to which such counsel need
express no opinion pursuant to this clause (xv), and those which
have previously been obtained.
(xvi) No registration under the Act of the
Securities is required in connection with the sale of the
Securities to the Initial Purchaser as contemplated by this
Agreement and the Final Memorandum or in connection with the
initial resale of the Securities by the Initial Purchaser in
accordance with Section 8 of this Agreement, and prior to the
commencement of the Exchange Offer (as defined in the
Registration Rights Agreement) or the effectiveness of the Shelf
Registration Statement (as defined in the Registration Rights
Agreement), the Indenture is not required to be qualified under
the TIA, in each case assuming (i) that the Purchaser who buy
such Securities in the initial resale thereof are qualified
institutional buyers as defined in Rule 144A promulgated under
the Act ("QIBs" or "Qualified Institutional Buyers"), accredited
investors as defined in Rule 501(a)(1), (2), (3) or (7)
promulgated under the Act ("Accredited Investors"), or foreign
Purchaser (as defined in Section 8), (ii) the accuracy of the
Initial Purchaser's representations in Section 8 and those of the
Company and XCL-China contained in this Agreement regarding the
absence of a general solicitation in connection with the sale of
such Securities to the Initial Purchaser and the initial resale
thereof and (iii) the due performance by the Initial Purchaser of
the agreements set forth in Section 8 hereof.
(xvii) Neither the consummation of the transactions
contemplated by this Agreement nor the sale, issuance, execution
or delivery of the Securities will violate Regulation G, T, U or
X of the Board of Governors of the Federal Reserve System.
At the time the foregoing opinion is delivered, Satterlee
Stephens Burke & Burke LLP shall additionally state that it has
participated in conferences with officers and other
representatives of the Company and XCL-China, representatives of
the independent public accountants for the Company,
representatives of the Initial Purchaser and counsel for the
Initial Purchaser, at which conferences the contents of the Final
Memorandum and related matters were discussed, and, although it
has not independently verified and is not passing upon and
assumes no responsibility for the accuracy, completeness or
fairness of the statements contained in the Final Memorandum
(except to the extent specified in clause (xi)), no facts have
come to its attention which lead it to believe that the Final
Memorandum, on the date thereof or at the Closing Date, contained
an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make
the statements contained therein, in light of the circumstances
under which they were made, not misleading (it being understood
that such firm need express no opinion with respect to the
financial statements and related notes thereto and the other
financial, statistical and geological data included in the Final
Memorandum). In rendering such opinion, such counsel may (i)
rely in respect to matters of fact upon certificates of officers
of the Company and its Subsidiaries and upon information obtained
from public officials, (ii) assume that all documents submitted
to such counsel as originals are authentic, that all copies
submitted to such counsel conform to the originals thereof, and
that the signatures on all documents examined by such counsel are
genuine, (iii) state that such counsel's opinion is limited to
the federal law of the United States and the laws of the State of
New York and the General Corporation Law of the State of
Delaware, (iv) rely in respect to all matters involving XCL-China
and the laws of the British Virgin Islands upon the opinion of
local counsel, and (v) may make such other assumptions and
qualifications as may be reasonably acceptable to the Initial
Purchaser. The opinion of Satterlee Stephens Burke & Burke LLP
described in this subsection (a) shall be rendered to the Initial
Purchaser at the request of the Company and XCL-China and shall
so state therein.
References to the Final Memorandum in this subsection (a)
shall include any amendment or supplement thereto prepared in
accordance with the provisions of this Agreement at the Closing
Date.
(b) On the Closing Date, the Initial Purchaser shall
have received the opinion, in form and substance satisfactory to
the Initial Purchaser, dated as of the Closing Date and addressed
to the Initial Purchaser, of Vinson & Elkins L.L.P., counsel for
the Initial Purchaser, with respect to certain legal matters
relating to this Agreement and such other related matters as the
Initial Purchaser may require. In rendering such opinion, Vinson
& Elkins L.L.P. shall have received and may rely upon such
certificates and other documents and information as it may
reasonably request to pass upon such matters.
(c) The Initial Purchaser shall have received from the
Independent Accountants a comfort letter or letters dated the
date hereof and the Closing Date, in form and substance
satisfactory to the Initial Purchaser, to the effect set forth in
Exhibit C hereto.
(d) The representatives and warranties of each of the
Company and XCL-China contained in this Agreement shall be true
and correct in all material respects on and as of the date hereof
and on and as of the Closing Date as if made on and as of the
Closing Date (except for the representations and warranties which
were true and correct as of acertain specified date which shall
continue to be true and correct as of such date); the statements
of the Company's and XCL-China's officers made pursuant to any
certificate delivered in accordance with the provisions hereof
shall be true and correct in all material respects on and as of
the date made and on and as of the Closing Date; the Company and
XCL-China shall have complied in all material respects with all
agreements and satisfied all conditions on their part to be
performed or satisfied hereunder at or prior to the Closing Date;
and, except as described in the Final Memorandum (exclusive of
any amendment or supplement thereto after the date hereof),
subsequent to the date of the most recent financial statements in
such Final Memorandum, there shall have been no development that,
singly or in the aggregate, is reasonably likely to cause a
Material Adverse Effect.
(e) The sale of the Securities hereunder shall not be
enjoined (temporarily or permanently) on the Closing Date.
(f) Subsequent to the date of the most recent financial
statements in the Final Memorandum (exclusive of any amendment or
supplement thereto after the date hereof), other than as
described in such Final Memorandum or contemplated hereby,
neither the Company nor any Subsidiary shall have incurred any
liabilities or obligations, direct or contingent (other than in
the ordinary course of business), that are material to the
Company and its Subsidiaries, taken as a whole, or entered into
any transactions not in the ordinary course of business that are
material to the business, condition (financial or other) or
results of operations or prospects of the Company, taken as a
whole, and there shall not have been any adverse change in the
capital stock or long-term indebtedness of the Company or any
Subsidiary that is material to the business, condition (financial
or other) or results of operations or prospects of the Company
and the Subsidiaries, taken as a whole.
(g) Subsequent to the date of the most recent financial
statements in the Final Memorandum (exclusive of any amendment or
supplement thereto after the date hereof), the conduct of the
business and operations of the Company or XCL-China shall not
have been interfered with by strike, fire, flood, hurricane,
accident or other calamity (whether or not insured) or by any
court or governmental action, order or decree, and, except as
otherwise stated therein, the properties of the Company or XCL-
China shall not have sustained any loss or damage (whether or not
insured) as a result of any such occurrence, except any such
interference, loss or damage which would not, individually or in
the aggregate, have a Material Adverse Effect.
(h) The Initial Purchaser shall have received
certificates of the Company and XCL-China, dated the Closing
Date, signed on behalf of the Company and XCL-China by their
respective Chairman of the Board or President and their Chief
Financial Officer, to the effect that:
(i) the representations and warranties of the
Company and XCL-China contained in this Agreement are true and
correct in all material respects as of the date hereof and as of
the Closing Date (except for the representations and warranties
which were true and correct as of a certain specified date which
shall continue to be true and correct as of such date), and the
Company and XCL-China have performed all covenants and agreements
and satisfied hereunder all conditions on their part to be
performed or satisfied hereunder at or prior to the Closing Date;
(ii) at the Closing Date, since the date hereof or
since the date of the most recent financial statements in the
Final Memorandum (exclusive of any amendment or supplement
thereto after the date hereof), no event or events have occurred,
no information has become known nor does any condition exist
that, individually or in the aggregate, would have a Material
Adverse Effect;
(iii) since the date hereof or since the date of
the most recent financial statements in the Final Memorandum
(exclusive of any amendment or supplement thereto after the date
hereof), other than as described in the Final Memorandum or
contemplated hereby, neither the Company nor any Subsidiary has
incurred any liabilities or obligations, direct or contingent
(other than in the ordinary course of business), that are
material to the Company and its Subsidiaries, taken as a whole,
or entered into any transactions not in the ordinary course of
business that are material to the business, condition (financial
or other) or results of operations or prospects of the Company
and its Subsidiaries, taken as a whole, and there has not been
any change in the capital stock or long-term indebtedness of the
Company or any Subsidiary that is material to the business,
condition (financial or other) or results of operations or
prospects of the Company and its Subsidiaries, taken as a whole;
(iv) the sale of the Securities hereunder has not
been enjoined (temporarily or permanently; and
(v) the Concurrent Debt Offering shall have been
consummated as contemplated by the Final Memorandum.
(i) On the Closing Date, the Initial Purchaser shall
have received the Registration Rights Agreement executed by the
Company.
(j) The Initial Purchaser shall have received from H.J.
Gruy and Associates, Inc. (1) a letter dated the date hereof, in
form and substance satisfactory to the Initial Purchaser, to the
effect set forth in Exhibit D hereto.
(k) The Concurrent Debt Offering shall have been
consummated as contemplated by the Final Memorandum.
(l) [Intentionally omitted.]
(m) The directors and executive officers of the Company
who are holders of outstanding shares of or securities
exercisable or exchangeable for or convertible into shares of
capital stock of the Company and the principal holders of the
Company's Series A, Cumulative Convertible Preferred Stock shall
have entered into a written agreement with the Initial Purchaser
in the form of Exhibit E hereto (each such agreement a "Lock-up
Agreement"), and executed originals of each Lock-up Agreement
shall have been delivered to you.
On or before the Closing Date, the Initial Purchaser and
counsel for the Initial Purchaser shall have received such
further documents, opinions, certificates, letters and schedules
or instruments relating to the business, corporate, legal and
financial affairs of the Company and XCL-China as they shall have
heretofore reasonably requested from the Company and XCL-China.
All such documents, opinions, certificates, letters,
schedules or instruments delivered pursuant to this Agreement
will comply with the provisions hereof only if they are
reasonably satisfactory in all material respects to the Initial
Purchaser and counsel for the Initial Purchaser. The Company and
XCL-China shall furnish to the Initial Purchaser such conformed
copies of such documents, opinions, certificates, letters,
schedules and instruments in such quantities as the Initial
Purchaser shall reasonably request.
8. Representations and Warranties by the Initital
Purchaser. The Initial Purchaser represents and warrants that it
has duly authorized, executed and delivered this Agreement. The
Initial Purchaser hereby acknowledges that the Securiteis have
not been registered under the Act; they are being offered and
sold pursuant to an exemption from registration contained in the
Act based in part on the Initial Purchaser's representations
contained in this Agreement, including, without limitatin, the
following: it has substantial experience in evaluating and
investing in private placement transactions of securities in
companies dimilar to the Company so that it is capable of
evaluating the merits and resks of its investment in the Company;
it acknolwedges that it must bear the economic risk of this
investment indefinitely unless the Securiteis are regitered under
the Act or an exemption from registration is available; it is an
"accredited investor" within the meaning of Rule 501(a)
prolulgated under the Act; it has received and read the Final
Memorandum, in particular the information set forth in the
sections entitled "Disclosure of Forwrd-Looking Information,"
"Risk Factors," "Management's Discussion and Analysis of
Financial Condition and Results of Operations," "Transfer
Restrictions" and "Private Placement," and has had an opportunity
to discuss the Company's business, management and financial
affairs with directors, officers and other management of the
Company and its subsidiaries and ask questiosn of, and receive
answers from the Compandy and its managment regarding the terms
and conditions of its investment in the Company. The Initital
Purchaser represents and warrants that it is a QIB. The Initial
Purchaser agrees with the Company and XCL-China that (a) it has
not and will not solicit offers for, or offer or sell, the
Securities by any form of general solicitation or general
advertising (as those terms are used in Regulation D under the
Act) or in any manner involving a public offering within the
meaning of Section 4(2) of the Act and (b) it has and will
solicit offers for the Securities only from, and will offer the
Securities only to (A) in the case of offers inside the United
States, (i) persons whom the Initial Purchaser reasonably
believes to be QIBs, if any such person is buying for one or more
institutional accounts for which such person is acting as
fiduciary or agent, only when such person has represented to the
Initial Purchaser that each such account is a QIB, to whom notice
has been given that such sale or delivery is being made in
reliance on Rule 144A under the Act, and, in each case, in
transactions under Rule 144A or (ii) a limited number of other
institutional investors reasonably believed by the Initial
Purchaser to be Accredited Investors that, prior to their
purchase of the Securities, deliver to the Initial Purchaser a
letter containing the representations and agreements set forth in
Appendix A to the Final Memorandum and (B) in the case of offers
outside the United States, to persons other than U.S. persons
("foreign purchaser") which term shall include dealers or other
professional fiduciaries in the United States acting on a
discretionary basis for foreign beneficial owners (other than an
estate or trust)); provided, however, that, in the case of this
clause (b), in purchasing such Securities such persons are deemed
to have represented and agreed as provided under the caption
"Transfer Restrictions" contained in the Final Memorandum. The
Initial Purchaser further represents and agrees that, except as
permitted by this Agreement, it will not offered, sell or deliver
any Securities (i) as part of the distribtution at any time or
(ii) otherwise until 40 days (or such longer period as may be
provided under Regulation S, as amended) after the later of the
commencment of the offering of the Units, within the United
States or to, or for the account or benefit of, U.S. Persons, and
that it will send to each dealer to which it sells Units in
reliance on Regulation S during the restricted period a
confirmation or other notice setting forth the restrictions on
offers and sales of the Securities within the United States or
to, or for the account or benefit of, U.S. Person (terms used in
this paragraph having the meanings given to them by Regulation S
under the Securities Act). The Initital Purchaser further
represents, warrants and agrees that (i) it has not offered or
sold and prior to the date six months after the date of issue of
the Securities will not offer or sell any Securities to persons
in the United Kingdom except to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their
businesses or otherwise in circumstances which have not resulted
and will not result in an offer to the public in the United
Kingdom within the meaning of the Public Offers of Securities
Regulations 1995, (ii) it has complied, and will comply, with all
applicable provisions of the Financial Services Act 1986 of Great
Britain with respect to anything done by it in relation to the
Securities in, from or otherwise involving the United Kingdom,
and (iii) it has only issued or passed on, and will only issue or
pass on, in the United Kingdom, any document received by it in
connection with the issuance of the Securities to a person who is
of a kind described in Article 11(3) of the Financial Services
Act 1986 (Investment Advertisements) (Exemptions) Order 1995 of
Great Britain or is a person to whom the document may otherwise
lawfully be issued or passed on. The Initial Purchaser agrees
that it will not offer, sell or deliver any of the Securities in
any jurisdiction outside the United States except under
circumstances that will result in compliance with the provisions
of Regulation S promulgated under the Act and the applicable laws
of such jurisdiction, and that it will take at its own expense
whatever action is required to permit its purchase and resale of
the Securities in such jurisdictions. The Initial Purchaser
understands that no action has been taken to permit a public
offering in any jurisdiction outside the United States where
action would be required for such purpose. The Initial Purchaser
agrees not to cause any advertisement of the Securities to be
published in any newspaper or periodical or posted in any public
place and not to issue any circular relating to the Securities,
except in any such case with the consent of the Company. The
Initial Purchaser agrees to send and give a copy of the Final
Memorandum (as the same may be supplement or amended) to each
Purchaser of the Units at or prior to the written confirmation of
the sale of the Units to such person.
9. Indemnification and Contribution. (a) The Company
and XCL-China, jointly and severally, agree to indemnify and hold
harmless the Initial Purchaser, and each person, if any, who
controls the Initial Purchaser within the meaning of Section 15
of the Act or Section 20 of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), against any losses, claims,
damages or liabilities to which the Initial Purchaser or such
controlling person may become subject under the Act, the Exchange
Act or otherwise, insofar as any such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are
based upon:
(i) any untrue statement or alleged untrue
statement of any material fact contained in any Memorandum or any
amendment or supplement thereto; or
(ii) the omission or alleged omission to state, in
any Memorandum or any amendment or supplement thereto, a material
fact required to be stated therein or necessary to make the
statements therein not misleading; or
(iii) any breach by the Company or XCL-China of
their respective representations, warranties and agreements set
forth herein;
and, subject to the provisos hereto will reimburse, as incurred,
the Initial Purchaser and each such controlling person for any
legal or other expenses incurred by the Initial Purchaser or such
controlling person in connection with investigating, defending
against or appearing as a third-party witness in connection with
any such loss, claim, damage, liability or action in respect
thereof; provided, however, the Company and XCL-China will not be
liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged
omission made in any Memorandum or any amendment or supplement
thereto in reliance upon and in conformity with written
information concerning the Initial Purchaser furnished to the
Company or XCL-China by the Initial Purchaser specifically for
use therein. This indemnity agreement will be in addition to any
liability that the Company or XCL-China may otherwise have to the
indemnified parties. Neither the Company nor XCL-China shall be
liable under this Section 9 for any settlement of any claim or
action effected without its prior written consent, which shall
not be unreasonably withheld; and provided further, however, that
this indemnity, as to the Preliminary Offering Memorandum, shall
not inure to the benefit of the Initial Purchaser (or any person
controlling such Initial Purchaser) on account of any loss,
claim, damage or liability arising from the sale of Securities to
any person by such Initial Purchaser if such Initial Purchaser
failed to send or give a copy of the Final Memorandum (as the
same may be supplemented or amended) to such person at or prior
to the written confirmation of the sale of the Securities to such
person, and the untrue statement or alleged untrue statement or
omission or alleged omission of a material fact in such
Preliminary Offering Memorandum was corrected in the Final
Memorandum, unless such failure resulted from noncompliance by
the Company with Section 5(d).
(b) The Initial Purchaser agrees to indemnify and hold
harmless each of the Company, XCL-China, their directors, their
officers and each person, if any, who controls the Company or XCL-
China within the meaning of Section 15 of the Act or Section 20
of the Exchange Act against any losses, claims, damages or
liabilities to which the Company or XCL-China or any such
director, officer or controlling person may become subject under
the Act, the Exchange Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained in any
Memorandum or any amendment or supplement thereto or (ii) the
omission or the alleged omission to state therein a material fact
required to be stated in any Memorandum or any amendment or
supplement thereto or necessary to make the statements therein
not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in
conformity with written information concerning such Initial
Purchaser, furnished to the Company or XCL-China by the Initial
Purchaser specifically for use therein or (iii) any breach by the
Initial Purchaser of its representations, warranties and
agreements set forth herein; and subject to the limitation set
forth immediately preceding this clause, will reimburse, as
incurred, any legal or other expenses incurred by the Company or
XCL-China or any such director, officer or controlling person in
connection with investigating or defending against or appearing
as a third party witness in connection with any such loss, claim,
damage, liability or action in respect thereof. This indemnity
agreement will be in addition to any liability that the Initial
Purchaser may otherwise have to the indemnified parties. The
Initial Purchaser shall not be liable under this Section 9 for
any settlement of any claim or action effected without its prior
written consent, which shall not be unreasonably withheld.
Neither the Company nor XCL-China shall, without the prior
written consent of the Initial Purchaser, effect any settlement
or compromise of any pending or threatened proceeding in respect
of which the Initial Purchaser is or could have been a party, or
indemnity could have been sought hereunder by the Initial
Purchaser, unless such settlement (A) includes an unconditional
written release of the Initial Purchaser, in form and substance
reasonably satisfactory to the Initial Purchaser, from all
liability on claims that are the subject matter of such
proceeding and (B) does not include any statement as to an
admission of fault, culpability or failure to act by or on behalf
of the Initial Purchaser.
(c) Promptly after receipt by an indemnified party under
this Section 9 of notice of the commencement of any action for
which such indemnified party is entitled to indemnification under
this Section 9, such indemnified party will, if a claim in
respect thereof is to be made against the indemnifying party
under this Section 9, notify the indemnifying party of the
commencement thereof in writing; but the omission to so notify
the indemnifying party (i) will not relieve it from any liability
under paragraph (a) or (b) above unless and to the extent such
failure results in the forfeiture by the indemnifying party of
substantial rights and defenses and (ii) will not, in any event,
relieve the indemnifying party from any obligations to any
indemnified party other than the indemnification obligation
provided in paragraphs (a) and (b) above. In case any such
action is brought against any indemnified party, and it notifies
the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and,
to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified
party; provided, however, that if (i) the use of counsel chosen
by the indemnifying party to represent the indemnified party
would present such counsel with a conflict of interest, (ii) the
defendants in any such action include both the indemnified party
and the indemnifying party and the indemnified party shall have
been advised by counsel that there may be one or more legal
defenses available to it and/or other indemnified parties that
are different from or additional to those available to the
indemnifying party, or (iii) the indemnifying party shall not
have employed counsel reasonably satisfactory to the indemnified
party to represent the indemnified party within a reasonable time
after receipt by the indemnifying party of notice of the
institution of such action, then, in each such case, the
indemnifying party shall not have the right to direct the defense
of such action on behalf of such indemnified party or parties and
such indemnified party or parties shall have the right to select
separate counsel to defend such action on behalf of such
indemnified party or parties. After notice from the indemnifying
party to such indemnified party of its election so to assume the
defense thereof and approval by such indemnified party of counsel
appointed to defend such action, the indemnifying party will not
be liable to such indemnified party under this Section 9 for any
legal or other expenses, other than reasonable costs of
investigation, subsequently incurred by such indemnified party in
connection with the defense thereof, unless (i) the indemnified
party shall have employed separate counsel in accordance with the
proviso to the immediately preceding sentence (it being
understood, however, that in connection with such action the
indemnifying party shall not be liable for the expenses of more
than one separate counsel (in addition to local counsel) in any
one action or separate but substantially similar actions in the
same jurisdiction arising out of the same general allegations or
circumstances, designated by the Initial Purchaser in the case of
paragraph (a) of this Section 9 or the Company or XCL-China in
the case of paragraph (b) of this Section 9, representing the
indemnified parties under such paragraph (a) or paragraph (b), as
the case may be, who are parties to such action or actions) or
(ii) the indemnifying party has authorized in writing the
employment of counsel for the indemnified party at the expense of
the indemnifying party. After such notice from the indemnifying
party to such indemnified party, the indemnifying party will not
be liable for the costs and expenses of any settlement of such
action effected by such indemnified party without the prior
written consent of the indemnifying party (which consent shall
not be unreasonably withheld), unless such indemnified party
waived in writing its rights under this Section 9, in which case
the indemnified party may effect such a settlement without such
consent.
(d) In circumstances in which the indemnity agreement
provided for in the preceding paragraphs of this Section 9 is
unavailable to, or insufficient to hold harmless, an indemnified
party in respect of any losses, claims, damages or liabilities
(or actions in respect thereof), each indemnifying party, in
order to provide for just and equitable contribution, shall
contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages or liabilities
(or actions in respect thereof) in such proportion as is
appropriate to reflect (i) the relative benefits received by the
indemnifying party or parties on the one hand and the indemnified
party on the other from the offering of the Securities or (ii) if
the allocation provided by the foregoing clause (i) is not
permitted by applicable law, not only such relative benefits but
also the relative fault of the indemnifying party or parties on
the one hand and the indemnified party on the other in connection
with the statements or omissions or alleged statements or
omissions that resulted in such losses, claims, damages or
liabilities (or actions in respect thereof). The relative
benefits received by the Company and XCL-China on the one hand
and the Initial Purchaser on the other shall be deemed to be in
the same proportion as the total proceeds from the offering
(before deducting expenses) received by the Company bear to the
total discounts and commissions received by such Initial
Purchaser. The relative fault of the parties shall be determined
by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information
supplied by the Company or XCL-China on the one hand, or such
Initial Purchaser on the other, the parties' relative intent,
knowledge, access to information and opportunity to correct or
prevent such statement or omission or alleged statement or
omission, and any other equitable considerations appropriate in
the circumstances.
(e) The Company, XCL-China and the Initial Purchaser
agree that it would not be equitable if the amount of such
contribution were determined by pro rata or per capita allocation
or by any other method of allocation that does not take into
account the equitable considerations referred to in the first
sentence of the immediately preceding paragraph (d).
Notwithstanding any other provision of the immediately preceding
paragraph (d), the Initial Purchaser shall not be obligated to
make contributions hereunder that in the aggregate exceed the
total discounts, commissions and other compensation received by
such Initial Purchaser under this Agreement, less the aggregate
amount of any damages that such Initial Purchaser has otherwise
been required to pay by reason of the untrue or alleged untrue
statements or the omissions or alleged omissions to state a
material fact, and no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. For purposes of
the immediately preceding paragraph (d), each person, if any, who
controls the Initial Purchaser within the meaning of Section 15
of the Act or Section 20 of the Exchange Act shall have the same
rights to contribution as the Initial Purchaser, and each
director of the Company and XCL-China, each officer of the
Company and XCL-China and each person, if any, who controls the
Company and XCL-China within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act, shall have the same rights to
contribution as the Company and XCL-China.
10. Survival Clause. The respective representations,
warranties, agreements, covenants, indemnities and other
statements of the Company and XCL-China, their respective
officers and the Initial Purchaser set forth in this Agreement or
made by or on behalf of them pursuant to this Agreement shall
remain in full force and effect, regardless of (i) any
investigation made by or on behalf of the Company and XCL-China,
any of their respective officers or directors, the Initial
Purchaser or any controlling person referred to in Section 9
hereof and (ii) delivery of and payment for the Securities. The
respective agreements, covenants, indemnities and other
statements set forth in Sections 6, 9 and 16 hereof shall remain
in full force and effect, regardless of any termination or
cancellation of this Agreement.
11. Termination. (a) This Agreement may be terminated
in the sole discretion of the Initial Purchaser by notice to the
Company given prior to the Closing Date in the event that the
Company or XCL-China shall have failed, refused or been unable to
perform all obligations and satisfy all conditions on their
respective part to be performed or satisfied hereunder at or
prior thereto or, if at or prior to the Closing Date:
(i) either the Company or XCL-China shall have
sustained any loss or interference with respect to its businesses
or properties from fire, flood, hurricane, accident or other
calamity, whether or not covered by insurance, or from any
strike, labor dispute, slow down or work stoppage or any legal or
governmental proceeding, which loss or interference, in the sole
judgment of the Initial Purchaser, has had or has a Material
Adverse Effect, or there shall have been, in the sole judgment of
the Initial Purchaser, any Material Adverse Effect, or any event
or development involving or reasonably likely to cause or result
in a Material Adverse Change (including without limitation a
change in management or control of the Company or XCL-China),
except in each case as described in the Final Memorandum
(exclusive of any amendment or supplement thereto);
(ii) trading in securities of the Company or in
securities generally on the New York Stock Exchange, American
Stock Exchange or the NASDAQ National Market shall have been
suspended or minimum or maximum prices shall have been
established on any such exchange or market;
(iii) a banking moratorium shall have been declared
by New York or United States authorities;
(iv) there shall have been (A) an outbreak or
escalation of hostilities between the United States and any
foreign power, or (B) an outbreak or escalation of any other
insurrection or armed conflict involving the United States or any
other national or international calamity or emergency, or (C) any
material change in the financial markets of the United States
which, in the case of clause (A), (B) or (C) and in the sole
judgment of the Initial Purchaser, makes it impracticable or
inadvisable to proceed with the private offering or the delivery
of the Securities as contemplated by the Final Memorandum; or
(v) any securities of the Company shall have been
downgraded or placed on any "watch list" for possible downgrading
by any nationally recognized statistical rating organization.
(b) Termination of this Agreement pursuant to this
Section 11 shall be without liability of any party to any other
party except as provided in Section 10 hereof.
12. Information Supplied by the Initial Purchaser. The
statements set forth in the last paragraph on the front cover
page, the first paragraph on page 3, and the third, fourth,
ninth, thirteenth, fifteenth and sixteenth paragraphs under the
heading "Private Placement" in the Memorandum (to the extent such
statements relate to the Initial Purchaser) constitute the only
information furnished by the Initial Purchaser to the Company or
XCL-China for the purposes of Sections 2(a) and 9 hereof.
13. Notices. All communications hereunder shall be in
writing and, if sent to the Initial Purchaser, shall be mailed or
delivered or telecopied and confirmed in writing to (i) Jefferies
& Company, Inc., 909 Fannin Street, Suite 3100, Houston, Texas
77010, Attention: Robert W. Carington, Telecopy No. (713) 650-
8730; and if sent to the Company or XCL-China, shall be mailed or
delivered or telecopied and confirmed in writing to it at 110 Rue
Jean Lafitte, Lafayette, Louisiana 70508, Attention: General
Counsel, Telecopy No. (318) 327-3316; with a copy to Satterlee
Stephens Burke & Burke LLP, 230 Park Avenue, Suite 1130, New
York, New York 10169, Attention: Peter A. Basilevsky, Esq.,
Telecopy No.: (212) 818-9606.
All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally
delivered; five business days after being deposited in the United
States mail, postage prepaid, if mailed; one business day after
being timely delivered to a next-day air courier; and when
receipt is acknowledged by the addressee, if telecopied.
14. Successors. This Agreement shall inure to the
benefit of and be binding upon the Initial Purchaser, the Company
and XCL-China and their respective successors and legal
representatives, and nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any other
person any legal or equitable right, remedy or claim under or in
respect of this Agreement, or any provisions herein contained,
this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of
such persons and for the benefit of no other person except that
(i) the indemnities of the Company and XCL-China contained in
Section 9 of this Agreement shall also be for the benefit of any
person or persons who control the Initial Purchaser within the
meaning of Section 15 of the Act or Section 20 of the Exchange
Act and (ii) the indemnities of the Initial Purchaser contained
in Section 9 of this Agreement shall also be for the benefit of
the directors of the Company and XCL-China, their respective
officers and any person or persons who control the Company or XCL-
China within the meaning of Section 15 of the Act or Section 20
of the Exchange Act. No purchaser of Securities from the Initial
Purchaser will be deemed a successor because of such purchase.
15. Applicable Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New
York.
16. Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same
instrument.
If the foregoing correctly sets forth our understanding,
please indicate your acceptance thereof in the space provided
below for that purpose, whereupon this letter shall constitute a
binding agreement among the Company, XCL-China and the Initial
Purchaser.
Very truly yours,
XCL LTD.
By:______________________________
Name:
Title:
XCL-CHINA LTD.
By:______________________________
Name:
Title:
The foregoing Agreement is hereby
confirmed and accepted as of the date
first above written.
JEFFERIES & COMPANY, INC.
By:________________________________
Name:
Title: