CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT ("Agreement"), effective as
of February 20, 1997 and expiring on February 20, 1998, by and
between XCL Ltd., a Delaware corporation., with offices at 110
Rue Jean Lafitte, Lafayette, Louisiana 70508 (hereinafter the
"Company") and Patrick B. Collins, 14018 Taylorcrest, Houston,
Texas 77079 (hereinafter "Consultant").
W I T N E S S E T H:
WHEREAS, Consultant has substantial experience and
ability in financial reporting and oil and gas accounting; and
WHEREAS, the Company desires to retain and secure for
itself the experience and ability of Consultant for the purpose
of assisting the Company with its financial reporting
requirements; and
WHEREAS, the Company and Consultant desire to enter
into a consulting agreement to set forth this proposed consulting
relationship;
NOW, THEREFORE, the parties to this Agreement hereby
agree as follows:
ARTICLE I
Rights and Duties Under Consulting Agreement
1.1 Term of Agreement and Duties. The Company
and Consultant agree that for the period commencing February 20,
1997 and terminating February 20, 1998, Consultant shall perform
consulting services for the Company with regard to the financial
reporting obligations of the Company, including oil and gas
accounting matters, review of 1996 financial statements,
presentation of financial statements, projections and footnotes
thereto in any debt and equity offering memoranda of the Company,
and preparation or review of 1997 financial statements.
1.2 A. Compensation. For consulting
services performed by Consultant during the term of this
Agreement, the Company shall pay Consultant by the issuance of
400,000 shares of Common Stock and warrants to purchase 200,000
shares of Common Stock of the Company at an exercise price of
$0.25 per share, exercisable for a five-year period.
B. Restricted Securities. Consultant
acknowledges that the Common Stock and stock purchase warrants,
and the shares of Common Stock issuable upon exercise thereof,
(hereinafter collectively referred to as the "Securities"), being
delivered pursuant to Section 1.2 of this Agreement, are being
issued (i) without registration under the Securities Act of 1933,
as amended (the "Act"), or any other securities laws; no federal
or state agency has made any finding or determination as to the
fairness for investment, nor any recommendation or endorsement of
an investment in the Securities, and the Securities are
"restricted securities" as defined in Rule 144 promulgated under
the Act; (ii) to you for your own account, for investment and not
with any present intention to distribute or resell, directly or
indirectly, all or any portion of the interest therein; (iii) you
warrant and represent that you are financially able to bear the
economic risk associated with these Securities for an indefinite
period of time with no assurance of any return thereon; (iv) you
warrant and represent that you have the requisite knowledge and
experience in financial matters, and you have had access to all
information regarding the Company and the Securities which you
have requested, to enable you to evaluate the merits and risks
associated with the Securities; (v) you warrant and represent
that, in making your investment decision with respect to the
Securities, you have reviewed the Company's latest Annual Report
on form 10-K and Quarterly Report on Form 10-Q and that you have
solely relied upon your own investigation of the Company and its
affairs, it being understood that the Company makes no
representations and warranties with respect to the Securities or
the Company, it business affairs, financial condition or
prospects; and (vi) acknowledge that; the Securities may not be
sold or offered for sale in the absence of an effective
registration statement for the Securities under the Act, or an
opinion of counsel acceptable to the Company to the effect that
such registration is not required; the certificate(s) evidencing
the Securities may be imprinted with a suitable restrictive
legend substantially to such effect that the Company is under no
obligation to take any steps to register the Securities under the
Act or otherwise cause the Securities to become freely
transferable (including, without limitation, to make the
provisions of Rule 144 available for any resales of the
Securities under such Rule).
1.3 Reimbursement of Expenses. The Company
shall reimburse Consultant for all reasonable and necessary
travel, or other related out-of-pocket expenses actually incurred
by it during the term of this Agreement in carrying out its
duties and responsibilities hereunder.
1.4 Time Requirements under Consulting Agreement.
Subject to the foregoing, Consultant agrees to provide the time
necessary for the performance of its consulting hereunder.
1.5 Place of Performance of Consulting Services.
Consultant shall perform its services hereunder in Lafayette,
Louisiana; Houston, Texas; and/or such other places as the
Company may direct.
1.6 Indemnification. The Company shall
indemnify Consultant for all liabilities in connection with any
proceeding arising from services performed pursuant to this
Agreement, other than liability arising from the Consultants
gross negligence or willful misconduct.
1.7 Confidentiality of Company's Business.
Consultant acknowledges that the Company's business is highly
competitive and that the Company's books, records and documents,
the Company's technical information concerning its products,
equipment, services and processes, procurement procedures and
pricing techniques, the names of and other information (such as
credit and financial data) concerning the Company's customers and
business affiliates, all comprise confidential business
information and trade secrets of the Company and are valuable,
special, and unique proprietary assets of the Company
("Confidential Information"). Consultant further acknowledges
that protection of Company's Confidential Information against
unauthorized disclosure and use is of critical importance to the
company in maintaining its competitive position. Accordingly,
Consulting hereby agrees that he will not, at any time during or
after the term of this Agreement, make any disclosure of any
Confidential Information, or make any use thereof, except for the
benefit of, and on behalf of, the Company. However, the
Consultant's obligation under this Section 1.7 shall not extend
to information which is or becomes part of the public domain or
is available to the public by publication or otherwise than
through the Consultant. The provisions of this Section 1.7 shall
survive the termination of this Agreement. Money damages would
not be sufficient remedy for breach of this Section 1.7 by
Consultant, and the Company shall be entitled to specific
performance and injunctive relief as remedies for such breach or
any threatened breach. Such remedies for a breach of this
Section 1.7 by the Consultant, but shall be in addition to all
remedies available at law or in equity to the Company including
the recovery of damages from the Consultant. For the purposes of
this paragraph, the term Company shall also include affiliates of
the Company.
1.8 Conflict of Interest. Consultant agrees to use
his best efforts, skill and abilities so long as Consultant's
Services are retained hereunder to promote the best interest of
Company and its business. As part of the consideration for the
compensation to be paid to Consultant hereunder, and as an
additional incentive for the Company to enter into this
Agreement, Company and Consultant agree to the noncompetitive
provisions of this Section 1.8. During the term of this
Agreement, Consultant agrees that, unless prior written approval
of the President of the Company is obtained, Consultant will not
directly or indirectly for himself or for others:
(i) consult, advise, counsel or otherwise assist
any customer, supplier, or direct competitor of the
Company or any affiliate which, in any manner, would
have, or is likely to have, an adverse effect upon the
Company or any affiliate; or
(ii) consult, advise, counsel or otherwise assist
any Federal or State regulatory agency on any matter or
in a regulatory proceeding which, in any manner, would
have, or is likely to have, an adverse effect upon the
Company or any affiliate;
Consultant understands that the foregoing restrictions may
limit Consultant's ability to engage in a business similar to the
Company's business during the period provided for above, but
acknowledges that Consultant will receive sufficiently high
remuneration and other benefits from the Company hereunder to
justify such restrictions. The Company shall be entitled to
enforce the provisions of this Section 1.8 by resorting to
appropriate legal and equitable action.
It is expressly understood and agreed that the Company and
Consultant consider the restrictions contained in this Section
1.8 to be reasonable and necessary for the purposes of preserving
and protecting the goodwill and Confidential Information and
proprietary information of the Company. Nevertheless, if any of
the aforesaid restrictions are found by a court having
jurisdiction to be unreasonable, or over broad as to geographic
area or time, or otherwise unenforceable, the parties intend for
the restrictions therein set forth to be modified by such court
so as to be reasonable and enforceable and, as so modified by the
court, to be fully enforced.
1.9 Independent Contractor:
(i) The parties hereby agree that the services
rendered by Consultant in the fulfillment of the terms
and obligations of this Agreement shall be as an
independent contractor and not as an employee, and with
respect thereto, Consultant is not entitled to the
benefits provided by the Company to its employees
including, but not limited to, group insurance and
participation in the Company's employee benefit and
pension plan. Further, Consultant is not an agent,
partner, or joint venture of the Company. Consultant
shall not represent himself to third persons to be
other than an independent contractor of the Company,
nor shall he permit himself to offer or offer or agree
to incur or assume any obligations or commitments in
the name of the Company or for the Company without the
prior written consent and authorization of the Company.
Consultant warrants that the services to be provided
hereunder will not cause of conflict with any other
duties or obligations of Consultant to third parties.
Consultant shall not subcontract or assign any of the
work to be performed hereunder without obtaining the
prior written consent of the Company, provided,
however, nothing contained herein shall prohibit
Consultant from incorporating and rendering services
hereunder as a corporation.
(ii) Consultant shall be responsible for payment of
all taxes including Federal, State and local taxes
arising out of the Consultant's activities under this
Agreement, including by way of illustration but not
limitation, Federal and State income tax, Social
Security tax, Unemployment Insurance taxes, and any
other taxes or business license fees as required.
ARTICLE II
Miscellaneous
2.1 Succession. This Agreement shall inure to
the benefit of and be binding upon the Company, its successors
and assigns, and upon Consultant. Consultant shall be prohibited
from assigning this Agreement without prior written approval of
the Company.
2.2 Notice. Any notice to be given to the
Company hereunder shall be deemed sufficient if addressed to the
Company in writing and personally delivered or mailed by
certified mail to its office at the address set forth above. Any
notice to be given to Consultant hereunder shall be sufficient if
addressed to it in writing and personally delivered or mailed by
certified mail to its address set forth above. Either party may,
by notice as aforesaid, designate a different address for the
receipt of notice.
2.3 Amendment. This Agreement may not be
amended or supplemented in any respect, except by a subsequent
written instrument entered into by both parties hereto.
2.5 Severability. In the event any provision of
this Agreement shall be held to be illegal, invalid or
unenforceable for any reasons, the illegality, invalidity, or
unenforceablity thereof shall not affect the remaining provisions
hereof, but such illegal, invalid, or unenforceable provision
shall be fully severable and this Agreement shall be construed
and enforced as if the illegal, invalid, or unenforceable
provision had never been included herein.
2.6 Headings. The titles and headings of
Articles and Sections are included for convenience of reference
only and are not to be considered in connection with the
construction or enforcement of the provisions hereof.
2.7 Governing Law. This Agreement shall be
governed in all respects by the laws of the State of Delaware.
IN WITNESS WHEREOF, the parties have executed this
Agreement effective as of the 20th day of February, 1997.
XCL LTD.
By:___________________________
Name:_________________________
Title:_________________________
______________________________
PATRICK B. COLLINS