AGREEMENT
This Agreement dated as of March 3, 1998, between
XCL Ltd., a Delaware corporation ("XCL"), and Arbco
Associates, L.P., Kayne Anderson Non-Traditional
Investments, L.P., Offense Group Associates, L.P.,
Opportunity Associates, L.P., each a California limited
partnership (collectively "Buyer").
W I T N E S S E T H:
WHEREAS, simultaneously herewith Buyer has entered
into a Stock Purchase Agreement (the "Purchase Agreement")
with China Investment and Development Corporation, a
Delaware corporation ("CIDC"), and China Investment &
Development Co. Ltd., a Republic of China corporation ("CIDC-
ROC," and together with CIDC, the "Sellers"), relating to
the sale by the Sellers to Buyer of all the outstanding
shares (the "Shares") of Series B, Cumulative Preferred
Stock, par value $1.00 per share (the "Series B Preferred
Stock") of XCL and warrants (the "Warrants") to purchase
221,666 shares of the common stock, par value $0.01 per
share (the "Common Stock"), of XCL; and
WHEREAS, the purchase of the Shares and the
Warrants as provided for in the Purchase Agreement is a
condition of the settlement and dismissal of certain
litigation by CIDC and CIDC-ROC against XCL and others; and
WHEREAS, in partial consideration for the services
of Buyer in effectuating the transactions provided for in
the Purchase Agreement in order to facilitate the settlement
and dismissal of such litigation and in order to induce
Buyer to take such actions to enable XCL to complete the
conditions to the settlement of the litigation, XCL has
agreed to create a class of Preferred Stock entitled Amended
Series B, Cumulative Convertible Preferred Stock ("Amended
Series B Preferred Stock") and to exchange the Shares of
Series B Preferred Stock purchased by Buyer for an
equivalent number of shares of Amended Series B Preferred
Stock and to issue to Buyer certain new warrants for the
purchase of Common Stock of XCL as provided for herein;
WHEREAS, the parties hereto wish to provide for
the exchange of the Shares, the issuance of certain new
warrants to Buyer and the cancellation of the Warrants on
the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the premises
and mutual agreements herein contained and other good and
valuable consideration, the receipt and sufficiency of which
are hereby acknowledged and confirmed, the parties hereto
hereby agree as follows:
1. Return of Warrants. In consideration of
XCL's covenants and agreements contained herein, on the
date hereof, Buyer hereby transfers to XCL all Buyer's
right, title and interest in and to the Warrants and
the warrant certificates (the "Warrant Certificates")
representing the Warrants and acknowledges that XCL
will cancel such Warrants, and from and after the date
hereof, the Warrants shall be deemed null and void and
of no further force and effect and no holder of any
Warrant Certificate shall be entitled to any rights
thereunder or with respect thereto and Buyer covenants
that if the Warrant Certificates ever come into Buyer's
possession or control, Buyer will promptly surrender
them to XCL for cancellation.
2. Redemption Notice. Buyer agrees that any
and all notices of redemption given with respect to the
Series B Preferred Stock prior to the date hereof shall
be deemed to have been revoked and withdrawn and that
no such notice of redemption shall be of any continuing
force and effect with respect to the Series B Preferred
Stock.
3. Issuance of New Warrants. As partial
consideration for the return of the Warrants for
cancellation and Buyer entering into the Purchase
Agreement, XCL shall issue warrants to purchase 250,000
shares of Common Stock, at an exercise price of $5.50
per share (the number of shares of Common Stock that
may be purchased pursuant to such warrants and the
exercise price to be subject to adjustment as provided
in the warrant certificate) and to be evidenced by a
warrant certificate substantially in the form of
Exhibit A hereto.
4. Exchange of the Series B Preferred Stock.
As partial consideration for the return of the Warrants
for cancellation and Buyer entering into the Purchase
Agreement, XCL shall take all corporate action
necessary to create the Amended Series B Preferred
Stock as set forth in Exhibit B hereto and shall
exchange for and in consideration of the 44,465 Shares
of Series B Preferred Stock purchased by Buyer from
Sellers 44,465 shares of Amended Series B Preferred
Stock and Buyer hereby consents to such exchange.
5. Accrued Dividends. XCL acknowledges that,
as of March 3, 1998, dividends in the aggregate amount
of $261,919.55 remain accrued and unpaid upon the
outstanding Series B Preferred Stock and that such
dividends shall be paid by XCL on the date hereof by
the issuance to Buyer of 2,620 shares of Amended Series
B Preferred Stock (which includes one additional share
of Amended Series B Preferred Stock to cover the
fractional shares represented by the dividend arrearage
and the purchase price of the Series B Preferred
Stock).
6. Issuance of Certificates. Upon return by
Buyer to XCL of the Series B Preferred Stock
Certificate(s) received by Buyer from Sellers pursuant
to the Purchase Agreement and the Warrants, XCL will
issue to each individual Buyer certificates
representing shares of Amended Series B Preferred Stock
issued in exchange therefor, shares of Amended Series B
Preferred Stock paid as dividend arrearages and warrant
certificates as listed on Exhibit C hereto.
7. Representations of Buyer. The
representations of each Buyer as to itself contained in
paragraph 5(a) of the Purchase Agreement shall be
deemed to be made to XCL herein as if they were
contained herein.
8. Survival. All covenants contained in this
Agreement shall survive the execution and delivery of
this Agreement.
9. Amendment and Modification. This Agreement
may be amended or modified at any time by the parties
hereto, pursuant to an instrument in writing signed by
both parties.
10. Entire Agreement; Assignment. This
Agreement (i) constitutes the entire agreement between
the parties hereto with respect to the subject matter
hereof and supersedes all other prior agreements and
understandings, both written and oral, between the
parties hereto with respect to the subject matter
hereof and (ii) shall not be assigned, by operation of
law or otherwise by either party hereto, without the
prior written consent of the other party.
11. Validity. The invalidity or
unenforceability of any term or provision of this
Agreement in any situation or jurisdiction shall not
affect the validity or enforceability of the other
terms or provisions hereof or the validity or
enforceability of the offending term or provision in
any other situation or in any other jurisdiction.
12. Notices. Unless otherwise provided
herein, all notices and other communications hereunder
shall be in writing and shall be deemed given upon
receipt by the other parties at the following addresses
or telecopy numbers:
(a) if to XCL, to
110 Rue Jean Lafitte
Lafayette, LA 70508
Telecopy No.: (318) 237-3316 or 261-0737
(b) if to Buyer, to
Kayne Anderson Investment Management, Inc.
1800 Avenue of the Stars, 2nd Floor
Los Angeles, CA 90067
13. Expenses. XCL shall reimburse Buyer the
fees of its in-house counsel for review of this
Agreement and the transaction described herein, such
fees not to exceed $5,000.
14. Governing Law. This Agreement shall be
governed by, enforced under and construed in accordance
with the laws of the State of New York, without giving
effect to any choice or conflict of law provision or
rule thereof.
15. Counterparts. This Agreement may be
executed in any number of counterparts, original or
facsimile, each of which shall be deemed an original,
but all of which together shall constitute one and the
same instrument.
16. Parties in Interest. This Agreement shall
be binding upon and inure solely to the benefit of each
party hereto and nothing in this Agreement, express or
implied, is intended by or shall confer upon any other
person any rights, benefits or remedies of any nature
whatsoever under or by reason of this Agreement.
17. No Waivers. Except as otherwise expressly
provided herein, no failure to exercise, delay in
exercising, or single or partial exercise of any right,
power or remedy by any party, and no course of dealing
between the parties, shall constitute a waiver of any
such right, power or remedy. No waiver by either party
of any default, misrepresentation, or breach of
warranty or covenant hereunder, whether intentional or
not, shall be deemed to extend to any prior or
subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any
rights arising by virtue of any prior or subsequent
such occurrence. No waiver shall be valid unless in
writing and signed by the party against whom such
waiver is sought to be enforced.
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of the date first above written.
XCL LTD.
By:___________________________
Name:_________________________
Please Print
Title:________________________
ARBCO ASSOCIATES, L.P., KAYNE
ANDERSON NON-TRADITIONAL INVESTMENTS, L.P.,
OFFENSE GROUP ASSOCIATES, L.P.
and
OPPORTUNITY ASSOCIATES, L.P.
By: KAIM Non-Traditional, L.P.
The General Partner of
each of the foregoing
By: Kayne Anderson Investment
Management, Inc.
Its General Partner
By:______________________________
Robert V. Sinnott
Vice-President