CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT ("Agreement"), effective
as of January 1, 1999, by and between XCL Ltd., a Delaware
corporation., with offices at 110 Rue Jean Lafitte,
Lafayette, Louisiana 70508 (hereinafter the "Company") and
R. Thomas Fetters, 101 Red Brick Circle, Lafayette, LA 70503
(hereinafter "Consultant").
W I T N E S S E T H:
WHEREAS, Consultant has substantial experience and
ability in oil and gas exploration, development and
production; and
WHEREAS, the Company and Consultant desire to
extend and modify certain terms of a prior nonexclusive
consulting agreement dated June 1, 1997, by entering into
this Agreement.
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
January 1, 1999 and terminating December 31, 2000,
Consultant shall consult with Company management in
connection with all aspects of the Company's exploration,
development and production projects, specifically the
project coordination of the Sichuan Gas Project and
evaluation of other new exploration ventures within China.
Thereafter, this contract shall continue on a month to month
basis, until terminated by either party on thirty days
written notice.
1.2 Compensation. For consulting services
performed by Consultant during the term of this Agreement,
the Company shall pay Consultant the sum of $120,000.00, to
be paid in monthly installments of $5,000.00, subject to
termination of this Agreement as provided herein. This
payment shall constitute full payment for all services
rendered under this Agreement, but is in addition to the
compensation that Consultant is entitled to as a member of
the Board of Directors of the Company. In addition,
Consultant and the Company may, from time to time, enter
into written agreement whereby Consultant shall be entitled
compensation as a finder's fee on certain specifically
identified projects, and any such compensation shall be in
addition to the compensation paid under this agreement.
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 him during the term of this Agreement in
carrying out his duties and responsibilities hereunder.
1.4 Time Requirements under Consulting
Agreement. Subject to the foregoing, Consultant agrees
devote the reasonable time necessary to fulfill his
obligations hereunder as agreed to from time to time by
Consultant and the Company.
1.5 Place of Performance of Consulting
Services. Consultant shall perform its services hereunder
in Lafayette, Louisiana and 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 properties and prospects, 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 consult, advise, counsel or otherwise
assist any customer, supplier, or, as to operations in
China, a direct competitor of the Company or any subsidiary
which, in any manner, would have, or is likely to have, an
adverse effect upon the Company or any subsidiary.
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.
1.10 Termination: This Agreement may be
terminated at any time by either party, without cause, and
without any liability to the other party, by providing the
other party ninety (90) days written notice of termination.
In case of termination of this Agreement under this
provision, all compensation under this Agreement shall cease
except as to the pro rata portion of the term of this
Agreement that is prior to the effective date of the
termination.
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
Louisiana.
2.8 Prior Agreement. This Agreement
supersedes and replaces the Consulting Agreement dated
effective June 1, 1997, in its entirety from the effective
date of this Agreement forward.
IN WITNESS WHEREOF, the parties have executed this
Agreement effective as of the 1st day of January, 1999.
XCL LTD.
By:___________________________
Title:________________________
__________________________
R. THOMAS FETTERS