PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT (this "Agreement") is made as
of the 16th day of July, 1999, by and between XCL-Acquisitions,
Inc. ("Acquisitions"), Construction Specialists d/b/a Con-Spec,
Inc. ("Con-Spec") and The Estate of J. Edgar Monroe (the
"Estate").
Recitals
WHEREAS, pursuant to that certain Notarial Act of Transfer
and Assignment of Partial Undivided Interest in Non-Negotiable
Promissory Notes, Related Rights and Collateral and Security
Documents and Delivery of Possession of Non-Negotiable Promissory
Notes dated as of July 16, 1999, Con-Spec and the Estate
purchased from Acquisitions a 55% undivided partial interest in
the notes described on Exhibit A attached hereto (the "Notes"),
which evidence a loan to L.M. Holding Associates, L.P., a
Louisiana Partnership in Commendam (the "Loan"), and the
collateral securing the Notes (the "Loan Documents").
WHEREAS, following the purchase of an undivided partial
interest in the Notes, the parties' percentage interests in the
Notes and the Loan Documents are as set forth on Exhibit B
attached hereto (the "Participation Percentage").
WHEREAS, Acquisitions may sell certain other interests in
the Notes and Loan Documents in accordance with the terms of that
certain letter agreement between XCL Ltd., Con-Spec and the
Estate dated as of July 16, 1999 (the "Letter Agreement") (Con-
Spec and the Estate and any other persons or entities who
purchase interests in the Notes and Loan Documents in accordance
with the terms of the Letter Agreement are sometimes collectively
referred to herein as "Assignees").
WHEREAS, the parties hereto wish to provide for certain
terms and conditions pursuant to which they hold their
Participation Percentage in the Notes and the Loan Documents and
pursuant to which other persons or entities who purchase
interests in the Notes and the Loan Documents in accordance with
the terms of the Letter Agreement may hold their interests,
including their agreement that the Assignees will be paid their
portion of the Notes prior to any payment to Acquisitions and
that Con-Spec shall hold the Notes and manage and control the
Loan for itself and the other parties hereto.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants contained herein, the parties hereto agree as
follows:
Section 1. Con-Spec To Hold the Notes. Con-Spec shall hold
the Notes and collect all payments due thereon for the benefit of
the Assignees and, once the Assignees have been paid in full for
the portion of the Notes owned by them and until Con-Spec
delivers the Notes to Acquisitions, for the benefit of
Acquisitions.
Section 2. Payments on the Notes. Any payments of principal
and/or interest on the Notes shall be paid first to the Assignees
in proportion to their Participation Percentage until they have
been paid in full for the portion of the Notes owned by them and
then to Acquisitions. If Acquisitions receives payments of
principal and/or interest on the Notes before Assignees have been
paid the portion of the Notes owned by them in full, it shall
promptly remit such payments to Con-Spec until the Assignees have
been paid in full for the portion of the Notes owned by them, and
all such funds shall constitute a trust for the benefit of the
Assignees hereto until they are properly remitted. In the event
that Acquisitions is required for any reason to refund or repay
the maker of the Notes or any other person not a party hereto all
or any portion of any principal, interest or other payment which
was remitted by Acquisitions to the Assignees pursuant to this
Agreement, Assignees hereto shall immediately remit to
Acquisitions, on demand, their pro rata share of all amounts
which were required to be so refunded or repaid. Once the
Assignees have been paid in full the principal amount of the
Notes represented by their Participation Percentage, late
charges, attorney fees and costs and accrued interest thereon,
all further payments shall be owed to Acquisitions, and any
Assignee who receives such payments shall promptly remit them to
Acquisitions.
Section 3. Management. (a) Being vested with the right of
management and control of the Loan, Con-Spec will handle all
transactions under the Notes and the Loan Documents. Con-Spec
shall not be liable to the other parties hereto for any action
taken or omitted by it in connection with the Notes or the Loan
Documents, except for losses sustained by the other parties
hereto as a result of Con-Spec's intentional and malicious
conduct. Without limitation of the foregoing, Con-Spec (i) may
consult with legal counsel, independent public accountants and
other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in accordance with the
advice of such expert; and (ii) shall incur no liability under or
with respect of any of the Notes or the Loan Documents by acting
upon any notice, consent, certificate or other instrument or
writing (which may be by telegram, facsimile or telex) thought to
be signed or sent by the proper party or parties, which shall be
presumed to be genuine. In connection therewith, Con-Spec's has
no duty to determine or to inquire into any happening,
occurrence, performance, or failure of performance of any party
with respect to any agreements or arrangements between or among
the parties hereto or to any other party; to have any affirmative
duty to investigate whether the individual who purports to have
the authority to act on behalf of any person or entity or to be
liable for any failure of any bank or financial institution in
which any portion of the funds collected by Con-Spec is deposited
into by it. All losses, if any ultimately are incurred in
connection with the administration and satisfaction of the Notes
shall be borne by the parties on a pro rata basis in accordance
with their respective Participation Percentage. Con-Spec will
endeavor to collect all payments due by the maker of the Notes
under the Notes. In connection therewith, Con-Spec may in its
sole and absolute discretion release or substitute collateral,
give or withhold waivers, consents, extensions, or compromises in
connection with the Notes and the Loan Documents, amend or refuse
to amend the Loan Documents, and take or refrain from taking
action in connection with the making, handling, collecting,
realizing upon, or enforcing the Notes and/or the Loan Documents,
except that Con-Spec shall not increase the principal amount of
the Loan without the consent of all the parties hereto. The
Assignees and Acquisitions shall have the right to inspect Con-
Spec's records with respect to all transactions under the Loan
Documents upon advance notice and at reasonable intervals during
Con-Spec's regular business hours.
(b) Unless otherwise specifically provided for in this
Agreement or in any amendment thereto, all costs of administering
and managing the Notes and the Loan Documents shall be borne by
the parties hereto on a proportionate basis in accordance with
their respective Participation Percentages. Con-Spec shall not
charge any fee to the other parties hereto for managing and
controlling the Loan.
(c) Neither Con-Spec nor any of its officers, directors,
employees, or agents shall be liable to the other parties hereto
for any action lawfully taken or any failure to act by it or them
or any error in judgment with respect to any transactions
relating to the Notes or the Loan Documents except for its or
their intentional and/or malicious omissions, or commissions and
any amounts due as a result thereof shall be borne by the parties
hereto on a proportionate basis in accordance with their
respective Participation Percentages. The parties hereto will
indemnify Con-Spec and hold Con-Spec harmless on a proportionate
basis in accordance with their respective Participation
Percentages for any losses or costs which are to be borne by the
parties hereto on a proportionate basis in accordance with their
respective Participation Percentages. Notwithstanding anything to
the contrary herein, except for intentional and/or malicious
omissions or commissions by Con-Spec, all the parties hereto
convenant they will not commence any action against Con-Spec as a
result of any such omission or action taken by it pursuant to
this Agreement. If Con-Spec becomes a party to any controversy or
legal action, the parties hereto agree to indemnify and hold Con-
Spec harmless from and against any and all liability in
connection with such controversy or legal action and to pay Con-
Spec all costs, charges, expenses, actual damages and attorneys
fees which it may incur in connection therewith in proportions to
their interest in the Loan.
(d) Con-Spec's control and management of the Loan shall
terminate (i) automatically upon the bankruptcy or liquidation of
Con-Spec, or (ii) at the election of the majority of the
Assignees hereto and the appointment by such parties of another
person or entity to control and manage the Loan, which person or
entity shall thereafter have all of the rights and
responsibilities that Con-Spec had pursuant to this Agreement
prior to such termination, and Con-Spec shall have only the
rights and responsibilities which the other Assignees had prior
to such termination, or (iii) upon payment in full to the
Assignees of the principal amount of the Notes represented by
their Participation Percentage, attorneys fees, costs and late
charges and accrued interest thereon, at which time the Notes
shall be delivered to Acquisitions and this Agreement shall
terminate, or (iv) if Con-Spec elects to terminate its management
and control of the Loan and provides the other parties hereto
with written notice of such termination 30 days prior to the
effective date of such termination (following which the other
Assignees may appoint another person or entity to manage and
control the Loan, or, if the Assignees cannot agree upon a person
or entity who is willing to manage and control the Loan before
the effective date of Con-Spec's termination, Acquisitions shall
manage and control the Loan and Con-Spec shall deliver the Notes,
Loan Documentation, records of payment and any other documents or
information in its possession as a result of managing and
controlling the Loan to its successor for that purpose).
Section 4. Collection of the Notes. If the Notes are placed
in the hands of an attorney for collection or to take other
appropriate proceedings to enforce the Notes or the Loan
Documents, all payments thereafter received by Con-Spec or the
other parties hereto in connection with the Notes or the Loan
Documents shall be applied (i) first, to all costs and expenses
of any nature whatsoever incurred for the maintenance,
preservation, defense, protection, sale, other disposition,
collection, and enforcement of the Notes, the Loan Documents and
any collateral for the Notes, including, without limitation,
attorneys' fees, expenses, and disbursements and court costs and
(ii) second, to accrued and unpaid interest and principal on the
Notes. Acquisitions agrees to execute all additional documents,
instruments and agreements that Con-Spec, its successors or
assigns may reasonably deem to be necessary to effectuate the
intent of this Agreement. If Con-Spec, its successors or assigns
so requests, Acquisitions will appoint such person as its true
and lawful attorney-in-fact, irrevocably, with full power of
substitution, to demand, collect, receive, receipt for, sue and
recover all sums of money or other property which may now or
hereafter become due, owing or payable under the Notes and to
file any claim or claims or to take any action or institute or
take part in any proceedings which in the reasonable discretion
of Agent seem necessary or advisable to effectuate the foregoing.
Section 5. Notices. Any notice or demand which, by provision
of this Agreement, is required or permitted to be given or served
by a party hereto to or on another party hereto shall be deemed
to have been sufficiently given and served for all purposes (if
mailed) three calendar days after being deposited, postage
prepaid, in the United States mail, registered or certified mail,
or (if delivered by express courier) one business day after being
delivered to such courier, or (if delivered in person) the same
day as delivery, in each case addressed (until another address or
addresses is given in writing pursuant to this provision) as
follows:
If to Con-Spec:
Construction Specialists d/b/a Con-Spec, Inc.
901 Airport Blvd.
Suite 705
Houston, TX 77061
Attn: Mr. Patrick A. Tesson
If to the Estate:
The Estate of J. Edgar Monroe
c/o Mr. Robert J. Monroe, Executor
228 St. Charles Ave.
Suite 1402
New Orleans, LA 70130
If to Acquisitions:
XCL-Acquisitions, Inc.
110 Rue Jean Lafitte
Second Floor
Lafayette, LA 70505
Attn: Mr. Benjamin B. Blanchet
Section 6. Representations and Warranties of Acquisitions.
(a) Acquisitions is a corporation duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its organization and has the corporate power and
authority and the legal right to own the Notes, and to transfer
an undivided interest in and to the Note and the right to manage
and control the Loan and to conduct the business in which it is
currently engaged.
(b) Acquisitions is not required to obtain any order,
consent, approval or authorization of, or required to make any
declaration or filing with, any governmental authority or any
other person, other than those that have been made or obtained,
in connection with the execution and delivery of this Agreement.
(c) This Agreement has been duly executed and delivered
on behalf of Acquisitions, and this Agreement constitutes a
legal, valid and binding obligation of Acquisitions, enforceable
against Acquisitions in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
the enforcement of creditors' rights generally and except as
enforceability may be subject to general principles of equity,
whether such principles are applied in a court of equity or at
law.
Section 7. Miscellaneous. Neither the execution of this
Agreement nor the sharing in the ownership of the Notes is
intended to be, nor shall it be construed to be, the formation of
a partnership or joint venture between the parties hereto, or the
creation of an agency relationship. Neither this Agreement nor
any provisions hereof may be changed, waived, discharged or
terminated orally or in any manner other than by an instrument in
writing signed by the party against whom enforcement of the
change, waiver, discharge or termination is sought. Additional
Assignees may be added to this Agreement by the attachment to
this Agreement of a revised Exhibit B listing such Assignees and
showing their Participation Percentage. In the event that any
one or more of the provisions contained in this Agreement shall,
for any reason, be held invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall
not affect any other provision of this Agreement. This Agreement
is a contract made under and shall be construed in accordance
with and governed by the laws of the United States of America and
the State of Louisiana. This Agreement may be executed in two or
more counterparts, and it shall not be necessary that the
signatures of all parties hereto be contained on any one
counterpart hereof, each counterpart shall be deemed an original,
but all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have each caused this
Agreement to be executed as of the day and year first written
above.
WITNESSES: XCL-ACQUISITIONS, INC.
_________________________ By:___________________________________
Name:____________________ Name:______________________________
(Please Print) Title:_______________________________
_________________________
Name:____________________
(Please Print)
CONSTRUCTION SPECIALISTS, INC.
d/b/a CON-SPEC, INC.
_________________________ By:________________________________________
Name:____________________ Patrick A. Tesson
(Please Print) President
_________________________
Name:____________________
(Please Print)
THE ESTATE OF J. EDGAR MONROE
_________________________ By:________________________________________
Name:____________________ Robert J. Monroe
(Please Print) Executor
_________________________
Name:____________________
(Please Print)