EXHIBIT 10.1
Option Agreement
between
Harken Energy Corporation
and
The Liverpool Limited Partnership
and
Xxxxxxx International LP
13 February 2003
This Option Agreement is entered into this 13th day of February 2003 between:
(1) HARKEN ENERGY CORPORATION ("HEC") of 000 XxxxXxxx Xxxx Xxxxxxxxx,
Xxxxx 000, Xxxxxxx, Xxxxx 00000, Xxxxxx Xxxxxx of America;
(2) The Liverpool Limited Partnership ("Liverpool") of 00 Xxxxx Xxxxxx,
Xxxxx Xxxxx, Xxxxxxxx XX00, Xxxxxxx; and
(3) Xxxxxxx International LP ("International") of c/o HSBC Financial
Services (Cayman) Ltd., X.X. Xxx 0000, Xxxx Xxxxxx, Xxxxx Xxxxxx,
Xxxxxx Xxxxxxx.
WHEREAS
(a) The Funds hold in aggregate $8.57 million nominal of Harken Energy
Corporation 5% Senior Convertible Notes due 2003 (the "2003 Notes");
and
(b) The Funds have agreed to exchange $2 million nominal of the 2003 Notes
for $1.6 million nominal of Harken Energy Corporation 7% Senior
Convertible Notes due 2006, Series A, with principal terms as set out
in the memorandum of understanding executed by HEC and Xxxxxxx dated
16 January 2003;
NOW, for full and valuable consideration which the parties hereto acknowledge,
HEC and the Funds agree as follows:
1 Definitions
In this Agreement, unless the context otherwise requires, the
following expressions have the following meanings:
(A) "business day" means each Monday, Tuesday, Wednesday, Thursday,
and Friday which is a day on which banking institutions in the City of
New York, Houston Texas, and London England are not obligated or
authorized by law, regulation or executive order to close.
(B) "the Call Options" means the options granted in accordance with
Section 2
(C) "the Call Option Period" means the period beginning on the date
hereof and ending on 30 April 2003
(D) "Xxxxxxx" means Xxxxxxx Advisors (UK) Limited
(E) "the Funds" means Liverpool and International
(F) "the Option Price" means the price, payable in cash, of 60% of
nominal value of the 2003 Notes to be purchased by HEC pursuant to the
Put Options or Call Options, plus accrued and unpaid interest up to
the date of payment of the Option Price for such Notes to the Funds
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(G) "the Put Options" means the options granted in accordance with
Section 3
(H) "the Put Option Period" means the period beginning on 1 May 2003
and ending on 31 May 2003
2 Grant and Exercise of the Call Options
(A) In consideration of these presents, Liverpool and International
hereby grant to HEC the right and option during the Call Option Period
to purchase from them, and each Fund shall be obliged to sell, up to
$2.95 million and up to $3.62 million nominal of 2003 Notes
respectively at the Option Price on the terms of this Agreement.
(B) Notice of exercise of the Call Options may be given at any time
and from time to time to the Funds during the Call Option Period in
respect of any multiple of $100,000 in aggregate principal amount of
2003 Notes. Such notice shall be given in writing specifying a date
for completion which date shall be not more than 5 business days nor
less than 3 business days after the date of service of the notice. If
HEC exercises any Call Option, 44.91 percent of the 2003 Notes
underlying such Call Option must be purchased from Liverpool and the
remainder from International.
3 Grant and Exercise of the Put Options
(A) In consideration of these presents, HEC grants to the Funds the
right and option to sell to HEC, and HEC shall be obliged to purchase
from the Funds, at the Option Price such nominal amount of 2003 Notes
which shall equal, when aggregated with the 2003 Notes purchased by
HEC from the Funds pursuant to the Call Options by the end of the Call
Option Period, $3.3 million nominal of 2003 Notes.
(B) The Put Options may only be exercised if the Company receives
$10,000,000 in gross proceeds pursuant to the consummation of the
transactions contemplated by the Rights Offering and the Standby
Purchase Agreement between the Company and Xxxxxx Investments
Enterprises Ltd. dated September 6, 2002, as amended, before the date
of exercise of the Put Options.
(C) Notice of the exercise of the Put Options may be given by the
Funds at any time and from time to time to HEC during the Put Option
Period in respect of any multiples of $100,000 of 2003 Notes. Such
notice shall be in writing specify a date for completion which date
shall be not more than 5 business days nor fewer than 3 business days
after the date of service of the notice.
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4 Undertakings by HEC
HEC hereby undertakes with the Funds it will use its best efforts to
complete the Rights Offering and the transactions contemplated in the
Standby Purchase Agreement by 30 April 2003.
5 Non- Assignability
The Put Options and the Call Options may not be assigned in whole or
in part.
6 Notices
Any notice to be given by HEC hereunder shall be deemed served if
faxed to Xxxxxxx at facsimile number 00 (0)00 0000 0000 with a
telephone confirmation from Xxxxxxx of receipt or if delivered to
Xxxxxxx at 0xx Xxxxx, 00 Xxxx Xxxxxx, Xxxxxx XX0X 0XX. Any notice to
be given by the Funds hereunder shall be given by Xxxxxxx and shall be
deemed served if faxed to HEC at facsimile number 001 281 504 4100
(Attention A. Xxxxx Xxxxxxxx, Senior Vice President-Finance and
Secretary) with a telephone confirmation from HEC of receipt or if
delivered to HEC at its address set out in this Agreement.
7 Counterparts
This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one and the same instrument.
Either party may enter into this Agreement by executing any such
counterpart.
8 Choice of law / Arbitration
With respect to any matters under this Agreement that are governed by
state law, but excluding the next paragraph of this Section 8, which
shall be governed by the United States Federal Arbitration Act, the
parties agree that this Agreement shall be construed and governed by
the laws of the State of New York.
Any dispute between the Funds and HEC as to a violation or alleged
violation of any provision of this Agreement shall be resolved by
final and binding arbitration, which arbitration shall be conducted in
accordance with the rules of the American Arbitration Association
insofar as said rules are not in conflict with the provisions of this
Agreement, with such arbitration hearing to be conducted in New York.
The arbitration provisions of this Paragraph shall be governed by the
United States Federal Arbitration Act. THE PARTIES UNDERSTAND AND
AGREE THAT THIS SECTION CONSTITUTES A WAIVER OF THEIR RIGHT TO A TRIAL
BY JURY OF ANY CLAIMS OR CONTROVERSIES COVERED BY THIS AGREEMENT, AND
THAT NONE OF THOSE CLAIMS OR CONTROVERSIES SHALL BE RESOLVED BY A JURY
TRIAL.
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The arbitration provided for in this Agreement shall be final and
binding and enforceable in any court of competent jurisdiction, and
such arbitration shall be the sole method of resolving disputes
between the parties with respect hereto.
10. Miscellaneous
Any facsimile signature of any person on a document required or
permitted pursuant to this Agreement shall constitute a legal, valid
and binding execution thereof by such person.
IN WITNESS whereof, this Agreement has been entered into as of the day and year
first above written.
HARKEN ENERGY CORPORATION
By: /s/ Xxxxx X. Xxxx, President and Chief Operating Officer
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LIVERPOOL LIMITED PARTNERSHIP
By: /s/ Xxxxxx Xxxxxxxxx, Vice President
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XXXXXXX INTERNATIONAL LP
By: /s/ Xxxxxx Xxxxxxxxx, Vice President
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