1
RESTRUCTURING AND SALE AGREEMENT (HARKEN)
THIS RESTRUCTURING AND SALE AGREEMENT (HARKEN) is made and entered
into as of the 5th day of October, 1995, by and among Harken Energy
Corporation, a Delaware corporation ("HARKEN") , Harken Energy West Texas,
Inc., a Delaware corporation ("HARKEN SUB"), Internationale Nederlanden (U.S.)
Capital Corporation, a Delaware corporation ("ING") , New England Mutual Life
Insurance Company, a Massachusetts corporation ("NEW ENGLAND"), and EnCap
1989-I Limited Partnership, a Texas limited partnership ("ELP").
RECITALS:
A. Reference is herein made to that certain Loan Agreement dated
as of May 22, 1992, by and among Yellowhouse Project Co., a Delaware
corporation ("YELLOWHOUSE"), ING, New England and ELP, as heretofore amended
(the "LOAN AGREEMENT"), whereunder ING, New England and ELP (collectively, the
"INVESTORS") made loans to Yellowhouse in the aggregate principal amount equal
to $12,000,000 (the "LOANS"). Immediately prior to the execution and delivery
of this Agreement, Yellowhouse, Xxxxxx & Xxxxxxx Petroleum Company, a Delaware
corporation ("XXXXXX & PARSLEY"), and the Investors have executed and delivered
that certain Restructuring Agreement (P&P) of even date herewith (the "P&P
AGREEMENT"), whereby (among other things) the Investors have agreed (subject to
the terms thereof) to forgive the outstanding principal amount of the Loans,
plus accrued and unpaid interest thereon, save and except for an aggregate
principal amount equal to $750,000. Under the P&P Agreement, Yellowhouse has
executed new promissory notes of even date herewith in favor of ING, New
England and ELP in an aggregate amount equal to $750,000 (the "NEW YELLOWHOUSE
NOTES").
B. Reference is herein made to that certain Agreement of Purchase
and Sale dated as of even date herewith by and between Yellowhouse, Xxxxxx &
Xxxxxxx, and the Harken Sub (the "PURCHASE AGREEMENT"). As consideration for
the sale by Yellowhouse to the Harken Sub of the "PROPERTIES" (as defined in
the Purchase Agreement) under the Purchase Agreement, the Harken Sub has agreed
to assume the indebtedness evidenced by the New Yellowhouse Notes.
Consummation of the transactions contemplated by the Purchase Agreement is
specifically conditioned (among other things) upon the agreement of the
Investors to permit the assumption of the indebtedness evidenced by the New
Yellowhouse Notes by the Harken Sub.
C. The parties hereto deem it in their mutual best interests to
set forth in writing the terms of their agreements with respect to (i) the
assumption by the Harken Sub of the indebtedness evidenced by the New
Yellowhouse Notes, (ii) the issuance by Harken to the Investors of (x) shares
of common stock of Harken and (y) warrants to purchase shares of common stock
of Harken, and (iii) certain other matters.
1
2
AGREEMENT:
NOW, THEREFORE, for and in consideration of the foregoing Recitals and
the mutual agreements contained herein, the sufficiency of which is hereby
acknowledged and confirmed, the parties hereto, intending to be legally bound
thereby, agree as follows:
SECTION 1. DEFINITIONS AND REFERENCES.
(a) When used in this Agreement, the following terms shall have
the respective meanings assigned to them in this Section 1 or in the sections,
subsections or other subdivisions referred to below:
"AGREEMENT" shall mean this Restructuring and Sale Agreement (Harken),
as hereafter amended, modified, supplemented or otherwise changed in accordance
with the terms hereof.
"AMENDED SECURITY DOCUMENTS" shall have the meaning assigned to it in
Section 5.
"CLOSING" shall have the meaning assigned to it in Section 8.
"CLOSING DATE" shall have the meaning assigned to it in Section 8.
"CLOSING SHARES" shall have the meaning assigned to it in Section 3(a).
"DEFICIENCY NOTE" shall have the meaning assigned to it in Section
10(a)(ii).
"ELP" shall have the meaning assigned to it in the introductory
paragraph to this Agreement.
"HARKEN" shall have the meaning assigned to it in the introductory
paragraph to this Agreement.
"HARKEN COMMON STOCK" shall mean shares of common stock of Harken,
$0.01 par value per share.
"HARKEN ENTITY" shall have the meaning assigned to it in Section 6.
"HARKEN SUB" shall have the meaning assigned to it in the introductory
paragraph to this Agreement.
"ING" shall have the meaning assigned to it in the introductory
paragraph to this Agreement.
"INVESTORS" shall have the meaning assigned to it in Paragraph A of
the Recitals.
2
3
"LOAN AGREEMENT" shall have the meaning assigned to it in Paragraph A
of the Recitals.
"LOANS" shall have the meaning assigned to it in Paragraph A of the
Recitals.
"NEW ENGLAND" shall have the meaning assigned to it in the
introductory paragraph to this Agreement.
"NEW NOTES" shall have the meaning assigned to it in Section 2.
"NEW YELLOWHOUSE NOTES" shall have the meaning assigned to it in
Paragraph A of the Recitals.
"XXXXXX & XXXXXXX" shall have the meaning assigned to it in Paragraph
A of the Recitals.
"P&P AGREEMENT" shall have the meaning assigned to it in Paragraph B
of the Recitals.
"PROPERTIES" shall have the meaning assigned to it in Paragraph B of
the Recitals.
"PURCHASE AGREEMENT" shall have the meaning assigned to it in
Paragraph B of the Recitals.
"QUALIFIED OFFER" shall have the meaning assigned to it in Section
10(b)(i).
"QUALIFIED PURCHASER" shall have the meaning assigned to it in Section
10(b)(ii).
"REALIZED PROCEEDS" shall have the meaning assigned to it in Section
10(b)(iii).
"REGISTRATION RIGHTS AGREEMENT" shall have the meaning assigned to it
in Section 4.
"RELATED AGREEMENTS" shall mean the Purchase Agreement, the Warrants,
the Registration Rights Agreement and the Amended Security Documents.
"SEC DOCUMENT" shall have the meaning assigned to it in Section 10(h).
"SHARING RATIO" shall have the meaning assigned to it in Section
10(b)(iv).
"SPECIAL PROVISION OPTIONS" shall have the meaning assigned to it in
Section 10(a).
"SPECIAL PROVISION TERM" shall have the meaning assigned to it in
Section 10(b)(v).
"TARGET PROCEEDS" shall have the meaning assigned to it in Section
10(b)(vi).
"WARRANT" shall have the meaning assigned to it in Section 3(b).
3
4
"WARRANT SHARES" shall have the meaning assigned to it in Section 3(b).
"YELLOWHOUSE" shall have the meaning assigned to it in Paragraph A of
the Recitals.
(b) All references in this Agreement to sections, subsections and
other subdivisions refer to corresponding sections, subsections and other
subdivisions of this Agreement unless expressly provided otherwise. All
references to Exhibits are to Exhibits attached hereto, each of which is made a
part hereof for all purposes. Titles appearing at the beginning of any such
subdivisions are for convenience only and shall not constitute part of such
subdivisions and shall be disregarded in construing the language contained
herein. The words "this Agreement", "this instrument", "herein", "hereof",
"hereby", "hereunder" and words of similar import refer to this Agreement as a
whole and not to any particular subdivision unless expressly so limited. Words
in the singular form shall be construed to include the plural and vice versa,
unless the context otherwise requires. All references herein to "$" or to
"Dollars" are to U.S. dollars.
SECTION 2. ASSUMPTION OF NEW YELLOWHOUSE NOTES.
(a) Subject to the terms and conditions hereof, (i) the Harken Sub
hereby agrees to assume the indebtedness evidenced by the New Yellowhouse Notes
as of the Closing Date and (ii) the Investors hereby consent and agree to the
assumption by the Harken Sub of the indebtedness evidenced by the New
Yellowhouse Notes as of the Closing Date. The foregoing assumption shall be
evidenced by new promissory notes executed by the Harken Sub ( the "NEW
NOTES"), each of which shall be made payable to the appropriate Investor in the
principal amount set forth opposite such Investor's name below in this Section
2. Each New Note (A) will be dated the Closing Date, (B) will be
substantially in the form of Exhibit 2 in all material respects, and (C) will
be secured by the existing liens and security interests currently held by the
Investors pursuant to the Loan Agreement.
ING $375,000
New England $300,000
ELP $ 75,000
(b) Provided the transactions contemplated hereby are consummated,
the Harken Sub, ING, New England and ELP agree that: (i) as of the date hereof,
(A) an amount equal to $129,341.83 shall be deemed to have been applied against
the outstanding principal balance of the New Note executed in favor of ING, (B)
an amount equal to $103,473.47 shall be deemed to have been applied against the
outstanding principal amount of the New Note executed in favor of New England
and (C) an amount equal to $25,868.37 shall be deemed to have been applied
against the outstanding principal amount of the New Note executed in favor of
ELP; and (ii) the Harken Sub shall immediately wire transfer immediately
available funds to ING, New England and ELP an amount equal to $35,642.79,
$28,514.23 and $7,128.56, respectively, which amount shall be applied by such
party to reduce the outstanding principal balance of such party's New Note.
4
5
SECTION 3. ISSUANCE AND DELIVERY OF CLOSING SHARES AND WARRANTS.
(a) On the Closing Date and subject to the terms and conditions
hereof, Harken will issue and deliver to each Investor the number of shares of
Harken Common Stock set forth opposite such Investor's name below in this
Section 3(a) (such shares being called the "CLOSING SHARES"):
ING 1,500,000
New England 1,200,000
ELP 300,000
(b) On the Closing Date and subject to the terms and conditions
hereof, Harken will issue and deliver to each Investor a "WARRANT" (as herein
called), substantially in the form of Exhibit 3(b) in all material respects,
entitling such Investor to purchase on the terms and conditions contained in
such Warrant the number of shares of Harken Common Stock set forth opposite
such Investor's name below in this Section 3(b) (such shares being called the
"WARRANT SHARES"):
ING 500,000
New England 400,000
ELP 100,000
SECTION 4. REGISTRATION RIGHTS AGREEMENT. On the Closing Date
and subject to the terms and conditions hereof, the Investors and Harken agree
to execute and deliver the REGISTRATION RIGHTS AGREEMENT (as herein called)
substantially in the form of Exhibit 4 in all material respects.
SECTION 5. MORTGAGE AND OTHER SECURITY DOCUMENTS. On the
Closing Date and subject to the terms and conditions hereof, Harken and the
Harken Sub agree to execute and deliver (a) the Amended Mortgage, Deed of
Trust, Assignment of Production, Security Agreement and Financing Statement,
(b) the Statement of Amendment of Financing Statement and (c) the Financing
Statement (collectively, the "AMENDED SECURITY DOCUMENTS"), substantially in
the form of Exhibit 5 in all material respects.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF HARKEN AND HARKEN
SUB. Each of Harken and the Harken Sub (a "HARKEN ENTITY") hereby jointly and
severally represent and warrant to the Investors as follows:
(a) Each Harken Entity is a corporation duly organized,
validly existing, and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate
power and corporate authority to own, lease, and operate its
properties and to carry on its business as now being conducted. No
actions or proceedings to dissolve a Harken Entity are pending.
(b) Each Harken Entity is duly qualified or licensed to do
business and is in good standing in the State of Texas.
5
6
(c) Each Harken Entity has full corporate power and corporate
authority to execute, deliver, and perform this Agreement and all
Related Agreements to which it is a party and to consummate the
transactions contemplated hereby and thereby. The execution,
delivery, and performance by each Harken Entity of this Agreement and
all Related Agreements, and the consummation by it of the transactions
contemplated hereby and thereby, have been duly authorized by all
necessary corporate action of such Harken Entity. This Agreement has
been duly executed and delivered by each Harken Entity and
constitutes, and each other agreement, instrument, or document
executed or to be executed by such Harken Entity in connection with
the transactions contemplated hereby (including any Related Agreement
to which it is a party) has been, or when executed will be, duly
executed and delivered by such Harken Entity and constitutes, or when
executed and delivered will constitute, a valid and legally binding
obligation of such Harken Entity, enforceable against such Harken
Entity in accordance with their respective terms, except that such
enforceability may be limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium, and similar laws affecting
creditors' rights generally and (ii) equitable principles which may
limit the availability of certain equitable remedies (such as specific
performance) in certain instances.
(d) The execution, delivery, and performance by each Harken
Entity of this Agreement and the Related Agreements to which it is a
party and the consummation by it of the transactions contemplated
hereby and thereby do not and will not (i) conflict with or result in
a violation of any provision of the charter or bylaws or other
governing instruments of such Harken Entity, (ii) conflict with or
result in a violation of any provision of, or constitute (with or
without the giving of notice or the passage of time or both) a default
under, or give rise (with or without the giving of notice or the
passage of time or both) to any right of termination, cancellation, or
acceleration under, any bond, debenture, note, mortgage, indenture,
lease, contract, agreement, or other instrument or obligation to which
such Harken Entity is a party or by which such Harken Entity or any of
its properties may be bound, (iii) result in the creation or
imposition of any lien or other encumbrance upon the properties of
such Harken Entity, or (iv) violate any applicable law, rule or
regulation binding upon such Harken Entity.
(e) No consent, approval, order, or authorization of, or
declaration, filing, or registration with, any court or governmental
agency or of any third party is required to be obtained or made by any
Harken Entity in connection with the execution, delivery, or
performance by such Harken Entity of this Agreement and the Related
Agreements to which it is a party or the consummation by it of the
transactions contemplated hereby and thereby, other than (i)
compliance with any applicable requirements of the Securities Act and
any applicable state securities laws and (ii) the consent of the
Investors contemplated hereby.
(f) The Closing Shares to be issued by Harken at the Closing
have been duly authorized for such issuance and, when issued and
delivered by Harken in accordance with the provisions of this
Agreement, will be validly issued, fully paid, and nonassessable. The
issuance of the Closing Shares under this Agreement is not subject to
any preemptive or similar rights.
6
7
(g) The Warrants to be issued by Harken at the Closing
have been duly authorized for such issuance and, when issued and
delivered by Harken in accordance with the provisions of this
Agreement, will be validly issued and will constitute valid and
legally binding obligations of Harken enforceable against Harken in
accordance with their respective terms. The shares of Harken Common
Stock issuable upon the exercise of the Warrants have been duly
reserved for such issuance and, when issued and delivered by Harken in
accordance with the provisions of the Warrants, will be validly
issued, fully paid and nonassessable.
(h) Harken is current in its obligations to file all
periodic report and proxy statements with the Securities and Exchange
Commission required to be filed under the Securities Exchange Act of
1934, as amended, and applicable rules and regulations promulgated
thereunder. Harken's Annual Report on Form-10K for the year ended
December 31, 1994, and Harken's Quarterly Reports on Form-10Q for the
quarters ending March 31, 1995, and June 30, 1995, respectively (the
"SEC DOCUMENTS") do not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. Since June
30, 1995, there have been no material developments, transactions or
events affecting Harken (other than developments or events affecting
the oil and gas exploration and production industry gener- ally) other
than as disclosed by Harken in the SEC Documents or to the Investors
in writing. There are no material liabilities of Harken (contingent
or otherwise), other than as disclosed in the SEC Documents and the
financial statements included therein.
SECTION 7. REPRESENTATIONS AND WARRANTIES OF EACH INVESTOR.
Each Investor hereby severally (and not jointly or jointly and
severally) represents and warrants to the Harken Entities as follows:
(a) Such Investor is acquiring the Closing Shares and the
Warrant to be acquired by it hereunder for its own account for
investment and not with a view to, or for sale or other disposition in
connection with, any distribution of all or any part thereof, except
(i) in an offering covered by a registration statement filed with the
Securities and Exchange Commission under the Securities Act covering
the Closing Shares or Warrant, or (ii) pursuant to an applicable
exemption under the Securities Act.
(b) Such Investor acknowledges that it is able to fend for
itself, can bear the economic risk of its investment in the Closing
Shares and the Warrant to be acquired by it hereunder, and has such
knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of an investment in the
Closing Shares and the Warrant. Such Investor represents that it has
not been organized for the purpose of acquiring the Closing Shares and
the Warrant to be acquired by it hereunder.
(c) Such Investor understands that the Closing Shares and
the Warrant will not have been registered pursuant to the Securities
Act or any applicable state securities laws, that such Closing Shares
and the Warrant will be characterized as "restricted securities" under
7
8
federal securities laws, and that under such laws and applicable
regulations such Closing Shares and the Warrant cannot be sold or
otherwise disposed of without registration under the Securities Act or
an exemption therefrom.
(d) It is agreed and understood by such Investor that the
certificates representing the Closing Shares shall each conspicuously
set forth on the face or back thereof, in addition to any legends
required by applicable law or other agreement, a legend in
substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. SUCH SHARES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED
UNLESS THEY ARE FIRST REGISTERED PURSUANT TO THAT ACT AND APPLICABLE
STATE SECURITIES LAWS OR UNLESS THE CORPORATION RECEIVES A WRITTEN
OPINION OF COUNSEL, WHICH OPINION AND COUNSEL ARE SATISFACTORY TO THE
CORPORATION, TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.
(e) It has received a copy of the SEC Document and has
had an opportunity to ask questions and receive answers from Harken
regarding the business, properties, prospects and financial condition
of Harken and to obtain additional information necessary to verify the
accuracy of any information furnished to it or to which it had access.
SECTION 8. CLOSING. The closing of the transactions
contemplated hereby (the "CLOSING") will take place at the offices of Xxxxxxxx
& Xxxxxx, P.C., located at 0000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxx, at 11:00 a.m.
local time, on October 5, 1995, or at such other date and time as the Investors
and Harken may mutually agree upon. The date on which the Closing occurs is
herein called the "CLOSING DATE".
SECTION 9. CONDITIONS PRECEDENT.
(a) The obligations of the Investors to consummate the
transactions contemplated hereby shall be subject to each of the following
conditions being met:
(i) Each and every representation of each Harken Entity
under this Agreement shall be true and accurate in all material
respects as of the date when made and shall be deemed to have been
made again at and as of the time of Closing and shall at and as of the
time of Closing be true and accurate in all material respects except
as to changes specifically contemplated by this Agreement or consented
to by the Investors.
(ii) Each Harken Entity shall have performed and complied
in all material respects with (or compliance therewith shall have been
waived by the Investors) each and every covenant and agreement
required to be performed or complied with by such Harken Entity prior
to or at Closing.
8
9
(iii) The Harken Sub shall have executed and delivered a
New Note in favor of each Investor.
(iv) Each Investor shall have received a certificate or
certificates in definitive form representing the Harken Shares to be
issued to such Investor pursuant to Section 3(a).
(v) No suit, action or other proceedings shall, on the
date of Closing, be pending or threatened before any court or
governmental agency seeking to restrain, prohibit, or obtain damages
or other relief in connection with the consummation of the
transactions contemplated by this Agreement or any Related Agreement.
(vi) The Purchase Agreement and the P&P Agreement shall
have been executed and delivered by the respective parties thereto and
the transactions contemplated thereunder consummated.
(b) The obligations of each Harken Entity to consummate the
transactions contemplated hereby shall be subject to each of the following
conditions being met:
(i) Each and every representation of the Investors under
this Agreement shall be true and accurate in all material respects as
of the date when made and shall be deemed to have been made again at
and as of the time of Closing and shall at and as of the time of
Closing be true and accurate in all material respects except as to
changes specifically contemplated by this Agreement or consented to by
each Harken Entity.
(ii) Each Investor shall have performed and complied in
all material respects with (or compliance therewith shall have been
waived by each Harken Entity) each and every covenant and agreement
required to be performed or complied with by such Investor prior to or
at Closing.
(iii) No suit, action or other proceedings shall, on the
date of Closing, be pending or threatened before any court or
governmental agency seeking to restrain, prohibit, or obtain damages
or other relief in connection with the consummation of the
transactions contemplated by this Agreement or any Related Agreement.
(iv) The Purchase Agreement and the P&P Agreement shall
have been executed and delivered by the respective parties thereto and
the transactions contemplated thereunder consummated.
SECTION 10. CERTAIN POST-CLOSING ELECTIONS AND OBLIGATIONS.
9
10
(a) If, as of the expiration of the Special Provision Term,
Realized Proceeds are less than Target Proceeds, then, within ten days after
the expiration of the Special Provision Term, each of the Investors shall elect
one of the following options (the "SPECIAL PROVISION OPTIONS") by notice to
Harken, in which event such Investor, Harken and the Harken Sub shall have the
duties and obligations hereinafter described:
(i) Such Investor may elect to receive, and the Harken
Sub shall be obligated to execute and deliver, an assignment of a
portion of the Properties, which portion shall be equal to the product
of A times B, where "A" is equal to a percentage derived from a
fraction, the numerator of which is the Realized Proceeds and the
denominator of which is the Target Proceeds, and where "B" is equal to
the Investor's Sharing Ratio. If an Investor elects the option
described in this paragraph (i), such Investor shall be obligated to
assign to Harken without consideration therefor all of such Investor's
Closing Shares not theretofore disposed of (however, such Investor
shall be permitted to retain the Harken Warrant and any Warrant Shares
then held by it).
(ii) Such Investor may elect to receive, and the Harken
Sub shall be obligated to execute and deliver to such Investor a
promissory note (a "DEFICIENCY NOTE") in the principal amount equal to
[A minus B] times C, where "A" is the Target Proceeds, where "B" is
the Realized Proceeds, and where "C" is such Investor's Sharing Ratio.
Each Deficiency Note issued to an Investor (A) shall bear interest at
a rate of 10% per annum, (B) shall be payable in 36 consecutive equal
monthly principal payments plus accrued interest, the first of which
shall be due the first month immediately after the month during which
such note is executed and delivered, (C) shall be secured by a lien
and a security interest in the Properties and (D) at the election of
such Investor, shall be guaranteed by Harken with respect to payment
and performance. If an Investor elects the option described in this
paragraph (ii), such Investor shall be obligated to assign to Harken
without consideration therefor all of such Investor's Closing Shares
not theretofore disposed of (however, such Investor shall be permitted
to retain the Warrant and any Warrant Shares then held by it).
(iii) Such Investor may elect to retain all of its Closing
Shares not theretofore disposed of (as well as the Warrant and Warrant
Shares then held by it). If an Investor elects the option described
in this paragraph (iii), such Investor shall release any and all of
the interests it then has in any liens, security interests and other
claims with respect to the Properties.
(b) As used in this Section 10:
(i) the term "QUALIFIED OFFER" shall mean an offer to
purchase Closing Shares at a price not less than $1.50 per share
(which price per share shall be proportionately adjusted in the event
of any subdivision or combination of Harken
10
11
Common Stock) or such other price per share as agreed upon in writing
by Harken and all of the Investors;
(ii) the term "QUALIFIED PURCHASER" shall mean a person
introduced to the Investors by Harken that, in the good faith
determination of the Investors, is financially able to consummate the
purchase of Closing Shares that is the subject of the Qualified Offer
made by such person;
(iii) the term "REALIZED PROCEEDS" shall mean the sum of A
plus B, where "A" is equal to the aggregate gross proceeds actually
received by the Investors (prior to any commissions, fees or other
costs) from the sale of Closing Shares during the Special Provision
Term, and where "B" is equal to the aggregate gross proceeds the
Investors would have received from the sale of Closing Shares during
the Special Provision Term had they elected to accept a Qualified
Offer from a Qualified Purchaser;
(iv) the term "SHARING RATIO" shall mean with respect to
each Investor the percentage amount set forth opposite such Investor's
name below in this paragraph (iv):
ING 50%
New England 40%
ELP 10%
(v) the term "SPECIAL PROVISION TERM" shall mean the
period of time commencing the Closing Date and ending three-years
thereafter; and
(vi) the term "TARGET PROCEEDS" shall mean an amount equal
to $4,000,000 plus interest thereon (less any Realized Proceeds) at
the rate of 10% per annum from the Closing Date to the date as of
which any calculation of such amount is made hereunder.
(c) Notwithstanding anything else herein to the contrary, if,
during the Special Provision Term, (i) the daily closing price of the Harken
Common Stock shall be less than $0.50 per share for ten consecutive trading
days, and (ii) Realized Proceeds have not equaled or exceeded Target Proceeds,
each of the Investors shall thereupon have the right to exercise any of the
Special Provision Options.
(d) Notwithstanding the foregoing or anything else herein to the
contrary, any obligations owed by each Investor to Harken or the Harken Sub
pursuant to this Section 10 shall be several, and not joint and several.
(e) In the event that an Investor, on the one hand, or a Harken
Entity, on the other hand, is obligated under subsection (a) above to take
certain actions under such subsection, then such actions shall be taken as
promptly as possible but in any event within 30 days after the point in time
that an Investor makes an election under such subsection.
11
12
SECTION 11. NO COMMISSIONS OWED. Each Harken Entity jointly and
severally agree to indemnify and hold harmless each Investor (and its
affiliates, and its and their respective officers, directors, employees,
attorneys, contractors and agents) from and against any and all claims,
actions, causes of action, liabilities, damages, losses, costs or expenses
(including, without limitation, court costs and attorneys' fees) of any kind or
character arising out of or resulting from any agreement, arrangement or
understanding alleged to have been made by, or on behalf of, a Harken Entity
with any broker or finder in connection with this Agreement or the transactions
contemplated hereby. Each Investor severally (and not jointly or jointly and
severally) agrees to indemnify and hold harmless each Harken Entity (and their
respective officers, directors, employees, attorneys, contractors and agents)
from and against any and all claims, actions, causes of action, liabilities,
damages, losses, costs or expenses (including, without limitation, court costs
and attorneys' fees) of any kind or character arising out of or resulting from
any agreement, arrangement or understanding alleged to have been made by, or on
behalf of, such Investor with any broker or finder in connection with this
Agreement or the transactions contemplated hereby.
SECTION 12. NOTICES. All notices and other communications
required under this Agreement shall (unless otherwise specifically provided
herein) be in writing and be delivered personally, by recognized commercial
courier or delivery service which provides a receipt, by telecopier (with
receipt acknowledged), or by registered or certified mail (postage prepaid), at
the following addresses:
If to Harken or
the Harken Sub:
[Harken Energy Corporation] [Harken Energy West Texas, Inc.]
0000 X. XxxXxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Telecopier No.: (000)000-0000
Attention: Xxxxx X. Xxxxxxxx, Chairman
with a copy to:
Xxxxx X. Xxxxxxxx, General Counsel
If to the Investors: See Exhibit 12 hereto.
and shall be considered delivered on the date of receipt. Any party hereto may
specify as its proper address any other post office address within the
continental limits of the United States by giving notice to the other parties,
in the manner provided in this Section, at least ten (10) days prior to the
effective date of such change of address.
12
13
SECTION 13. SURVIVAL OF PROVISIONS. All representations, warranties
and covenants made by each party hereto in this Agreement or any other document
contemplated thereby or hereby shall be considered to have been relied upon by
the other parties hereto and shall survive the execution and delivery of this
Agreement or such other document, regardless of any investigation made by or on
behalf of any such party.
SECTION 14. MISCELLANEOUS MATTERS.
(a) PARTIES BEAR OWN EXPENSES. The Investors, on the one hand,
and the Harken Entities, on the other hand, shall each bear and pay all
expenses (including, without limitation, legal fees) incurred by them in
connection with the transactions contemplated by this Agreement.
(b) ENTIRE AGREEMENT. This Agreement and the other documents
contemplated hereunder contain the entire understanding of the parties
hereto with respect to the subject matter hereof and supersedes all prior
agreements, understandings, negotiations, and discussions among the
parties with respect to such subject matter.
(c) AMENDMENTS. This Agreement may be amended, modified,
supplemented, restated or discharged only by an instrument in writing
signed by all of the parties hereto.
(d) NO WAIVER. The failure of any party hereto to insist upon
strict performance of a covenant hereunder or of any obligation
hereunder, irrespective of the length of time for which such failure
continues, shall not be a waiver of such party's right to demand strict
compliance in the future. No consent or waiver, express or implied, to
or of any breach or default in the performance of any obligation
hereunder shall constitute a consent or waiver to or of any other breach
or default in the performance of the same or any other obligation
hereunder.
(e) CHOICE OF LAW. Without regard to principles of conflicts of
law, this Agreement shall be construed and enforced in accordance with
and governed by the laws of the State of Texas applicable to contracts
made and to be performed entirely within such state and the laws of the
United States of America.
(f) SUCCESSORS AND ASSIGNS. This Agreement shall be binding on
and inure to the benefit of the parties hereto and their respective
successors and assigns, provided that (i) neither Harken Entity may
assign its rights and duties hereunder without the prior written consent
of all of the Investors and (ii) no Investor may assign it rights and
duties hereunder without the prior written consent of Harken except for
any person to whom such Investor has transferred its Harken Common Stock,
Warrant or Warrant Shares.
(g) CERTAIN AGREEMENTS. Upon consummation of the transactions
contemplated hereunder, the Investors agree that neither Harken Entity
shall have any duty, obligation or liability under either the Loan
Agreement or that certain Performance Agreement dated as of May 22, 1992,
among Xxxxxx & Xxxxxxx, Yellowhouse and the Investors, and that each
13
14
Harken Entity's duties, obligations, and liabilities to the Investors
shall be those which are set forth in the documents contemplated hereby
or which may be hereafter executed to which either or both are parties.
Harken Sub agrees to execute an amendment to that certain Trust Agreement
dated as of May 22, 1992, between Yellowhouse, Bankers Trust Company and
the Investors as may be reasonably requested by the Investors to reflect
that Harken Sub is the "Borrower" (as such term is used in the Trust
Agreement) and to reflect such other changes as may be reasonably
necessary to correspond with the terms of the transactions contemplated
hereunder.
(h) COUNTERPARTS. This Agreement may be executed in multiple
counterparts, with each such counterpart constituting an original and all
of such counterparts constituting but one and the same agreement.
14
15
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
HARKEN ENERGY CORPORATION
By: /s/ Xxxxx X. Xxxxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Vice President and Secretary
HARKEN ENERGY WEST TEXAS, INC.
By: /s/ Xxxxx X. Xxxxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Vice President and Secretary
INTERNATIONALE NEDERLANDEN (U.S.)
CAPITAL CORPORATION
By: /s/ Xxxxx Xxxxx
---------------------------------
Name: Xxxxx Xxxxx
Title: Vice President
NEW ENGLAND MUTUAL LIFE
INSURANCE COMPANY
By: /s/ Xxxxxxx X. Xxxxxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Investment Officer
ENCAP 1989-I LIMITED PARTNERSHIP
By: ENCAP PARTNERS, General Partner
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Director
15
