EXCHANGE AGREEMENT
This EXCHANGE AGREEMENT (this 'Exchange Agreement') is made and
entered into this 11th day of July, 1996, but effective as of the 30th day of
June, 1996, by and among Momentum Operating Co., Inc. ('Momentum'), Harken
Energy Corporation ('HEC') and Harken Exploration Company ('HEX').
RECITALS:
A. On December 15, 1995, Momentum, HEC and HEX entered into that
certain Purchase and Sale Agreement (the 'Original Agreement'), pursuant to
which, in exchange for the consideration described in the Original Agreement,
Momentum sold the Properties (as defined in the Original Agreement) to HEX.
B. On December 20, 1995, upon the closing of the transactions
contemplated by the Original Agreement and among other actions:
(1) HEX issued to Momentum a promissory note dated
December 20, 1995 in the original principal amount of $13,000,000 (the 'Note');
(2) HEC and Momentum entered into that certain
Registration Rights Agreement (the 'Original Registration Rights Agreement');
and
(3) HEX executed that certain Deed of Trust, Security
Agreement, Assignment of Production and Financing Statement in favor of John
Huffman, Trustee, for the benefit of Momentum Operating Co., Inc. (the 'Deed of
Trust').
C. Momentum wishes to exchange the Note for shares of common
stock, $.01 par value per share (the 'Common Stock') of HEC and certain
obligations of HEX and HEC is willing to issue shares of its Common Stock in
exchange for the Note and HEX is willing to so obligate itself, and Momentum,
HEX and HEC desire to amend certain terms of, the Original Registration Rights
Agreement and the Deed of Trust, all on the terms and conditions contained
herein.
NOW, THEREFORE, in consideration of the mutual premises and the mutual
covenants herein, the parties hereto agree as follows:
AGREEMENT
1. EXCHANGE.
(a) Subject to the terms of this Exchange Agreement, the
parties hereto agree to exchange the Note for the shares of Common Stock
described in paragraph (b) below and the obligations of HEX described in
Section 3 below. HEC will use its reasonable best efforts to deliver the
shares of Common Stock described in paragraph (b)(i) below to Momentum within
15 business days following the execution of this Exchange Agreement. HEC shall
deliver additional shares of Common Stock pursuant to the terms of the letter
agreement described in paragraph (b)(viii) below. The date upon which the
shares of Common Stock are delivered to Momentum shall be referred to as the
'Issuance Date.'
(b) Upon the Issuance Date, the following actions shall
take place, each of which shall be deemed to occur simultaneously and each of
which shall be a condition precedent to each of the others:
(i) HEC shall deliver to Momentum a stock
certificate registered in the name of Momentum and representing 4,965,000
shares of Common Stock;
(ii) Momentum shall deliver the Note to HEX,
marked 'paid in full, except as provided in that certain Exchange Agreement
dated July 11, 1996, among Seller, Buyer and the Company';
(iii) HEC and Momentum shall execute and deliver
the Registration Rights Agreement in the form attached hereto as Exhibit A.
Momentum agrees to waive any and all registration rights granted to Momentum
pursuant to the Original Registration Rights Agreement insofar as the Original
Registration Rights Agreement might otherwise apply to the registration of the
shares of Common Stock delivered pursuant to this Exchange Agreement;
(iv) HEC and Momentum shall execute and deliver
the Supplemental Deed of Trust, Security Agreement, Assignment of Production
and Financing Statement, in the form attached hereto as Exhibit B;
(v) HEC shall deliver to Momentum a release of
the HEC Mortgage (as defined in the Original Agreement) executed by HEC, HEX
and Larry E. Cummings, Trustee;
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(vi) HEC and HEX shall deliver to Momentum the
opinions of counsel in the forms attached hereto as Exhibit C.1 and Exhibit
C.2;
(vii) HEC and HEX shall deliver to Momentum the
Officer's Certificates in the forms attached hereto as Exhibit D.1 and Exhibit
D.2; and
(viii) HEX, HEC and Momentum will enter into the
letter agreement attached hereto as Exhibit E.
2. EFFECT OF EXCHANGE. Except for the contingent payment
described in Section 3 below, tender of full performance by HEC and HEX of
their obligations contained in Section 1(b) above shall constitute full payment
of all amounts due under the Note. In addition any and all obligations of
Momentum, HEX or HEC pursuant to Section 7.1 of the Original Agreement shall
also be deemed to have been satisfied.
3. CONTINGENT PAYMENT.
(a) Momentum shall calculate the gross proceeds, before
deducting any commissions and other costs of sale, received by Momentum on or
before the Contingent Payment Date which are attributable to the sale of the
shares of Common Stock issued to Momentum pursuant to this Exchange Agreement
('the Proceeds'). The Contingent Payment Date shall be the earlier to occur of
(i) the expiration of 270 days following the date the registration statement
filed by HEC pursuant to Momentum's second Demand Registration (as defined in
the Registration Rights Agreement) is declared effective by the Securities and
Exchange Commission, or (ii) the date on which Momentum has sold all of the
shares of Common Stock issued to Momentum pursuant to this Exchange Agreement.
If the Contingent Payment Date falls on a day which is not a trading day on the
American Stock Exchange, the Contingent Payment Date shall be deemed to be the
next trading day. If Momentum has not sold all of the shares of the Common
Stock as of the close of trading on the American Stock Exchange on the
Contingent Payment Date, the Proceeds shall be deemed to include an amount
equal to the product of the number of shares of Common Stock held by Momentum
at the close of trading on the Contingent Payment Date multiplied by the
arithmetic mean of the daily closing sales prices of the Common Stock on the
American Stock Exchange, as reported in the Wall Street Journal, for the sixty
(60) trading days that Momentum was entitled to sell shares of Common Stock
pursuant to the Registration Rights Agreement immediately preceding the
Contingent Payment Date. If the Proceeds are less than U.S. $8,500,000, HEX
shall pay to Momentum an amount in cash equal to the difference between U.S.
$8,500,000 and the Proceeds. HEX shall make such payment within five business
days after receipt of Momentum's notice that the additional payment is due,
accompanied by documentation supporting Momentum's calculation of the Proceeds.
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(b) If there is any dispute concerning the payment
required by paragraph (a) above, HEX shall pay to Momentum the undisputed
portion and shall submit the disputed portion to binding arbitration. Momentum
and HEX shall each select a mutually acceptable person as an arbitrator and the
two arbitrators so chosen shall mutually select a third arbitrator. The group
of three arbitrators shall determine the amount of the payment required by
paragraph (a) above. If the two arbitrators selected by Momentum and HEX
cannot agree on a third arbitrator, or successor arbitrator if necessary, the
parties shall request the American Arbitration Association to appoint the third
arbitrator or successor arbitrator. All arbitration hearings shall be held in
Abilene, Texas and shall begin within thirty days after delivery of written
notice from one party to the other party and the arbitrators stating the
grounds for submitting an issue to arbitration. The arbitrators shall
arbitrate the dispute in accordance with the terms of this Exchange Agreement,
the Texas General Arbitration Act, and the Rules of the American Arbitration
Association to the extent such rules are not in conflict with the terms of this
Exchange Agreement or the Act. The arbitrators shall issue a written decision
which shall be final and binding on Momentum and HEX and may be enforced in any
court having jurisdiction. Momentum and HEX shall bear their own legal fees
and other costs incurred in connection with presenting their respective cases.
The costs and expenses of the arbitrators shall be shared equally by Momentum
and HEX. In fulfilling their duties, the arbitrators shall be bound by the
terms of this Exchange Agreement and may consider other matters which, in the
opinion of the arbitrators, are necessary or helpful to make a proper decision.
4.1 MOMENTUM'S REPRESENTATIONS. Momentum represents to HEC and
HEX that as of the date hereof and as of the Issuance Date:
(a) Momentum is a corporation duly organized, validly
existing and in good standing under the laws of the State of Texas. Momentum
is qualified to do business in the State of Texas.
(b) Momentum has the power and authority to carry on its
business as presently conducted, to enter into this Exchange Agreement and to
perform its obligations under this Exchange Agreement.
(c) Execution and delivery of this Exchange Agreement,
consummation of the transactions contemplated by this Exchange Agreement, and
performance of all obligations under this Exchange Agreement have been
authorized by all necessary action, corporate and otherwise, on the part of
Momentum. Execution and delivery of this Exchange Agreement does not, and the
consummation of the transactions contemplated by this Exchange Agreement will
not, violate or be in conflict with any agreement, instrument, judgment, order,
decree, law, rule or regulation by which Momentum is bound.
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(d) Subject to laws and equitable principles affecting
the rights of creditors generally, this Exchange Agreement is a binding
obligation of Momentum enforceable according to its terms.
(e) No suit, claim, demand or investigation is pending
or, to Momentum's knowledge, is threatened, that would effect Momentum's
interest in the Note. There are no bankruptcy or reorganization proceedings
pending or, to Momentum's knowledge, threatened against Momentum. As used in
this Exchange Agreement, the term 'knowledge' means actual awareness of
relevant facts and actual awareness of facts which would cause a person
exercising reasonable prudence to discover relevant facts.
(f) With respect to the shares of Common Stock which
Momentum may receive pursuant to Section 1 hereof:
(1) Momentum is acquiring the Common Stock for
its own account, and for the account of certain Momentum affiliates, for
investment only and not with a view toward the public sale or distribution of
the Common Stock in contravention of any laws, rules or regulations;
(2) Momentum is an 'Accredited Investor' as that
term is defined in Rule 501 of Regulation D by reason of Rule 501(a)(3) of the
Securities Act of 1933, as amended (the '1933 Act');
(3) Momentum has engaged its own advisors for
advice and counsel concerning Momentum's acquisition of the Common Stock, so
that it is capable of evaluating the merits and risks of its investment in the
Company and has the capability to protect its own interests;
(4) all subsequent offers and sales of the Common
Stock by Momentum shall be made pursuant to registration of the Common Stock
under the 1933 Act or pursuant to a valid exemption from registration;
(5) Momentum understands that the Common Stock is
being offered and sold to it in reliance on specific exemptions from the
registration requirements of United States federal and state securities laws
and that HEC and HEX are relying upon the truth and accuracy of and Momentum's
compliance with the representations, warranties, agreements, acknowledgments
and understandings of the Momentum in this Section 4.1(f) in order to determine
the availability of such exemptions and the eligibility of Momentum to acquire
the Common Stock;
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(6) Momentum and/or its advisors have been
furnished with all materials relating to the business, management, finances and
operations of the Company and materials relating to the offer and sale of the
Common Stock which have been requested by Momentum. Momentum and its advisors
have been afforded the opportunity to ask questions of the officers of the
Company and have received satisfactory answers to any such inquiries. Without
limiting the generality of the foregoing, Momentum has had the opportunity to
obtain and to review the Company's (i) Annual Report on Form 10-K/A for the
year ended December 31, 1995, (ii) Quarterly Report on Form 10-Q for the
quarter ended March 31, 1996, and (iii) Proxy Statement for the Annual Meeting
of Stockholders of Harken held June 11, 1996;
(7) Momentum understands that no United States
federal or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the Common Stock; and
(8) Momentum acknowledges that the Common Stock
must be held indefinitely unless subsequently registered under the 1933 Act or
unless an exemption from such registration is available. It is aware of the
provisions of Rule 144 promulgated under the 1933 Act which permit limited
resale of shares purchased in a private placement subject to the satisfaction
of certain conditions, including, among other things, the existence of a public
market for the shares, the availability of certain current public information
about the Company, the resale occurring not less than two years after a party
has purchased and paid for the security to be sold, the sale being effected
through a 'brokers transaction' or in transactions directly with a 'market
maker' and the number of shares being sold during any three-month period not
exceeding specified limitations.
4.2 HEX'S REPRESENTATIONS. HEX represents to Momentum that, as
of the date hereof, and as of the Issuance Date:
(a) HEX is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. HEX is qualified
to do business in the State of Texas. HEX is qualified under all applicable
laws, rules and regulations to own and operate its properties.
(b) HEX has the power and authority to carry on its
business as presently conducted, to enter into this Exchange Agreement and to
perform its obligations under this Exchange Agreement.
(c) Execution and delivery of this Exchange Agreement,
consummation of the transactions contemplated by this Exchange Agreement, and
performance of all
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obligations under this Exchange Agreement have been authorized by all necessary
action, corporate and otherwise, on the part of HEX. Execution and delivery of
this Exchange Agreement does not, and the consummation of the transactions
contemplated by this Exchange Agreement will not, violate or be in conflict
with any agreement, instrument, judgment, order, decree, law, rule or
regulation by which HEX is bound.
(d) Subject to laws and equitable principles generally
affecting the rights of creditors, this Exchange Agreement is a binding
obligation of HEX enforceable according to its terms.
(e) None of HEX's statements or representations in this
Exchange Agreement contains any untrue statement of any material fact or omits
to state any material fact necessary to be stated in order to make the
statements or representations made not misleading.
(f) As of the date of this Exchange Agreement, HEX in not
in material breach of, or default under, the Original Agreement or any other
agreement or instrument described in the Original Agreement or executed in
connection with the Original Agreement.
4.3 HEC'S REPRESENTATIONS. HEC represents to Momentum that, as of
the date hereof and as of the Issuance Date:
(a) HEC is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. HEC is qualified
to do business in the State of Texas. HEC is qualified under all applicable
laws, rules and regulations to own and operate its properties.
(b) HEC has the power and authority to carry on its
business as presently conducted, to enter into this Exchange Agreement and to
perform its obligations under this Exchange Agreement.
(c) Execution and delivery of this Exchange Agreement,
consummation of the transactions contemplated by this Exchange Agreement, and
performance of all of its obligations under this Exchange Agreement have been
authorized by all necessary action, corporate and otherwise, on the part of
HEC. Execution and delivery of this Exchange Agreement does not, and the
consummation of the transactions contemplated for it by this Exchange Agreement
will not, violate or be in conflict with any agreement, instrument, judgment,
order, decree, law or regulation by which HEC is bound.
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(d) Subject to laws and equitable principles generally
affecting the rights of creditors, this Exchange Agreement is a binding
obligation of HEC enforceable according to its terms.
(e) All shares of capital stock of HEC have been duly and
validly authorized and issued and are fully paid and nonassessable. The Common
Stock when issued, sold and delivered in accordance with the terms of this
Exchange Agreement, will be duly and validly issued, fully paid and
nonassessable. As of the date hereof, the authorized capital stock of HEC is
125,000,000 shares of common stock, par value $.01, of which 84,712,471 shares
are issued and outstanding and 10,000,000 shares of Preferred Stock, par value
$1.00, of which no shares are issued or outstanding. Except as disclosed in
Schedule 4.3(e), (i) there are no outstanding subscriptions, warrants, options,
calls or commitments of any character relating to or entitling any person to
purchase or otherwise acquire from HEC any capital stock of HEC, (ii) there are
no obligations or securities convertible into or exchangeable for any shares of
capital stock of HEC or any commitments of any character relating to or
entitling any person to purchase or otherwise acquire any such obligations or
securities, and (iii) there are no preemptive or similar rights to subscribe
for or to purchase any capital stock of HEC.
(f) HEC's (i) unaudited consolidated balance sheet as at
March 31, 1996 and the related consolidated statement of income, cash flows and
shareholders' equity for the three months then ended and (ii) audited
consolidated balance sheet as at December 31, 1995 and the related audited
consolidated statement of income, cash flows and shareholders' equity for the
fiscal year then ended (including in all cases the notes thereto)
(collectively, the 'Financial Statements') have been prepared in accordance
with generally accepted accounting principles consistently applied except as
noted therein and except, in the case of unaudited interim financial
statements, for normal year-end adjustments, and fairly present the
consolidated financial position of HEC and its consolidated subsidiaries as of
the respective dates set forth therein and the results of operations and cash
flows for HEC and its consolidated subsidiaries for the respective fiscal
periods set forth therein.
(g) Neither HEC nor any of its subsidiaries has sustained
since the date of the March 31, 1996 Financial Statements any adverse change in
its businesses, financial condition or results of operations that would be
material to HEC and its subsidiaries on a consolidated basis.
(h) Assuming the accuracy of the representations of
Momentum in Section 4.1(f) and except for the approval of the American Stock
Exchange with respect to the issuance of the shares of Common Stock required to
be issued pursuant to this Exchange Agreement, no consent, approval,
authorization, order, registration or qualification of or with
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any court or governmental agency or body is required by or on behalf of HEC
which has not been obtained as of the date hereof, for the valid execution and
delivery of, or for the performance by HEC of its obligations under, this
Exchange Agreement.
(i) There are no legal or governmental proceedings
pending to which HEC or any of its subsidiaries is a party or to which any of
its or their properties is subject, or which challenge the validity or legality
of HEC's obligations under this Exchange Agreement or the transactions
contemplated thereby which, individually or in the aggregate, would be
reasonably expected to have a material adverse effect on the business of HEC
and any of its subsidiaries taken as a whole; and, to HEC's knowledge, no such
proceedings are threatened by any governmental authority or by any other
person.
(j) Each of HEC and its subsidiaries is in material
compliance with all statutes, laws, ordinances, governmental rules or
regulations or any judgment, order or decree to which it is subject and
possesses such certificates, authorizations and permits issued by the
appropriate regulatory agencies or bodies necessary to conduct the business now
operated by it, except for such violations which, and except for such
certificates, authorizations and permits which if not possessed, would not be
reasonably expected to have a material adverse effect on the business of HEC
and its subsidiaries taken as a whole; and neither HEC nor any such subsidiary
has received any notice of proceedings related to any such violation or the
revocation or modification of any of the same which, individually or in the
aggregate, if the subject of any unfavorable decision, ruling or finding, would
be reasonably expected to have a material adverse effect on the business of HEC
and its subsidiaries taken as a whole.
(k) Except (i) as and to the extent disclosed or reserved
against in the Financial Statements, or (ii) for liabilities and obligations
incurred after March 31, 1996, that would not be reasonably expected to have a
material adverse effect on the business of HEC and any of its subsidiaries
taken as a whole, neither HEC nor any of its subsidiaries has any liabilities
or obligations of any nature, whether due or to become due, including, without
limitation, liabilities or obligations on account of taxes or other
governmental charges or penalties, interest or funds thereon or in respect
thereof and HEC does not know of any basis for any assertion against HEC or any
of its subsidiaries of any debt, liability or obligation in any amount not
reflected or reserved against in the Financial Statements which would be
required to be set forth therein in accordance with generally accepted
accounting principles.
(l) Except as disclosed in HEC's Annual Report on Form
10-K/A for the year ended December 31, 1995 or HEC's Quarterly Report on Form
10-Q for the quarter ended March 31, 1996, (i) neither HEC nor any of its
subsidiaries has received any written complaint, or notice of violation,
alleged violation, investigation, advisory action, potential liability or
potential responsibility, regarding environmental protection matters or permit
9
compliance with regard to any of its or their properties, nor does HEC have
knowledge that any governmental authority or third party is contemplating
delivering to HEC or any of its subsidiaries any such notice, (ii) there are no
governmental, administrative or judicial actions or proceedings pending under
any Environmental Laws to which HEC or any of its subsidiaries is or, to HEC's
knowledge, is likely to be named as a party with respect to any of its or their
properties, nor are there any consent decrees, other decrees, consent orders,
administrative orders or other orders, or other administrative or judicial
requirements, outstanding under any Environmental Law with respect to any of
such properties, and (iii) neither HEC nor any of its subsidiaries is an owner
or operator of any facility or operation which is in violation of any
Environmental Law or at which there has been or exists a release or threatened
release of Hazardous Materials to the environment. The terms 'Environmental
Laws' and 'Hazardous Materials' shall have the meanings given to such terms in
the Original Agreement.
(m) HEC and each of its subsidiaries has caused to be
duly filed in a timely manner, including any applicable extensions, with the
appropriate governmental authorities all returns, statements and reports with
respect to any taxes that are required to be filed by or with respect to it.
Except for tax liens securing the payment of taxes not yet due and payable,
there are no tax liens upon any assets of HEC or any of its subsidiaries and no
claim for assessment or collection of any material taxes has been asserted
against HEC or any of its subsidiaries, except for claims being challenged by
HEC in good faith which are listed in Schedule 4.3(m) to this Agreement.
(n) Each Material Contract is valid and binding on the
parties thereto and in full force and effect and neither HEC nor any of its
subsidiaries is in breach of a Material Contract, which breach would reasonably
be expected to have a material adverse effect on HEC or any of its
subsidiaries. To HEC's knowledge, no other party to any Material Contract is
in material breach thereof. For the purposes of this Section, Material
Contract shall mean: (i) all contracts requiring payment, or being reasonably
likely to result in payment, by any party thereto of more than $50,000.00
annually; (ii) all material contracts with any governmental authority; (iii)
all contracts not made in the ordinary course of business, which are material
to HEC or any of its subsidiaries; and (iv) all contracts relating to
indebtedness of HEC or any of its subsidiaries of a principal amount in excess
of $250,000.00.
(o) None of HEC's statements or representations in this
Exchange Agreement contains any untrue statement of any material fact or omits
to state any material fact necessary to be stated in order to make the
statements or representations made not misleading.
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(p) HEC is the legal owner and holder of the HEC Mortgage
and the Note (as defined in the HEC Mortgage) and of all rights arising under
the HEC Mortgage or such Note.
(q) As of the date of this Exchange Agreement, HEC in not
in material breach of, or default under, the Original Agreement or any other
agreement or instrument described in the Original Agreement or executed in
connection with the Original Agreement.
5. TERMINATION.
(a) This Exchange Agreement and the transactions
contemplated by his Exchange Agreement may be terminated in the following
situations:
(i) by Momentum if (x) the conditions to its
performance described in Section 1(b) are not satisfied within 15 business days
from the execution of this Exchange Agreement, or (y) any of HEX's or HEC's
representations are untrue in any material respect; or
(ii) by HEX or HEC if (x) the conditions to its
performance described in Section 1(b) are not satisfied within 15 business days
from the execution of this Exchange Agreement, or (y) any of Momentum's
representations are untrue in any material respect.
(b) Except as provided in this Section 5(b), if this
Agreement is terminated, neither party shall have any liability to any other
party arising under this Exchange Agreement. Following termination of this
Exchange Agreement, the Original Agreement shall govern the rights and
obligations of the parties. If any party breaches this Exchange Agreement, or
willfully fails to fulfill a condition to any other party's performance,
nothing in this Exchange Agreement shall be construed as limiting a
non-breaching party's legal or equitable rights and remedies arising under this
Exchange Agreement.
6. AMENDMENT TO ORIGINAL AGREEMENT. The Original Agreement is
hereby amended by deleting Section 7.13 thereof in its entirety.
7. NOTICES. All notices required or permitted under this
Exchange Agreement shall be effective upon receipt if personally delivered, if
mailed by registered or certified mail, postage prepaid, or if delivered by
telegram, fax or telecopy if directed to the parties as follows:
To Momentum:
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Momentum Operating Co., Inc.
232 South Main
P.O. Box 578
Albany, Texas 76430
Attn: Michael J. Parsons, President
To HEX or HEC:
Harken Exploration HEC
Harken Energy Corporation
5605 N. MacArthur Blvd., Suite 400
Irving, Texas 75038
Attn: Richard H. Schroeder, President
Copy to: Gregory S. Porter, Vice President - Legal
Any party may give written notice of a change in the address or individual to
which delivery shall be made.
8. EXPENSES. Except as otherwise provided in this Exchange
Agreement, all fees, costs and expenses incurred by the parties in negotiating
this Exchange Agreement and in consummating the transactions contemplated by
this Exchange Agreement shall be paid by the party which incurred them.
9. AMENDMENT. The provisions of this Exchange Agreement may be
altered, amended or waived only by a written agreement executed by the party to
be charged. No waiver of any provision of this Exchange Agreement shall be
construed as a continuing waiver of the provision.
10. ASSIGNMENT. Neither HEX nor HEC may assign all or any portion
of its rights or delegate all or any portion of its duties under this Exchange
Agreement without Momentum's prior written consent. To the extent permitted by
law, Momentum shall have the right to assign all or any portion of its rights
under this Exchange Agreement to any Momentum affiliate at any time. Momentum
affiliate shall have the same meaning given the term of 'Seller affiliate' in
the Original Agreement.
11. HEADINGS. The headings are for convenience only and do not
limit or otherwise affect the provisions of this Exchange Agreement.
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12. COUNTERPARTS. This Exchange Agreement may be executed in
counterparts, each of which shall be an original and which, taken together,
shall constitute the same agreement.
13. REFERENCES. References, including use of a pronoun, shall
include, where applicable, masculine, feminine, singular or plural individuals
or legal entities.
14. GOVERNING LAW. This Exchange Agreement and the transactions
contemplated by this agreement shall be governed and construed under the laws
of the State of Texas without giving effect to any rules of law which might
require application of the law of another jurisdiction. Venue of any action
arising under this Exchange Agreement shall be in Abilene, Texas.
15. ANNOUNCEMENTS. Except as otherwise required by law or
applicable regulation, neither Momentum, HEX nor HEC shall announce or
otherwise publicize this Exchange Agreement or the transactions contemplated by
this Exchange Agreement without the prior written consent of the other party.
16. ENTIRE EXCHANGE AGREEMENT. This Exchange Agreement is the
entire understanding between Momentum, HEX and HEC concerning the subject
matter of this Exchange Agreement. This Exchange Agreement supersedes all
negotiations, discussions, representations, prior agreements and
understandings, whether oral or written, including, without limitation, all
letters or expressions of intent between the parties, concerning the subject
matter of this Exchange Agreement. Except as expressly amended by the
Supplemental Deed of Trust, or the Registration Rights Agreement, the Original
Agreement and all agreements and instrument executed in connection with the
Original Agreement remain unaffected by this Exchange Agreement.
17. PARTIES IN INTEREST. This Exchange Agreement is binding upon
and shall inure to the benefit of Momentum, HEX and HEC and, except where
prohibited, their successors, representatives and assigns. Unless expressly
stated to the contrary, no other person is intended to have any benefits,
rights or remedies under this Exchange Agreement.
18. SCHEDULES AND EXHIBITS. All schedules and exhibits attached
to this Exchange Agreement are incorporated into this Exchange Agreement for
all purposes. Reference to the 'Exchange Agreement' includes all agreements
and instruments attached as schedules or exhibits to this Exchange Agreement or
executed in connection with the transactions contemplated by this Exchange
Agreement.
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19. SEVERANCE. If any provision of this Exchange Agreement is
found to be illegal or unenforceable, the other terms of this Exchange
Agreement shall remain in effect and this Exchange Agreement shall be construed
as if the illegal or unenforceable provision had not been included.
20. TIME. Time is of the essence of this Exchange Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Exchange
Agreement on the 11th day of July, 1996.
MOMENTUM OPERATING CO., INC.
By: /s/ Michael J. Parsons
----------------------------------
Name: Michael J. Parsons
----------------------------------
Title: President
----------------------------------
HARKEN EXPLORATION COMPANY
By: /s/ Gregory S. Porter
----------------------------------
Name: Gregory S. Porter
----------------------------------
Title: Vice President - Legal
----------------------------------
HARKEN ENERGY CORPORATION
By: /s/ Gregory S. Porter
----------------------------------
Name: Gregory S. Porter
----------------------------------
Title: Vice President - Legal
----------------------------------
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Exchange Agreement - Momentum Operating Co. and Harken Exploration Co.
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