Exhibit 10.1
G1
NEITHER THIS NOTE NOR THE SHARES OF COMMON STOCK ISSUABLE ON CONVERSION OF
THIS NOTE (THE "SHARES") HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE. THE
HOLDER HEREOF, BY PURCHASING THIS NOTE, AGREES FOR THE BENEFIT OF THE COMPANY
THAT THIS NOTE AND THE SHARES MAY NOT BE RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED OR DISPOSED OF UNLESS THE NOTE OR THE SHARES AS THE CASE MAY BE, HAS
BEEN REGISTERED UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES OR
BLUE SKY LAWS OR EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SUCH LAWS ARE
AVAILABLE.
IF THE HOLDER OF THIS NOTE WAS AN AFFILIATE OF THE COMPANY AT ANY TIME
DURING THE THREE MONTHS PRECEDING THE DATE OF ANY SUCH TRANSFER, THE FOREGOING
CONDITIONS MUST BE COMPLIED WITH REGARDLESS OF WHEN SUCH TRANSFER IS MADE.
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO
LIMITATIONS UNDER THE U.S. INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED
IN SECTIONS 165(j) AND 1287(a) OF THE UNITED STATES INTERNAL REVENUE CODE OF
1986, AS AMENDED.
THIS OBLIGATION IS NOT A DEPOSIT AND IS NOT INSURED BY ANY AGENCY OF THE
UNITED STATES GOVERNMENT.
HARKEN ENERGY CORPORATION
7% SENIOR CONVERTIBLE NOTES DUE 2007, SERIES G
NOTE
Harken Energy Corporation, a Delaware corporation (hereinafter, the
"Company," which term includes any successor to the Company), for value
received, hereby promises to pay to Waverley Investments Limited, upon
presentation and surrender of this Note (the "Note") the principal sum of THREE
MILLION FOUR HUNDRED AND TEN THOUSAND DOLLARS (U.S. $3,410,000) (the "Principal
Amount") on March 31, 2007, and to pay interest thereon in cash from and
including March 12, 2003, semi-annually in arrears on September 30 and March 31
in each year, commencing September 30, 2003 (each an " Interest Payment Date"),
at the rate of 7% per annum, calculated on the basis of a 360-day year
consisting of twelve 30-day months, until the principal hereof is paid or
payment thereof is duly provided for; provided, however, that the Principal
Amount payable upon presentation and surrender may be reduced from time to time
in connection with conversions, redemptions, purchases, cancellations and
similar events described in the Terms and Conditions hereof, and such reductions
shall be duly noted on Schedule A hereto (which is incorporated herein by this
reference as if set out in full); and provided further that interest accruing
after the date of a reduction in Principal Amount shall be calculated with
reference to the new Principal Amount.
Payments of interest on this Note shall be paid by the Company on each
Interest Payment Date, commencing September 30, 2003, to a bank account
nominated in writing by the registered holder of such Note as shown in the Note
Register at the close of business on the applicable Record Date.
Upon failure of the Company to make any payment of interest or principal on
the date when due and payable, the outstanding principal balance of the Notes
and, to the extent permitted by law, interest thereon will bear interest at the
Default Rate beginning on the date such payment was due until the default is
cured.
Notwithstanding any other provision of the Note to the contrary, in no
event shall the interest contracted for, charged or received in connection with
the Note (including any other costs or considerations that constitute interest
under applicable law which are contracted for, charged or received pursuant to
the Notes) exceed the maximum rate of nonusurious interest allowed under
applicable law as presently in effect and to the extent an increase is allowable
by such laws, but in no event shall any amount ever be paid or payable greater
than the amount contracted for in the Note, and all amounts paid by the Company
which constitute usurious interest under the applicable law shall be applied in
the manner described herein.
To the extent permitted by law, interest contracted for, charged or
received on the Note shall be allocated over the entire term of this Note, to
the end that interest paid on the Note does not exceed the maximum amount
permitted to be paid thereon by law.
The principal on this Note shall be paid to a bank account nominated in
writing by the registered holder of this Note as shown on the Note Register at
the close of business on the applicable Record Date.
This Note has been issued pursuant to resolutions adopted by the Board
of Directors of the Company by unanimous written consent effective 3 March 2003.
This Note and the Terms and Conditions shall be governed by and construed
in accordance with the laws of the State of New York.
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IN WITNESS WHEREOF, the Company has caused this Note to be duly executed in its
corporate name by the manual or facsimile signatures of the undersigned duly
authorized officers of the Company.
Dated as of March 18, 2003.
HARKEN ENERGY CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇, President and
Chief Operating Officer
[Corporate Seal]
ATTEST:
By: /s/ A. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------
A. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
Senior Vice President-Finance
and Secretary
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TERMS AND CONDITIONS OF THE NOTE
The U.S. $3,410,000 of 7% Senior Convertible Note Due 2007, Series G (the
"Note" or "Notes") of Harken Energy Corporation, a Delaware corporation (the
"Company") is constituted by, and authorized to be issued pursuant to these
Terms and Conditions and resolutions of the Board of Directors of the Company by
unanimous written consent effective on 3 March 2003.
Certain terms not otherwise defined in the text hereof are defined in
Condition 19 herein.
1. Form, Denominations, and Title, and Certain Administrative Provisions
(A) The Note is issued in registered certified form in denominations of
U.S. $1,000 or multiples thereof (the "Authorized Denomination") and with such
numerical and other identification designation as the Company shall deem
desirable.
(B) Title to the Note will pass by form of transfer as set out in Schedule
C and reregistration of new ownership in the Note Register. The Company may (to
the fullest extent permitted by applicable laws) deem and treat the registered
Holder of the Note as the absolute owner thereof for all purposes (whether or
not the Note shall be overdue and notwithstanding any notice to the contrary).
(C) The Note shall be executed on behalf of the Company by its President
and Chief Operating Officer under its corporate seal or a facsimile of such seal
reproduced thereon and attested by its Senior Vice President-Finance and
Secretary or an Assistant Secretary. The signature of any of these officers on
the Note may be manual or facsimile signatures of the present or any future such
authorized officer and may be imprinted or otherwise reproduced on the Note.
The Note bearing the manual or facsimile signatures of individuals who were
at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the delivery of the Note or did not hold such offices at the
date of the Note.
Upon surrender for transfer or exchange of the Note to the Company, if it
will serve as Note Registrar, or to the office of the Note Registrar designated
by the Company for that purpose, the Company shall execute and deliver in the
name of the transferee or transferees a new Note or Notes of the same series and
interest rate and in Authorised Denominations, and for the aggregate principal
amount the owner is entitled to receive. No transfer of the Note shall be
binding upon the Company, unless made at such office and shown on the Note
Register. The Bank of New York will initially serve as the Note Registrar.
In case the Company, pursuant to Conditions 3(B) and 3(C), shall be
consolidated or merged with or into any other Person or shall convey, transfer,
lease or otherwise dispose of its Properties and assets substantially as an
entirety to any Person, and the successor Person resulting from such
consolidation, or surviving such merger, or into which the Company shall have
been merged, or the Person which shall have received a conveyance, transfer,
lease or other disposition as aforesaid, shall have entered into an amendment
hereto, the Note may, from time to time, at the request of the successor Person,
be exchanged for another Note executed in the name of the successor Person with
such changes in phraseology and form as may be appropriate, but otherwise in
substance of like tenor as the Note surrendered for such exchange and of like
principal amount.
(D) Except as otherwise provided herein, no service charge shall be made
for any exchange, conversion or redemption of Notes, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any exchange of Notes.
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(E) (1) The Holder of this Note may grant proxies and otherwise authorize
any person to take any action which a Noteholder is entitled to take under these
Terms and Conditions.
(2) Nothing contained herein shall be deemed to authorize any transfers of
this Note otherwise than in accordance with the Securities Act. Unless otherwise
required by applicable law, the Company shall not recognize or give effect to
any attempt to transfer or convert any Note or any interest therein in violation
of the Securities Act.
(F) The Noteholder by acceptance of the Note hereby covenants and agrees
that neither the Note nor the Conversion Shares will be offered, sold,
transferred, pledged, converted or otherwise disposed of unless the Note and/ or
the Conversion Shares have been registered under the Securities Act or any
applicable state securities or blue sky laws or exemptions from the registration
requirements of such laws are available.
(G) If (i) any mutilated Note is surrendered to the Company or the Note
Registrar, or (ii) the Company or the Note Registrar, as the case may be,
receives evidence to its satisfaction of the destruction, loss or theft of any
Note, and there is delivered to the Company and the Note Registrar such security
and/or indemnity as may be required by them to save them harmless, then, in the
absence of notice to the Company or the Note Registrar that such Note has been
acquired by a bona fide purchaser, the Company shall execute and deliver, in
exchange for any such mutilated Note or in lieu of any such destroyed, lost or
stolen Note, a new Note of like tenor and principal amount, bearing a number not
contemporaneously Outstanding.
In case any such mutilated, destroyed, lost or stolen Note has become or is
about to become due and payable, the Company in its discretion may, instead of
issuing a new Note, pay such Note, as the case may be.
Upon the issuance of any new Note under this Condition, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses connected
therewith.
Every new Note issued pursuant to this Condition in lieu of any destroyed,
lost or stolen Note shall constitute an original additional contractual
obligation of the Company, whether or not the destroyed, lost or stolen Note
shall be at any time enforceable by anyone, and shall be entitled to all
benefits hereunder equally and proportionately with any and all other Notes duly
issued hereunder.
The provisions of this Condition are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of a mutilated, destroyed, lost or stolen Note.
(H) The Company shall maintain an office or agency where the Note may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent" or
"paying agent"). The Registrar shall keep a register of the Note and of its
transfer and exchange. The Company may appoint one or more co-registrars and one
or more additional paying agents. The term "Registrar" includes any co-registrar
and the term "Paying Agent" or "paying agent" includes any additional paying
agent. The Company may change any paying agent or Registrar without notice to
any Holder. The Company shall notify the Noteholder in writing of the name and
address of the Registrar or any paying agent, if the Company is not serving as
such. The Company or any of its Subsidiaries may act as paying agent or
Registrar. The Bank of New York will initially act as Registrar and paying
agent.
2. Status
The Note is a direct, unconditional and unsecured obligation of the
Company. The Note will rank senior to all Subordinated Obligations of the
Company, present and future, but, in the event of bankruptcy or insolvency of
the Company, only to the extent permitted by the applicable laws relating to
creditors' rights. The Notes will not be secured by any assets or property of
the Company. The Note will rank pari passu with all other present and future
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Indebtedness of the Company (including the Company's 5.0% Senior Convertible
Notes due 2003) other than Subordinated Obligations.
3. Covenants
(A) The Company will do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate existence, rights
(charter and statutory) and franchises of the Company; provided, however, that
the Company shall not be required to preserve any such right or franchise if the
Board of Directors shall determine that the preservation thereof is no longer in
the best interests of the Company and the conduct of its business, and that the
loss thereof is not disadvantageous in any material respect to the Noteholders;
and provided, further, that nothing contained in this Condition 3(A) shall
prohibit any transaction permitted by Condition 3(B) or Condition 3(C) herein.
(B) The Company will not merge or consolidate with or sell, convey,
transfer or lease or otherwise dispose of all, or substantially all of its
Properties and assets substantially as an entirety to any Person, unless: (a)
either (i) the Company shall be the surviving Person or (ii) the Person (if
other than the Company) formed by such consolidation or into which the Company
is merged or the Person which acquired by conveyance or transfer, or which
leases, the Properties and assets of the Company substantially as an entirety
(1) shall be a Person organized and validly existing under the laws of the
United States of America, any state thereof or the District of Columbia and (2)
shall expressly assume, by a written instrument, the Company's obligation for
the due and punctual payment of the principal of and interest on the Note and
the performance and observance of every Term and Condition contained herein.
(C) Upon any consolidation of the Company with or merger of the Company
with or into any other Person or any conveyance, transfer or lease of the
Properties and assets of the Company substantially as an entirety to any person,
the successor Person formed by such consolidation or into which the Company is
merged or to which such conveyance, transfer or lease is made shall succeed to,
and be substituted for, and may exercise every right and power of, the Company
under the Terms and Conditions contained herein with the same effect as if such
successor Person had been named as the Company herein, and in the event of any
such conveyance or transfer, the Company, except in the case of a lease, shall
be discharged of all obligations and covenants under the Note and may be
dissolved and liquidated.
(D) The Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (a) all taxes, assessments and
governmental charges levied or imposed upon the Company or upon the income,
profits or Property of the Company and (b) all lawful claims for labour,
materials and supplies which, if unpaid, might by law become a Lien upon the
Property of the Company; provided, however, that the Company shall not be
required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim whose amount, applicability or validity is being
contested in good faith by appropriate proceedings.
(E) The Company will not amend its Certificate of Incorporation or Bylaws
except as required by law, except in respect to such amendments that the Board
of Directors reasonably determines do not materially adversely affect the rights
of the Noteholder, or except to the extent that such amendment would not have a
material adverse effect on (a) the ability of the Company to perform its
obligations under the Note or (b) the rights of the Noteholder, except that
neither (i) increases in the number of Shares and issuance thereof with related
securities, nor (ii) designations of Preferred Stock of the Company,
modifications of the terms of such designations and issuance thereof with
related securities, nor (iii) modification or expansion of the indemnity
provisions provided by the Company to its directors and officers, nor (iv)
change of the Company's registered agent shall be deemed an amendment hereunder.
(F) To the extent permitted by law, the Company will provide to the
Noteholder such statements, certificates or other documentation concerning the
organization or operations of the Company as may be reasonably necessary to
establish any exceptions or exemptions from United States federal income tax
withholding and reporting requirements.
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(G) The Company shall file a registration statement on Form S-3 (or such
other form as the Company may determine is appropriate or required under the
rules of the Commission), within ninety (90) days following the Issue Date in
respect of all Shares that may be issuable at any time upon the conversion
and/or redemption of the Note. The Company shall use its best efforts to cause
the Commission to declare such registration statement (and any necessary
amendments thereto) effective. The Company shall also use its best efforts to
maintain the effectiveness of such registration statement, and to refile such a
registration statement from time to time in the event its effectiveness lapses,
until all such Shares that either are issued or that may be issued are Freely
Tradable in the United States.
While any Conversion Right remains exercisable, the Company will use its
best efforts to list and maintain a listing of all Shares issued upon conversion
or redemption of the Note on a Stock Exchange. In the event a Stock Exchange
requires stockholder approval in order to complete the listing of the Shares to
be so issued upon conversion or redemption of the Note, then the Company will
use its best efforts to obtain such stockholder approval at the earliest
possible stockholder meeting. In this event, the conversion or redemption in
Shares will occur only if and when stockholder approval has been obtained. If
the Company is unable to obtain or maintain such listing of Shares, it will
forthwith give not less than 30 calendar days notice to the Noteholder of the
listing, de-listing or quotation or lack of quotation of the Shares (as a class)
by any such Stock Exchange.
(H) If the Company shall at any time act as its own paying agent, it will,
on or before each due date of the principal of or interest on any of the Notes,
segregate and hold in trust for the benefit of the Persons entitled thereto a
sum sufficient to pay the principal or interest so becoming due until such sums
shall be paid to such Persons or otherwise disposed of as herein provided.
4. Interest
The Note bears interest from (and including) March 12, 2003 (the "Issue
Date"), at the rate of seven percent (7%) per annum, payable semi-annually in
arrears on September 30 and March 31 in each year (each an "Interest Payment
Date"), the first such payment to be made on September 30, 2003, in respect of
the period from (and including) March 12, 2003 to (but excluding) September 30,
2003, and this interest payable will equal U.S. $35.00 per U.S. $1,000 principal
amount of the Note for each complete semi-annual interest period.
The Note will cease to bear interest (i) from its due date for redemption
unless the Company shall default in the payment of the Redemption Price, in
which event interest shall continue to accrue as provided in herein, or (ii)
where the Conversion Right shall have been voluntarily exercised by the
Noteholder, from the Conversion Date, or (iii) in the case of a Mandatory
Conversion, from the Mandatory Conversion Date.
Any money held by the Company in trust for the payment of the principal of
or interest on the Note and remaining unclaimed for two years after such
principal or interest has become due and payable shall be discharged from such
trust; and the Holder of the Note shall thereafter, as an unsecured general
creditor, look only to the Company for payment thereof, and all liability of the
Company with respect to such trust money, and all liability of the Company as
trustee thereof, shall thereupon cease.
Interest is calculated on the basis of a 360 day year consisting of 12
months of 30 days each and, in the case of an incomplete month, the number of
days elapsed.
5. Payments
Payments of interest on the Note shall be paid by the Company or its paying
agent on each Interest Payment Date, commencing September 30, 2003, to the
Holder of such Note as shown on the Note Register at the close of business on
the applicable Record Date. The principal of and interest on the Notes shall be
payable in lawful money of the United States of America (a) on each Interest
Payment Date, by check mailed on the applicable payment date
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to the Holder thereof on the Record Date at its address shown on the
registration books of the Company kept by the Paying Agent, as Registrar,
without the need to present or surrender the Note, and (b) upon its presentation
and surrender as it becomes due and payable in full, whether at maturity or by
prior redemption, at the principal specified office of the Agent.
Notwithstanding the foregoing, at the option of any of the Holders of $1,000,000
in aggregate principal amount of the Notes, payment of principal and interest on
each Note may be transmitted by wire transfer to such Holders' account on file
with the Paying Agent upon the such Holder's written request delivered to the
Paying Agent; provided that that the final payment of principal shall be made
upon presentation of the Notes at the office of the Paying Agent designated for
such purpose.
If the Company defaults in a payment of interest on the Notes, it shall pay
the defaulted interest in any lawful manner to the Persons who are Holders on a
subsequent special record date. The Company shall notify the Agent in writing of
the amount of defaulted interest proposed to be paid on the Notes and the date
of the proposed payment. The Company shall fix or cause to be fixed each such
special record date and payment date; provided that no such special record date
shall be less than ten (10) days prior to the related payment date for such
defaulted interest. At least 15 days before the special record date, the
Company, or the Agent, upon the written request of the Company and in the name
and at the expense of the Company, shall mail or cause to be mailed to Holders a
notice that states the special record date, the related payment date and the
amount of such defaulted interest to be paid.
Payments of principal in respect of the Note and any net proceeds from the
sale of Shares payable under Condition 6(D) will only be made, against
presentation and surrender of the certificate for the Note at the specified
office of the Company or its paying agent. All payments of principal and
interest shall be made in U.S. dollars. Each such payment and any payment of the
net proceeds of the sale of Shares pursuant to Condition 6(D) will be made at
the specified office of the Company or its paying agent, at the option of the
Holder, by U.S. dollar cheque mailed to an address, or delivered in accordance
with the Holder's instructions, or by transfer to a U.S. dollar account
maintained by the Holder in accordance with the holder's instructions, subject
in all cases to any applicable fiscal or other laws and regulations, but without
prejudice to the provisions of Condition 9.
If, at any time, in the opinion of the Company or of the paying agent,
payments in U.S. dollars cannot be so made, payments will be made in U.S.
dollars in such other manner as may be approved by the Company and the paying
agent and notice of the alternative manner of payment will be given to the
Noteholder in accordance with Condition 15.
All monies paid by the Company to a paying agent for the payment of
principal or interest on any Note which remain unclaimed at the end of two (2)
years after the principal on such Note will have become due and payable will be
repaid to the Company and the Holder of such Note will thereafter have only the
rights of a creditor of the Company as described in these Terms and Conditions
or such rights as may be otherwise provided by applicable law.
A Holder shall be entitled to present a Note for payment only on a
Presentation Date and shall not be entitled to any further interest or other
payment if a Presentation Date is after the due date.
When making payments to Noteholders, fractions of one cent will be rounded
down to the nearest whole cent.
6. Conversion
(A) Optional Conversion by the Noteholder; Conversion Period and Price
(i) Noteholders have the right, subject as provided herein and to any
applicable laws and regulations, to require the Company to convert all or
any of the Note at its principal amount into Shares at any time during the
Conversion Period ("Conversion Right"). The Conversion Period begins after
the earlier to occur of (I)
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the close of the effective date of a Registration Statement filed by the
Company with the Commission with respect to the Shares or (II) the date
such Shares may be sold pursuant to the exemption from registration under
the Securities Act provided by Rule 144 or other exemption from
registration under the Securities Act, and ends upon the earliest to occur
of (A) the second Business Day prior to the later of March 31, 2007, or the
date on which all principal and interest on the Note is repaid in full, (B)
if such Notes shall have been called for redemption pursuant to Condition
7, the close of the second Business Day prior to the Redemption Date, or
(C) the effective date of a Mandatory Conversion. Upon conversion, the
right of the converting Noteholder to repayment of the principal amount of
the Note to be converted (and, subject as provided in Condition 6(B)(iv),
accrued and unpaid interest thereon) shall be extinguished and released,
and in consideration and in exchange therefor the Company shall allot and
issue Shares credited as paid up in full as provided in this Condition 6.
The number of Shares to be issued on conversion of a Note will be
determined by dividing the principal amount of the Note to be converted,
plus accrued and unpaid interest thereon, by the Conversion Price, (as
defined below) in effect on the Conversion Date, with the result being
rounded down to the nearest whole number.
(ii) A Conversion Right may only be exercised in respect of the
Authorized Denomination or multiples thereof of Notes. If more than one
Note is converted at any one time by the same Holder, the number of Shares
to be issued upon such conversion will be calculated on the basis of the
aggregate principal amount of the Notes to be converted. Fractions of
Shares will not be issued on conversion and no cash adjustments will be
made in respect thereof.
(iii) Except for conversions pursuant to Condition 7(B)(iii), the
price at which Shares will be issued upon the exercise of a Conversion
Right (the "Conversion Price") initially will be U.S. $0.50. The Conversion
Price will be subject to adjustment in accordance with the manner provided
in Condition 6(C). The Company shall give notice of any adjustment of the
Conversion Price in accordance with Condition 15 within ten (10) Business
Days with effective date of such adjustment.
(iv) Notwithstanding the provisions of paragraph (i) of this Condition
6(A), if the Company shall default in making payment in full in respect of
any Note which shall have been called for redemption or shall fail to issue
Shares in respect of any Conversion or redemption, then, from the Relevant
Date, interest shall continue to accrue on such Note and the Conversion
Right attaching to such Note will continue to be exercisable (unless
already exercised by the Company pursuant to Condition 6(D)) up to, and
including the close of business (at the place where the Note is deposited
in connection with the exercise of the Conversion Right) on the date upon
which the full amount of the monies payable in respect of such Note has
been duly received by the Holder or, or the date of the issuance of the
Conversion Shares or redemption Shares.
(B) Procedure for Conversion
(i) To exercise the Conversion Right attaching to any Note, the Holder
thereof must complete, execute and deposit at his own expense during normal
business hours at the specified office of the Company, a notice of conversion (a
"Conversion Notice") in the form for the time being currently obtainable from
the specified office of the Company, together with the relevant Note and any
amount to be paid by the Noteholder pursuant to this Condition 6(B)(i). The form
of Conversion Notice is attached hereto as Exhibit A.
The Conversion Date must fall at a time when the Conversion Right
attaching to that Note is expressed in these Conditions to be exercisable
and will be deemed to be the date of the surrender of the Note and delivery
of such Conversion Notice and, if applicable, any payment to be made or
indemnity given under these Conditions in connection with the exercise of
such Conversion Right.
A Noteholder delivering a Note for conversion must pay any taxes and
capital, stamp, issue and registration duties arising on conversion (other
than any taxes or capital, or stamp duties payable in the U.S. or required
by any Stock Exchange, by the Company in respect of the allotment and issue
of Shares and listing of the Shares on conversion). A Conversion Notice
delivered shall be irrevocable.
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(ii) As soon as practicable, and in any event not later than fourteen (14)
calendar days after the Conversion Date, the Company will in the case of Notes
converted on exercise of the Conversion Right or a Note being converted in
accordance with Condition 6(D) and in respect of which a Conversion Notice or
has been delivered and the relevant Note and amounts payable by the relevant
Noteholder deposited as permitted by sub-paragraph (i) above, cause the person
or persons designated for the purpose in the Conversion Notice to be registered
as holder(s) of the relevant number of Shares and will make a certificate or
certificates for the relevant Shares available for collection at the Company's
principal office in Houston, Texas or at the Company's transfer agent in New
York, New York, or, if so requested in the relevant Conversion Notice, will
deliver such certificate or certificates to the person and at the place
specified in the Conversion Notice, at the risk of the Noteholder, together with
any other securities, property or cash required to be delivered upon conversion
and such assignments and other documents (if any) as may be required by law to
effect the transfer thereof.
(iii) The person or persons specified for that purpose will be deemed for
all purposes to be the Holder of record of the number of Shares issuable upon
conversion with effect from the Conversion Date or Mandatory Conversion Date, as
the case may be. The Shares issued upon conversion of the Notes will in all
respects rank pari passu with the issued and outstanding Shares of Common Stock
in issue on the relevant Conversion Date or Mandatory Conversion Date, as the
case may be, except for any right excluded by mandatory provisions of applicable
law. A Holder of Shares issued on conversion of Notes shall not be entitled to
any rights for any record date which precedes the relevant Conversion Date or
Mandatory Conversion Date, as the case may be.
(iv) If any notice requiring the redemption of any Notes is given pursuant
to Condition 7(B) on or after the fifteenth (15th) calendar day prior to the
record date in respect of any dividend payable in respect of the Shares and such
notice specifies a date for redemption falling on or prior to the next following
Interest Payment Date, interest shall (subject as hereinafter provided) accrue
on Notes which shall have been delivered for conversion on or after such record
date from the preceding Interest Payment Date; provided, that the relevant
Noteholder's entitlement to interest on any Note, in the event that the Shares
allotted on conversion thereof shall carry an entitlement to receive such
dividend, shall be limited to the amount by which the interest such Noteholder
would have received had no conversion taken place exceeds the amount of the
dividend received on such Shares. Any such interest shall be paid by the Company
not later than fourteen (14) calendar days after the relevant Conversion Date by
U.S. dollar cheque drawn on, or by transfer to U.S. dollar account maintained by
the payee with, a bank outside the United States in accordance with instructions
given by the relevant Noteholder.
(C) Adjustment of Conversion Price
(i) Dividends or Distributions of Common Stock. In case the Company shall
pay or make a dividend or other distribution on its Common Stock exclusively in
Common Stock or shall pay or make a dividend or other distribution on any other
class of capital stock of the Company which dividend or distribution includes
Common Stock, the Conversion Price in effect at the opening of business on the
day next following the date fixed for the determination of stockholders entitled
to receive such dividend or other distribution shall be reduced by multiplying
such Conversion Price by a fraction of which the numerator shall be the number
of shares of Common Stock outstanding at the close of business on the date fixed
for such determination and the denominator shall be the sum of such number of
shares and the total number of shares constituting such dividend or other
distribution, such reduction to become effective immediately after the opening
of business on the day next following the date fixed for such determination. For
the purposes of this Condition 6(C)(i), the number of shares of Common Stock at
any time outstanding shall not include shares held in the treasury of the
Company. For the avoidance of doubt, this Condition does not apply to dividends
or other distributions in shares of the Common Stock pursuant to the terms of
the securities to which such dividend or other distribution may be made.
(ii) Dividends or Distributions of Rights, Warrants or Options to Purchase
Common Stock. In case the Company shall pay or make a dividend or other
distribution on its Common Stock consisting exclusively of, or shall otherwise
issue to all holders of its Common Stock, rights, warrants or options entitling
the holders thereof to subscribe for or purchase shares of Common Stock at a
price per share less than the Market Price per share
10
(as further defined in certain circumstances as provided in paragraph (vii) of
this Condition 6(C)) of the Common Stock on the date fixed for the determination
of stockholders entitled to receive such rights, warrants or options, the
Conversion Price in effect at the opening of business on the day following the
date fixed for such determination shall be reduced by multiplying such
Conversion Price by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding at the close of business on the date fixed
for such determination plus the number of shares of Common Stock which the
aggregate of the offering price of the total number of shares of Common Stock so
offered for subscription or purchase would purchase at such Market Price and the
denominator shall be the number of shares of Common Stock outstanding at the
close of business on the date fixed for such determination plus the number of
shares of Common Stock so offered for subscription or purchase, outstanding at
the close of business on the date fixed for such reduction to become effective
immediately after the opening of business on the day following the date fixed
for such determination. For the purposes of this paragraph (ii), the number of
shares of Common Stock at any time outstanding shall not include shares held in
the treasury of the Company. The Company shall not issue any rights, warrants or
options in respect of shares of Common Stock held in the treasury of the
Company.
(iii) Dividends or Distributions in Cash. In case the Company shall, by
dividend or otherwise, make a distribution to all holders of its Common Stock
exclusively in cash in an aggregate amount that, together with (1) the aggregate
amount of any other distributions to all holders of its Common Stock made
exclusively in cash within the 12 months preceding the date of payment of such
distribution and in respect of which no Conversion Price adjustment pursuant to
this 6(C)(iii) has been made and (2) the aggregate of any cash plus the fair
market value (as determined in good faith by the Board of Directors, whose
determination shall be conclusive and described in a resolution of the Company's
Board of Directors), as of the expiration of the tender or exchange offer
referred to below, of consideration payable in respect of any tender or exchange
offer by the Company or a Subsidiary for all or any portion of the Common Stock
concluded within the 12 months preceding the date of payment of such
distribution and in respect of which no Conversion Price adjustment pursuant to
paragraph (vi) of this Condition 6(C) has been made, exceeds five percent (5%)
of the product of the Market Price per share (as further defined in certain
circumstances as provided in paragraph (vii) of this Condition 6(C)) of the
Common Stock on the date fixed for stockholders entitled to receive such
distribution times the number of shares of Common Stock outstanding on such
date, the Conversion Price shall be reduced so that the same shall equal the
price determined by multiplying the Conversion Price in effect immediately prior
to the effectiveness of the Conversion Price reduction contemplated by this
paragraph (iii) by a fraction of which the numerator shall be the Market Price
per share (determined as provided in Condition 6(C)(vii)) of the Common Stock on
the date of such effectiveness less the amount of cash so distributed applicable
to one share of Common Stock and the denominator shall be such Market Price per
share of the Common Stock, such reduction to become effective immediately prior
to the opening of business on the day following the date fixed for the payment
of such distribution.
(iv) All Other Distributions or Dividends. Subject to the last sentence of
this paragraph (iv), in case the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock evidences of its indebtedness,
shares of any class of capital stock, securities, cash or Property (excluding
any rights, warrants or options referred to in Condition 6(C)(ii), any dividend
or distribution paid exclusively in cash and any dividend or distribution
referred to in Condition 6(C)(i), the Conversion Price shall be reduced so that
the same shall equal the price determined by multiplying the Conversion Price in
effect immediately prior to the effectiveness of the Conversion Price reduction
contemplated by this paragraph (iv) by a fraction of which the numerator shall
be the Market Price per share (as further defined in certain circumstances as
provided in paragraph (vii) of this Condition 6(C)) of the Common Stock on the
date of such effectiveness less the fair market value (as determined in good
faith by the Board of Directors, whose determination shall be conclusive and
described in a resolution of the Company's Board of Directors and shall, in the
case of securities being distributed for which prior thereto there is an actual
or when issued trading market, be no less than the value determined by reference
to the average of the Market Price over the period specified in the succeeding
sentence), on the date of such effectiveness, of the portion of the evidences of
indebtedness, shares of capital stock, securities, cash and Property so
distributed applicable to one share of Common Stock and the denominator shall be
such Market Price per share of the Common Stock, such reduction to become
effective immediately prior to the opening of business on the day next following
the date fixed for the payment of such distribution (such date to being referred
to as the "Reference Date"). If the Board of Directors
11
determines the fair market value of any distribution for purposes of this
paragraph (iv) by reference to the actual or when issued trading market for any
securities comprising such distribution, it must in doing so consider the prices
in such market over the same period used in computing the Market Price per share
pursuant to paragraph (vi) of this Condition 6(C). For purposes of this
paragraph (iv), any dividend or distribution that includes shares of Common
Stock or rights, warrants or options to subscribe for or purchase shares of
Common Stock shall be deemed instead to be (1) a dividend or distribution of the
evidences of indebtedness, cash, Property, shares of capital stock or securities
other than such shares of Common Stock or such rights, warrants or options
(making any Conversion Price reduction required by this paragraph (iv))
immediately followed by (2) a dividend or distribution of such shares of Common
Stock or such rights, warrants or options (making any further Conversion Price
reduction required by Condition 6(C)(i) or (ii)), except (A) the Reference Date
of such dividend or distribution as defined in this Condition 6(C)(iv) shall be
substituted as "the date fixed for the determination of stockholders entitled to
receive such dividend or other distribution," "the date fixed for the
determination of stockholders entitled to receive such rights, warrants or
options," and "the date fixed for such determination" within the meaning of
Condition 6(C)(i) and Condition 6(C)(ii) and (2) any shares of Common Stock
included in such dividend or distribution shall not be deemed "outstanding at
the close of business on the date fixed for such determination" within the
meaning of Condition 6(C)(i)).
(v) Subdivision of Common Stock. In case outstanding shares of Common Stock
shall be subdivided into a greater number of shares of Common Stock, the
Conversion Price in effect at the opening of business on the day following the
day upon which such subdivision becomes effective shall be proportionately
reduced, and, conversely, in case outstanding shares of Common Stock shall each
be combined into a smaller number of shares of Common Stock, the Conversion
Price in effect at the opening of business on the day following the day upon
which such combination becomes effective shall be proportionately increased,
such reduction or increase, as the case may be, to become effective immediately
after the opening of business on the day following the day upon which such
subdivision or combination becomes effective.
(vi) Tender or Exchange Offer for Common Stock. In case a tender or
exchange offer made by the Company or any Subsidiary for all or any portion of
the Common Stock shall expire and such tender or exchange offer shall involve an
aggregate consideration having a fair market value (as determined in good faith
by the Board of Directors, whose determination shall be conclusive and described
in a resolution of the Company's Board of Directors) at the last time (the
"Expiration Time") tenders or exchanges may be made pursuant to such tender or
exchange offer (as it may be amended) that, together with (A) the aggregate of
the cash plus the fair market value (as determined in good faith by the Board of
Directors, whose determination shall be conclusive and described in a resolution
of the Company's Board of Directors), as of the expiration of the other tender
or exchange offer referred to below, of consideration payable in respect of any
other tender or exchange offer by the Company or a Subsidiary for all or any
portion of the Common Stock concluded within the preceding 12 months and in
respect of which no Conversion Price adjustment pursuant to this paragraph (vi)
has been made and (B) the aggregate amount of any distributions to all holders
of the Common Stock made exclusively in cash within the preceding 12 months and
in respect of which no Conversion Price adjustment pursuant to Condition 6(C)(v)
has been made, exceeds five percent (5%) of the product of the Market Price per
share (determined as provided in Condition 6(C)(vii)) of the Common Stock on the
Expiration Time times the number of shares of Common Stock outstanding
(including any tendered shares) on the Expiration Time, the Conversion Price
shall be reduced (but not increased) so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior to
the Expiration Time by a fraction of which the numerator shall be (1) the
product of the Market Price per share (as further defined in certain
circumstances as provided in paragraph (vii) of this Condition 6(C)) of the
Common Stock at the Expiration Time times the number of shares of Common Stock
outstanding (including any tendered or exchanged shares) at the Expiration Time
minus (2) the fair market value (determined as aforesaid) of the aggregate
consideration payable to stockholders based on the acceptance (up to any maximum
specified in the terms of the tender or exchange offer) of all shares validly
tendered or exchanged and not withdrawn as of the Expiration Time (the shares
deemed so accepted, up to any such maximum, being referred to as the "Purchased
Shares") and the denominator shall be the product of (1) such Market Price per
share at the Expiration Time times (2) such number of outstanding shares at the
Expiration Time less the number of Purchased Shares, such reduction to become
effective immediately prior to the opening of business on the day following the
Expiration Time.
12
(vii) Determination of Market Price. For the purpose of any computation of
the Market Price under this paragraph (vii) and Conditions 6(C)(ii), (iv) and
(v), when certain circumstances described therein have occurred within ten (10)
Business Days of the event giving rise to the adjustment in the Conversion
Price, (A) if the "ex" date (as hereinafter defined) for any event (other than
the issuance or distribution requiring such computation) that requires an
adjustment to the Conversion Price pursuant to paragraphs (i), (ii), (iii),
(iv), (v) or (vi) above ("Other Event") occurs on or after the tenth Stock
Exchange Business Day prior to the date in question and prior to the "ex" date
for the issuance or distribution requiring such computation (the "Current
Event"), the closing price for each Stock Exchange Business Day prior to the
"ex" date for such Other Event shall be adjusted by multiplying such closing
price by the same fraction by which the Conversion Price is so required to be
adjusted as a result of such Other Event, (B) if the "ex" date for any Other
Event occurs after the "ex" date for the Current Event and on or prior to the
date in question, the closing price for each Stock Exchange Business Day on and
after the "ex" date for such Other Event shall be adjusted by multiplying such
closing price by the reciprocal of the fraction by which the Conversion Price is
so required to be adjusted as a result of such Other Event, (C) if the "ex" date
for any Other Event occurs on the "ex" date for the Current Event, one of those
events shall be deemed for purposes of clauses (A) and (B) of this proviso to
have an "ex" date occurring prior to the "ex" date for the other event, and (C)
if the "ex" date for the Current Event is on or prior to the date in question,
after taking into account any adjustment required pursuant to clause (B) of this
proviso, the closing price for each Stock Exchange Business Day on or after such
"ex" date shall be adjusted by adding thereto the amount of any cash and the
fair market value on the date in question (as determined in good faith by the
Board of Directors in a manner consistent with any determination of such value
for purposes of Condition 6(C)(iii) or Condition 6(C)(iv) or (C), whose
determination shall be conclusive and described in a resolution of the Company's
Board of Directors) of the portion of the rights, warrants, options, evidences
of indebtedness, shares of capital stock, securities, cash or Property being
distributed applicable to one share of Common Stock. For the purpose of any
computation under Condition 6(C)(vi), the Market Price per share of Common Stock
on any date in question shall be deemed to be the Market Price on the date
selected by the Company commencing on or after the latest (the "Commencement
Date") of (A) the date 20 Stock Exchange Business Days before the date in
question, (B) the date of commencement of the tender or exchange offer requiring
such computation, and (C) the date of the last amendment, if any, of such tender
or exchange offer involving a change in the maximum number of shares for which
tenders are sought or a change in the consideration offered, and ending not
later than the date of the Expiration Time of such tender or exchange offer (or,
if such Expiration Time occurs before the close of trading on a Stock Exchange
Business Day, not later than the Stock Exchange Business Day immediately
preceding the date of such Expiration Time); provided, however, that if the "ex"
date for any Other Event (other than the tender or exchange offer requiring such
computation) occurs on or after the Commencement Date and on or prior to the
date of the Expiration Time for the tender or exchange offer requiring such
computation, the closing price for each Stock Exchange Business Day prior to the
"ex" date for such Other Event shall be adjusted by multiplying such closing
price by the same fraction by which the Conversion Price is so required to be
adjusted as a result of such other event. For purposes of this paragraph, the
term "ex" date, (A) when used with respect to any issuance or distribution,
means the first date on which the Common Stock trades regular way on the
relevant exchange or in the relevant market from which the closing price was
obtained without the right to receive such issuance or distribution, (B) when
used with respect to any subdivision or combination of shares of Common Stock,
means the first date on which the Common Stock trades regular way on such
exchange, or in such market after the time at which such subdivision or
combination becomes effective, and (C) when used with respect to any tender or
exchange offer means the first date on which the Common Stock trades regular way
on such exchange or in such market after the Expiration Time of such tender or
exchange offer.
(viii) Further Reductions for Federal Income Tax. The Company may make such
reductions in the Conversion Price, in addition to those required by Conditions
6(C) (i), (ii), (iii), (iv), (v), and (vi), as it considers to be advisable in
order that any event treated for Federal income tax purposes as a dividend of
stock or stock rights shall not be taxable to the recipients.
(ix) Adjustments to be Carried Forward. No adjustment in the Conversion
Price shall be required unless such adjustment would require an increase or
decrease of at least five percent (5%) in the Conversion Price; provided,
however, that any adjustments which by reason of this paragraph (ix) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment.
13
(x) Notice of Adjustments of Conversion Price
Whenever the Conversion Price is adjusted as herein provided the Company
shall compute the adjusted Conversion Price in accordance with Condition 6(C)
and shall prepare a certificate signed by the chief financial officer of the
Company setting forth the adjusted Conversion Price and showing in reasonable
detail the facts upon which such adjustment is based, and such certificate shall
forthwith be delivered to any paying agent and the Company shall cause notice
thereof to be delivered in accordance with Condition 15 at least ten (10)
Business Days in advance of the effective date of such adjustment.
(D) Mandatory Conversion
(i) The Noteholder acknowledges and agrees that provided the Shares into
which the Notes would be converted are Freely Tradeable and listed on a Stock
Exchange, the Company may, at its own cost (save those expenses or taxes
referred to in Condition 6(D)(iii)), at any time following ninety days from the
Effective Date, elect to exercise the Conversion Right on behalf of each and
every Noteholder in respect of all of the Notes Outstanding at the Conversion
Price applicable as of the date fixed by the Company for such conversion (the
"Mandatory Conversion Date"), provided that the average of the Market Price of
the Shares over the Stock Exchange Business Days in any thirty (30) consecutive
calendar day period following the Effective Date, is equal to or greater than
one hundred twenty-five percent (125%) of the Conversion Price. The Company will
give notice in the manner set out in Condition 15 that the criteria for
Mandatory Conversion under this Condition 6(D) has been met within 30 days of
having met such criteria. The form of Company Conversion Notice is attached
hereto as Exhibit B.
(ii) At least 45 calendar days prior to the Mandatory Conversion Date, the
Company shall cause written notice of the Mandatory Conversion Date to be given
to any paying and conversion agent. Not less than 30 and not more than 60
calendar days prior to the Mandatory Conversion Date, the Company shall cause
written notice of the Mandatory Conversion Date to be given to the Noteholders
(in accordance with Condition 15). Following such notice, the Noteholders will
be required on or before the Mandatory Conversion Date to deliver or procure
delivery of the Notes together with a duly completed Conversion Notice to the
specified office of the company, during its usual business hours for such
purposes and perform together with the Company, the obligations applicable to it
on conversion specified in this Condition 6. Failure to deliver the Conversion
Notice shall not affect the conversion of such Notes pursuant to the terms of
this Condition 6(D).
(iii) If any Noteholder with respect to whose Notes Mandatory Conversion
(pursuant to this Condition 6) is to take place shall fail to perform its
obligations specified in this Condition 6 or shall have a registered address in
any territory where, in the absence of any registration statement or other
special formalities or legal requirements, the issue, allotment, transfer or
delivery of the Shares arising on Mandatory Conversion in the reasonable opinion
of the Company, is or could be unlawful or impracticable, subject to applicable
law, Company shall make arrangements for the sale of such Shares to a third
party at the best consideration reasonably obtainable by the Company and it
shall pay, or shall arrange for the paying agent to pay, to such Noteholder the
consideration received by it in respect of such Shares (after any deduction
required to reimburse any reasonable and proper expenses incurred in arranging
any such sale or any taxes payable in connection therewith arising solely as a
result of the Noteholder's failure to perform its obligations under this
Condition 6(D)).
(iv) From and after the Mandatory Conversion Date and upon compliance by
the Company of its obligations hereunder with respect to such conversion, the
Notes shall cease to constitute Indebtedness of the Company and shall thereafter
be only deemed to represent the right to receive Shares.
(E) Notice of Certain Corporate Action
In case of the occurrence of one or more of the events that are listed
herein, the Company shall cause to be mailed to any paying agent and conversion
agent and any Noteholder in the manner provided under Condition 15
14
hereof within ten (10) Business Days after the date on which notice is sent to
the holders of the Company's Common Stock. Such events are: (i) the Company
shall declare a dividend (or any other distribution) on its Common Stock payable
(1) otherwise than exclusively in cash, or (2) exclusively in cash in an amount
that would require a Conversion Price adjustment pursuant to Condition
6(C)(iii); or (ii) the Company shall authorize the granting to the holders of
its Common Stock of rights, warrants or options to subscribe for or purchase any
shares of capital stock of any class or of any other rights (excluding employee
stock options); or (iii) of any reclassification of the Common Stock of the
Company (other than a subdivision or combination of its outstanding shares of
Common Stock), or of any consolidation or merger to which the Company is a party
and for which approval of any stockholders of the Company is required, or of the
sale or transfer of all or substantially all of the assets of the Company; or
(iv) of the voluntary or involuntary dissolution, liquidation or winding up of
the Company; or (v) the Company or any Subsidiary of the Company shall commence
a tender or exchange offer for all or a portion of the Company's outstanding
shares of Common Stock (or shall amend any such tender or exchange offer); The
Notice shall state (i) the date on which a record is to be taken for the purpose
of such dividend, distribution or granting of rights, warrants or options, or,
if a record is not to be taken, the date as of which the holders of Common Stock
of record to be entitled to such dividend, distribution, rights, warrants or
options are to be determined, or (ii) the date on which such reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding up is
expected to become effective, and the date as of which it is expected that
holders of Common Stock of record shall be entitled to exchange their shares of
Common Stock for securities, cash or other Property deliverable upon such
re-classification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up, or (iii) the date on which such tender offer
commenced, the date on which such tender offer is scheduled to expire unless
extended, the consideration offered and the other material terms thereof (or the
material terms of any amendment thereto).
(F) Consolidation, Amalgamation or Merger
In the event that the Company shall be a party to any transaction,
including without limitation any (i) recapitalization or reclassification of the
Common Stock (other than a change in par value, or from par value to no par
value, or from no par value to par value, or as a result of a subdivision or
combination of the Common Stock), (ii) any consolidation of the Company with, or
merger of the Company into, any other person, any merger of another person into
the Company (other than a merger which does not result in a reclassification,
conversion, exchange or cancellation of all of the outstanding shares of Common
Stock of the Company), (iii) any sale or transfer of all or substantially all of
the assets of the Company, or (iv) any compulsory share exchange pursuant to
which the Common Stock is converted into the right to receive other securities,
cash or other Property, the Company will forthwith notify the Noteholders of
such event in accordance with Condition 15 and, then lawful provision shall be
made as part of the terms of such transaction whereby the Holder of each Note
then Outstanding shall have the right (during the period in which such Note is
convertible) to convert such Note into the class and amount of shares and other
securities and property receivable upon such transaction by a holder of such
number of shares of Common Stock which would have been liable to be issued upon
conversion of such Note immediately prior to the transaction. So far as legally
possible, the Company shall cause the Person formed by such consolidation or
resulting from such merger or which acquired such assets or which acquired the
Company's Shares, as the case may be, to execute and deliver to the Noteholder
an amendment to these Terms and Conditions as provided for under Condition 17.
Such amendment shall provide for adjustments which, for events subsequent to the
effective date of such amendment, shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Condition. The above
provisions of this Condition 6(F) shall similarly apply to successive
transactions of the foregoing type.
(G) Conversion Prohibited Under Certain Circumstances
The Note shall not be convertible into Conversion Shares as provided in
this Condition 6 nor may it be redeemed for Shares as provided in Condition
7(B)(iii) herein if the Stock Exchange on which the Shares are listed requires
the approval by the stockholders of the Company of the issuance of the Shares
which may be issued upon the exercise of the conversion rights contained in this
Condition 6 or issued pursuant to Condition 7(B)(iii) and the stockholders fail
to approve such issuances of the Shares at an annual meeting or special meeting
held to approve such issuances.
15
7. Redemption and Purchase
(A) Unless previously redeemed, converted or purchased and canceled as
provided herein, the Company will redeem the Note at its principal amount on
March 31, 2007.
(B) (i) If as a result of any change in, or amendment to, the laws or
regulations of the U.S. or any political sub-division of, or any authority in,
or of, the U.S. having power to tax, or any change in the application or
official interpretation of such laws or regulations, which change or amendment
becomes effective after March 31, 2002, the Company has or will become obliged
to pay additional amounts as provided or referred to in Condition 8 (and such
amendment or change has been evidenced by the delivery by the Company to the
paying agent or Noteholder (who shall, in the absence of manifest error, accept
such certificate and opinion as sufficient evidence thereof) of (x) a
certificate signed by two officers of the Company on behalf of the Company
stating that such amendment or change has occurred (irrespective of whether such
amendment or change is then effective), describing the facts leading thereto and
stating that such obligation cannot be avoided by the Company taking reasonable
measures available to it and (y) an opinion of independent legal advisers of
recognized standing to the effect that such amendment or change has occurred
(irrespective of whether such amendment or change is then effective), the
Company may at its option, having given not less than 30 nor more than 60
calendar days' notice to the Noteholders in accordance with Condition 15 (which
notice shall be irrevocable), redeem all the Notes but not some only, at their
principal amount together with interest (if any) accrued to (but excluding) the
Redemption Date, provided that no notice of redemption shall be given earlier
than 90 calendar days before the earliest date on which the Company would be
required to pay such additional amounts were a payment in respect of the Notes
then due.
(ii) The Company may, at its option, at any time and from time to time, and
after having given not less than 30 nor more than 60 calendar days' notice to
the Noteholder in accordance with Condition 15 (which notice shall be
irrevocable), redeem the Notes for cash, in whole or in part, at a Redemption
Price equal to 100 per cent of their principal amount together with interest (if
any) accrued to (but excluding) the Redemption Date. If the Company elects to
redeem less than all the Notes, Company or its paying agent will select which
Notes to redeem by lot, random, or such other method as it shall deem fair and
appropriate. Upon expiry of any such notice period as is referred to in this
Condition 7(B) (and subject as provided above), the Company shall be bound to
redeem Notes at their principal amount, together with interest accrued to but
excluding the Redemption Date.
(iii) Provided that the Shares which may be issued pursuant to this
paragraph shall be Freely Tradeable and listed on a Stock Exchange, commencing
March 31, 2006, the Company may redeem upon not less than 30 nor more than 60
days notice, pursuant and subject the Conditions listed above, up to 50% of the
Outstanding Notes for Shares and, on March 31, 2007, the scheduled Maturity
Date, the Company may redeem upon not less than 30 nor more than 60 days notice
any Outstanding Notes for Shares. If the Company elects to redeem the Notes for
Shares, each Note will be redeemed for the number of shares of Common Stock
equal to 110% of the sum of the face value of the Note plus interest accrued and
unpaid thereon divided by the average of the Market Price of the Shares over the
30 Stock Exchange Business Day period immediately preceding the date of notice
of such redemption. If the Company elects to redeem less than all the Notes, the
Company will select which Notes to redeem by lot, random, or such other method
as it shall deem fair and appropriate. Upon expiry of any such notice period as
is referred to in this Condition 7(B) (and subject as provided above), the
Company shall be bound to redeem Notes as described above.
(C) Subject to applicable law, the Company or any of its Subsidiaries may
at any time purchase Notes in any manner and at any price in the open market or
by private treaty. If purchases are made by tender, tenders must be available to
all Noteholders alike. Notes purchased by the Company or any of its Subsidiaries
will forthwith be surrendered for cancellation and shall no longer be deemed
Outstanding.
(D) All Notes which are redeemed by the Company will forthwith be canceled
and may not be reissued or resold.
16
8. Taxation
All payments in respect of the Notes by the Company shall be made without
withholding or deduction for, or on account of, any present or future taxes,
duties, assessments or governmental charges of whatever nature ("Taxes") imposed
or levied by or on behalf of the U.S. or any political sub-division of, or any
authority in, or of, the U.S. having power to tax, unless the withholding or
deduction of the Taxes is required by law. In that event, the Company will pay
such additional amounts as may be necessary in order that the net amounts
received by the Noteholders after the withholding or deduction shall equal the
respective amounts which would have been receivable in respect of the Notes in
the absence of the withholding or deduction; except that no additional amounts
shall be payable in relation to any payment in respect of any Note:
(A) to, or to a third party on behalf of, a Holder who is liable for the
Taxes in respect of the Note by reason of such Holder having some connection
with the U.S. other than the mere holding of the Note; and
(B) presented for payment more than 30 calendar days after the Relevant
Date except to the extent that a Holder would have been entitled to additional
amounts on presenting the same for payment on the last day of such period of 30
calendar days; or
(C) to, or to a third party on behalf of, a Holder who would not be liable
or subject to the withholding or deduction by making a declaration of
non-residence or other similar claim for exemption to the relevant tax
authority.
Any reference in these Terms and Conditions to any amounts in respect of
the Notes shall be deemed also to refer to any additional amounts which may be
payable under this Condition.
9. Additional Covenants
While any Conversion Right remains exercisable, the Company will, save with
the approval of an Extraordinary Resolution:
(1) at all times after ninety (90) days from the date of the initial
issuance of the Notes keep available for issuance free from any preemptive
rights out of its authorized but unissued capital such number of Shares as
would enable the Conversion Rights and all other rights of subscription and
exchange for and conversion into Shares to be satisfied in full;
(2) maintain a listing for all the issued Shares and all Shares to be
issued on the exercise of the Conversion Rights on a Stock Exchange, it
being understood that if the Company is unable to obtain or maintain such
listing of Shares and will forthwith give notice to the Noteholders in
accordance with Condition 15 of the listing, de-listing or quotation or
lack of quotation of the Shares (as a class) by any such Stock Exchange;
and
(3) not in any way modify the rights attaching to the Shares with
respect to voting, dividends or liquidation.
10. Prescription
Notes will become void unless presented for payment within periods of ten
(10) years (in the case of principal) and five (5) years (in the case of
interest) from the Relevant Date in respect of the Notes, as the case may be,
subject to the provisions of Condition 5.
11. Events of Default and Enforcement
(A) Event of Default
17
"Event of Default," wherever used in these Terms and Conditions, means any
one of the following events (whatever the reason for such Event of Default,
whether voluntary or involuntary or effected by operation of law or pursuant to
any judgment, decree or order of any court or any order, rule or regulation of
any administrative or governmental body) which shall have occurred and is
continuing:
(1) if default is made for a period of five (5) Business Days or more
in the payment of interest or principal due in respect of the Notes or any
of them; or
(2) if the Company fails to perform or observe any of its other
obligations, covenants, conditions or provisions under the Notes, these
Terms and Conditions, the Company's 5.0% Senior Notes due 2003, or the
trust indenture pursuant to which such 5.0% Senior Notes due 2003 were
issued, and such failure continues for the period of 30 calendar days (or
such longer period as the Majority Holders may in their absolute discretion
permit) next following the service by the one or more of the Holders on the
Company of notice requiring the same to be remedied; or
(3) if (i) any other Indebtedness of the Company becomes due and
payable prior to its Stated Maturity by reason of an event of default
(howsoever defined) or (ii) any such Indebtedness of the Company is not
paid when due or, as the case may be, within any applicable grace period or
(iii) the Company fails to pay when due (or, as the case may be, within any
applicable grace period) any amount payable by it under any present or
future guarantee for, or indemnity in respect of, any Indebtedness of any
Person or (iv) any security given by the Company or any subsidiary for any
Indebtedness of any Person or any guarantee or indemnity of Indebtedness of
any Person by the Company becomes enforceable by reason of default in
relation thereto and steps are taken to enforce such security save in any
such case where there is a bona fide dispute as to whether the relevant
Indebtedness or any such guarantee or indemnity as aforesaid shall be due
and payable (following any applicable grace period); provided, however,
that in each such case the Indebtedness exceeds in the aggregate U.S.
$2,000,000 and in each such case such event continues unremedied for a
period of 30 calendar days (or such longer period as the Majority Holders
may in their sole discretion consent to in writing upon receipt of written
notice from the Company); or
(4) if the Company shall generally fail to pay its debts as such debts
come due (except debts which the Company may contest in good faith
generally) or shall be declared or adjudicated by a competent court to be
insolvent or bankrupt, shall consent to the entry of an order of relief
against it in an involuntary bankruptcy case, shall enter into any
assignment or other similar arrangement for the benefit of its creditors or
shall consent to the appointment of a custodian (including, without
limitation, a receiver, liquidator or Company); or
(5) if a receiver, administrative receiver, administrator or other
similar official shall be appointed in relation to the Company or in
relation to the whole or a substantial part its undertaking or assets or a
distress, execution or other process shall be levied or enforced upon or
sued out against, or an encumbrancer shall take possession of, the whole or
a substantial part of the assets of any of them and in any of the foregoing
cases is not paid out or discharged within 90 calendar days (or such longer
period as the Majority Holders may in their absolute discretion consent to
in writing upon receipt of written notice from the Company); or
(6) if the Company institutes proceedings to be adjudicated a
voluntary bankrupt, or shall consent to the filing of a bankruptcy
proceeding against it, or shall file a petition or answer or consent
seeking organization under the laws of the Federal Bankruptcy Code or any
similar applicable U.S. federal, state or foreign law, or shall consent to
the filing of any such petition, or shall consent to the appointment of a
receiver or liquidator or trustee or assignee (or other similar official)
in bankruptcy or insolvency of it or its Property, or shall make an
assignment for the benefit of creditors, or shall admit in writing its
inability to pay its debts generally as they come due; or
(7) if a decree or order by a court having jurisdiction in the
premises shall have been entered adjudging the Company a bankrupt or
insolvent, or approving as properly filed a petition seeking the
reorganization of the Company under the Federal Bankruptcy Code or any
other similar applicable U.S. federal, state or foreign law, and such
decree or order shall have continued undischarged or unstayed for a period
of 90 calendar days; or a
18
decree or order of a court having jurisdiction in the premises for the
appointment of a receiver or liquidator or trustee or assignee (or other
similar official) in bankruptcy or insolvency of the Company or of all or
substantially all of its Property, or for the winding up or liquidation of
its affairs, shall have been entered, and such decree or order shall have
continued undischarged and unstayed for a period of 90 calendar days; or
(8) if a warranty, representation, or other statement made by or on
behalf of the Company contained herein or any certificate or other
agreement furnished in compliance herewith is false in any material respect
when made and such falsity continues for a period of 30 calendar days (or
such longer period as the Majority Holders may in their absolute discretion
permit) next following the service by one or more of the Holders on the
Company of notice requiring the same to be remedied; or
(9) if there is any final judgment or judgments for the payment of
money exceeding in the aggregate U.S. $2,000,000 outstanding against the
Company which has been outstanding for more than 60 calendar days from the
date of its entry and shall not have otherwise been discharged in full or
stayed by appeal, bond or otherwise.
(B) Acceleration of Maturity; Rescission and Annulment
If an Event of Default (other than an Event of Default specified in
Condition 11(A)(6) or 11(A)(7)) occurs and is continuing, then and in every such
case the Majority Holders may declare the principal amount of all the Notes and
accrued and unpaid interest thereon to be due and payable immediately, by a
notice in writing to the Company, and upon any such declaration such principal
amount and accrued and unpaid interest shall become immediately due and payable.
If an Event of Default specified in Condition 11(A)(6) or Condition
11(A)(7) occurs and is continuing, then the principal amount of all the Notes
and all accrued and unpaid interest thereon shall ipso facto become and be
immediately due and payable without any declaration or other act on the part of
any Noteholder.
At any time after a declaration of acceleration has been made and before a
judgment or decree for payment of the money due has been obtained by the
Majority Holders as hereinafter in this Condition provided, the Majority
Holders, with written notice to the Company, may rescind and annul such
declaration and its consequences if
(1) the Company has paid or deposited in a manner satisfactory to such
Holders a sum sufficient to pay
(i) all overdue interest on all Outstanding Notes,
(ii) all unpaid principal of any Outstanding Notes which has become
due otherwise than by such declaration of acceleration, and interest on
such unpaid principal at the rate prescribed therefor in the Notes,
(iii) to the extent that payment of such interest is legally
enforceable, interest on overdue interest at the rate prescribed therefor
in the Notes, and
(iv) all reasonable sums paid or advanced by the such Holders
hereunder; and
(2) all Events of Default, other than the non-payment of amounts of
principal of or interest on Notes which have become due solely by such
declaration of acceleration, have been cured or waived as provided in Condition
11(K)
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
19
(C) Collection of Indebtedness and Suits for Enforcement by the Majority
Holders
The Company covenants that if
(1) default is made in the payment of any installment of interest on
any Note when such interest becomes due and payable and such default
continues for a period of five (5) Business Days, or
(2) default is made in the payment of the principal of any Note at the
Maturity thereof and such default continues for a period of five (5)
Business Days,
the Company will, upon demand of the Majority Holders, pay to the Holders of the
Notes, the whole amount then due and payable on the Notes for principal and
interest, and interest on any overdue principal and, to the extent that payment
of such interest shall be legally enforceable, upon any overdue installment of
interest, at the rate prescribed therefor in the Notes, and, in addition
thereto, such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable expenses, disbursements and
advances of the Holders, their agents and counsel, and the reasonable
compensation of such agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand, the
Majority Holders in their name, may institute a judicial proceeding for the
collection of the sums so due and unpaid, may prosecute such proceeding to
judgment or final decree and may enforce the same against the Company or any
other obligor upon the Notes and collect the moneys adjudged or decreed to be
payable in the manner provided by law out of the Property of the Company or any
other obligor upon the Notes, wherever situated.
If an Event of Default occurs and is continuing, the Majority Holders may
in their discretion proceed to protect and enforce their rights and the rights
of the other Noteholders by such appropriate judicial proceedings as such
Holders shall deem most effectual to protect and enforce any such rights,
whether for the specific enforcement of any covenant or agreement in these Terms
and Conditions or to enforce any other proper remedy.
(D) Majority Holders May File Proofs of Claim
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the Notes
or the Property of the Company or of such other obligor or their creditors, the
Majority Holders (irrespective of whether the principal of the Notes shall then
be due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Majority Holders shall have made any demand on the
Company for the payment of overdue principal or interest) shall be entitled and
empowered, by intervention in such proceeding or otherwise,
(1) to file and prove a claim for the whole amount of principal and
interest owing and unpaid in respect of the Notes and to file such other papers
or documents as may be necessary or advisable in order to have the claims of the
Holders (including any claim for the reasonable expenses, disbursements and
advances of such Holders, their agents and counsel and the reasonable fees and
expenses of the paying agent and its counsel) and of the other Noteholders
allowed in such judicial proceeding, and the reasonable compensation of such
agents and counsel, and
(2) to collect and receive any moneys or other Property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
similar official in any such judicial proceeding is hereby authorized by each
Noteholder to make such payments to the Majority Holders due them for
20
the reasonable expenses, disbursements and advances of such Holders, their
agents and counsel and the reasonable compensation of such agents and counsel,
and to pay to the Paying Agent (where one is appointed) all such other sums due
under the Notes. In the absence of such appointment, any such sums shall be paid
for the rateable benefit of all the Noteholders.
Nothing herein contained shall be deemed to authorize the Majority Holders,
except as permitted by law and these Terms and Conditions, to authorize or
consent to or accept or adopt on behalf of any Noteholder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Noteholder thereof, or to authorize the such Holder to vote in
respect of the claim of any Noteholder in any such proceeding, except to the
extent permitted by law.
(E) Majority Holders May Enforce Claims Without Possession of Notes
All rights of action and claims under these Terms and Conditions may be
prosecuted and enforced by the Majority Holders without the possession of any of
the Notes or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Majority Holders shall be brought in their own
name and any recovery of judgment shall, after provision for the payment of the
reasonable compensation, expenses, disbursements and advances of the Majority
Holders, their agents and counsel, be paid to the Paying Agent (where one is
appointed) for the rateable benefit of all the Noteholders in respect of which
such judgment has been recovered.
(F) Application of Money Collected
Any money collected by the Majority Holder pursuant to this Condition shall
be applied in the following order in case of the distribution of such money on
account of principal or interest, upon presentation of the Notes and the
notation thereon of the payment if only partially paid and upon surrender
thereof if fully paid:
FIRST: To the payment of the amounts then due and unpaid for principal
of and interest on the Notes in respect of which or for the benefit of
which such money has been collected, ratably, without preference or
priority of any kind, according to the amounts due and payable on such
Notes for principal and interest, respectively; and
SECOND: The balance, if any, to the Person or Persons entitled
thereto.
(G) Unconditional Right of Holders to Receive Principal and Interest
Notwithstanding any other provision in these Terms and Conditions, the
Holder of any Note shall have the right, which is absolute and unconditional, to
receive payment, as provided herein and in such Note of the principal of and
interest on, such Note on the respective Stated Maturity or expressed in such
Note (or, in the case of redemption, on the Redemption Date) and to institute
suit for the enforcement of any such payment, and such rights shall not be
impaired without the consent of such Holder; provided, that all monies paid by
the Company to the Paying Agent (if appointed) for the payment of principal or
interest on any Note which remain unclaimed at the end of two (2) years after
the Stated Maturity or Redemption Date of such Note will be repaid to the
Company and the Holder of any Note shall thereafter have only the rights of a
creditor of the Company or such rights as may be otherwise provided by
applicable law.
21
(H) Restoration of Rights and Remedies
If the Majority Holders or any Noteholder has instituted any proceeding to
enforce any right or remedy under these Terms and Conditions and such proceeding
has been discontinued or abandoned for any reason, or has been determined
adversely to the Majority Holders or to such Noteholder, then and in every such
case, subject to any determination in such proceeding, the Company, the Majority
Holders and the Noteholders shall be restored severally and respectively to
their former positions hereunder and thereafter all rights and remedies of the
Majority Holders and the Noteholders shall continue as though no such proceeding
had been instituted.
(I) Rights and Remedies Cumulative
Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Notes as provided herein, no right or
remedy herein conferred upon or reserved to the Noteholders is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
(J) Delay or Omission Not Waiver
No delay or omission of the Majority Holders or Holder of any Note to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Noteholders may be exercised from time to time, and as often as may be
deemed expedient, by the Noteholders.
(K) Waiver of Past Defaults
Subject to Condition 11(B), the Majority Holders may on behalf of the
Holders of all the Notes waive any past default hereunder and its consequences,
except a default
(1) in respect of the payment of the principal of or interest on any Note,
or
(2) in respect of a covenant or provision hereof which under Condition 17
cannot be modified or amended without the consent of the Holder of each
Outstanding Note affected.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of these Terms and Conditions; but no such waiver shall extend to any subsequent
or other default or Event of Default or impair any right consequent thereon.
(L) Waiver of Stay or Extension Laws
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of these Terms and Conditions; and the Company (to the extent that
it may lawfully do so) hereby expressly waives all benefit or advantage of any
such law.
(M) Requirements Regarding Agents (if appointed)
22
(1) At any time after an Event of Default has occurred and is continuing
the Majority Holders shall notify in writing the Company and the Paying Agent
(if appointed), and may by notice in writing to the Company and the Paying Agent
(if appointed):
(i) require the Paying Agent, until notified to the contrary by
Majority Holders, to hold all Notes and all moneys, documents and records
held by it in respect of Notes to the order of the Holders; or
(ii) require the Paying Agent to deliver to the Holders on a pro rata
basis all funds held by it for the benefit of the Holders, and to deliver
the documents and records held by it in respect of Notes to the Holders,
provided that such notice shall be deemed not to apply to any documents or
records which the relevant Paying Agent is obliged to release by any law or
regulation; and
(iii) require the Company to make all subsequent payments in respect
of the Notes to or to the order of the Holders and not to the Paying Agent.
(2) The Majority Holders shall notify the Paying Agent immediately upon the
cure or waiver of an Event of Default. Upon receipt of such notice, the
provisions of this Condition 11(M) shall no longer apply.
(3) Prior to taking any action under these Terms and Conditions at the
direction of any Person with respect to the Notes, the Paying Agent shall be
entitled to receive (and shall receive) indemnity or security satisfactory to
it.
12. Liability Solely Corporate
No recourse shall be had for the payment of the principal of or interest on
any Notes or any part thereof, or for any claim based thereon or otherwise in
respect thereof, or of the indebtedness represented thereby, or upon any
obligation, covenant or agreement in these Terms and Conditions, against any
incorporator, or against any stockholder, officer or director, as such, past,
present or future, of the Company, or of any predecessor or successor Person,
either directly or through the Company or any such predecessor or successor
Person, whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, it being expressly agreed
and understood that the Notes and these Terms and Conditions which are a part
thereof are solely corporate obligations, and that no personal liability
whatsoever shall attach to, or be insured by, any such incorporator,
stockholder, officer or director, as such, past, present or future, of the
Company or of any predecessor or successor Person, either directly or through
the Company or any such predecessor or successor Person, because of the
indebtedness hereby authorized or under or by reason of any of the obligations,
covenants, promises or agreements contained in the Notes or the these Terms and
Conditions which constitute a part thereof or to be implied herefrom; and that
any such personal liability is hereby expressly waived and released as a
condition of, and as part of the consideration for the exchange transaction
pursuant to which the Notes were issued; provided, however, that nothing herein
contained shall be taken to prevent recourse to and the enforcement of the
liability, if any, of any stockholder or subscriber to capital stock of the
Company upon or in respect of shares of capital stock not fully paid up.
13. Defeasance and Covenant Defeasance
(A) Company's Option to Effect Defeasance or Covenant Defeasance
The Company may, at its option by Board Resolution, at any time, with
respect to the Notes, elect to have either Condition 13(B) or Condition 13(C)
applied to all Outstanding Notes upon compliance with the conditions set forth
below in this Condition, The Company shall promptly give notice of such election
to the Holders.
(B) Legal Defeasance and Discharge
23
Upon the Company's exercise under Condition 13(A) of the option applicable
to this Condition 13(B), the Company shall be deemed to have been discharged
from its obligations with respect to all Outstanding Notes on the date the
conditions set forth in Condition 13(D) are satisfied (hereinafter, "legal
defeasance"). For this purpose, such legal defeasance means that the Company
shall be deemed to have paid and discharged the entire indebtedness represented
by the Outstanding Notes, which shall thereafter be deemed to be "Outstanding"
only for the purposes of Condition 13(E) and the other Conditions of these Terms
and Conditions referred to in (1) and (2) below, and to have satisfied all its
obligations under such Notes, including the obligation to pay interest on the
Notes, and these Terms and Conditions insofar as such Notes are concerned (and
the Holders, at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following which shall survive until
otherwise terminated or discharged hereunder: (1) the rights of Holders of
Outstanding Notes to receive, solely from the trust fund described in Condition
13(D) and as more fully set forth in such Condition, payments in respect of the
principal of and interest on such Notes when such payments are due, and (B) the
Company's obligations with respect to the Notes under Conditions 1(D), 1(E),
1(H), 3(D) or 3(L). Subject to compliance with this Condition, the Company may
exercise its option under this Condition 13(B) notwithstanding the prior
exercise of its option under Condition 13(C) with respect to the Notes.
(C) Covenant Defeasance
Upon the Company's exercise under Condition 13(A) of the option applicable
to this Condition 13(C), the Company shall be released from its obligations
under any covenant contained in Condition 3 (except Condition 3(D) with respect
to the Outstanding Notes on and after the date the conditions set forth in
Condition 13(D)) are satisfied (hereinafter, "covenant defeasance"), and the
Notes shall thereafter be deemed not to be "Outstanding" for the purposes of any
request, demand, authorization, direction, declaration, notice, consent, waiver
or Act of Noteholders (and the consequences of any thereof) in connection with
such covenants, but shall continue to be deemed "Outstanding" for all other
purposes hereunder. For this purpose, such covenant defeasance means that, with
respect to the Outstanding Notes, the Company may omit to comply with and shall
have no liability in respect of any term, condition or limitation set forth in
any such covenant, whether directly or indirectly, by reason of any reference
elsewhere herein to any such covenant or by reason of any reference in any such
covenant to any other provision herein or in any other document and such
omission to comply shall not constitute a Default or an Event of Default under
Condition 11(A)(4) , but, except as specified above, the remainder of these and
the Notes shall be unaffected thereby.
(D) Conditions to Legal Defeasance or Covenant Defeasance
The following shall be the conditions to application of either Condition
13(B) or Condition 13 (C) to the Outstanding Notes:
(1) The Company shall irrevocably have deposited or caused to be
deposited with a paying agent as trust funds in trust for the purpose of
making the following payments, specifically pledged as security for, and
dedicated solely to, the benefit of the Holders of such Notes, (A) money in
an amount, or (B) U.S. Government Obligations which through the scheduled
payment of principal and interest in respect thereof in accordance with
their terms will provide, not later than one day before the due date of any
payment, money in an amount, or (C) a combination thereof, sufficient, in
the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
paying agent, to pay and discharge, and which shall be applied by the
paying agent to pay and discharge, the principal of and interest on the
Outstanding Notes on the Stated Maturity (or Redemption Date, if
applicable) of such principal or installment of interest; provided that the
paying agent shall have been irrevocably instructed to apply such money or
the proceeds of such U.S. Government Obligations to said payments with
respect to the Notes; and provided further that, upon the effectiveness of
this Condition 13(D), the money or U.S. Government Obligations deposited
shall not be subject to the rights of the
24
Noteholders pursuant to the provisions of this Condition. Before or after
such a deposit, the Company may give to the paying agent a notice of its
election to redeem all of the Outstanding Notes at a future date in
accordance with Condition 7, which notice shall be irrevocable. Such
irrevocable redemption notice, if given, shall be given effect in applying
the foregoing.
(2) No Default or Event of Default with respect to the Notes shall
have occurred and be continuing on the date of such deposit or, insofar as
paragraphs (6) and (7) of Condition 11(A) hereof are concerned, at any time
during the period ending on the 91st day after the date of such deposit (it
being understood that this condition shall not be deemed satisfied until
the expiration of such period).
(3) No event or condition shall exist that pursuant to the provisions
of Condition 13(B) or 13(C) would prevent the Company from making payments
of the principal of or interest on the Notes on the date of such deposit or
at any time during the period ending on the 91st day after the date of such
deposit (it being understood that this condition shall not be deemed
satisfied until the expiration of such period).
(4) Such legal defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a default under any material
agreement or material instrument to which the Company is a party or by
which it is bound.
(5) In the case of an election under Condition 13(B), the Company
shall have delivered to the paying agent an Opinion of Counsel stating that
the Holders of the Outstanding Notes will not recognize income, gain or
loss for U.S. federal income tax purposes as a result of such defeasance
and will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such defeasance
had not occurred.
(f) The Company shall have delivered to the paying agent an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for relating to either the legal defeasance under
Condition 13(B) or the covenant defeasance under Condition 13(C) (as the
case may be) have been complied with.
(E) Deposited Money and U.S. Government Obligations to Be Held in Trust;
Other Miscellaneous Provisions
Subject to the provisions of the disposition of unclaimed moneys contained
herein, all money and U.S. Government Obligations (including the proceeds
thereof) deposited with the paying agent pursuant to Condition 13(D) in respect
of the Outstanding Notes shall be held in trust and applied by the paying agent,
in accordance with the provisions of these Terms and Conditions, to the payment,
either directly or through the paying agent (including the Company acting as its
own paying agent) to the Holders of the Notes of all sums due and to become due
thereon in respect of principal and interest, but such money and U.S. Government
Obligations need not be segregated from other funds except to the extent
required by law.
(F) Reinstatement
If the paying agent is unable to apply any money or U.S. Government
Obligations in accordance with Condition 13(E) by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, then the Company's obligations under
these Terms and Condition shall be revived and reinstated as though no deposit
had occurred pursuant to Condition 13(B) or 13(C), as the case may be, until
such time as the paying agent is permitted to apply all such money or U.S.
Government Obligations in accordance with Condition 13(E); provided, however,
that no action taken in good faith by the Company after a deposit of money or
U.S. Government Obligations or both pursuant to Condition 13(E) and prior to the
revival and reinstatement of obligations under these Terms and Conditions
pursuant to this Condition 13(F) shall constitute the
25
basis for the assertion of an Event of Default pursuant to Condition 11; and
provided, further, that if the Company makes any payment of principal of or
interest on any Note following the reinstatement of its obligations, the Company
shall be subrogated to the rights of the Holders of such Notes to receive such
payment from the money or U.S. Government Obligations held the Paying Agent.
14. Replacement of Notes
As provided in Conditions 1(H), should any Note be lost, stolen, mutilated,
defaced or destroyed, it may be replaced at the specified office of the paying
agent or Company upon payment by the claimant of the expenses incurred in
connection with the replacement and on such terms as to evidence indemnity and
security as the Company and paying agent may reasonably require. Mutilated or
defaced Notes must be surrendered before replacements will be issued.
15. Notices
(A) Notices to all the Noteholders will be valid if posted by ordinary mail
to the address of the Noteholder on the Note Register (unless another form of
notice is permitted by these Terms and Conditions) with a written copy provided
to RP&C International, Limited. Any notice shall be deemed to have been given on
the date which is 5 Business Days after the date of posting. If posting of
notice as provided above is not practicable, notice will be given in such other
manner, and shall be deemed to have been given on such date, as the Company may
reasonably approve.
(B) Any request, demand, authorization, direction, declaration, notice,
consent, waiver, Extraordinary Resolution or Act of Noteholders or other
document provided or pertained by these Terms and Conditions (herein
collectively called "Notice") to be made upon, given or furnished to, or filed
with the Company by any Noteholder shall be sufficient for every purpose
hereunder (unless otherwise herein expressly provided) if made, given, furnished
or filed in writing to or with the Company addressed to it at the address of its
principal office which shall initially be: Harken Energy Corporation, ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, Chairman of the Board and Chief Executive Officer Tel. (▇▇▇) ▇▇▇-▇▇▇▇,
Fax, (▇▇▇) ▇▇▇-▇▇▇▇; with a copy to A. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Senior Vice
President-Finance and Secretary: Tel. (▇▇▇) ▇▇▇-▇▇▇▇, Fax. (▇▇▇) ▇▇▇-▇▇▇▇.
16. Acts of Noteholders, Meetings of Noteholders
(A) Any Extraordinary Resolution, request, demand, authorization,
direction, declaration, notice, consent, waiver or other action provided by
these Terms and Conditions to be given or taken by Noteholders may be embodied
in and evidenced by one or more instruments of substantially similar tenor
signed by such Noteholders in person or by agents duly appointed in writing;
and, except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Noteholders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of these Terms and Conditions and conclusive in favor of the Company, if
made in the manner provided in this Condition
(B) The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to such witness, notary public or other such officer the
execution thereof. Where such execution is by a signer acting in a capacity
other than such signer's individual capacity, such certificate or affidavit
shall also constitute sufficient proof of authority. The fact and date of the
execution of any such instrument or writing, or the authority of the Person
executing the same, may also be proved in any other manner which the Company
deems sufficient.
(C) Any Extraordinary Resolution, request, demand, authorization,
direction, notice, consent, waiver or other Act of the Holders of any Note shall
bind every future Holder of the same Note and the Holder of every
26
Note issued upon conversion or redemption thereof or in exchange therefor or in
lieu thereof in respect of anything done, omitted or suffered to be done the
Company or any paying or conversion agent in reliance thereon, whether or not
notation of such action is made upon such Note.
(D) The Noteholders may convene a meeting at any time and from time to time
to consider any matter affecting the Holders of the Notes, including the
modification of the Terms and Conditions and to make, give or take any request,
demand, authorization, direction, notice, consent, waiver or other action
provided by this these Terms and Conditions to be made, given or taken by
Holders of the Notes.
(E) Notice of every meeting of the Holders of the Notes, setting forth the
time and the place of such meeting and in general terms the action proposed to
be taken at such meeting, shall be given in the manner provided in Condition 15,
not less than 21 nor more than 180 days prior to the date fixed for the meeting.
(F) To be entitled to vote at any meeting of Holders of the Notes, a Person
shall be (i) a Holder of one or more Outstanding Notes, or (ii) a Person
appointed by an instrument in writing as proxy for a Holder or Holders of one or
more Outstanding Notes by such Holder or Holders. The only Persons who shall be
entitled to be present or to speak at any meeting of Noteholders shall be the
Persons entitled to vote at such meeting and their counsel, any representatives
of the Company, and their respective counsel.
(G) The quorum at any meeting for passing any Extraordinary Resolution will
be one or more Persons present holding or representing 50% or more in principal
amount of the Outstanding Notes as of the date of the meeting, or at any
adjourned such meeting one or more Persons present whatever the principal amount
of the Notes held or represented by such Person and the vote required for
passing an Extraordinary Resolution at such meeting will be not less than a
majority of the principal amount of the Outstanding Notes and represented at
such meeting or adjournment thereof; provided, that at any meeting, the business
of which includes the modification of the provisions of the Terms and Conditions
and the provisions of these Terms and Conditions, the necessary quorum and vote
required for passing an Extraordinary Resolution will be one or more Persons
present holding or representing not less than a majority, or at any adjourned
such meeting not less than one-third, of the principal amount of the Outstanding
Notes. An Extraordinary Resolution passed at any meeting of the Holders of the
Notes will be binding on all Holders of the Notes, whether or not such
Noteholders are present at the meeting.
17. Amendments to Terms and Conditions
(A) Amendments with Consent of Noteholders
With the consent of the Holders of a majority in principal amount of the
Notes Outstanding, the Company, when authorized by a Board Resolution, may amend
these Terms and Conditions for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions hereof or of
modifying in any manner the rights of the Noteholders hereunder; provided,
however, that no such amendment shall, without the consent of the Holder of each
Outstanding Note affected thereby:
(1) change the Stated Maturity of the principal of, or any installment
of principal of or interest on, any Note, or reduce the principal amount
thereof or the rate of interest thereon, or change the coin or currency in
which any Note or the interest thereon is payable, or impair the right to
institute suit for the enforcement of any such payment after the Stated
Maturity thereof (or, in the case of redemption, on or after the Redemption
Date), or
(2) reduce the percentage in principal amount of the Outstanding
Notes, the consent of whose Holders is required for any amendment of these
terms and conditions, or the consent of whose Holders is required for any
waiver of compliance with certain provisions of these Terms and Conditions
or certain defaults hereunder and their consequences provided for herein,
or
27
(3) modify any of the provisions of Condition 11(K), except to
increase any such percentage or to provide that certain other provisions of
these Terms and Conditions be modified or waived without the consent of the
Holder of each Outstanding Note affected thereby,
(4) modify any of the provisions of these Terms and Conditions
relating to the subordination of the Notes in a manner adverse to the
Holders thereof, or
(5) modify any of the provisions of these Terms and Conditions
relating to Conversion Rights or redemption rights.
It shall not be necessary for any Act of Noteholders under this Condition
to approve the particular form of any proposed amendment to the Terms and
Conditions, but it shall be sufficient if such Act shall approve the substance
thereof.
(B) Effect of Amendments
Upon the entering into of an amendment of these Terms and Conditions
pursuant to the terms hereof, these Terms and Conditions shall be modified in
accordance therewith, and amendment shall form a part of these Terms and
Conditions for all purposes; and every Holder of Notes theretofore or thereafter
delivered hereunder shall be bound thereby.
18. Governing Law
The Notes, including these Terms and Conditions, are governed by, and will
be construed in accordance with, the laws of the State of New York.
19. Definitions of Certain Terms
"Act," when used with respect to any Noteholder, has the meaning specified
in Condition 16.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person and the terms "controlling" and "controlled"
have meanings correlative to the foregoing.
"Authorized Denomination" means U.S. $1,000.
"Board of Directors" means either the board of directors of the Company or
any duly authorized committee of that board.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
which is a day on which banking institutions in the City of New York, New York,
and London, England are not authorized or obliged by law, regulation or
executive order to close.
"Capitalized Lease Obligation" means the amount of the liability under any
capital lease that, in accordance with GAAP, is required to be capitalized and
reflected as a liability on the balance sheet of the relevant Person.
28
"Commission" means the Securities and Exchange Commission, as from time to
time constituted or, if at any time after the Issue Date such Commission is not
existing, then the body performing similar duties at such time.
"Common Stock" means, with respect to any Person, any and all shares,
interests, participation and other equivalents (however designated, whether
voting or non-voting) of such Person's common stock, whether now outstanding or
issued after the Issue Date, and includes, without limitation, all series and
classes of such common stock.
"Company" means Harken Energy Corporation, until a successor Person shall
have become such pursuant to the applicable provisions of these Terms and
Conditions, and thereafter "Company" shall mean such successor Person.
"Conversion Agent" or "conversion agent" means any Person (including the
Company acting as conversion agent) authorized by the Company to effect
conversions of the Note on behalf of the Company. The initial conversion agent
is the Bank of New York.
"Conversion Date" means the Business Day during the Conversion Period on
which the Conversion Right is exercised by delivery to the Conversion Agent of
the Note surrendered for conversion and the completed notice of a Noteholder's
intention to exercise its Conversion Right (as set forth in Exhibit A hereto)
with respect to any Note.
"Conversion Period" means, with respect to any Note, the period which
begins after the earlier to occur of (I) the close of the effective date of a
Registration Statement filed by the Company with the Commission with respect to
the Shares or (II) the date such Shares may be sold pursuant to the exemption
from registration under the Securities Act provided by Rule 144 or other
exemption from registration under the Securities Act, and ends upon the earliest
to occur of (A) the second Business Day prior to the later of March 31, 2007, or
the date on which all principal and interest on the Notes is repaid in full, (B)
if such Notes shall have been called for redemption pursuant to Condition 7 of
these Terms and Conditions, the close of the second Business Day prior to the
Redemption Date, or (C) the effective date of a Mandatory Conversion.
"Conversion Price" means, in respect of a Conversion Right, initially U.S.
$0.50.
"Conversion Right" means the right of a Holder of any Note to convert such
Note into Conversion Shares.
"Conversion Shares" means the Shares into which the Notes are convertible.
"Corporation" includes corporations, limited liability companies, limited
and general partnerships, associations, joint-stock companies and business
trusts.
"Default Rate" means, with respect to the Notes, ten percent (10%) per
annum.
"Effective Date" means the first Business Day following the date upon which
the Commission declares to be effective a registration statement filed by the
Company pursuant to the Securities Act relating to the Conversion Shares.
"Extraordinary Resolution" means a resolution passed at a meeting of the
Noteholders duly convened and held in these Terms and Conditions.
29
"Federal Bankruptcy Code" means the Bankruptcy Act or Title 11 of the
United States Code, as amended from time to time.
"Freely Tradable" means, with respect to the Notes and the Conversion
Shares and redemption Shares, that under the Securities Act the holders thereof
may then offer and sell any amount of such outstanding securities to the public
in the United States without restrictions in transactions that are not brokers'
transactions (as defined in the Securities Act) either (i) pursuant to an
effective registration statement then in effect or (ii) pursuant to Rule 144(k).
For purposes of determining whether such securities are Freely Tradable, it
shall be assumed that no person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the Company has ever held such securities from and after their issuance.
"Generally Accepted Accounting Principles" or "GAAP" means generally
accepted accounting principles in the United States, as applied from time to
time by the Company and its Subsidiaries in the preparation of its financial
statements.
"Guaranty" means all obligations of any Person (other than endorsements in
the ordinary course of business of negotiable instruments for deposit or
collection) of such Person guaranteeing or in effect guaranteeing any
Indebtedness, dividend or other obligation, of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, including without
limitation all obligations incurred through an agreement, contingent or
otherwise, by such Person: (i) to purchase such Indebtedness or obligation or
any Property or assets constituting security therefor, or (ii) to advance or
supply funds (1) for the purchase or payment of such Indebtedness or obligation,
or (2) to enable the recipient of such funds to maintain certain financial
conditions (e.g. agreed amount of working capital) under loan or similar
documents, or (iii) to lease Property or to purchase securities or other
Property or services primarily for the purpose of assuring the owner of such
Indebtedness or obligation of the ability of the primary obligor to make payment
of the Indebtedness or obligation, or (iv) otherwise to assure the owner of the
Indebtedness or obligation of the primary obligor against loss in respect
thereof. For the purposes of all computations made under these Terms and
Conditions, a Guaranty in respect of any Indebtedness shall be deemed to be
Indebtedness equal to the principal amount and accrued interest of such
Indebtedness which has been guaranteed, and a Guaranty in respect of any other
obligation or liability or any dividend shall be deemed to be Indebtedness equal
to the maximum aggregate amount of such obligation, liability or dividend.
"Holder or Noteholder" means a Person in whose name a Note is registered in
the Note Register.
"Indebtedness" of any Person means and includes all present and future
obligations of such Person, which shall include all obligations (i) which in
accordance with generally accepted accounting principles in the United States
shall be classified upon a balance sheet of such Person as liabilities of such
Person, (ii) for borrowed money, (iii) which have been incurred in connection
with the acquisition of Property (including, without limitation, all obligations
of such Person evidenced by any debenture, bond, note, commercial paper or other
similar security, but excluding, in any case, obligations arising from the
endorsement in the ordinary course of business of negotiable instruments for
deposit or collection), (iv) secured by any Lien existing on Property owned by
such Person, even though such Person has not assumed or become liable for the
payment of such obligations, (v) created or arising under any conditional sale
or other title retention agreement with respect to Property acquired by such
Person, notwithstanding the fact that the rights and remedies of the seller,
lender or lessor under such agreement in the event of default are limited to
repossession or sale of such Property, (vi) which are Capitalized Lease
Obligations, (vii) for all Guaranties, whether or not reflected in the balance
sheet of such Person and (viii) which are all reimbursement and other payment
obligations (whether contingent, matured or otherwise) of such Person in respect
of any acceptance or documentary credit. Notwithstanding the foregoing,
Indebtedness shall not include (i) Indebtedness incidental to the operation of
the business of the Person in the ordinary course and in the aggregate not
material to the business and operations of the Person, (ii) Indebtedness for
30
which the Company or any of its Subsidiaries are the sole obligors and obligees,
and (iii) Indebtedness represented by purchase, rental or lease obligations not
to exceed $1,000,000 in any period of 12 months for any Person and its
Subsidiaries.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Notes.
"Issue Date" means the date of the initial issuance of the Note.
"Lien" means any mortgage, charge, pledge, lien, security interest or
encumbrance of any kind whatsoever, including any interest in Property securing
an obligation owed to, or a claim by, a Person other than the owner of the
Property, whether such interest is based on the common law, statute or contract,
and including but not limited to the security interest lien arising from a
mortgage, encumbrance, pledge, conditional sale or trust receipt or a lease,
consignment or bailment for security purposes. The term "Lien" shall include
reservations, exceptions, encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases and other title exceptions and encumbrances
affecting Property. For the purposes of these Terms and Conditions, the Company
or its Subsidiary shall be deemed to be the owner of any Property which it has
acquired or holds subject to a conditional sale agreement, financing lease or
other arrangement pursuant to which title to the Property has been retained by
or vested in some other Person for security purposes.
"Majority Holders" means the Holders of a majority of the principal amount
of Notes Outstanding.
"Mandatory Conversion" means conversion of the Notes at the option of the
Company pursuant to Condition 6D.
"Market Price" means the daily closing sale price of the Shares for a Stock
Exchange Business Day on a Stock Exchange. If the Common Stock is not quoted on
any Stock Exchange, then the Market Price shall be for any particular day shall
be calculated promptly at the Company's expense by a reputable investment bank
selected by the Company.
"Maturity," when used with respect to any Note, means the date on which the
principal of such Note becomes due and payable as therein or herein provided,
whether at the Stated Maturity or the Redemption Date and whether by declaration
of acceleration, call for redemption or otherwise.
"Note Register" means the register maintained by the Company for the
registration and transfer of the Note.
"Note Registrar" means the registrar appointed by the Company from time to
time to act as Note registrar.
"Outstanding," when used with respect to Notes, means, as of the date of
determination, all Notes theretofore issued, except: (1) Notes heretofore
cancelled by the paying and conversion agent or delivered to the paying agent or
Company for cancellation; (2) Notes, or portions thereof, for whose payment or
redemption money in the necessary amount has been theretofore deposited any
paying agent (other than the Company) in trust or set aside and segregated in
trust by the Company (if the Company shall act as its own paying agent) for the
Holders of such Notes; provided that, if such Notes are to be redeemed, notice
of such redemption has been duly given or provision therefor satisfactory to the
paying agent (if appointed) has been made; (3) Notes, except to the extent
provided in Conditions 13 (B) and 13(C), with respect to which the Company has
effected defeasance and/or covenant defeasance as provided in Condition 13; and
(4) Notes which have been paid pursuant to or in exchange for or in lieu of
which other Notes have been issued, however, that in determining whether the
Holders of the requisite principal amount of Outstanding Notes have taken any
Act or given or made any Extraordinary Resolution, Notes owned by the Company or
any other obligor upon the Notes or any Affiliate of the Company (other than
Persons whose Affiliate relationship arises solely from ownership of Conversion
Shares) or such other obligor shall be disregarded and deemed not to be
Outstanding.
31
"Paying Agent" or "paying agent" means any Person (including the Company
acting as paying agent) authorized by the Company to pay the principal of or
interest on any Notes on behalf of the Company. Pursuant to the terms and
conditions hereof, the Company has initially appointed The Bank of New York as
the paying agent.
"Person" means any individual, corporation, limited liability company,
limited or general partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Preferred Stock" means, with respect to any Person, any and all shares,
interests, participation or other equivalents (however designated) of such
Person's preferred or preference stock whether now outstanding or issued on or
after the Issue Date, and includes, without limitation, all classes and series
of preferred or preference stock.
"Presentation Date" means the date on which a Note is presented by a
Noteholder for payment of principal or if such date is not a Business Day in
London and New York, the next date which is a Business Day in each of the
foregoing cities.
"Property" or "Properties" means any kind of property or asset, whether
real, personal or mixed, or tangible or intangible, and any interest therein.
"Record Date" means the 15th day preceding each Interest Payment Date
whether or not a Business Day.
"Redemption Date," when used with respect to any Note to be redeemed, in
whole or in part, means the date fixed for such redemption by or pursuant to
these Terms and Conditions.
"Redemption Price," when used with respect to any Note to be redeemed,
means the price at which it is to be redeemed pursuant to the terms hereof, plus
accrued and upaid interest to, but excluding, the Redemption Date, if applicable
expressed in a number of Conversion Shares into which such Note shall be
converted in the event the Notes are to be redeemed for Shares and, in the event
of any other redemption, a cash amount.
"Relevant Date" means the date on which the payment first becomes due;
provided, that if the full amount of the money payable has not been received by
the Paying Agent on or before the due date, it shall mean the date on which, the
full amount of the money having been so received, notice to that effect shall
have been duly given to the Noteholders by the Company in accordance with
Condition 15.
"Rule 144A" means Rule 144A, as amended, promulgated by the Commission
pursuant to the Securities Act.
"Rule 144" means Rule 144, as amended, promulgated by the Commission
pursuant to the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated from time to time by the Commission pursuant
thereto.
"Shares" means the common stock, par value U.S. $0.01, of the Company (and
all other (if any) shares or stock resulting from any sub-division,
consolidation or reclassification of such shares).
"Stated Maturity," when used with respect to any Indebtedness or any
installment of principal thereof or interest thereon, means the date specified
in such
32
Indebtedness as the fixed date on which the principal of such Indebtedness or
such installment of principal or interest is due and payable.
"Stock Exchange" means any United States national or regional stock
exchange or quotation service such as NASDAQ National Market System or any
similar quotation service maintained by the National Quotation Bureau or any
successor thereto.
"Stock Exchange Business Day" means any day (other than a Saturday or
Sunday) on which the a Stock Exchange is open for business.
"Subordinated Obligation" means any Indebtedness of the Company outstanding
on such date which is contractually subordinate or junior in right of payment to
the Notes.
"Subsidiary" of any Person means any Corporation of which at least a
majority of the shares of stock having by the terms thereof ordinary voting
power to elect a majority of the Board of Directors of such Corporation
(irrespective of whether or not at the time stock of any other class or classes
of such Corporation shall have or might have voting power by reason of the
happening of any contingency) is directly or indirectly owned or controlled by
the Person.
"U.S. Government Obligations" means securities that are (x) direct
obligations of the United States of America for the timely payment of which its
full faith and credit is pledged or (y) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the timely payment of which is unconditionally guaranteed as a full
faith and credit obligation by the United States of America, which, in either
case, are not callable or redeemable at the option of the issuer thereof, and
shall also include a depository receipt issued by a bank (as defined in Section
3(a)(2) of the Securities Act), as custodian with respect to any such U.S.
Government Obligation or a specific payment of principal of or interest on any
such U.S. Government Obligation held by such custodian for the account of the
holder of such depository receipt, provided that (except as required by law)
such custodian is not authorized to make any deduction from the amount payable
to the holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or the specific payment
of principal of or interest on the U.S. Government Obligation evidenced by such
depository receipt.
33
SCHEDULE A
Principal Amount of this Note
The aggregate principal amount of this Note is as shown by the latest
entry made by or on behalf of the Paying Agent in the fourth column below.
Reductions in the outstanding principal amount of this Note following
redemption, conversion into shares of Common Stock, or the purchase and
cancellation of Notes are entered in the second and third columns below.
Outstanding Notation made by or on
Reasons for change in principal Behalf of the Company (other
The outstanding Amount of this than
Principal amount of Amount of Note following such In respect of the initial
Date Note Such change Change Principal amount
----------------------------------------------------------------------------------------------------------------------
, 2003 Not applicable Not applicable Not applicable
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
34
SCHEDULE B
Interest Payments in respect of this Note
The following payments of interest in respect of this Note have been made:
Amounts of interest Notation made by and on behalf of the
Date made Due and payable Amount of interest paid Company
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
35
SCHEDULE C
Form of Transfer
FOR VALUE RECEIVED, [ ] being the registered holder of this Note hereby
transfers to [ ] of [ ] U.S. $[ ] in principal amount of the U.S.$3,410,000 (the
"Note") of HARKEN ENERGY CORPORATION (the "Issuer") and irrevocably requests and
authorizes the Issuer or the Note Registrar in its capacity as registrar in
relation to the Note to effect the relevant transfer by means of appropriate
entries in the register kept by it.
Dated:
By: _______________________________
(duly authorized)
In connection with any transfer of this Note, the undersigned confirms that
documents are being furnished to the registrar which comply with the conditions
set forth in this Note.
The registrar shall not be obligated to register this Note in the name of any
Person other than the Holder hereof unless and until the conditions to any such
registration or transfer set forth here in have been satisfied.
Note
The name of the Person by or on whose behalf this form of transfer is signed
must correspond with the name of the registered holder as it appears on the face
of this Note.
(1) A representative of such registered holder should state the capacity in
which he signed, e.g. executor.
(2) The signature of the Person effecting a transfer shall conform to any list
of duly authorized specimen signatures supplied by the registered holder or
be certified by a recognized bank, notary public or in such other manner as
the registrar may require.
(3) Any transfer of the Note shall be in an amount equal to U.S.$1,000 or any
integral multiple of U.S.$1,000 in excess thereof.
36
EXHIBIT A
HOLDER'S CONVERSION NOTICE
To: [Conversion Agent][Company]
The undersigned Holder of the 7% Senior Convertible Notes Due 2007, Series
G (the "Notes") in the aggregate principal amount of U.S. $ tendered
herewith hereby irrevocably exercises the option to convert such Note(s) into
shares of Common Stock in accordance with the Terms and Conditions of the Notes
relating to the issuance by Harken Energy Corporation of an aggregate of U.S.
$3,410,000 of the Notes and directs that the Conversion Shares issuable and
deliverable upon such conversion be issued and delivered to the undersigned in
the name and at the address set forth below.
If the Conversion Shares are to be issued in the name of a Person other
than the undersigned, the undersigned will pay all transfer taxes payable with
respect thereto and is delivering herewith a certificate in proper form
certifying that the applicable restrictions on transfer have been complied with.
All terms used and not otherwise defined herein have the respective
meanings set forth in the Terms and Conditions.
DATE: _____________________
-----------------------------------
Name of Holder
-----------------------------------
Signature(s) of Holder
Address for Delivery
of Share Certificates
-----------------------------------
-----------------------------------
-----------------------------------
Name for Registration
of Share Certificates (if
Different than Holder):
-----------------------------------
A-1
EXHIBIT B
COMPANY'S CONVERSION NOTICE
To: Conversion Agent/Noteholder
Harken Energy Corporation (the "Company") hereby irrevocably exercises the
option to convert all of the 7% Senior Convertible Notes Due 2007, Series G (the
"Notes") of the Company that have not been previously converted and are
Outstanding at the date of this notice into shares of its Common Stock, in
accordance with the Terms and Conditions, pursuant to which the Company has
issued an aggregate of U.S. $3,410,000 of the Notes, and confirms that the
Conversion Shares issuable and deliverable upon conversion shall be issued and
delivered to the Noteholders in accordance with the instructions for
registration and delivery of the Conversion Shares to each Holder, to be
provided by each Holder to the Conversion Agent or the Company.
The Company is entitled to exercise its option to convert because (i)
ninety (90) days has elapsed from the Effective Date, (ii) the average of the
Market Price of the Common Stock over the Stock Exchange Business Days during
the thirty (30) consecutive calendar day period beginning on and ending
on (being a date after the Effective Date) equaled or exceeded 125% of
the Conversion Price, and (iii) the Conversion Shares were Freely Tradeable on
the date such threshold was met and for the 30 calendar day period after such
date.
All terms used and not otherwise defined herein shall have the respective
meanings set forth in the Terms and Conditions.
DATE: HARKEN ENERGY CORPORATION
--------------------
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
B-1
EXHIBIT C
COMPANY'S NOTICE OF REDEMPTION FOR SHARES
To: [Paying and Conversion Agent] [Noteholder]
Harken Energy Corporation (the "Company") hereby irrevocably exercises the
option to convert _______ United States dollars (U.S. $ ) principal amount
of the 7% Senior Convertible Notes Due 2007, Series G (the "Notes") of the
Company that have not been previously converted and are Outstanding at the date
of this notice into shares of its Common Stock, in accordance with the Terms and
Conditions, pursuant to which the Company has issued an aggregate of U.S.
$3,410,000 of the Notes, and confirms that the Conversion Shares issuable and
deliverable upon conversion shall be issued and delivered to the Noteholders in
accordance with the instructions for registration and delivery of the Conversion
Shares to each Holder, to be provided by each Holder to the Conversion
Agent/Company.
Each Note so redeemed will be redeemed for the number of Shares of Common
Stock equal to 110% of the face value of the Note plus interest accrued and
unpaid thereon divided by US $ , which represents the average of the Market
Price of the Common Stock over the 30 Stock Exchange Days day period immediately
preceding the pricing date.
All terms used and not otherwise defined herein shall have the respective
meanings set forth in the Terms and Conditions.
DATE: __________________________ HARKEN ENERGY CORPORATION
By:
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Name:
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Title:
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C-1