Exhibit 10.1

 

REDEMPTION AND RELEASE AGREEMENT

This Redemption and Release Agreement (this “Agreement”) is entered into as of
January 31, 2006 (the “Effective Date”), by and among International Business
Associates Holding Co., Ltd., a British Virgin Islands company (“IBAH”),
International Business Associates (USA), Inc., a Delaware corporation (“IBA
USA”), International Business Associates, Ltd., an exempt Turks and Caicos
company (the “Company”), John Kean, Jr., and Stanley J. Brownell (together with
Mr. Kean, the “Stockholders”).

WHEREAS, IBAH owns (i) 12,500 Preferred Shares, (ii) the Warrant, and (iii) 24
shares of IBA USA Common Stock;

WHEREAS, the Stockholders own 26 shares of Common Stock, being all of the issued
and outstanding Common Stock and all of the issued and outstanding ownership
interests in the Company other than the 12,500 Preferred Shares owned by IBAH;

WHEREAS, IBAH and the Company desire to restructure their relationship on the
terms and conditions set forth herein;

WHEREAS, the Company, IBA USA, IBAH, and the Stockholders each desire to effect
the Redemption and to settle and compromise fully and finally any and all
disputes, controversies, entitlements, and claims that IBAH may have against the
Company, IBA USA, or the Stockholders or that the Company, IBA USA, or the
Stockholders may have against IBAH, on the terms and conditions set forth
herein.

WHEREAS, capitalized terms used in this Agreement are used as defined on
ATTACHMENT A to this Agreement, unless the context otherwise requires.

NOW, THEREFORE, in consideration of the promises, covenants, and agreements
contained herein, the parties agree as follows:

1.     Redemption.

1.1           Redemption.  Subject to the terms and conditions set forth in this
Agreement, IBAH agrees to sell to the Company, and the Company agrees to
purchase and redeem from IBAH, 7,500 Preferred Shares and the Warrant, and IBAH
agrees to sell to IBA USA, and IBA USA agrees to purchase and redeem from IBAH,
24 shares of IBA USA Common Stock.

1.2           Closing.

(a)           The closing of the Redemption (the “Closing”) shall be effective
as of the Effective Date.

(b)           (IBAH’s Deliveries)  At Closing, IBAH shall deliver to the Company
and to IBA USA:

(i)                                     One or more share certificates
evidencing 7,500 Preferred Shares, together with a stock power executed in
blank;

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(ii)                                  One or more share certificates evidencing
24 shares of IBA USA Common Stock held by IBAH accompanied by a stock power
executed in blank;

(iii)                               The Warrant;

(iv)                              Resignation letters executed by Alan Quasha
and Elmer Johnston whereby such persons resign from their positions as directors
of the Company and IBA USA; and

(v)                                 Copies of minutes or consents of the Board
of Directors of IBAH authorizing IBAH’s execution, delivery and performance of
this Agreement.

(c)           (The Company’s Deliveries)  At Closing, the Company and IBA USA
shall deliver to IBAH:

(i)                                     US$7,500,000 by wire transfer of
immediately available funds to an account or accounts designated by IBAH;

(ii)                                  to the extent that the stock certificates
delivered by IBAH evidence ownership of an amount in excess of 7,500 Preferred
Shares, a replacement stock certificate issued by the Company in the name of
IBAH evidencing such excess number of Preferred Shares;

(iii)                               Copies of minutes or consents of the
Company’s Board of Directors authorizing the Company’s execution, delivery and
performance of this Agreement by the Company; and

(iv)                              Copies of minutes or consents of IBA USA’s
Board of Directors authorizing IBA USA’s execution, delivery and performance of
this Agreement.

(d)           (Mutual Deliveries)  IBAH, the Company and IBA USA shall have
executed and mutually delivered a Confidentiality Agreement substantially in the
form attached to this Agreement as ATTACHMENT B.

1.3           Termination and Modification of Agreements.  From and after the
Closing, except as otherwise set forth in this Agreement or any agreement,
instrument, or document executed in connection herewith or delivered at Closing,
all agreements between IBAH and its affiliates, on the one hand, and the
Company, IBA USA, the Stockholders, and their respective affiliates, on the
other hand, shall be terminated.  Without limiting the generality of the
foregoing, the Warrant and that certain letter agreement dated September 10,
2004, between the Company and Harken shall be terminated and of no further force
or effect from and after the Closing.

 

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2.     Releases.

2.1           IBAH Release.

(a)           IBAH and Harken hereby acknowledge that, in consideration for the
Redemption and the releases contained herein made by the Company, IBA USA, and
the Stockholders, and other valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, from and after the Closing, IBAH and Harken
hereby fully, finally, and completely releases each of the Company, IBA USA, the
Stockholders, and their respective predecessors, successors, subsidiaries,
affiliates, owners, partners (both general and limited), stockholders, officers,
directors, employees, agents, attorneys, representatives and representatives of
each of them (the “Company Released Parties”), of and from any and all claims,
actions, demands, and/or causes of action, of whatever kind or character,
whether now known or unknown, arising from, relating to, or in any way connected
with, facts or events occurring on or before the Closing, including as a
stockholder of the Company; provided, however, that neither IBAH nor Harken is
not releasing any claims for breach of any representation, warranty, covenant or
agreement of this Agreement or any agreement, instrument, or document executed
or delivered in connection with the Closing by any Company Released Parties. 
IBAH and Harken agree that this Agreement includes a release of any negligence
claims, contractual claims for breach or default, and any claims for any alleged
breach of fiduciary duties owed by the Company, IBA USA, the Stockholders, or
any of the other Company Released Parties in any capacity, and any related
attorneys’ fees and costs, if any, that IBAH or Harken may have against the
Company, IBA USA, the Stockholders, or any other Company Released Parties.  IBAH
and Harken waive and release the Company Released Parties from each and every
claim that this Agreement was procured by fraud or signed under duress or
coercion so as to make this release not binding.  IBAH and Harken understand and
agree that by signing this Agreement they are giving up the right to pursue
legal claims that it may have against any of the Company Released Parties.

(b)           The release set forth in this Section 2.1 is intended as a release
of all claims against the Company Released Parties, whether now known or
unknown.  In furtherance thereof, IBAH and Harken expressly waive any right or
claim of right to assert hereafter that any claim, demand, obligation and/or
cause of action has, through ignorance, oversight, error or otherwise, been
omitted from the terms of this Agreement.  IBAH and Harken make this waiver with
full knowledge of their rights, after consulting with legal counsel, and with
specific intent to release both their known and unknown claims.

(c)           IBAH and Harken hereby represent and warrant that neither IBAH nor
Harken has assigned or otherwise transferred to any other person or entity any
interest in any claim, action, demand and/or cause of action it has, or may
have, or may claim to have in connection with the matters released hereby and/or
the persons and entities released herein, and hereby agrees to indemnify and
hold harmless all persons or entities hereby released from any and all injuries,
harm, damages, penalties, costs, losses, expenses and/or liability or other
detriment including all reasonable attorneys’ fees incurred as a result of any
and all claims, actions, demands, and/or causes of

 

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action of whatever nature or character that may hereafter be asserted against
any of the Company Released Parties by any person or entity claiming by, through
or under IBAH or Harken by virtue of such an assignment or other transfer.

2.2           Company Release.

(a)           The Company, IBA USA, and the Stockholders (collectively, the
“Releasing Parties”) hereby acknowledges that in consideration for the releases
contained herein made by IBAH and Harken, and other valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, from and after the
Closing, the Releasing Parties hereby fully, finally, and completely release
IBAH, Harken, and their respective predecessors, successors, subsidiaries,
affiliates, owners, partners (both general and limited), stockholders, officers,
directors, employees, agents, attorneys, representatives and representatives of
each of them (the “IBAH Released Parties”), of and from any and all claims,
actions, demands, and/or causes of action, of whatever kind or character,
whether now known or unknown, arising from, relating to, or in any way connected
with, facts or events occurring on or before the Closing, including as an
employee, director or stockholder of the Company or IBA USA; provided, however,
that the Releasing Parties are not releasing hereby any claim for breach of any
representation, warranty, covenant or agreement of this Agreement or any
agreement, instrument, or document executed or delivered in connection with the
Closing by any IBAH Released Parties.  The Releasing Parties agree that this
Agreement includes a release of any negligence claims, contractual claims for
breach or default, and any claims for any alleged breach of fiduciary duties
owed by IBAH, Harken or any of the other IBAH Released Parties in any capacity,
and any related attorneys’ fees and costs, if any, that the Releasing Parties
may have against IBAH, Harken or any other IBAH Released Parties.  The Releasing
Parties waive and release the IBAH Released Parties from any claim that this
Agreement was procured by fraud or signed under duress or coercion so as to make
this release not binding.  The Releasing Parties understand and agree that by
signing this Agreement they are jointly and severally giving up the right to
pursue any legal claim that they may have against any of the IBAH Released
Parties.

(b)           The release set forth in this Section 2.2 is intended as a release
of all claims against the IBAH Released Parties, whether now known or unknown. 
In furtherance thereof, the Releasing Parties expressly waive any right or claim
of right to assert hereafter that any claim, demand, obligation and/or cause of
action has, through ignorance, oversight, error or otherwise, been omitted from
the terms of this Agreement.  The Releasing Parties make this waiver with full
knowledge of their respective rights, after consulting with legal counsel, and
with specific intent to release all of their respective known and unknown
claims.

(c)           The Releasing Parties hereby represent and warrant that they have
not assigned or otherwise transferred to any other person or entity any interest
in any claim, action, demand and/or cause of action they have, or may have, or
may claim to have in connection with the matters released hereby and/or the
persons and entities released herein, and hereby agree, jointly and severally,
to indemnify and hold harmless all persons or entities hereby released from any
and all injuries, harm,

 

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damages, penalties, costs, losses, expenses and/or liability or other detriment
including all reasonable attorneys’ fees incurred as a result of any and all
claims, actions, demands, and/or causes of action of whatever nature or
character that may hereafter be asserted against any of the IBAH Released
Parties by any person or entity claiming by, through or under the Releasing
Parties by virtue of such an assignment or other transfer.

3.     Certain Covenants and Agreements.  IBAH, IBA USA, the Company and the
Stockholders hereby covenant and agree with each other as follows:

3.1           Financial Statements.

(a)           The Company and IBA USA shall reasonably cooperate with IBAH, its
parent company, and their auditors in IBAH’s 2005 fiscal year end audit and the
preparation of IBAH’s 2005 fiscal year end audited financial statements.

(b)           If and so long as IBAH holds of record any of the capital stock of
the Company, the Company shall provide to IBAH on or before the 20th day of
April, July, October, and January, in respect of the immediately preceding
calendar quarter, quarterly and year-to-date consolidated income statements and
balance sheets through December 31, 2006, and, in January, the year end
financial statements for the preceding year.

3.2           Management.                If and so long as IBAH holds of record
any of the capital stock of the Company, the Company and IBA USA shall continue
to operate their respective businesses through the earlier to occur of December
31, 2006, or a Conversion Event (defined below), consistent in all respects with
the management guidelines set forth in “Exhibit A” to the Stockholders
Agreement.

3.3           Certain Liabilities.  IBAH shall indemnify the Company, IBA USA,
and the Stockholders from and against any obligation that may arise or may have
arisen under that certain Fee Agreement between Emerging Markets Group and the
Company dated September 8, 2004, to pay fees to Emerging Markets Group.

3.4           Cooperation.  IBAH, at its own expense, shall reasonably cooperate
in good faith with the Company in its efforts to find new sources of capital
funding.

3.5           Additional Redemption.

(a)           At any time from and after the Closing until December 31, 2006,
subject to the terms and conditions of this Agreement, the Company shall have
the right, at its sole option, to redeem all, but not less than all, of the
Preferred Shares held by IBAH for cash consideration equal to US $5,000,000. 
The Company shall give IBAH written notice (the “Redemption Notice”) of its
intention to redeem the Preferred Shares, which notice shall state the date for
such redemption.  Such date shall be not more than sixty (60) and not less than
twenty (20) days from the date the Redemption Notice is received by IBAH.

 

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(b)           At the closing for any such redemption of such Preferred Shares,
IBAH shall surrender to the Company the certificates evidencing such Preferred
Shares, duly endorsed in blank or accompanied by an appropriate stock power
executed in blank, in exchange for US $5,000,000 paid by wire transfer of
immediately available funds to an account or accounts designated by IBAH.

3.6           Conversion.  At any time that IBAH holds of record any Preferred
Shares, if the Company shall have received cash proceeds of not less than US
$2,000,000 through, or as a result of, any investment in the Company or any
financing, recapitalization, reorganization, or sale of capital stock of the
Company (or any rights thereto) (a “Conversion Event”), the Company shall
immediately convert IBAH’s Preferred Shares into a number of shares of Common
Stock equal to nineteen (19%) percent (on a fully diluted basis after issuance
of such Common Stock to IBAH) of the Company’s total outstanding and issued
Common Stock.  Upon any such conversion, IBAH shall surrender one or more share
certificates evidencing IBAH’s ownership of its Preferred Shares, and the
Company shall deliver to IBAH share certificates evidencing the shares of Common
Stock issued to IBAH.  For as long as the Preferred Shares are outstanding, the
foregoing conversion obligation shall be in addition to the mandatory redemption
obligations set forth in Section 3 of the Terms of Issuance of the Preferred
Shares.

4.     Representations and Warranties of IBAH.  IBAH represents and warrants to
the Company, IBA USA and the Stockholders as follows:

4.1           Ownership.  IBAH owns the Redeemed Securities beneficially and of
record free and clear of all liens, claims, encumbrances, proxies and
restrictions of any kind or nature whatsoever, except restrictions on transfer
imposed by applicable securities laws and the Stockholders Agreement.  Except
for the Stockholders Agreement, there are no outstanding options, warrants,
subscriptions or other rights or obligations to purchase or acquire any of the
Redeemed Securities, nor any outstanding securities convertible into or
exchangeable for any of the Redeemed Securities.

4.2           Authority.  Upon the execution and delivery by IBAH of this
Agreement and the other agreements contemplated hereby, this Agreement and the
other agreements contemplated hereby will constitute the legal, valid, and
binding obligations of IBAH.  IBAH has the right, power, and authority to
execute and deliver this Agreement and to perform its obligations under this
Agreement.  IBAH is not, nor will be, required to obtain any consent from any
person in connection with the execution and delivery of this Agreement and the
other agreements contemplated hereby, the consummation or performance of any of
the transactions contemplated hereby or thereby, or the sale and delivery of the
Redeemed Securities or termination of the Warrant.

5.     Representations and Warranties of the Company.  The Company and IBA USA
represent and warrant to IBAH as follows:

5.1           Capital Structure.  The Company’s authorized capital stock
(immediately prior to Closing) is US$5,000 divided in 4,000 shares of Common
Stock, of which 26 shares are currently issued and outstanding, and 100,000
shares of par value US$0.01 each, of which 12,500 shares have been designated as
the Preferred Shares and are outstanding.  The 26 outstanding shares of Common
Stock and the 12,500 Preferred Shares represent all of the

 

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outstanding equity interests in the Company.  There are no outstanding or
authorized options, warrants (other than the Warrant), purchase rights,
subscription rights, conversion rights, exchange rights or other contracts or
commitments that require the Company to issue, sell or otherwise cause to become
outstanding any of its capital stock.  There are no outstanding stock
appreciation, phantom stock or similar rights with respect to the Company.  The
Company has no obligation of any kind to issue any additional equity interests
in the Company to any person.

5.2           Authority.  Upon the execution and delivery by the Company of this
Agreement and the other agreements contemplated hereby, this Agreement and the
other agreements contemplated hereby will constitute the legal, valid, and
binding obligations of the Company.  The Company has the right, power, and
authority to execute and deliver this Agreement and to perform its obligations
under this Agreement.  The Company is not, nor will be, required to obtain any
consent from any person in connection with the execution and delivery of this
Agreement and the other agreements contemplated hereby, the consummation or
performance of any of the transactions contemplated hereby or thereby, or the
redemption of the Redeemed Securities.

6.     Representations and Warranties of the Stockholders.  Each Stockholder,
severally for himself only, represents and warrants to IBAH as follows:

6.1           Ownership.  Such Stockholder owns 13 shares of Common Stock free
and clear of all liens, claims, encumbrances, proxies and restrictions of any
kind or nature whatsoever, except those imposed by applicable securities laws
and the Stockholders Agreement.  Except for the Stockholders Agreement, there
are no outstanding options, warrants, subscriptions or other rights or
obligations to purchase or acquire any of such Stockholder’s Common Stock, nor
any outstanding securities convertible into or exchangeable for any of such
Stockholder’s Common Stock.

6.2           Authority.  Upon the execution and delivery by such Stockholder of
this Agreement and the other agreements contemplated hereby, this Agreement and
the other agreements contemplated hereby will constitute the legal, valid, and
binding obligations of such Stockholder.  Such Stockholder has the right, power,
and authority to execute and deliver this Agreement and to perform his
obligations under this Agreement.  Such Stockholder is not, nor will be,
required to obtain any consent from any person in connection with the execution
and delivery of this Agreement and the other agreements contemplated hereby, the
consummation or performance of any of the transactions contemplated hereby or
thereby.

7.     Amendments to Stockholders Agreement.  The Stockholders Agreement shall
remain in full force and effect, as hereby amended effective as of the Effective
Date.  The Stockholders Agreement is hereby amended as follows:

7.1           Ownership.  Section 1.1 of the Stockholders Agreement is hereby
amended to read in its entirety as follows:

(a)           Ownership. Without the consent of the Purchaser, at any time that
any shares of the Company’s Series A Preferred shall remain outstanding, the
Founders shall not acquire, by purchase or otherwise, ownership of capital stock
representing more than eighty-one percent (81%) of the outstanding

 

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shares of capital stock of the Company, on a Fully Diluted Basis, except in
accordance with this Agreement. Without the consent of the Founders and subject
to the terms and conditions of that certain Redemption and Release Agreement
dated January 31, 2006, at any time that any shares of the Company’s Series A
Preferred shall remain outstanding, the Purchaser shall not acquire, by purchase
or otherwise, ownership of capital stock representing more than nineteen (19%)
of the outstanding shares of capital stock of the Company, on a Fully Diluted
Basis, except in accordance with this Agreement.  As used in this Agreement,
“Fully Diluted Basis” means, as the context requires, either (a) the aggregate
number of Common Stock issued and outstanding at the relevant time, after giving
effect to all then outstanding options, warrants, convertible securities or
other rights to acquire Common Stock (whether or not then exercisable or
exercisable at a price below the then market value of the Common Stock) of all
shareowners, and/or (b) the number of Common Stock owned by a particular
shareholder at the relevant time, after giving effect to all then outstanding
options, warrants, convertible securities or other rights to acquire Common
Stock (whether or not then exercisable or exercisable at a price below the then
market value of the Common Stock) held by such shareholder.

7.2           Board of Directors.

(a)           Section 1.2 of the Stockholders Agreement is hereby amended to
read in its entirety as follows:

The management of the Company and the preparation and adoption of the Company’s
business plan will be vested in the Board of Directors and such officers as the
Board may designate from time to time.  Subject to the management guidelines
attached hereto as Exhibit A (prior to the earlier to occur of December 31,
2006, or an Investment  Event (defined below)) and the other terms of this
Agreement, the day-to-day management of the Company will be at the direction of
the Board of Directors.  The Board and the members appointed thereto (each a
“Director”) shall be proposed by and shall serve at the direction of the
Stockholders as provided for herein and in the Memorandum of Association and
Articles of Association.  An “Investment Event” shall mean Company’s receipt of
cash proceeds of not less than US $2,000,000 through, or as a result of, any
investment in the Company or any financing, recapitalization, reorganization, or
sale of capital stock of the Company (or any rights thereto).

(b)           Section 1.2(a) of the Stockholders Agreement is hereby amended to
read in its entirety as follows:

The Board of Directors shall be comprised of five (5) Directors or such other
number of directors as may be established in accordance with the Company’s
organizational documents from time to time.  So long as the Purchaser holds of
record any shares of the Series A Preferred or

 

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ordinary shares of the Company that entitle the Purchaser to vote at least
fifteen percent (15%) of all the votes that may be cast in an election of
directors of the Company, the Purchaser shall be entitled to nominate one (1)
director for membership on the Board of Directors of the Company, and the
Founders shall be entitled to nominate four (4) directors for membership on the
Board of Directors of the Company.  The Purchaser and the Founders agree to vote
for the nominees of each of them.  If a Founder is unable to serve or has
transferred his shares of Common Stock in the manner permitted by Section
3.3(a), then the Founder’s successor in interest as holder of his Shares or his
legal representative shall be entitled to nominate directors in the same manner
and to the same extent as if the Founder were himself acting.

(c)           Section 1.2(b) of the Stockholders Agreement is hereby amended to
read in its entirety as follows:

Subject to the Company’s Memorandum of Association and Articles of Association
(as in effect on the date hereof and from time to time thereafter) and the terms
and conditions of this Agreement, the Board will have the authority on behalf
and in the name of the Company to perform all acts necessary and desirable to
the objects and purposes of the Company and to comply, as deemed necessary in
the Board’s sole discretion, with any and all applicable laws, regulations,
orders or decrees without a vote of the Stockholders (including but not limited
to opening bank or other accounts and negotiating, effecting and authorizing the
purchase and sale of Shares); provided (prior to the earlier of December 31,
2006, or an Investment Event) that those matters which, under the terms of
Exhibit A, are within the scope of powers and authority of the Company’s
management shall remain with Company’s management unless otherwise modified by
the Board as deemed necessary in its sole discretion to comply with any laws,
regulations, orders or decrees as set forth in this Subsection (b).  In
addition, the Board is hereby authorized to amend the terms of Exhibit A at any
time after of earlier of December 31, 2006, or an Investment Event.  The
Purchaser and the Founders agree to instruct their Board of Directors nominees
to elect John Kean Jr. as the Chairperson of the Board, so long as he is able to
serve and remains a Stockholder.  He shall preside over all Board meetings.  As
used in this Agreement, “Shares” means and includes any and all shares of Common
Stock and/or shares of capital stock of the Company, by whatever name called,
which carry voting rights and shall include any such shares now owned or
subsequently acquired by a Stockholder, however acquired, including without
limitation stock splits and stock dividends.

7.3           Certain Actions Requiring Special Unanimous Approval.  The clause
“(so long as any shares of the Series A Preferred remain outstanding)” in
Section 2.1 of the Stockholders Agreement is hereby amended to read as “(except
in connection with an Investment Event or

 

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after the conversion of the Series A Preferred to Common Stock as a result of
such Investment Event)”.

7.4           Rights of First Refusal and Purchase Options.  From and after an
Investment Event, the term “Purchaser” as used in Sections 3.4 through 3.7,
inclusive, of the Stockholders Agreement shall be deemed to refer to all
shareholders of the Company other than the Founders.  In addition, for purposes
of Sections 3.4 through 3.7, inclusive, of the Stockholders Agreement, the
purchase rights of all shareholders of the Company other than the Founders shall
be pro rata in accordance with such shareholders’ respective ownership interests
in the Company (or such other allocation as may be agreeable among such
shareholders if any shareholder desires to purchase less than its pro rata
share).

7.5           Pre-Emptive Rights.  A new Section 3.9 shall be added to the
Stockholders Agreement, which shall read in its entirety as follows:

3.9           Preemptive Rights.  The Company hereby grants to Purchaser a right
of first refusal to purchase its Pro Rata Share (as defined herein) of New
Securities (as defined herein) that the Company may, from time to time, propose
to issue and sell at any time that the Purchaser holds of record any shares of
the Series A Preferred or ordinary shares of the Company that entitle the
Purchaser to vote at least fifteen percent (15%) of all the votes that may be
cast in an election of directors of the Company.

(a)           Notice.  If the Company proposes to undertake an issuance or sale
of New Securities the Company shall give the Purchaser written notice of its
intention, describing the amount and type of New Securities and the price and
terms upon which the Company proposes to issue the same.  The Purchaser shall
have thirty (30) days from the date of receipt of any such notice to agree to
purchase up to its respective Pro Rata Share of such New Securities for the
price and upon the terms specified in the notice by giving written notice to the
Company and stating therein the quantity of New Securities to be purchased.  The
closing of the purchase of the New Securities to be issued and sold to the
Purchaser shall occur at the same time as the closing of the sale of New
Securities not elected or eligible to be purchased by Purchaser shall occur.

(b)           Eligible Sales to Third Parties.  After giving the notice and
opportunity for Purchaser to participate as required under Section 3.9(a) above,
the Company shall have ninety (90) days thereafter to issue and sell the New
Securities not elected nor eligible to be purchased by the Purchaser at the
price and upon the terms no more favorable to the purchasers of such securities
than specified in the Company’s notice under Section 3.9(a).  In the event the
Company has not sold such New Securities within said ninety (90) day period, the
Company shall not thereafter issue or sell any New Securities without first
offering such securities to the Purchaser in the manner provided above.

(c)           Definitions.  For purposes of this Agreement, the following terms
have the following definitions:

 

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(i)                                     “New Securities” means any shares of
capital stock of the Company, including Common Stock and any series of preferred
stock, whether now authorized or not, of any type whatsoever that are, or may
become, convertible into or exchangable for said shares of Common Stock and
rights, options or warrants to purchase said shares of Common Stock or preferred
stock, and securities of any type whatsoever that are, or may become,
convertible into or exchangeable for said shares of Common Stock or such
preferred stock; provided, however, that for purposes hereunder, “New
Securities” does not include (A) Common Stock offered to the public generally
pursuant to a registration statement under the Securities Act of 1933, as
amended; or (B) securities issued in connection with any stock split or stock
dividend by the Company.

(ii)                                  “Pro Rata Share” means the ratio that (A)
the sum of the total number of shares of Common Stock that are then held by the
Purchaser, on a Fully Diluted Basis, bears to (B) the sum of the total number of
shares of Common Stock then outstanding, on a Fully Diluted Basis.

7.6           Balance of Agreement.  Except as modified by this Agreement, the
Stockholders Agreement shall continue in full force and effect after Closing.

8.     Choice of Law.  This Agreement shall be governed by and construed in
accordance with the laws of the State of New York (without reference to the
conflicts of law provisions thereof).  To the extent that any conflict may arise
between the terms and conditions of this Agreement and the terms and conditions
of the Company’s Memorandum of Association or Articles of Association or any
other organizational document, the terms and conditions of this Agreement shall
prevail.

9.     Terms Confidential.  The parties shall use reasonable commercial efforts
to keep the terms, amounts and facts of this Agreement completely confidential
to avoid disclosure hereafter of any information concerning this Agreement to
anyone except their respective attorneys, accountants, or other professional
advisors.  Notwithstanding the foregoing prohibition, (a) the parties shall not
be prohibited from disclosing the terms, amounts and facts of this Agreement or
this Agreement itself as may be requested by governmental entities or as may be
required by law, including any Federal or state securities laws or regulations,
and (b) the Company shall not be prohibited from disclosing the terms, amounts
and facts of this Agreement or this Agreement itself as may be requested by any
person or entity with whom the Company is engaged in discussions with concerning
any investment in the Company or any financing, recapitalization,
reorganization, or sale of the capital stock of Company (or any rights thereto)
or all or substantially all of the assets of the Company.  The Company may
inform its employees the transactions contemplated by this Agreement.

10.   Entire Agreement.  In addition to the Stockholders Agreement, the
Executive Employment Agreements dated September 10, 2004, between the Company
and each of the Stockholders shall remain in full force and effect.  Otherwise,
this Agreement, and the other agreements,

 

11

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instruments, or documents executed in connection herewith or delivered at
Closing, constitute the entire agreement among the parties with respect to the
subject matter hereof and thereof, and supersede any other agreement with
respect hereto and thereto, and there are no other or continuing agreements or
understandings between IBAH, on one hand, and the Company, IBA USA, or the
Stockholders, on the other hand, except as expressly recited herein or therein;
provided, that, the foregoing shall not affect any agreements solely between the
Company, IBA USA, and the Stockholders to the extent that the IBAH Released
Parties are not affected thereby.

11.   Execution in Counterparts.  This Agreement may be executed in any number
of counterparts, each of which when so executed and delivered shall constitute
an original, but such counterparts together shall constitute but one and the
same Agreement.  The exchange of copies of this Agreement and of signature pages
by facsimile transmission shall constitute effective execution and delivery of
this Agreement as to the parties and may be used in lieu of the original
Agreement for all purposes.  Signatures of the parties transmitted by facsimile
shall be deemed to be their original signatures for all purposes.

12.   Legal Advice.  Each party hereto acknowledges that such party has had the
advice of independent counsel selected by such party in connection with the
terms of this Agreement and the other agreements executed in connection
herewith, and that no offer, promise, inducement or consideration of any kind or
degree, except as expressly stated in this Agreement, has been provided or
promised to such party by any other party or person in connection with such
party’s entry into this Agreement and the other agreements executed in
connection herewith.

13.   Severability.  Should any provision of this Agreement be declared and/or
be determined by any court to be illegal or invalid, the validity of the
remaining parts, terms or provisions shall not be affected thereby.

14.   Expenses.  Except as otherwise provided in this Agreement, each party to
this Agreement will bear its respective fees and expenses incurred in connection
with the preparation, negotiation, execution and performance of this Agreement
and the transactions contemplated by this Agreement, including all fees and
expenses of its agents and representatives.  If any party hereto is institutes a
Proceeding to enforce such party’s rights in accordance with the provisions of
this Agreement, the prevailing party shall be entitled to recover its reasonable
expenses, including attorneys’ fees, in connection with any such action.

15.   Further Assurances.  At any time and from time to time, upon the
reasonable of a party hereto, each other party hereto shall promptly execute and
deliver all such further agreements, documents, and instruments and take such
further action as may be necessary or appropriate to carry out the provisions
and purposes of this Agreement or any other agreement executed in connection
herewith.

16.   Miscellaneous.  This Agreement shall be binding upon, and inure to the
benefit of the parties hereto and their respective heirs, successors and
assigns. A modification or waiver of any of the provisions of this Agreement
shall be effective only if made in writing and signed by each of the parties
hereto.  The failure of any party to insist upon the strict performance of any
of the provisions of this Agreement shall not be construed as a waiver of any
subsequent default of the same or any other provision.

 

12

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17.   Notices.  Any notices required to be given pursuant to the provisions
hereof shall be given in writing to the parties below by certified mail, return
receipt requested, or electronically confirmed facsimile transmission as
follows:

If to the Company or IBA USA:

35 Mill Street, P.O. Box 444
Bernardsville, NJ  07924
Attention: John Kean, Jr. & Stanley J. Brownell
Fax:  (908) 766-5912

 

If to IBAH:

 

c/o Harken Energy Corporation
180 State Street
Southlake, Texas 76092
Attention: Mikel D. Faulkner, President
Fax:  (817) 288-0971

 

If to John Kean, Jr.:

 

40 Mountain Top Road
Bernardsville, NJ   07924
Fax:  (908) 766-5912

 

                If to Stanley J. Brownell:

 

P.O. Box 314
18 Old Turnpike Road
Oldwich, NJ  08858
Fax:  (908) 766-5912

 

 

 

[SIGNATURE PAGE FOLLOWS]

 

13

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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed
and entered into as of the day and year first above written.

International Business Associates Holding Co.,

Ltd., a British Virgin Islands company

 

 

By:

/s/  Mikel D. Faulkner

 

Mikel D. Faulkner, President

 

and Chief Executive Officer

 

 

 

 

International Business Associates, Ltd.,

an exempt Turks and Caicos company

 

 

By:

/s/  John Kean, Jr.

 

John Kean, Jr., Chief Executive Officer

 

 

 

 

International Business Associates (USA), Inc.,

a Delaware corporation

 

 

 

By:

/s/  John Kean, Jr.

Name:

John Kean, Jr.

Title:

President & CEO

 

 

/s/  John Kean, Jr.

John Kean, Jr. , individually

 

 

/s/  Stanley J. Brownell

Stanley J. Brownell, individually

 

 

 

Harken hereby executes this agreement for the sole purpose of agreeing to be
bound by the provisions of Section 2.1 of this Agreement.

Harken Energy Corporation

 

 

 

By:

/s/  Mikel D. Faulkner

 

Mikel D. Faulkner, President

 

 

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ATTACHMENT A

CERTAIN DEFINED TERMS

 

Capitalized terms used in the foregoing agreement but not otherwise defined
therein shall have the following meanings:

 

“Common Stock” means the Company’s ordinary stock, US$1.00 par value per share.

 

“Governmental Body” means any: nation, state, county, city, town, borough,
village, district or other jurisdiction; federal, state, local, municipal,
foreign or other government; governmental or quasi-governmental body of any
nature (including any agency, branch, department, board, commission, court,
tribunal or other entity exercising governmental or quasi-governmental powers);
multinational organization or body; body exercising, or entitled or purporting
to exercise, any administrative, executive, judicial, legislative, police,
regulatory or taxing authority or power; or official of any of the foregoing.

 

“Harken” means Harken Energy Corporation, a corporation with offices at 180
State Street, Southlake, TX 76092.

 

“IBA USA Common Stock” means the IBA USA’s common stock, US$0.01 par value per
share.

 

“Including,” “includes” and “include” mean, respectively, “including, without
limitation,” “includes, without limitation” and “include, without limitation.”

 

“Preferred Shares” means collectively the Company’s Series A Redeemable
Preferred Shares, par value US$.01 per share.

 

“Proceedings” means any action, arbitration, audit, hearing, investigation,
litigation or suit (whether civil, criminal, administrative, judicial or
investigative, whether formal or informal, whether public or private) commenced,
brought, conducted or heard by or before, or otherwise involving, any
Governmental Body or arbitrator.

 

“Redeemed Securities” means collectively 7,500 Preferred Shares, the Warrant,
and 24 shares of Common Stock, US$0.01 par value per share, of IBA USA.

 

“Redemption” means collectively the acquisition of the Redeemed Securities by
the Company and by IBA USA.

 

“Stockholders Agreement” means the Stockholders Agreement dated September 10,
2004, among the Company, the Stockholders and IBAH.

 

“Warrant” means that certain Ordinary Share Purchase Warrant issued September
10, 2004, to purchase 24 shares of Common Stock.

 

 

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ATTACHMENT B

FORM OF

CONFIDENTIALITY AGREEMENT

 

 

CONFIDENTIALITY AND NONDISCLOSURE AGREEMENT

 

                This Confidentiality and Nondisclosure Agreement (“Agreement”)
is made and entered into as of January 31, 2006, by and among International
Business Associates Holding Co., Ltd., a British Virgin Islands company,
International Business Associates (USA), Inc., a Delaware corporation,
International Business Associates, Ltd., an exempt Turks and Caicos company
(collectively referred to herein as the “Parties” and individually as a
“Party”).

 

                WHEREAS, the Parties have recently had or will have business
relationships with respect to business opportunities involving natural gas
trading and other related activities in Eastern Europe and the United States. 
Each of the foregoing items being referred to herein individually as a “Project”
and collectively as the “Projects.”  As a result of such discussions, it is
deemed desirable by each Party or its Affiliates to disclose certain information
to the other Party or its Affiliates; and

 

                WHEREAS, it is a condition to the disclosure of such information
that the Parties enter into this Agreement to evidence the Parties’ undertakings
and agreement with respect to the treatment as confidential, and the control and
use of, information that may be furnished to the Parties;

 

                NOW, THEREFORE, in consideration of the foregoing premises, the
mutual covenants contained herein and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the Parties hereby agree
as follows:

 

                1.             Defined Terms.  As used in this Agreement each of
the following terms shall have the meanings assigned to such term as set forth
below:

                                1.1.          “Affiliate” means any Person that
directly or indirectly (through one or more intermediaries) controls or is
controlled by or is under common control with the relevant Person specified
herein.

 

                                1.2.          “Confidential Information” means
(a) all information, whether of a business , technical, engineering, economic or
other nature and regardless of the form in which it is communicated or
maintained, relating to a party (the “Disclosing Party”), its Affiliates and/or
the Projects that is provided to the other Party (the “Receiving Party”) or any
of its Representatives by the Disclosing Party or any of its Representatives,
(b) all sketches, drawings, reports, analysis, compilations, studies and notes
containing or reflecting all information described in 1.2(a), regardless of who
prepares such materials, (c) the fact that the Confidential information has been
made available to or is being inspected or evaluated by the Receiving Party, and
(d) the fact that such discussions and negotiations are taking place concerning
a Project or Projects or other related transactions between the Parties, except
that Confidential Information shall not include:

 

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(i)            information which was already in the receiving Party’s or its
Representatives’ possession on a non-confidential basis prior to disclosure
hereunder;

 

(ii)           information which prior to disclosure was already in the public
domain, or which after disclosure entered the public domain other than by a
breach of this Agreement by the Receiving Party or any of its Representatives;
and

 

(iii)          information which was received from a third party which the
Receiving Party reasonably believes was not an is not violating an obligation of
confidentiality to the Disclosing Party or its Affiliates; provide that use or
disclosure by the Receiving Party of information which the Receiving Party
obtains in the manner described by this Section 1.2(iii) does not violate any of
the terms under which it was disclosed by said third party.

 

                                1.3.          “Person” means any natural person,
corporation, company, partnership, limited liability company, joint venture,
trust, organization, association, sole proprietorship or other entity.

 

                                1.4.          “Representatives” means the
directors, officers, employees, partners, managers, agents, representatives,
advisors, consultants, or contractors of the person specified or of its
Affiliates.

 

                2.             Restrictions on Disclosure and Use of
Confidential Information.

 

                                2.1.          The Receiving Party Agrees to, and
to cause its Representatives to, treat all Confidential Information as
confidential and secret and comply with the terms and conditions contained
herein.  The Receiving Party shall not, and shall not permit its Representatives
to, disclose Confidential Information to any person (except as set forth in this
Section 2), without the prior written consent of the Disclosing Party.

 

                                2.2.          Without the prior written consent
of the Disclosing Party, the Receiving Party shall not, and shall not permit its
Representatives to, make any use whatsoever of the Confidential Information
other than as may be necessary to evaluate the possible joint development of a
Project or Projects.  Without limiting the generality of the foregoing, the
Receiving Party shall not, and shall not permit its Representatives to, use the
Confidential Information for its own business or benefit or for other than for
the specific purpose set forth in this Agreement during the term hereof.

 

                                2.3.          Except as set forth in Section
2.4, the Receiving Party shall only disclose Confidential Information to its
Representatives who need to know the contents of the Confidential Information
for the purpose of evaluating and pursuing the Projects and Persons chosen by
the Receiving Party as potential lenders or investors in the Projects or other
Persons

 

 

--------------------------------------------------------------------------------

 

that are concerned with the Projects and whose knowledge of such Confidential
Information is necessary or advisable for such purpose.  Each such Person
receiving Confidential Information from the Receiving Party shall have the same
obligations with respect too such Confidential Information as the Receiving
Party hereunder, and the Receiving Party shall so instruct each such Person
receiving Confidential Information and shall use all reasonable efforts to
prevent and prosecute unauthorized use or disclose of Confidential Information
by such Persons.  The Receiving Party shall be liable to the Disclosing Party
for any breach of such obligations by any such Persons.

 

                                2.4.          If the Receiving Party or any of
its Representatives is requested or required (by deposition, interrogatories,
requests for information or documents in legal proceedings, subpoenas or similar
process) in connection with any proceeding to disclose or otherwise becomes
legally compelled to disclose any Confidential Information, the Receiving Party
shall provide the Disclosing Party with prompt written notice and reasonable
assistance (subject to reimbursement by the Disclosing Party of all reasonable
and out of pocket expenses incurred by the Receiving Party in providing such
assistance) so as to enable the Disclosing Party to seek a protective order or
other appropriate remedy or waive compliance with this Agreement.  If such a
protective order or other remedy is not obtained, or if the Disclosing Party
waives compliance with this Agreement, the Receiving Party (or such other
Persons to which such request is directed) may disclose Confidential
Information, but only such Confidential Information as it is legally required to
disclose to avoid contempt or other penalty in the reasonable opinion of counsel
to the Receiving Party, and shall exercise reasonable efforts to obtain reliable
assurance that confidential treatment will be accorded such Confidential
Information disclosed.

 

                3.             Safekeeping and Return of Confidential
Information.

 

                                3.1.          The Receiving Party shall take all
reasonable steps to prevent the unauthorized use, distribution or reproduction
of all copies of written materials relating to or containing any party of
Confidential Information, including all sketches, drawings, reports, analysis,
compilations, studies and notes, and all copies, reproductions, reprints and
translations thereof.  The Receiving Party shall not, and shall not permit its
Representatives to, directly or indirectly, duplicate or otherwise produce, in
whole or in part, such Confidential Information in any manner inconsistent with
the terms hereof.

 

                                3.2.          The Receiving Party shall return
to the Disclosing Party, within ten (10) days after receipt of such a request by
the Disclosing Party, all materials containing or reflecting Confidential
Information that are in the possession of the Receiving Party and its
Representatives, without retaining copies, except to the extent prohibited or
required by applicable law in the reasonable opinion of counsel to the Receiving
Party and except in the case of reports, analysis, compilations, studies, notes
or other documents or records prepared by the Receiving Party which contain or
otherwise reflect or are generated from Confidential Information, the Receiving
Party may retain copies, but shall keep such copies confidential in accordance
with this Agreement.  Notwithstanding the return of such materials, the
receiving Party and its Representatives shall continue to be bound by the
obligations of confidentiality and other obligations hereunder.

 

--------------------------------------------------------------------------------

 

                4.             Notice.  Any notices required to be given
pursuant to the provisions hereof shall be given in writing to the parties below
by certified mail, return receipt requested, or electronically confirmed
facsimile transmission as follows:

If to the International Business Associates, Ltd. or International Business
Associates (USA), Inc.:

35 Mill Street, P.O. Box 444
Bernardsville, NJ  07924
Attention: John Kean, Jr. & Stanley J. Brownell
Fax:  (908) 766-5912

 

If to International Business Associates Holding Co.:

 

c/o Harken Energy Corporation
180 State Street
Southlake, Texas 76092
Attention: Mikel D. Faulkner, President
Fax:  (817) 288-0971

 

                5.             Term.      This Agreement and the obligations of
confidentiality undertaken hereby shall terminate and be of no further force and
effect after one (1) year from the date of this Agreement.

 

                6.             No Waiver; Amendments.  No failure or delay by
the Disclosing Party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any right,
power or privilege hereunder.  Any modification of and amendment to this
Agreement and any waiver of any provision of this Agreement must be in writing
signed by the Parties.

 

                7.             Governing Law.  This Agreement shall be governed
by and construed and enforced in accordance with the laws of the state of New
York, USA without reference to the conflict of laws or principles thereof.

 

                8.             Severability.          If any provision of this
Agreement is held to be illegal, invalid or unenforceable under present or
future laws, such provision shall be fully severable and this Agreement shall be
construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a part of this Agreement, and the remaining provisions of
this Agreement shall remain in full force and effect and shall not be affected
by the illegal, invalid or unenforceable provision or by its severance from this
Agreement.  Furthermore, in lieu of such illegal, invalid or unenforceable
provision, there shall be added automatically as a part of this Agreement a
provision as similar in its terms to such illegal, invalid or unenforceable
provision as may be possible and be legal, valid and enforceable.

 

                9.             Remedies.  It is agreed that each Party shall be
entitled to relief both at law and in equity, including, but not limited to
injunctive relief and specific performance, in the event of

 

 

--------------------------------------------------------------------------------

 

any breach or anticipated breach of this Agreement, without proof of any actual
or special damages provided that in no event will a party or its Representatives
be liable for punitive or exemplary damages.

 

                10.           Successors and Assigns.  Neither Party may assign
this Agreement or any of its rights hereunder except with the prior written
consent of the other Party and except that either Party may, without the consent
of the other Party, but with written notice to the other Party, assign this
Agreement and the rights hereunder to any of its Affiliates that own or propose
to acquire an interest in the Project provided that the assigning Party shall
continue to be bound by its obligations as a Receiving Party with respect to the
Confidential Information of a Disclosing Party in accordance with this
Agreement.  This Agreement shall be binding upon and inure to the benefit of the
successors and permitted assigns of the parties.

 

                11.           No Obligation or Joint Venture.  The Parties agree
that unless and until a definitive agreement has been executed and delivered, no
contract or agreement providing for a business relationship between the Parties
shall be deemed to exist between the Parties, and neither Party will be under
any legal obligation of any kind whatsoever with respect to such relationship by
virtue of this Agreement or any written or oral expression thereof, except, in
the case of this Agreement, for the matters specifically agreed to herein.  For
purposes of this Agreement, the term “definitive agreement” does not include an
executed letter of intent or any other preliminary written agreement or offer,
unless specifically so designated in writing and executed by both Parties.  This
Agreement does not obligate either Party to deal exclusively with the Other
Party.

 

                12.           Counterparts.  This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original, and all of
which together shall constitute one and the same instrument.  Any executed
counterpart transmitted by facsimile or similar transmission by any Party shall
be deemed an original and shall be binding upon such Party.

 

                13.           No Warranty.  The Parties hereby acknowledge that
neither Party, nor any of its representatives, agents, affiliates or assigns
makes any representations or warranties whatsoever concerning the accuracy,
completeness or correctness of the Confidential Information supplied hereunder,
nor must such representation or warranty be implied.

 

                14.           Entire Agreement.  This Agreement represents the
entire agreement between the Parties with respect to the subject matter hereof
and supersedes all prior agreements, whether oral or written.

 

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                IN WITNESS WHEREOF, the Parties have executed this Agreement as
of the date first written above.

 

 

International Business Associates Holding Co.,

Ltd., a British Virgin Islands company

 

 

By:

/s/  Mikel D. Faulkner

 

Mikel D. Faulkner, President

 

and Chief Executive Officer

 

 

 

 

International Business Associates, Ltd.,

an exempt Turks and Caicos company

 

 

By:

/s/  John Kean, Jr.

 

John Kean, Jr., Chief Executive Officer

 

 

 

 

International Business Associates (USA), Inc.,

a Delaware corporation

 

 

 

By:

/s/  John Kean, Jr.

Name:

John Kean, Jr.

Title:

President & CEO

 

 

 

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