HARKEN ENERGY CORP
LOAN AGREEMENT DATED 7/15/2002
<DOCUMENT>
<TYPE>EX-10.18
<SEQUENCE>3
<FILENAME>dex1018.txt
<DESCRIPTION>LOAN AGREEMENT DATED 7/15/2002
<TEXT>
<PAGE>

                                                                   Exhibit 10.18

                                 LOAN AGREEMENT

        THIS LOAN AGREEMENT (the "Agreement") is made and entered into as of
July 15, 2002, by and between Harken Energy Corporation, a Delaware corporation
(the "Borrower"), and Lyford Investments Enterprises Ltd., a British Virgin
Islands company (the "Lender").

                                R E C I T A L S:

        WHEREAS, Borrower is seeking to borrow, and Lender has agreed to lend,
the sum of Three Million Dollars ($3,000,000) through a term loan on the terms
and conditions hereinafter set forth;

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

        1.      DEFINITIONS. As used in this Agreement, the following terms
have the following meanings:

                "Affiliate" means, with respect to a specified entity or person,
        any other entity or person that directly, or indirectly through one or
        more intermediaries, controls or is controlled by, or is under common
        control with, the specified entity or person. For purposes of this
        definition, "control" means the possession, directly or indirectly, of
        the power to direct or cause the direction of the management and
        policies of an entity or person, whether through the ownership of voting
        securities, by contract or otherwise.

                "Board Change" shall mean a change in the majority of the
        members of Borrower's Board of Directors or a change in the office of
        the Chairman of the Board of Borrower.

                "Business Day" means any day on which commercial banks are not
        authorized or required to close in Houston, Texas.

                "Cure Period" has the meaning specified in Section 8(b)(i).

                "Default Option Period" has the meaning specified in Section
        8(b)(iii).

                "Default Rate" has the meaning specified in Section 8(b)(ii).

                "Default Rate Period" has the meaning specified in Section
        8(b)(ii).

                "Equity Financing Transaction" has the meaning specified in
        Section 3(c).

                "Event of Default" has the meaning specified in Section 8(a).

                "GED" refers to Global Energy Development PLC, a subsidiary of
        Borrower.

                "GED Option Price" has the meaning specified in Section
        8(b)(iii).

<PAGE>

                "GED Warrant" has the meaning as specified in Section 7(a).

                "Interest Rate" means the rate of ten percent (10%) per annum,
        with no compounding.

                "Maturity Date" means July 15, 2005.

                "Non-Payment Default" has the meaning specified in Section 8(c).

                "Note" means the Promissory Note issued by Borrower, payable in
        accordance with the terms hereof and thereof, evidencing the
        indebtedness hereunder substantially in the form of Exhibit A hereto, as
        the same may be amended, supplemented or modified.

                "Payment Default" has the meaning specified in Section 8(b).

                "Securities Act" means the Securities Act of 1933, as amended.

                "Term Loan" has the meaning specified in Section 2(a).

        2.      LOAN TERMS.

                (a) Term Loan. Subject to the terms and conditions hereof, the
Lender will lend the amount of Three Million Dollars ($3,000,000.00) (the "Term
Loan") to Borrower. The Term Loan shall be evidenced by, and payable in
accordance with the terms of the Note. The proceeds of the Term Loan shall be
used by Borrower for general corporate purposes, including working capital needs
or to refinance or pay long-term or short-term debt obligations.

                (b) Interest. Except as otherwise provided in this Agreement or
in the Note, the unpaid principal amount of the Term Loan outstanding from time
to time shall bear interest from the date hereof until fully paid at the
Interest Rate. All interest shall be computed on the basis of a year of 360 days
and the actual number of days elapsed (including the first day but excluding the
last day).

        3.      PAYMENTS.

                (a) Terms of Payment. All payments of principal, interest or
other amounts to be made by Borrower shall be made in accordance with the terms
of this Agreement and the Note.

                (b) Method of Payment. All payments of principal, interest or
other amounts to be made by Borrower shall be made in accordance with the terms
of the this Agreement and the Note and shall be made to Lender at its designated
office, without setoff, deduction or counterclaim in immediately available
funds. Whenever any payment under this Agreement, the Note or any other
documents executed in connection herewith shall be stated to be due on a day
that is not a Business Day, such payment may be made on the next Business Day,
and interest shall continue to accrue during such extension.

                                       -2-

<PAGE>

                (c)     Prepayment.

                        (i)   Voluntary Prepayment. Prepayment of the Term Loan,
and the corresponding Note, may be made at any time without the consent of the
Lender and without penalty.

                        (ii)  Mandatory Prepayment. Notwithstanding the other
provisions of this Agreement or the Note, Borrower shall be obligated to make
the following prepayments:

                              (A)       In the event that Borrower is subject to
a Board Change, Borrower shall immediately prepay the entire amount owed under
the Term Loan, including any principal and any accrued but unpaid interest on
the Term Loan; and

                              (B)       In the event that Borrower receives cash
proceeds upon an Equity Financing Transaction, Borrower shall, within thirty
(30) days of Borrower's receipt of such cash proceeds, use such cash proceeds to
prepay any remaining principal amount of this Loan to Lender; provided that,
such prepayment obligation shall not exceed sixty percent (60%) of the aggregate
cash proceeds received by Borrower upon closing of the Equity Financing
Transaction. As used herein the term "Equity Financing Transaction" shall
include any sale of Borrower's common stock for cash other than (i) issuances of
securities upon the exercise of options or warrants, (ii) issuances of stock
bonuses or stock awards or under any plan to issue securities as compensation to
employees, directors or consultants of the Borrower or any Affiliate of
Borrower, (iii) issuances of securities upon the conversion of any other
security of Borrower, (iv) issuances of securities in a merger or acquisition,
or (v) securities issued in connection with any stock split, stock dividend,
recapitalization or similar event.

        4. ABSENCE OF SECURITY. Repayment of the Term Loan is not secured by any
of the assets or properties of the Borrower, by any liens or encumbrances on any
assets or property of Borrower, or in any other manner. Lender expressly agrees
and represents that nothing in this Agreement or the Note shall create or
constitute any security interest, pledge or lien upon any of the securities of
GED held by Borrower.

        5. REPRESENTATIONS OF BORROWER. Borrower represents, warrants and
acknowledges to the Lender that:

                (a) Due Organization and Qualification. Borrower is a
corporation duly existing under the laws of its state of incorporation and
qualified and licensed to do business in any state in which the conduct of its
business or its ownership of property requires that it be so qualified.

                (b) Due Authorization; No Conflict. The execution, delivery, and
performance of this Agreement are within Borrower's powers, have been duly
authorized, and are not in conflict with nor constitute a breach of any
provision contained in Borrower's Certificate of Incorporation or Bylaws, nor
will such events constitute an event of default under any material agreement to
which Borrower is a party or by which Borrower is bound. This Agreement when
executed and delivered by the Borrower will constitute a valid and legally
binding obligation of the Borrower, enforceable in

                                       -3-


<PAGE>

accordance with its terms, and subject to the laws of general application
relating to bankruptcy, insolvency and the relief of debtors and rules of law
governing specific performance, injunctive relief or other equitable remedies.

                (c) Litigation. There is no action, suit or proceeding pending
or currently threatened against the Borrower which questions the validity of
this Agreement or the Note or the right of the Borrower to enter into this
Agreement or the Note or to consummate the transactions contemplated hereby or
thereby.

                (d) Solvency, Payment of Debts. Borrower is solvent and able to
pay its debts (including trade debts) as they mature.

        6.      REPRESENTATIONS OF LENDER. Lender represents, warrants and
acknowledges to the Borrower as follows:

                (a) Accredited Investor. Lender is an accredited investor, as
defined in Rule 501(a) of Regulations D promulgated under the Securities Act,
and has such knowledge and experience in financial and business matters that it
is capable of evaluating the merits and risks of an investment in this Term
Loan, and making an informed investment decision. Lender has not been organized
solely for the purpose of investing in the Term Loan.

                (b) Investment. This Term Loan, and any securities of the
Borrower acquired by Lender as a result of this transaction, is solely for the
account of Lender, for investment purposes only, not as a nominee or agent, and
not with a view to the resale, distribution or assignment thereof or of dividing
or allowing others to participate in this investment.

                (c) Access to Data. Lender has had a reasonable opportunity to
ask questions or and receive answers from the Borrower and its executive
officers concerning the Borrower and all such questions, if any, have been
answered to the full satisfaction of Lender. Lender has had the opportunity to
obtain from the Borrower any information, to the extent possessed by Borrower or
obtainable without unreasonable effort and expense, necessary to evaluate the
merits and risks of this investment and has concluded, based on the information
presented to Lender, Lender's own understanding of investments of this nature
and of an investment in any of the Borrower's securities in particular, and the
advice of such consultants or counsel as Lender has deemed appropriate, that
Lender wishes to make this investment.

                (d) Rule 144. Lender understands that the Note is characterized
as a "restricted security" under the federal securities laws inasmuch as it is
being acquired from the Borrower in a transaction not involving a public
offering and that under such laws and applicable regulations such security may
only be resold without registration under the Securities Act only in certain
limited circumstances. In this connection, Lender represents that it is familiar
with Securities and Exchange Commission Rule 144, as presently in effect, and
understands the resale limitations imposed thereby and by the Securities Act.
Lender also understands that no public market now exists for the Note or of any
other securities that may be issued by the Borrower hereunder and that the
Borrower has made

                                       -4-


<PAGE>

no assurances that a public market will ever exist for the Note or any other
securities that may be issued by the Borrower hereunder.

                (e) Due Authorization; No Conflict. The execution, delivery, and
performance of this Agreement are within Lender's powers, have been duly
authorized, and are not in conflict with nor constitute a breach of any
provision contained in Lender's Certificate of Incorporation or Bylaws, nor will
such events constitute an event of default under any material agreement to which
Lender is a party or by which Lender is bound. This Agreement when executed and
delivered by the Lender will constitute a valid and legally binding obligation
of the Lender, enforceable in accordance with its terms, and subject to the laws
of general application relating to bankruptcy, insolvency and the relief of
debtors and rules of law governing specific performance, injunctive relief or
other equitable remedies.

        7.      COVENANTS.

                (a) GED Warrant. As further consideration for Lender's agreement
to enter into the Agreement, Borrower covenants that it shall, within 30 days
after the date of this Agreement, deliver to Lender a non-transferable
non-registered stock purchase warrant granting Borrower a right to purchase up
to 4.2 million shares of GED at an exercise price of 50 pence per share (the
"GED Warrant"). The Warrant shall expire, and shall no longer be exercisable by
Lender, on or after 90 days after the Maturity Date of the Note, provided that,
if an Event of Default occurs, the Warrant shall continue to be exercisable for
a period of three years after the original expiration date.

                (b) Voting Restriction. Borrower covenants that, so long as the
Term Loan remains outstanding, it will not vote any of its GED shares in favor
of any financing transaction involving the issuance of GED shares at a price
less than 25 pence per share; provided that, this restriction shall not apply to
(in each case referring to issuances of GED securities): (i) issuances of
securities upon the exercise of options or warrants, (ii) issuances of stock
bonuses or stock awards or under any plan to issue stock as compensation to
employees, directors or consultants of GED or any Affiliate of GED, (iii)
issuances of securities for non-cash consideration, (iv) issuances of securities
upon the conversion of any other security, (v) issuances under a direct stock
purchase plan, dividend reinvestment plan or similar plan, (vi) issuances of
securities in a merger or acquisition, (vii) securities issued in connection
with any stock split, stock dividend, recapitalization or similar event or
(viii) any similar issuances of securities that are not made primarily for the
purpose of raising additional capital.

        8.      DEFAULT.

                (a) Events of Default. Each of the following shall be deemed an
"Event of Default:"

                    (i) Borrower shall fail to pay when due any of the
obligations under this Agreement or Note;

                                       -5-

<PAGE>

                        (ii)    Borrower shall fail to comply with any covenant
contained in this Agreement;

                        (iii)   The insolvency or bankruptcy of the Borrower;

                        (iv)    The commission of any act of bankruptcy by the
Borrower;

                        (v)     The filing by or against the Borrower of a
petition in bankruptcy or any petition for relief under the federal or state
bankruptcy laws or the continuation of such petition without dismissal for a
period of ninety (90) days or more;

                        (vi)    The appointment of, or the Borrower applies for
the appointment of, a receiver or trustee or similar person, to take possession
of the property or assets of the Borrower; or

                        (vii)   The Borrower shall file a certificate of
dissolution under applicable state law or shall be liquidated, dissolved or
wound-up or shall commence or have commenced against it any action or proceeding
for dissolution, winding-up or liquidation, or shall take any corporate action
in furtherance thereof.

                (b) Remedies Upon Payment Default. Notwithstanding the
provisions of this Agreement or of the Note, if any Event of Default as
described in subsection (i) of Section 8(a) above (hereinafter a "Payment
Default") shall occur, then Lender may exercise any and all legal and equitable
rights and remedies set forth in this Agreement or the Note, including the
following:

                        (i)     Cure Period. For a period of 30 days following
the due date of any payment giving rise to a Payment Default (the "Cure
Period"), Borrower shall have an opportunity to cure such default by making full
payment of all amounts due to Lender, including the payment of all interest that
accrues under the terms of the Note through the date of payment.

                        (ii)    Default Rate Period. For an additional period
beginning on the date following the expiration of the Cure Period and continuing
for 30 days thereafter (the "Default Rate Period"), Borrower shall have an
opportunity to cure any Payment Default by making full payment of all amounts
then due to Lender, including the payment of all interest that accrues under the
terms of the Note through the date of payment; provided that the rate of
interest applied to such default payment shall increase to a rate equal to 200%
times the Interest Rate (hereinafter, the "Default Rate").

                        (iii)   Default Option Period. In the event that
Borrower fails to cure a Payment Default on or before the expiration of the
Default Rate Period, Lender shall, thereafter and for a period continuing until
such time as Maker has made full payment of all amounts then due to Lender (the
"Default Option Period"), have the option, in lieu of exercising any other
remedies that may be available to Lender, to purchase from Borrower a number of
shares of GED (as determined herein) in exchange for the release by Holder of
Borrower's obligation to pay any such amounts then due to Lender. Holder may
exercise such option by delivering a notice of exercise to Maker at any

                                       -6-

<PAGE>

time during a Default Option Period; provided that, such notice is received by
Maker prior to payment by Maker of the amounts then due to Lender. The total
number of shares subject to the option shall be determined by dividing the total
amount of the debt then due and payable to Lender (converted into British
Pounds) by the GED Option Price (defined below). The conversion of indebtedness
to British Pounds shall be computed using the currency exchange rate (U.S.
Dollars to British Pounds) as reported in the Wall Street Journal as of the
close of business on the Business Day immediately preceding the date of Lender's
notice of exercise of such option. The parties agree to use best efforts to
close the sale of GED shares as contemplated herein within 30 days of Lender's
notice to Borrower and to execute and provide such documents as necessary to
effect the transfer of the GED shares to Lender and the release of indebtedness
contemplated herein. During the Default Option Period, interest will continue to
accrue and be payable at the Default Rate. As used herein, the "GED Option
Price" shall mean the lesser of (i) 25 pence or (ii) 70% of the closing bid
price of GED shares as quoted on the London Stock Exchange on the Business Day
immediately preceding the delivery of a notice of exercise of the option by
Lender.

                (c) Remedies Upon Non-Payment Default. If any Event of Default
as described in subsections (ii) through (ix) of Section 8(a) above (hereinafter
a "Non-Payment Default") shall occur and such Non-Payment Default has not been
cured by Borrower, then Lender may exercise any and all legal and equitable
rights and remedies set forth in this Agreement or the Note including, without
limitation, declaring all principal and accrued interest under the Note
immediately due and payable.

                (d) Obligations Continue. The obligations of Borrower and the
rights of Lender under this Agreement and the Note shall continue in full
force and effect until the Term Loan has been paid in full.

        9.      MISCELLANEOUS.

                (a) Expenses. Borrower agrees to pay Lender for the reasonable
fees and expenses of counsel for Lender; such fees are agreed to be $50,000.
Except as otherwise provided herein, each party shall bear its own legal
expenses related to this transaction.

                (b) Transfer; Successors and Assigns. The terms and conditions
of this Agreement shall inure to the benefit of and be binding upon the
respective successors and assigns of the parties. Notwithstanding the foregoing,
Lender may not assign, pledge, or otherwise transfer its obligations or rights
under this Agreement without the prior written consent of Borrower.

                (c) Amendments and Waivers. Any term of this Agreement may be
amended only with the written consent of the Lender and the Borrower. Any
amendment or waiver effected in accordance with this Section 9(c) shall be
binding upon the Lender, the Borrower and each transferee of the Agreement. Any
waiver by the Lender or the Borrower of a breach of any provision of this
Agreement shall not operate as or be construed to be a waiver of any other
breach of such provision or of any breach of any other provision of this
Agreement. The failure of the Lender or the Borrower to insist upon strict
adherence to any term of this Agreement on one or more occasions shall not be

                                       -7-

<PAGE>


considered a waiver or deprive that party of the right thereafter to insist upon
strict adherence to that term or any other term of this Agreement.

                (d) Notices. All notices, consents, waivers and other
communications under this Agreement must be in writing and will be deemed to
have been duly given when (a) delivered by hand (with written confirmation of
receipt), (b) sent by facsimile (with written confirmation of receipt), or (c)
when received by the addressee, if sent by U.S. mail or a nationally recognized
overnight delivery service, in each case to the appropriate addresses and
facsimile numbers set forth below (or to such other addresses and facsimile
numbers as a party may designate by notice to the other party):

        To Lender:

                Lyford Investments Enterprises Ltd.
                c/o Quadrant Management Inc.
                720 Fifth Ave., 9th Floor
                New York, NY 10019
                Attn: Alan Quasha
                Facsimile No.: (212) 231-3939

        To Borrower:

                Harken Energy Corporation
                580 WestLake Park Boulevard, Suite 600
                Houston, Texas 77079
                Attention: A. Wayne Hennecke, Secretary
                Facsimile No.: (281) 504-4104

                with a required copy to:

                James W. Ryan
                Porter & Hedges, L.L.P.
                700 Louisiana, 35th Floor
                Houston, Texas 77002-2764
                Facsimile No.: (713) 226-0290

                (e) Governing Law. Unless otherwise specified therein, this
Agreement shall be governed by and construed in accordance with the laws of the
State of New York and the United States of America. Each party hereby
irrevocably agrees that any legal proceeding arising out of or in connection
with this Agreement shall be brought in the district courts of Harris County,
Texas, or in the United States District Court for the Southern District of
Texas, Houston Division.

                (f)     Counterparts. This Agreement may be executed in several
identical counterparts, and by the parties hereto on separate counterparts, and
each counterpart, when so

                                       -8-

<PAGE>


executed and delivered, shall constitute an original instrument, and all such
separate counterparts shall constitute but one and the same instrument.

                (g)     Captions. The headings and captions appearing in this
Agreement have been included solely for convenience and shall not be considered
in construing the Agreement.

                (h) Entire Agreement. This Agreement, together with the Note and
any other document executed in connection herewith, embody the entire agreement
between the Borrower and the Lender and supersede all prior proposals,
agreements and understandings relating to the subject matter hereof and thereof.

                (i) Invalidity. If any provision of this Agreement is invalid,
illegal or unenforceable, the balance of this Agreement shall remain in effect,
and if any provision is inapplicable to any person or circumstance, it shall
nevertheless remain applicable to all other persons and circumstances. In such
an event, the parties will in good faith attempt to effect the business
agreement represented by such invalidated term to the fullest extent permitted
by law.

                  [Remainder of page left blank intentionally]

                                       -9-

<PAGE>


        IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth above.

                                        BORROWER:

                                        HARKEN ENERGY CORPORATION


                                       By:

                                           -------------------------------------
                                           Bruce N. Huff
                                           President and Chief Operating Officer

                                        LENDER:

                                        LYFORD INVESTMENTS ENTERPRISES LTD.


                                       By:

                                           -------------------------------------
                                           Alan Quasha
                                           Title:
                                                 -------------------------------

                                      -10-

<PAGE>


                                    EXHIBIT A

                                 PROMISSORY NOTE

<PAGE>

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND HAS BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION
WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE
EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN
EXEMPTION FROM REGISTRATION AVAILABLE SO THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

$3,000,000                                                         July 15, 2002

                                 PROMISSORY NOTE

        FOR VALUE RECEIVED, Harken Energy Corporation, a Delaware corporation
(the "Maker"), promises to pay to the order of Lyford Investments Enterprises
Ltd., a British Virgin Islands company (the "Holder"), the principal amount of
Three Million Dollars ($3,000,000) together with interest thereon calculated
from the date hereof in accordance with the provisions of this Note. Terms not
defined herein, shall have the meaning given them in the Loan Agreement among
the Maker and the Holder dated as of July 15, 2002 (the "Loan Agreement").

        1. LOAN AGREEMENT. This Note (the "Note") is issued under the terms of
the Loan Agreement. The Holder is entitled to the benefits and subject to
certain obligations under the Loan Agreement and may enforce the agreements of
the Maker contained therein and exercise the remedies provided for thereby. The
benefits and rights of the Holder are subject to certain conditions and
restrictions also set forth in the Loan Agreement, which conditions and
restrictions may be enforced against the Holder.

        2. MATURITY. Except as otherwise provided in this Agreement or the Loan
Agreement, all accrued but unpaid interest and outstanding principal under this
Note shall be due and payable on July 15, 2005 (the "Maturity Date").
Notwithstanding the foregoing, Holder may declare the entire unpaid principal
sum of this Note, together with accrued and unpaid interest thereon, immediately
due and payable in advance of the Maturity Date upon the occurrence of a
Non-Payment Default under the terms of the Loan Agreement. Prepayments may be
made on this Note at any time, and without penalty. In accordance with the Loan
Agreement, Maker may also be required to prepay this Note in certain
circumstances as described therein.

        3.      INTEREST.

                (a) Rate. Except as otherwise provided in this Note or in the
Loan Agreement, the unpaid principal amount of the Note outstanding from time to
time shall bear interest from the date hereof until fully paid at the Interest
Rate (as defined in the Loan Agreement). All interest shall be computed and paid
in accordance with the Loan Agreement.

                (b)     Payments. All accrued interest on the Note shall be due
and payable on a quarterly basis in arrears beginning with an initial payment of
accrued interest on December 15, 2002

<PAGE>


and continuing thereafter on March 15, June 15, September 15 and December 15 of
each year until the Maturity Date.

        4.      DEFAULT. In the event of a Payment Default or Non-Payment
Default (as defined in the Loan Agreement, this Note shall be subject to the
remedies and conditions set forth in the Loan Agreement.

        5. ABSENCE OF SECURITY. Repayment of this Note is not secured by any of
the assets or properties of the Maker, by any liens or encumbrances on any
assets or property of Maker, or in any other manner. Holder expressly agrees and
represents that nothing in this Note or in the Loan Agreement shall create or
constitute any security interest, pledge or lien upon any of the securities of
GED held by Maker.

        6.      MISCELLANEOUS.

        (a) Transfer; Successors and Assigns. The terms and conditions of this
Note shall inure to the benefit of and be binding upon the respective successors
and assigns of the parties. Notwithstanding the foregoing, Holder may not
assign, pledge, or otherwise transfer this Note without the prior written
consent of Maker.

        (b) Amendments and Waivers. Any term of this Note may be amended only
with the written consent of the Holder and the Maker. Any amendment or waiver
effected in accordance with this Section 5(c) shall be binding upon the Holder,
the Maker and each transferee of the Agreement. Any waiver by the Holder or the
Maker of a breach of any provision of this Note shall not operate as or be
construed to be a waiver of any other breach of such provision or of any breach
of any other provision of this Note. The failure of the Holder or the Maker to
insist upon strict adherence to any term of this Note on one or more occasions
shall not be considered a waiver or deprive that party of the right thereafter
to insist upon strict adherence to that term or any other term of this Note.

        (c) Notices. All notices, consents, waivers and other communications
under this Note must be in writing and will be deemed to have been duly given
when (a) delivered by hand (with written confirmation of receipt), (b) sent by
facsimile (with written confirmation of receipt), or (c) when received by the
addressee, if sent by U.S. mail or a nationally recognized overnight delivery
service, in each case to the appropriate addresses and facsimile numbers set
forth below (or to such other addresses and facsimile numbers as a party may
designate by notice to the other party):

        To Holder:

                Lyford Investments Enterprises Ltd.
                c/o Quadrant Management Inc.
                720 Fifth Ave., 9th Floor
                New York, NY 10019
                Attn: Alan Quasha

                                       -2-

<PAGE>


                Facsimile No.: (212) 231-3939

        To Maker:

                Harken Energy Corporation
                580 WestLake Park Boulevard, Suite 600
                Houston, Texas 77079
                Attention: A. Wayne Hennecke, Secretary
                Facsimile No.: (281) 504-4110

                with a required copy to:

                James W. Ryan
                Porter & Hedges, L.L.P.
                700 Louisiana, 35th Floor
                Houston, Texas 77002-2764
                Facsimile No.: (713) 226-0290

                (d) Governing Law. Unless otherwise specified therein, this Note
shall be governed by and construed in accordance with the laws of the State of
New York and the United States of America. Each party hereby irrevocably agrees
that any legal proceeding arising out of or in connection with this Note shall
be brought in the district courts of Harris County, Texas, or in the United
States District Court for the Southern District of Texas, Houston Division.

                (e) Counterparts. This Note may be executed in several identical
counterparts, and by the parties hereto on separate counterparts, and each
counterpart, when so executed and delivered, shall constitute an original
instrument, and all such separate counterparts shall constitute but one and the
same instrument.

                (f)     Captions. The headings and captions appearing in this
Note have been included solely for convenience and shall not be considered in
construing the Note.

                (g) Entire Agreement. This Note, together with the Loan
Agreement and any other document executed in connection with the Loan Agreement,
embody the entire agreement between the Holder and the Maker and supersede all
prior proposals, agreements and understandings relating to the subject matter
hereof and thereof.

                (h) Invalidity. If any provision of this Note is invalid,
illegal or unenforceable, the balance of this Note shall remain in effect, and
if any provision is inapplicable to any person or circumstance, it shall
nevertheless remain applicable to all other persons and circumstances. In such
an event, the parties will in good faith attempt to effect the business
agreement represented by such invalidated term to the fullest extent permitted
by law.

                  [Remainder of page left blank intentionally]

                                       -3-

<PAGE>


        IN WITNESS WHEREOF, the parties hereto have executed this Note as of the
date set forth above.

                                        MAKER:

                                        HARKEN ENERGY CORPORATION


                                        By:
                                           -------------------------------------
                                           Bruce N. Huff
                                           President and Chief Operating Officer

                                        HOLDER:

                                        LYFORD INVESTMENTS ENTERPRISES LTD.


                                        By:
                                           -------------------------------------
                                           Alan Quasha
                                           Title:
                                                 -------------------------------

                                       -4-

</TEXT>
</DOCUMENT>
