Securities Purchase Agreement - Harken Energy Corp. and RGC International Investors LDC
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (this "AGREEMENT"), dated as of April 9,
1998, by and among Harken Energy Corporation, a Delaware corporation, with
headquarters located at 5605 N. MacArthur Boulevard, Suite 400, Irving, Texas
75038 ("COMPANY"), and RGC International Investors, LDC (the "BUYER").
WHEREAS:
A. The Company and the Buyer are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Rule 506 under Regulation D ("REGULATION D") as promulgated by the United
States Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "1933 ACT");
B. The Company has authorized a new series of preferred stock,
designated as Series F Convertible Preferred Stock (the "PREFERRED STOCK"),
having the rights, preferences and privileges set forth in the Certificate of
Designations, Rights and Preferences attached hereto as EXHIBIT "A" (the
"CERTIFICATE OF DESIGNATION");
C. The Preferred Stock is convertible into shares of common
stock, $.01 par value per share, of the Company (the "COMMON STOCK"), upon the
terms and subject to the limitations and conditions set forth in the
Certificate of Designation;
D. The Buyer desires to purchase and the Company desires to issue
and sell, upon the terms and conditions set forth in this Agreement, an
aggregate of Fifteen Thousand (15,000) shares of Preferred Stock, for an
aggregate purchase price of Fifteen Million Dollars ($15,000,000); and
E. Contemporaneous with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a Registration
Rights Agreement, in the form attached hereto as EXHIBIT "B" (the "REGISTRATION
RIGHTS AGREEMENT"), pursuant to which the Company has agreed to provide certain
registration rights under the 1933 Act and the rules and regulations
promulgated thereunder, and applicable state securities laws; and
NOW, THEREFORE, the Company and the Buyer hereby agree as follows:
1. PURCHASE AND SALE OF PREFERRED SHARES.
a. Purchase of Preferred Shares. Subject to the
terms and conditions hereof, the Company shall issue and sell to the Buyer and
the Buyer agrees to purchase from the
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Company 15,000 shares of Series F Convertible Preferred Stock (collectively,
together with any Preferred Stock issued in replacement thereof or otherwise
with respect thereto in accordance with the terms thereof, the "PREFERRED
SHARES") for the aggregate purchase price of Fifteen Million United States
Dollars ($15,000,000) (the "Purchase Price").
b. Form of Payment. On the Closing Date (as
defined below), (i) the Buyer shall pay the Purchase Price for the Preferred
Shares to be issued and sold to it at the closing by wire transfer of
immediately available funds to the Company, in accordance with the Company's
written wiring instructions, against delivery of duly executed certificates
representing such number of Preferred Shares which the Buyer is purchasing and
(ii) the Company shall deliver such certificates duly executed on behalf of the
Company, to the Buyer, against delivery of such Purchase Price.
c. Closing Date. Subject to the satisfaction
(or waiver) of the conditions thereto set forth in Section 6 and Section 7
below, the date and time of the issuance and sale of the Preferred Shares
pursuant to this Agreement (the "CLOSING DATE") shall be 12:00 noon Eastern
Standard Time on April 9, 1998, or such other mutually agreed upon time. The
closing shall occur on the Closing Date at the offices of the Company, or at
such other location as may be agreed to be the parties.
2. BUYER'S REPRESENTATIONS AND WARRANTIES. The Buyer
represents and warrants to the Company that:
a. Investment Purpose. As of the date hereof,
the Buyer is purchasing the Preferred Shares, the Investment Options described
in Section 4(e) below (the "Investment Options") and the shares of Common Stock
(i) issuable upon conversion of the Preferred Shares and (ii) issuable upon
exercise of the Investment Options (collectively, the "CONVERSION SHARES" and,
together with the Preferred Shares and the Investment Options, the
"SECURITIES") for its own account for investment only and not with a view
towards the public sale or distribution thereof, except pursuant to sales
registered or exempted from registration under the 1933 Act.
b. Accredited Investor Status. The Buyer is an
"accredited investor" as that term is defined in Rule 501(a) of Regulation D.
c. Reliance on Exemptions. The Buyer
understands that the Securities are being offered and sold to it in reliance
upon specific exemptions from the registration requirements of United States
federal and state securities laws and that the Company is relying upon the
truth and accuracy of, and the Buyer's compliance with, the representations,
warranties, agreements, acknowledgments and understandings of the Buyer set
forth herein in order to determine the availability of such exemptions and the
eligibility of the Buyer to acquire the Securities.
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d. Information. The Buyer and its advisors, if
any, have been furnished with all materials relating to the business, finances
and operations of the Company and materials relating to the offer and sale of
the Securities which have been requested by the Buyer or its advisors. The
Buyer and its advisors, if any, have been afforded the opportunity to ask
questions of the Company and have received what the Buyer believes to be
satisfactory answers to any such inquiries. Neither such inquiries nor any
other due diligence investigation conducted by Buyer or any of its advisors or
representatives shall modify, amend or affect Buyer's right to rely on the
Company's representations and warranties contained in Section 3 below. The
Buyer understands that its investment in the Securities involves a significant
degree of risk.
e. Governmental Review. The Buyer understands
that no United States federal or state agency or any other government or
governmental agency has passed upon or made any recommendation or endorsement
of the Securities.
f. Transfer or Resale. The Buyer understands
that (i) except as provided in the Registration Rights Agreement, the
Securities have not been and are not being registered under the 1933 Act or any
applicable state securities laws, and may not be transferred unless (a)
subsequently included in an effective registration statement thereunder, (b)
the Buyer shall have delivered to the Company an opinion of counsel (which
opinion shall be reasonably acceptable to the Company) to the effect that the
Securities to be sold or transferred may be sold or transferred pursuant to an
exemption from such registration, or (c) sold pursuant to Rule 144 promulgated
under the 1933 Act (or a successor rule) ("RULE 144")); (ii) any sale of such
Securities made in reliance on Rule 144 may be made only in accordance with the
terms of said Rule and further, if said Rule is not applicable, any resale of
such Securities under circumstances in which the seller (or the person through
whom the sale is made) may be deemed to be an underwriter (as that term is
defined in the 1933 Act) may require compliance with some other exemption under
the 1933 Act or the rules and regulations of the SEC thereunder; and (iii)
neither the Company nor any other person is under any obligation to register
such Securities under the 1933 Act or any state securities laws or to comply
with the terms and conditions of any exemption thereunder (in each case, other
than pursuant to the Registration Rights Agreement). Notwithstanding the
foregoing or anything else contained herein to the contrary, the Securities may
be pledged as collateral in connection with a bona fide margin account or other
lending arrangement, provided that such transaction complies with applicable
securities laws.
g. Legends. The Buyer understands that the
Preferred Shares and, until such time as the Conversion Shares have been
registered under the 1933 Act as contemplated by the Registration Rights
Agreement, the Conversion Shares, may bear a restrictive legend in
substantially the following form (and a stop-transfer order may be placed
against transfer of the certificates for such Securities):
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended. The
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securities have been acquired for investment and may not be
sold, transferred or assigned in the absence of an effective
registration statement for the securities under said Act, or
an opinion of counsel, in form, substance and scope reasonably
acceptable to the Company, that registration is not required
under said Act or unless sold pursuant to Rule 144 under said
Act."
The legend set forth above shall be removed and the Company
shall issue a certificate without such legend to the holder of any Security
upon which it is stamped, if, unless otherwise required by applicable state
securities laws, (a) such Security is registered for sale under an effective
registration statement filed under the 1933 Act, or (b) such holder provides
the Company with an opinion of counsel, in form, substance and scope reasonably
acceptable to the Company, to the effect that a public sale or transfer of such
Security may be made without registration under the 1933 Act and such sale or
transfer is effected or (c) such holder provides the Company with reasonable
assurances that such Security can be sold pursuant to Rule 144 under the 1933
Act (or a successor rule thereto) without any restriction as to the number of
Securities acquired as of a particular date that can then be immediately sold.
The Buyer agrees to sell all Securities, including those represented by a
certificate(s) from which the legend has been removed, in compliance with
applicable prospectus delivery requirements, if any.
h. Authorization; Enforcement. This Agreement
and the Registration Rights Agreement have been duly and validly authorized,
executed and delivered on behalf of the Buyer and are valid and binding
agreements of the Buyer enforceable in accordance with their terms.
i. Residency. The Buyer is a resident of the
jurisdiction set forth immediately below such Buyer's name on the signature
page hereto.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company represents and warrants to each Buyer that, except as described in the
Schedules hereto and except as set forth in any document filed by the Company
(not including the exhibits thereto) with the SEC since March 31, 1997 pursuant
to the reporting requirements of the Securities Exchange Act of 1934, as
amended (the "1934 ACT"):
a. Organization and Qualification. The Company
and each of its Subsidiaries (as defined below), if any, is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated, with full power and authority
(corporate and other) to own, lease, use and operate its properties and to
carry on its business as and where now owned, leased, used, operated and
conducted. SCHEDULE 3(A) sets forth a list of all of the Subsidiaries of the
Company and the jurisdiction in which each is incorporated. The Company and
each of its Subsidiaries is duly qualified as a foreign corporation to do
business and is in good standing in every jurisdiction in which the nature of
the business conducted by it
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makes such qualification necessary except where the failure to be so qualified
or in good standing could not reasonably be expected to have a Material Adverse
Effect. "MATERIAL ADVERSE EFFECT" means any material adverse effect on the
business, operations, assets, or financial condition of the Company and its
Subsidiaries taken as a whole, or on the transactions contemplated hereby or by
the agreements or instruments to be entered into in connection herewith.
"SUBSIDIARIES" means any corporation or other organization, whether
incorporated or unincorporated, in which the Company owns, directly or
indirectly, a majority equity or other ownership interest.
b. Authorization; Enforcement. (i) The Company
has all requisite corporate power and authority to file and perform its
obligations under the Certificate of Designation and to enter into and perform
this Agreement and the Registration Rights Agreement and to consummate the
transactions contemplated hereby and thereby and to issue the Securities, in
accordance with the terms hereof and thereof, (ii) the execution and delivery
of this Agreement and the Registration Rights Agreement by the Company and the
consummation by it of the transactions contemplated hereby and thereby
(including without limitation, the issuance of the Preferred Shares and the
issuance and reservation for issuance of the Conversion Shares issuable upon
conversion thereof) have been duly authorized by the Company's Board of
Directors and no further consent or authorization of the Company, its Board of
Directors, or its shareholders is required (except for any shareholder approval
that may be required pursuant to Section 4(h) hereof), (iii) this Agreement has
been duly executed and delivered and the Certificate of Designation has been
duly filed by the Company, and (iv) this Agreement and the Certificate of
Designation constitutes, and upon execution and delivery by the Company of the
Registration Rights Agreement such instrument will constitute, a legal, valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms.
c. Capitalization. As of the date hereof, the
authorized capital stock of the Company consists of (i) 175,000,000 shares of
Common Stock of which 122,823,347 shares are issued and outstanding, 8,960,499
shares are reserved for issuance pursuant to the Company's stock option plans,
12,234,624 shares are reserved for issuance pursuant to securities (other than
the Preferred Shares) exercisable for, or convertible into or exchangeable for
shares of Common Stock and 4,897,959 shares are reserved for issuance upon
conversion of the Preferred Shares (subject to adjustment pursuant to the
Company's covenant set forth in Section 4(h) below) and exercise of the
Investment Options; and (ii) 10,000,000 shares of preferred stock, none of
which shares are issued and outstanding. All of such outstanding shares of
capital stock are, or upon issuance will be, duly authorized, validly issued,
fully paid and nonassessable. No shares of capital stock of the Company are
subject to preemptive rights or any other similar rights of the stockholders of
the Company or any liens or encumbrances imposed through the actions or failure
to act of the Company. Except as disclosed in SCHEDULE 3(C), as of the date of
this Agreement, (i) there are no outstanding options, warrants, scrip, rights
to subscribe for, puts, calls, rights of first refusal, agreements,
understandings, claims or other commitments or rights of any character
whatsoever relating to, or securities or rights convertible into or
exchangeable for any shares of capital stock of the Company or any of its
Subsidiaries, or arrangements by which the Company
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or any of its Subsidiaries is or may become bound to issue additional shares of
capital stock of the Company or any of its Subsidiaries, and (ii) there are no
agreements or arrangements under which the Company or any of its Subsidiaries
is obligated to register the sale of any of its or their securities under the
1933 Act (except the Registration Rights Agreement) and (iii) there are no
anti-dilution or price adjustment provisions contained in any security issued
by the Company (or in any agreement providing rights to security holders) that
will be triggered by the issuance of the Preferred Shares or the Conversion
Shares. The Company has furnished or made available to the Buyer true and
correct copies of the Company's Certificate of Incorporation as in effect on
the date hereof ("CERTIFICATE OF INCORPORATION"), the Company's By-laws, as in
effect on the date hereof (the "BY-LAWS"), and the terms of all securities
convertible into or exercisable for Common Stock of the Company and the
material rights of the holders thereof in respect thereto.
d. Issuance of Shares. The Preferred Shares and
Conversion Shares are duly authorized and, upon issuance in accordance with the
terms of this Agreement (including the issuance of the Conversion Shares upon
(i) conversion of the Preferred Shares in accordance with the Certificate of
Designation and (ii) exercise of the Investment Options in accordance with
Section 4(e) of this Agreement) will be validly issued, fully paid and non-
assessable, and free from all taxes, liens and charges with respect to the
issue thereof and shall not be subject to preemptive rights or other similar
rights of stockholders of the Company (provided that the Company may be
required to obtain shareholder approval to authorize additional shares pursuant
to Section 4(h) hereof). The term Conversion Shares includes the shares of
Common Stock issuable upon conversion of the Preferred Shares, including
without limitation, such additional shares, if any, as are issuable pursuant to
the Certificate of Designation. The Company understands and acknowledges the
potentially dilutive effect to the Common Stock upon the issuance of the
Conversion Shares upon conversion of the Preferred Shares and exercise of the
Investment Options. The Company further acknowledges that its obligation to
issue Conversion Shares upon conversion of the Preferred Shares and exercise of
the Investment Options in accordance with this Agreement and the Certificate of
Designation is absolute and unconditional regardless of the dilutive effect
that such issuance may have on the ownership interests of other stockholders of
the Company.
e. No Conflicts. The execution, delivery and
performance of this Agreement and the Registration Rights Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby and thereby (including, without limitation, the filing of the
Certificate of Designation and the issuance and reservation for issuance of the
Conversion Shares; provided that the Company may be required to obtain
shareholder approval to authorize additional shares pursuant to Section 4(h)
hereof) will not (i) conflict with or result in a violation of any provision of
the Certificate of Incorporation or By-laws or (ii) violate or conflict with,
or result in a breach of any provision of, or constitute a default (or an event
which with notice or lapse of time or both could become a default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company or
any of its Subsidiaries is a party, or result in a violation of any law, rule,
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regulation, order, judgment or decree (including federal and state securities
laws and regulations) applicable to the Company or any of its Subsidiaries or
by which any property or asset of the Company or any of its Subsidiaries is
bound or affected (except for such conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations as could not reasonably
be expected to, individually or in the aggregate, have a Material Adverse
Effect). Neither the Company nor any of its Subsidiaries is in violation of
its Certificate of Incorporation, By-laws or other organizational documents and
neither the Company nor any of its Subsidiaries is in default (and no event has
occurred which with notice or lapse of time or both could put the Company or
any of its Subsidiaries in default) under, and neither the Company nor any of
its Subsidiaries has taken any action or failed to take any action that would
give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company or
any of its Subsidiaries is a party or by which any property or assets of the
Company or any of its Subsidiaries is bound or affected, except for possible
defaults and rights as could not reasonably be expected to, individually or in
the aggregate, have a Material Adverse Effect. The businesses of the Company
and its Subsidiaries, if any, are not being conducted, and shall not be
conducted so long as the Buyer owns any of the Preferred Shares, in violation
of any law, ordinance or regulation of any governmental entity, except as could
not reasonably be expected to have a Material Adverse Effect. Except as
specifically contemplated by this Agreement and as required under the 1933 Act
and any applicable state securities laws, the Company is not required to obtain
any consent, authorization or order of, or make any filing or registration
with, any court or governmental agency or any regulatory or self regulatory
agency in order for it to execute, deliver or perform any of its obligations
under this Agreement or the Registration Rights Agreement in accordance with
the terms hereof or thereof. Except as disclosed in SCHEDULE 3(E), all
consents, authorizations, orders, filings and registrations which the Company
is required to obtain pursuant to the preceding sentence have been obtained or
effected on or prior to the date hereof. The Company is not in violation of
the listing requirements of the American Stock Exchange (the "AMEX") and does
not reasonably anticipate that the Common Stock will be delisted by the AMEX in
the foreseeable future. The Company and its Subsidiaries are unaware of any
facts or circumstances which might give rise to any of the foregoing.
f. SEC Documents, Financial Statements. Since
December 31, 1994, the Company has timely filed all reports, schedules, forms,
statements and other documents required to be filed by it with the SEC pursuant
to the reporting requirements of the 1934 Act (all of the foregoing filed prior
to the date hereof and all exhibits included therein and financial statements
and schedules thereto and documents (other than exhibits) incorporated by
reference therein, being hereinafter referred to herein as the "SEC
DOCUMENTS"). The Company has delivered or made available to the Buyer true and
complete copies of the SEC Documents. As of their respective dates, the SEC
Documents complied in all material respects with the requirements of the 1934
Act and the rules and regulations of the SEC promulgated thereunder applicable
to the SEC Documents, and none of the SEC Documents, at the time they were
filed with the SEC, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances
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under which they were made, not misleading. As of their respective dates, the
financial statements of the Company included in the SEC Documents complied as
to form in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC with respect thereto. Such
financial statements have been prepared in accordance with generally accepted
accounting principles, consistently applied, during the periods involved
(except (i) as may be otherwise indicated in such financial statements or the
notes thereto, or (ii) in the case of unaudited interim statements, to the
extent they may not include footnotes or may be condensed or summary
statements) and fairly present in all material respects the consolidated
financial position of the Company and its consolidated Subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
normal year-end audit adjustments). Except as set forth in the financial
statements of the Company included in the SEC Documents, the Company has no
liabilities, contingent or otherwise, other than (i) liabilities incurred in
the ordinary course of business subsequent to December 31, 1996 and (ii)
obligations under contracts and commitments incurred in the ordinary course of
business and not required under generally accepted accounting principles to be
reflected in such financial statements, which, individually or in the
aggregate, are not material to the financial condition or operating results of
the Company.
g. Absence of Certain Changes. Since December
31, 1997 (the date of the Company's last audited financial statements), there
has been no material adverse change and no material adverse development in the
assets, liabilities, business, properties, operations, financial condition or
results of operations of the Company or any of its Subsidiaries.
h. Absence of Litigation. There is no action,
suit, claim, proceeding, inquiry or investigation before or by any court,
public board, government agency, self-regulatory organization or body pending
or, to the knowledge of the Company or any of its Subsidiaries, threatened
against or affecting the Company or any of its Subsidiaries that could
reasonably be expected to have a Material Adverse Effect. SCHEDULE 3(H)
contains a complete list and summary description of any pending or threatened
proceeding against or affecting the Company or any of its Subsidiaries, without
regard to whether it would have a Material Adverse Effect. The Company and its
Subsidiaries are unaware of any facts or circumstances which might give rise to
any of the foregoing.
i. Patents, Copyrights, etc. The Company and
each of its Subsidiaries owns or possesses the requisite licenses or rights to
use all patents, patent rights, inventions, know-how, trade secrets,
trademarks, service marks, service names, trade names and copyrights
("INTELLECTUAL PROPERTY") necessary to enable it to conduct its business as now
operated (and, except as set forth in SCHEDULE 3(I) hereof, to the best of the
Company's knowledge, as presently contemplated to be operated in the future);
there is no claim or action by any person pertaining to, or proceeding pending,
or to the Company's knowledge threatened which challenges the right of the
Company or of a Subsidiary with respect to any Intellectual Property necessary
to enable it to conduct its business as now operated (and, except as set forth
in SCHEDULE 3(I) hereof, to the
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best of the Company's knowledge, as presently contemplated to be operated in
the future); to the best of the Company's knowledge, the Company's or its
Subsidiaries, current and intended products, services and processes do not
infringe on any Intellectual Property or other rights held by any person; and
the Company is unaware of any facts or circumstances which might give rise to
any of the foregoing. The Company and each of its Subsidiaries have taken
reasonable security measures to protect the secrecy, confidentiality and value
of their Intellectual Property.
j. [Intentionally Omitted]
k. Tax Status. Except as set forth on SCHEDULE
3(K), the Company and each of its Subsidiaries has made or filed all federal
and state income and all other tax returns, reports and declarations required
by any jurisdiction to which it is subject (unless and only to the extent that
the Company and each of its Subsidiaries has set aside on its books provisions
reasonably adequate for the payment of all unpaid and unreported taxes) and has
paid all taxes and other governmental assessments and charges that are material
in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and has set aside on
its books provisions reasonably adequate for the payment of all taxes for
periods subsequent to the periods to which such returns, reports or
declarations apply, except for filings and payments that could not reasonably
be expected to have a Material Adverse Effect. There are no unpaid taxes in
any material amount claimed to be due by the taxing authority of any
jurisdiction, and the officers of the Company know of no basis for any such
claim.
l. Certain Transactions. Except as set forth on
SCHEDULE 3(L) and except for arm's length transactions pursuant to which the
Company or any of its Subsidiaries makes payments in the ordinary course of
business upon terms no less favorable than the Company or any of its
Subsidiaries could obtain from third parties and other than the grant of stock
options disclosed on SCHEDULE 3(C), none of the officers or directors of the
Company is presently a party to any transaction or transactions (which are,
individually or in the aggregate, material to the Company) with the Company or
any of its Subsidiaries (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement providing
for the furnishing of services to or by, providing for rental of real or
personal property to or from, or otherwise requiring payments to or from any
officer, director or such employee or, to the knowledge of the Company, any
corporation, partnership, trust or other entity in which any officer or
director has a substantial interest or is an officer, director, trustee or
partner.
m. Disclosure. All information relating to or
concerning the Company or any of its Subsidiaries set forth in this Agreement
and provided to the Buyer pursuant to Section 2(d) hereof and otherwise in
connection with the transactions contemplated hereby is true and correct in all
material respects and the Company has not omitted to state any material fact
necessary in order to make the statements made herein or therein, in light of
the circumstances under which they were made, not misleading. No event or
circumstance has occurred or exists
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with respect to the Company or any of its Subsidiaries or its or their
business, properties, operations or financial conditions, which, under
applicable law, rule or regulation, requires public disclosure or announcement
by the Company on or before the date hereof but which has not been so publicly
announced or disclosed (assuming for this purpose that the Company's reports
filed under the 1934 Act are being incorporated into an effective registration
statement filed by the Company under the 1933 Act).
n. Acknowledgment Regarding Buyer's Purchase of
Securities. The Company acknowledges and agrees that the Buyer is acting
solely in the capacity of an arm's length purchaser with respect to this
Agreement and the transactions contemplated hereby. The Company further
acknowledges that the Buyer is not acting as a financial advisor or fiduciary
of the Company (or in any similar capacity) with respect to this Agreement and
the transactions contemplated hereby and any advice given by the Buyer or any
of its respective representatives or agents in connection with this Agreement
and the transactions contemplated hereby is merely incidental to the Buyer's
purchase of the Securities. The Company further represents to the Buyer that
the Company's decision to enter into this Agreement has been based solely on
the independent evaluation by the Company and its representatives.
o. No Integrated Offering. Neither the Company,
nor any of its affiliates, nor any person acting on its or their behalf, has
directly or indirectly made any offers or sales in any security or solicited
any offers to buy any security under circumstances that would require
registration under the 1933 Act of the issuance of the Securities to the Buyer.
The issuance of the Securities to the Buyer will not be integrated with any
other issuance of the Company's securities (past, current or future) which
requires stockholder approval under the rules of the AMEX.
p. No Brokers. The Company has taken no action
which would give rise to any claim by any person for brokerage commissions,
finder's fees or similar payments relating to this Agreement or the
transactions contemplated hereby, except for dealings with Shimono Group
Incorporated, whose commissions and fees will be paid for by the Company.
q. Permits; Compliance. The Company and each of
its Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exemptions, consents, certificates,
approvals and orders necessary to own, lease and operate its properties and to
carry on its business as it is now being conducted (collectively, the "COMPANY
PERMITS"), and there is no action pending or, to the knowledge of the Company,
threatened regarding suspension or cancellation of any of the Company Permits,
except such Company Permits and actions which could not reasonably be expected
to have a Material Adverse Effect. Neither the Company nor any of its
Subsidiaries is in conflict with, or in default or violation of, any of the
Company Permits, except for any such conflicts, defaults or violations which,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect. Since December 31, 1997, neither the Company nor any
of its Subsidiaries has received
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any notification with respect to possible conflicts, defaults or violations of
applicable laws, except for notices relating to possible conflicts, defaults or
violations, which conflicts, defaults or violations could not reasonably be
expected to have a Material Adverse Effect.
r. Environmental Matters.
(i) Except as set forth in SCHEDULE
3(R), there are, to the Company's knowledge, with respect to the Company or any
of its Subsidiaries or any predecessor of the Company, no past or present
violations of Environmental Laws (as defined below), releases of any material
into the environment, actions, activities, circumstances, conditions, events,
incidents, or contractual obligations which may give rise to any common law
environmental liability or any liability under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 or similar federal, state,
local or foreign laws and neither the Company nor any of its Subsidiaries has
received any notice with respect to any of the foregoing, nor is any action
pending or, to the Company's knowledge, threatened in connection with any of
the foregoing except, in each case, as could not reasonably be expected to have
a Material Adverse Effect. The term "ENVIRONMENTAL LAWS" means all federal,
state, local or foreign laws relating to pollution or protection of human
health or the environment (including, without limitation, ambient air, surface
water, groundwater, land surface or subsurface strata), including, without
limitation, laws relating to emissions, discharges, releases or threatened
releases of chemicals, pollutants contaminants, or toxic or hazardous
substances or wastes (collectively, "HAZARDOUS MATERIALS") into the
environment, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials, as well as all authorizations, codes, decrees, demands or
demand letters, injunctions, judgments, licenses, notices or notice letters,
orders, permits, plans or regulations issued, entered, promulgated or approved
thereunder.
(ii) Other than those that are or were
stored, used or disposed of in compliance with applicable law, no Hazardous
Materials are contained on or about any real property currently owned, leased
or used by the Company or any of its Subsidiaries, and no Hazardous Materials
were released on or about any real property previously owned, leased or used by
the Company or any of its Subsidiaries during the period the property was
owned, leased or used by the Company or any of its Subsidiaries, except in the
normal course of the Company's or any of its Subsidiaries' business or could
not reasonably be expected to have a Material Adverse Effect.
(iii) Except as set forth in SCHEDULE
3(R), there are no underground storage tanks on or under any real property
owned, leased or used by the Company or any of its Subsidiaries that are not in
compliance with applicable law.
s. Title to Property. The Company and its
Subsidiaries have marketable title to all real property and good and marketable
title to all personal property owned
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<PAGE> 12
by them which is material to the business of the Company and its Subsidiaries,
in each case free and clear of all liens, encumbrances and defects except such
as are described in SCHEDULE 3(S) or such as would not have a Material Adverse
Effect (it being understood that marketable title as used herein shall mean
such title to real property as is customarily held in the oil and gas
business). Any real property and facilities held under lease by the Company
and its Subsidiaries are held by them under valid, subsisting and enforceable
leases with such exceptions as would not have a Material Adverse Effect.
t. Insurance. The Company and each of its
Subsidiaries are insured by insurers of recognized financial responsibility
against such losses and risks and in such amounts as management of the Company
believes to be prudent and customary in the businesses in which the Company and
its Subsidiaries are engaged. Neither the Company nor any such Subsidiary has
any reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that
would not have a Material Adverse Effect.
u. Internal Accounting Controls. The Company
and each of its Subsidiaries maintain a system of internal accounting controls
sufficient, in the judgment of the Company's board of directors, to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with management's
general or specific authorization and (iv) the recorded accountability for
assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
v. Foreign Corrupt Practices. Since December
31, 1994, neither the Company, nor any of its Subsidiaries, nor any director,
officer, agent, employee or other person acting on behalf of the Company or any
Subsidiary has, in the course of his actions for, or on behalf of, the Company,
used any corporate funds for any unlawful contribution, gift, entertainment or
other unlawful expenses relating to political activity; made any direct or
indirect unlawful payment to any foreign or domestic government official or
employee from corporate funds; violated or is in violation of any provision of
the U.S. Foreign Corrupt Practices Act of 1977; or made any bribe, rebate,
payoff, influence payment, kickback or other unlawful payment to any foreign or
domestic government official or employee.
4. COVENANTS.
a. Best Efforts. The parties shall use their
best efforts to satisfy timely each of the conditions described in Section 6
and 7 of this Agreement.
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<PAGE> 13
b. Form D; Blue Sky Laws. The Company agrees to
file a Form D with respect to the Securities as required under Regulation D and
to provide a copy thereof to each Buyer promptly after such filing. The
Company shall, on or before the Closing Date, take such action as the Company
shall reasonably determine is necessary to qualify the Securities for sale to
the Buyer at the applicable closing pursuant to this Agreement under applicable
securities or "blue sky" laws of the states of the United States (or to obtain
an exemption from such qualification), and shall provide evidence of any such
action so taken to each Buyer on or prior to the Closing Date.
c. Reporting Status; Eligibility to Use Form
S-3. The Company's Common Stock is registered under Section 12(b) of the 1934
Act. So long as any Buyer beneficially owns any of the Securities, the Company
shall timely file all reports required to be filed with the SEC pursuant to the
1934 Act, and the Company shall not terminate its status as an issuer required
to file reports under the 1934 Act even if the 1934 Act or the rules and
regulations thereunder would permit such termination. The Company currently
meets, and will use its commercially reasonable best efforts to continue to
meet, the "registrant eligibility" requirements set forth in the general
instructions to Form S-3.
d. Use of Proceeds. The Company shall use the
proceeds from the sale of the Preferred Shares and the shares of Common Stock
issued pursuant to the Investment Options (as defined below) in the manner set
forth in SCHEDULE 4(D) attached hereto and made a part hereof and shall not,
directly or indirectly, use such proceeds for any loan to or investment in any
other corporation, partnership, enterprise or other person (except in
connection with its currently existing direct or indirect Subsidiaries).
e. Investment Options. At the time of each
conversion of Preferred Stock by Buyer, Buyer shall have the option (the
"Investment Options") to purchase one additional share of Common Stock for
every share of Common Stock issuable as a result of such conversion of the
Preferred Stock (not including shares of Common Stock issuable as a result of
the Premium Amount (as defined in the Certificate of Designation)) on the
applicable Conversion Date (as defined in the Certificate of Designation), at a
purchase price equal to the applicable Conversion Price (as defined in the
Certificate of Designation). In order to exercise the Investment Option that
arises on a Conversion Date, the Buyer must make the appropriate election
included on the Notice of Conversion (as defined in the Certificate of
Designation) in respect of such Conversion Date and pay to the Company, in
immediately available funds, on or within one business day following the
Conversion Date, the aggregate purchase price for the shares of Common Stock
issuable as a result of the exercise of such Investment Option. Failure to
make such election or payment in accordance with the immediately preceding
sentence will result in expiration of the Investment Option in respect of such
Conversion Date.
Notwithstanding anything in this Section 4(e) to the
contrary, unless the Buyer delivers a waiver in accordance with the immediately
following sentence, in no event (other than pursuant to the Automatic
Conversion (as defined in the Certificate of Designation)) shall the
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<PAGE> 14
Buyer be entitled to exercise a number of Investment Options (or portions
thereof) in excess of the number of Investment Options (or portions thereof)
upon exercise of which the sum of (i) the number of shares of Common Stock
beneficially owned by the Buyer and its affiliates (other than shares of Common
Stock which may be deemed beneficially owned through the ownership of the
unexercised Investment Options and unconverted Preferred Shares) and (ii) the
number of shares of Common Stock issuable upon exercise of the Investment
Options (or portions thereof) with respect to which the determination described
herein is being made, would result in beneficial ownership by the Buyer and its
affiliates of more than 4.9% of the outstanding shares of Common Stock. For
purposes of the immediately preceding sentence, beneficial ownership shall be
determined in accordance with Section 13(d) of the 1934 Act, and Regulation
13D-G thereunder, except as otherwise provided in clause (i) hereof and the
Buyer may waive the limitations set forth therein by written notice to the
Company upon not less than sixty-one (61) days prior written notice (with such
waiver taking effect only upon the expiration of such sixty-one (61) day notice
period).
f. Expenses. At the closing, the Company shall
pay to Rose Glen Capital Management, L.P. ("RGC") a nonaccountable expense
allowance equal to Thirty Thousand Dollars ($30,000).
g. Financial Information. The Company agrees to
send the following reports to each Buyer until such Buyer transfers, assigns,
or sells all of the Securities: (i) within ten (10) days after the filing with
the SEC, a copy of its Annual Report on Form 10-K, its Quarterly Reports on
Form 10-Q and any Current Reports on Form 8-K; (ii) within one (1) day after
release, copies of all press releases issued by the Company or any of its
Subsidiaries; and (iii) contemporaneously with the making available or giving
to the stockholders of the Company, copies of any notices or other information
the Company makes available or gives to such stockholders.
h. Reservation of Shares. The Company shall not
reduce the number of shares of Common Stock reserved for issuance upon
conversion of Preferred Shares without the consent of each Buyer. The Company
shall use its best efforts at all times to maintain the number of shares of
Common Stock so reserved for issuance at no less than the full number that is
then actually issuable upon full conversion of the Preferred Shares (based on
the Conversion Price of the Preferred Shares in effect from time to time) and
the full exercise of the Investment Options. If at any time the number of
shares of Common Stock authorized and remaining reserved for issuance is below
the number of Conversion Shares issuable upon conversion of the Preferred
Shares and exercise of the Investment Options (based on the Conversion Price of
the Preferred Shares then in effect), the Company will promptly take all
corporate action necessary to authorize and reserve a sufficient number of
shares, including, without limitation, calling a special meeting of
shareholders to authorize additional shares to meet the Company's obligations
under this Section 4(h), in the case of an insufficient number of authorized
shares, and using its best efforts to obtain shareholder approval of an
increase in such authorized number of shares.
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<PAGE> 15
i. Listing. The Company shall promptly secure
the listing of the Conversion Shares upon each national securities exchange or
automated quotation system, if any, upon which shares of Common Stock are then
listed (subject to official notice of issuance) and shall maintain, so long as
any other shares of Common Stock shall be so listed, such listing of all
Conversion Shares from time to time issuable upon conversion of the Preferred
Shares and the exercise of the Investment Options. The Company will obtain and
maintain the listing and trading of its Common Stock on the AMEX, the Nasdaq
National Market ("NASDAQ"), the Nasdaq SmallCap Market ("NASDAQ SMALLCAP") or
the New York Stock Exchange ("NYSE"), and will comply in all respects with the
Company's reporting, filing and other obligations under the bylaws or rules of
the National Association of Securities Dealers ("NASD") and such exchanges, as
applicable. The Company shall promptly provide to each Buyer copies of any
notices it receives from the AMEX and any other exchanges or quotation systems
on which the Common Stock is then listed regarding the continued eligibility of
the Common Stock for listing on such exchanges and quotation systems.
j. Corporate Existence. So long as a Buyer
beneficially owns any Preferred Shares, the Company shall maintain its
corporate existence and shall not sell all or substantially all of the
Company's assets, except in the event of a merger or consolidation or sale of
all or substantially all of the Company's assets, where the surviving or
successor entity in such transaction (i) assumes the Company's obligations
hereunder and under the agreements and instruments entered into in connection
herewith and (ii) is a publicly traded corporation whose Common Stock is listed
for trading on the AMEX, Nasdaq or NYSE.
k. No Integration. The Company will not conduct
any future offering that will be integrated with the issuance of the Securities
solely for purposes of Rule 713 of the AMEX.
l. Solvency. The Company (both before and after
giving effect to the transactions contemplated by this Agreement) is solvent
(i.e., its assets have a fair market value in excess of the amount required to
pay its probable liabilities on its existing debts as they become absolute and
matured) and currently the Company has no information that would lead it to
reasonably conclude that the Company would not have, nor does it intend to take
any action that would impair, its ability to pay its debts from time to time
incurred in connection therewith as such debts mature. The Company did not
receive a qualified opinion from its auditors with respect to its most recent
fiscal year end and does not anticipate or know of any basis upon which its
auditors might issue a qualified opinion in respect of its current fiscal year.
5. TRANSFER AGENT INSTRUCTIONS. The Company shall
issue irrevocable instructions to its transfer agent to issue certificates,
registered in the name of the Buyer or, after registration of the Conversion
Shares under the 1933 Act, its nominee, for the Conversion Shares in such
amounts as specified from time to time by the Buyer to the Company upon
conversion of the Preferred Shares in accordance with the terms thereof upon
receipt by the Company of a properly completed and executed notice of
conversion in accordance with the
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<PAGE> 16
Certificate of Designation (the "IRREVOCABLE TRANSFER AGENT INSTRUCTIONS").
Prior to registration of the Conversion Shares under the 1933 Act, all such
certificates shall bear the restrictive legend specified in Section 2(g) of
this Agreement. The Company warrants that no instruction other than the
Irrevocable Transfer Agent Instructions referred to in this Section 5, and stop
transfer instructions to give effect to Section 2(f) hereof (in the case of the
Conversion Shares, prior to registration of the Conversion Shares under the
1933 Act), will be given by the Company to its transfer agent and that the
Securities shall otherwise be freely transferable on the books and records of
the Company as and to the extent provided in this Agreement and the
Registration Rights Agreement. Nothing in this Section shall affect in any way
the Buyer's obligations and agreement set forth in Section 2(g) hereof to
comply with all applicable prospectus delivery requirements, if any, upon
resale of the Securities. If the Buyer provides the Company with an opinion of
counsel, reasonably satisfactory to the Company in form, substance and scope,
that registration of a resale by the Buyer of any of the Securities is not
required under the 1933 Act, the Company shall permit the transfer, and, in the
case of the Conversion Shares, promptly instruct its transfer agent to issue
one or more certificates in such name and in such denominations as specified by
the Buyer. The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the Buyer, by vitiating the intent and
purpose of the transaction contemplated hereby. Accordingly, the Company
acknowledges that the remedy at law for a breach of its obligations under this
Section 5 will be inadequate and agrees, in the event of a breach or threatened
breach by the Company of the provisions of this Section, that the Buyer shall
be entitled, in addition to all other available remedies, to an injunction
restraining any breach and requiring immediate transfer, without the necessity
of showing economic loss and without any bond or other security being required.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL. The
obligation of the Company hereunder to issue and sell the Preferred Shares to
the Buyer at the closing is subject to the satisfaction, at or before the
Closing Date, of each of the following conditions thereto, provided that these
conditions are for the Company's sole benefit and may be waived by the Company
at any time in its sole discretion:
a. The Buyer shall have executed this Agreement
and the Registration Rights Agreement, and delivered the same to the Company.
b. The Buyer shall have delivered the Purchase
Price in accordance with Section 1(b) above.
c. The Certificate of Designation shall have
been accepted for filing with the Secretary of State of the State of Delaware.
d. The representations and warranties of the
Buyer shall be true and correct in all material respects as of the date when
made and as of the Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date), and the Buyer
shall have performed, satisfied and complied in all material respects with the
covenants,
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<PAGE> 17
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Buyer at or prior to the Closing Date.
e. No litigation, statute, rule, regulation,
executive order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by or in any court or governmental authority of
competent jurisdiction or any self-regulatory organization having authority
over the matters contemplated hereby which prohibits the consummation of any of
the transactions contemplated by this Agreement.
7. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
The obligation of the Buyer hereunder to purchase the Preferred Shares at the
closing is subject to the satisfaction, at or before the Closing Date, of each
of the following conditions, provided that these conditions are for such
Buyer's sole benefit and may be waived by the Buyer at any time in its sole
discretion:
a. The Company shall have executed this
Agreement and the Registration Rights Agreement, and delivered the same to the
Buyer.
b. The Company shall have delivered to the Buyer
duly executed certificates (in such denominations as the Buyer shall request)
representing the Preferred Shares in accordance with Section 1(b) above.
c. The Certificate of Designation shall have
been accepted for filing with the Secretary of Sate of the State of Delaware,
and a copy thereof certified by such Secretary of State shall have been
delivered to the Buyer.
d. The Irrevocable Transfer Agent Instructions,
in form and substance satisfactory to the Buyer, shall have been delivered to
and acknowledged in writing by the Company's Transfer Agent.
e. The representations and warranties of the
Company shall be true and correct in all material respects as of the date when
made and as of the Closing Date as though made at such time (except for
representations and warranties that speak as of a specific date) and the
Company shall have performed, satisfied and complied in all material respects
with the covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Company at or prior to the Closing
Date. The Buyer shall have received a certificate or certificates, executed by
the chief executive officer of the Company, dated as of the Closing Date, to
the foregoing effect and as to such other matters as may be reasonably
requested by the Buyer including, but not limited to certificates with respect
to the Company's Certificate of Incorporation, By-laws and Board of Directors'
resolutions relating to the transactions contemplated hereby.
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f. No litigation, statute, rule, regulation,
executive order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by or in any court or governmental authority of
competent jurisdiction or any self-regulatory organization having authority
over the matters contemplated hereby which prohibits the consummation of any of
the transactions contemplated by this Agreement.
g. Trading in the Common Stock on the AMEX shall
not have been suspended by the SEC or the AMEX.
h. The Buyer shall have received an opinion of
the Company's general counsel, dated as of the Closing Date, in form, scope and
substance reasonably satisfactory to the Buyer and in substantially the same
form as EXHIBIT "C" attached hereto.
8. GOVERNING LAW; MISCELLANEOUS.
a. Governing Law. This Agreement shall be
governed by and interpreted in accordance with the laws of the State of
Delaware without regard to the principles of conflict of laws. The parties
hereto hereby submit to the exclusive jurisdiction of the United States Federal
Courts located in Delaware with respect to any dispute arising under this
Agreement, the agreements entered into in connection herewith or the
transactions contemplated hereby or thereby.
b. Counterparts; Signatures by Facsimile. This
Agreement may be executed in two or more counterparts, all of which shall be
considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party.
This Agreement, once executed by a party, may be delivered to the other party
hereto by facsimile transmission of a copy of this Agreement bearing the
signature of the party so delivering this Agreement.
c. Headings. The headings of this Agreement are
for convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.
d. Severability. If any provision of this
Agreement shall be invalid or unenforceable in any jurisdiction, such
invalidity or unenforceability shall not affect the validity or enforceability
of the remainder of this Agreement or the validity or enforceability of this
Agreement in any other jurisdiction.
e. Entire Agreement; Amendments. This Agreement
and the instruments referenced herein contain the entire understanding of the
parties with respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor the Buyer
makes any representation, warranty, covenant or undertaking with respect to
such matters. No provision of this Agreement may be waived or amended other
than by an instrument in writing signed by the party to be charged with
enforcement.
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f. Notices. Any notices required or permitted
to be given under the terms of this Agreement shall be sent by certified or
registered mail (return receipt requested) or delivered personally or by
courier (including a recognized overnight delivery service) or by facsimile and
shall be effective five days after being placed in the mail, if mailed by
regular U.S. mail, or upon receipt, if delivered personally or by courier
(including a recognized overnight delivery service) or upon telephone
confirmation of receipt by the addressee if by facsimile, in each case
addressed to a party. The addresses for such communications shall be:
If to the Company:
Harken Energy Corporation
5605 N. MacArthur Boulevard
Suite 400
Irving, Texas 75038
Attention: Mikel D. Faulkner
Facsimile: (972) 753-6944
With copy to:
Harken Energy Corporation
5605 N. MacArthur Boulevard
Suite 400
Irving, Texas 75038
Attention: Larry E. Cummings
Facsimile: (972) 753-6963
If to the Buyer: To the address set forth immediately below
the Buyer's name on the signature pages hereto.
Each party shall provide notice to the other party of any
change in address.
g. Successors and Assigns. This Agreement shall
be binding upon and inure to the benefit of the parties and their successors
and permitted assigns. Neither the Company nor the Buyer shall assign this
Agreement or any rights or obligations hereunder without the prior written
consent of the other, which consent will not be unreasonably withheld; provided
that, in the event of a proposed assignment to a competitor of the Company or
to a purchaser seeking to acquire control of the Company without the consent of
the Board of Directors of the Company, such consent may be withheld for any
reason or for no reason. Notwithstanding the foregoing, subject to Section
2(f), the Buyer may assign its rights hereunder to any holder of an interest in
the Buyer upon a liquidation of the Buyer's assets in accordance with its
governing documents or to any of its "affiliates," as that term is defined
under the 1934 Act, without the consent of the Company.
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<PAGE> 20
h. Third Party Beneficiaries. This Agreement is
intended for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any provision
hereof be enforced by, any other person.
i. Survival. The representations and warranties
of the Company and the Buyer and the agreements and covenants set forth in
Sections 2, 3, 4, 5 and 8 shall survive the closing hereunder for two (2) years
notwithstanding any due diligence investigation conducted by or on behalf of
the other party. The Company agrees to indemnify and hold harmless the Buyer
and all their officers, directors, employees and agents for loss or damage
arising as a result of or related to any material breach by the Company of any
of its representations, warranties and covenants set forth in Sections 3 and 4
hereof or any of its covenants and obligations under this Agreement or the
Registration Rights Agreement, including advancement of expenses as they are
incurred.
j. Publicity. The Company and the Buyer shall
have the right to review a reasonable period of time before issuance of any
press releases, SEC, the AMEX or NASD filings, or any other public statements
with respect to the transactions contemplated hereby; provided, however, that
the Company shall be entitled, without the prior approval of the Buyer, to make
any press release or SEC, the AMEX or NASD filings with respect to such
transactions as is required by applicable law and regulations.
k. Further Assurances. Each party shall do and
perform, or cause to be done and performed, all such further acts and things,
and shall execute and deliver all such other agreements, certificates,
instruments and documents, as the other party may reasonably request in order
to carry out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
l. No Strict Construction. The language used in
this Agreement will be deemed to be the language chosen by the parties to
express their mutual intent, and no rules of strict construction will be
applied against any party.
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IN WITNESS WHEREOF, the Buyer and the Company have caused this
Agreement to be duly executed as of the date first above written.
HARKEN ENERGY CORPORATION
By: /s/ Larry E. Cummings
------------------------------------------------
Larry E. Cummings
Vice President and Secretary
RGC INTERNATIONAL INVESTORS, LDC
By: Rose Glen Capital Management, L.P., Investment Manager
By: RGC General Partner Corp., as General Partner
By: /s/ Wayne D. Bloch
------------------------------------------------
Wayne D. Bloch
Managing Director
RESIDENCE: Cayman Islands
ADDRESS:
c/o Rose Glen Capital Management, L.P.
3 Bala Plaza East, Suite 200
251 St. Asaphs Road
Bala Cynwyd, PA 19004
Facsimile: (610) 617-0570
Telephone: (610) 617-5900
AGGREGATE SUBSCRIPTION AMOUNT:
Number of Shares of Preferred Stock: 15,000
Aggregate Purchase Price: $15,000,000
21