{"id":43399,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/exchange-agreement-harken-energy-corp-harken-capital-corp.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"exchange-agreement-harken-energy-corp-harken-capital-corp","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/planning\/exchange-agreement-harken-energy-corp-harken-capital-corp.html","title":{"rendered":"Exchange Agreement &#8211; Harken Energy Corp., Harken Capital Corp., Sidro SA, Lambertine Holdings Ltd. and Rauscher Pierce &#038; Clark (Guernsey) Ltd."},"content":{"rendered":"<pre>\n\n\n                               EXCHANGE AGREEMENT\n\n\n\n\n              ----------------------------------------------------\n\n\n\n\n                          Harken  Energy  Corporation,\n                           Harken Capital Corporation\n\n                                      and\n\n                                  Sidro S.A.,\n                          Lambertine Holdings Ltd, and\n                    Rauscher Pierce &amp; Clark (Guernsey) Ltd.\n\n\n\n\n\n\n              ----------------------------------------------------\n\n\n\n\n                               December 24, 1997\n\n                               TABLE OF CONTENTS\n\n\n<font size=\"2\">\n                                                                                                             Page\n                                                                                                          \nARTICLE I -- Definitions and References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   1\n         Section 1.1.     Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   1\n         Section 1.2.     References and Titles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   3\n\nARTICLE II -- Restrictions on Transfer of Company Shares  . . . . . . . . . . . . . . . . . . . . . . . . .   3\n         Section 2.1.     Restrictions on Transfer  . . . . . . . . . . . . . . . . . . . . . . . . . . . .   3\n         Section 2.2.     Legend  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   3\n         Section 2.4.     Improper Transfers  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   4\n\nARTICLE III -- Investors Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   4\n         Section 3.1.     Exercise of Investors' Option . . . . . . . . . . . . . . . . . . . . . . . . . .   4\n         Section 3.2.     Number of Harken Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   5\n         Section 3.3.     Closing of Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   5\n         Section 3.4.     Harken's Cash Option  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   5\n\nARTICLE IV -- Harken Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   6\n         Section 4.1.     Exercise of Harken's Option . . . . . . . . . . . . . . . . . . . . . . . . . . .   6\n         Section 4.2.     Number of Harken Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   6\n         Section 4.3.     Amount of Cash  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   7\n         Section 4.4.     Closing of Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   7\n\nARTICLE V -- Issuance of Additional Harken Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   7\n         Section 5.1.     Issuance of Additional Shares . . . . . . . . . . . . . . . . . . . . . . . . . .   7\n         Section 5.2.     Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   8\n\nARTICLE VI -- Harken Representations, Warranties and Covenants  . . . . . . . . . . . . . . . . . . . . . .   9\n         Section 6.1.     Organization and Corporate Authority  . . . . . . . . . . . . . . . . . . . . . .   9\n         Section 6.2.     Qualification to do Business  . . . . . . . . . . . . . . . . . . . . . . . . . .   9\n         Section 6.3.     Capitalization  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  10\n         Section 6.4.     Finders' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  10\n         Section 6.5.     Authority of Harken . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  10\n         Section 6.6.     Non-Contravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  10\n         Section 6.7.     Governmental Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  11\n         Section 6.8.     Reports and Financial Statements of Harken  . . . . . . . . . . . . . . . . . . .  11\n         Section 6.9.     Disclosure  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  11\n         Section 6.10.    Harken Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  12\n         Section 6.11.    Absence of Bankruptcy Proceedings . . . . . . . . . . . . . . . . . . . . . . . .  12\n         Section 6.12.    No Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  12\n         Section 6.13.    Litigation  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  12\n         Section 6.14.    Compliance with Laws  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  12\n<\/font>\n\n\n\n\n\n                                      -i-\n\n\n<font size=\"2\">                                                                                                          \nARTICLE VII -- Investors Representations, Warranties and Covenants  . . . . . . . . . . . . . . . . . . . .  13\n         Section 7.1.     Organization and Corporate Authority  . . . . . . . . . . . . . . . . . . . . . .  13\n         Section 7.2.     Finders' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  13\n         Section 7.3.     Authority of Investor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  13\n         Section 7.4.     Non-Contravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  13\n         Section 7.5.     Governmental Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  14\n         Section 7.6.     Investment Intent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  14\n         Section 7.7.     Disclosure of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . .  14\n         Section 7.8.     Accredited Investor and Experience  . . . . . . . . . . . . . . . . . . . . . . .  14\n         Section 7.9.     Restricted Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  14\n         Section 7.10.    Legend  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  15\n         Section 7.11.    Title to Company Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  15\n         Section 7.12.    Organization and Corporate Authority of Company . . . . . . . . . . . . . . . . .  15\n         Section 7.13.    Qualification of Company to Business  . . . . . . . . . . . . . . . . . . . . . .  15\n         Section 7.14.    Company Charter and Bylaws  . . . . . . . . . . . . . . . . . . . . . . . . . . .  15\n         Section 7.15.    Capitalization of the Company . . . . . . . . . . . . . . . . . . . . . . . . . .  16\n         Section 7.16.    No Prior or Future Activities . . . . . . . . . . . . . . . . . . . . . . . . . .  16\n         Section 7.17.    Continuing Representations and Warranties . . . . . . . . . . . . . . . . . . . .  16\n\nARTICLE VIII -- Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  17\n         Section 8.1.     Assignment by Investors . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  17\n         Section 8.2.     Adjustments for Consolidation, Merger, Sale of Assets, Reorganization, etc. . . .  17\n         Section 8.3.     Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  17\n         Section 8.4.     Public Announcements  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  18\n         Section 8.5.     Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  18\n         Section 8.6.     Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  18\n         Section 8.7.     Waivers and Amendments  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  19\n         Section 8.8.     Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  19\n         Section 8.9.     Binding Effect; No Assignment; No Third Party Benefit . . . . . . . . . . . . . .  19\n         Section 8.10.    Entire Agreement  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  20\n         Section 8.11.    Severability  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  20\n         Section 8.12.    United States Dollars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  20\n         Section 8.13.    Survival of Representations and Warranties  . . . . . . . . . . . . . . . . . . .  20\n         Section 8.14.    Rights as Stockholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  20\n         Section 8.15.    Counterparts  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  20\n         Section 8.16.    Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  20\n         Section 8.17.    Consent to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  21\n         Section 8.18.    Further Assurances  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  21\n         Section 8.19.    Expenses  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  21\n<\/font>\n\n\n\n\n\n                                      -ii-\n\n\n\n                               EXCHANGE AGREEMENT\n\n\n         THIS EXCHANGE AGREEMENT (this 'Agreement') is made as of the 24th day\nof December, 1997, by and among HARKEN ENERGY CORPORATION, a Delaware\ncorporation (herein called 'Harken'), HARKEN CAPITAL CORPORATION, a Delaware\ncorporation (herein called the 'Company'), and SIDRO S.A., LAMBERTINE HOLDINGS\nLTD, and RAUSCHER PIERCE &amp; CLARK (GUERNSEY) LTD.,who are as of the date hereof\nthe sole stockholders of the Company (such stockholders herein collectively\ncalled 'Investors').  In consideration of the mutual covenants and agreements\ncontained herein, the parties hereto hereby agree as follows:\n\n\n                                   ARTICLE I\n\n                           Definitions and References\n\n         Section 1.1.       Defined Terms.  As used in this Agreement, each of\nthe following terms has the meaning given it in this Section 1.1 or in the\nsections or subsections referred to below:\n\n         'Allocated NPI Payments' shall mean, with respect to an Exchange by an\nInvestor pursuant to Article III or IV, the aggregate amount of the payments\nreceived by the Company pursuant to Section 3.7 of the Development Finance\nAgreement that have been distributed by the Company to such Investor through\nthe Exchange Date of such Exchange.\n\n         'Business Day' shall mean any day other than a Saturday, a Sunday or a\nday in which banks in the State of Texas are closed.\n\n         'Capital Contribution' shall mean, with respect to an Investor, the\ncapital contribution made by such Investor in cash to the Company in exchange\nfor the issuance by the Company to such Investor of Company Shares, the amount\nof such capital contribution and the number of such Company Shares being set\nforth opposite such Investor's name on Annex I hereto.\n\n         'Company Shares' shall mean shares of the Common Stock, par value $.01\nper share, of the Company.\n\n         The 'Current Market Price' of the Harken Shares on any date shall be\ndeemed to be the average of the daily closing prices for the Harken Shares for\nthe 10 Trading Days immediately preceding the day in question.  The closing\nprice for each such Trading Day shall be the closing sales price on the\nprincipal national stock exchange or stock market on which the Harken Shares\nare then listed, or, if not reported for such exchange or market, on the\ncomposite tape, or, in case no such sale takes place on such Trading Day, the\naverage of the\n\n\n\n\n\n\nreported closing bid and asked quotations on such exchange or market, or, if\nthe Harken Shares are not listed on any national stock exchange or stock\nmarket, or no such quotations are available, the average of the high bid and\nlow asked quotations in the over-the-counter market as reported by the National\nAssociation of Securities Dealers' Automated Quotations System or a similar\norganization.  Such closing prices shall be appropriately adjusted to take into\naccount any stock split, reverse stock split or stock dividend with respect to\nthe Harken Shares that occurs within such 10- Trading Day period.\n\n         'Development Finance Agreement' shall mean the Development Finance\nAgreement dated the Effective Date between Harken and the Company, entered into\nin connection with this Agreement.\n\n         'Effective Date' shall mean the date of this Agreement.\n\n         'Exchange' shall mean the exchange of Company Shares for (a) Harken\nShares or cash pursuant to Investors' Option as provided for in Article III or\n(b) Harken Shares or cash pursuant to Harken's Option as provided for in\nArticle IV.\n\n 'Exchange Date' shall  have the respective meanings assigned to it in Sections\n                                 3.1 and 4.1.\n\n         'Exchange Period' shall mean the period from and including the first\nanniversary of the Effective Date to and including the third anniversary of the\nEffective Date.\n\n         'Governmental Authority' shall mean (a) the United States of America\nor any state within the United States of America, (b) any court or any\ngovernmental department, commission, board, bureau, agency or other\ninstrumentality of the United States of America or of any state within the\nUnited States of America, and (c) in the case of the representations,\nwarranties and covenants of an Investor, the jurisdiction of organization of\nsuch Investor or any political subdivision of such jurisdiction or any court or\nany governmental department, commission, board, bureau, agency or other\ninstrumentality of such jurisdiction or political subdivision thereof.\n\n         'Harken Shares' shall mean shares of the Common Stock, par value $.01\nper share, of Harken, or shares of any class or classes of capital stock of\nHarken resulting from any reclassification or reclassifications thereof.\n\n         'Harken's Option' shall have the meaning assigned to it in Article IV.\n\n         'Harken's SEC Filings' shall have the meaning assigned to it in\nSection 6.8.\n\n         'Investors' Option' shall have the meaning assigned to it in Article\nIII.\n\n\n\n\n\n                                      -2-\n\n         'Law' shall mean any applicable statute, law, ordinance, regulation,\nrule, ruling, order, restriction, requirement, writ, injunction, decree or\nother official act of or by any Governmental Authority.\n\n         'Registration Rights Agreement' shall mean the Registration Rights\nAgreement dated the Effective Date between Harken and Investors, entered into\nin connection with this Agreement.\n\n         'SEC' shall mean the Securities and Exchange Commission.\n\n         'Securities Act' shall mean the Securities Act of 1933, as amended.\n\n         'Trading Day' shall mean any day on which the principal securities\nexchange or quotation system on which the Harken Shares are then listed is open\nfor trading on a regular basis.\n\n         Section 1.2.       References and Titles.  All references in this\nAgreement to articles, sections, subsections and other subdivisions refer to\nthe articles, sections, subsections and other subdivisions of this Agreement\nunless expressly provided otherwise.  Titles appearing at the beginning of any\nsubdivisions are for convenience only and do not constitute any part of such\nsubdivisions and shall be disregarded in construing the language contained in\nsuch subdivisions.  The words 'this Agreement', 'this instrument', 'herein',\n'hereof', 'hereby', 'hereunder' and words of similar import refer to this\nAgreement as a whole and not to any particular subdivision unless expressly so\nlimited.  The phrases 'this Section' and 'this subsection' and similar phrases\nrefer only to the sections or subsections hereof in which such phrases occur.\nPronouns in masculine, feminine and neuter genders shall be construed to\ninclude any other gender, and words in the singular form shall be construed to\ninclude the plural and vice versa, unless the context otherwise requires.\n\n\n                                   ARTICLE II\n\n                   Restrictions on Transfer of Company Shares\n\n         Section 2.1.       Restrictions on Transfer.  Each Investor agrees\nthat, during the period commencing on the Effective Date and ending on the\nBusiness Day next following the later of (a) the termination of the Exchange\nPeriod and (b) the consummation of any Exchange made by such Investor pursuant\nto Article III or IV, such Investor will not, directly or indirectly, offer,\nsell, assign, transfer, grant a participation in, pledge, or otherwise dispose\nof any of its Company Shares except in accordance with the terms of this\nAgreement.\n\n\n\n\n\n                                      -3-\n\n         Section 2.2.       Legend.   Each Investor agrees that the\ncertificates representing all Company Shares owned by such Investor shall each\nconspicuously set forth on the face or back thereof a legend in substantially\nthe following form:\n\n         'THE SHARES OF THE CORPORATION REPRESENTED BY THIS CERTIFICATE ARE\n         SUBJECT TO RESTRICTIONS ON THE TRANSFER THEREOF AS SET FORTH IN AN\n         EXCHANGE AGREEMENT DATED DECEMBER ____, 1997, BY AND AMONG HARKEN\n         ENERGY CORPORATION, HARKEN CAPITAL  CORPORATION AND THE STOCKHOLDERS\n         OF HARKEN CAPITAL CORPORATION, A COPY OF WHICH HAS BEEN DEPOSITED WITH\n         HARKEN CAPITAL CORPORATION AT ITS PRINCIPAL PLACE OF BUSINESS.  A COPY\n         OF THE EXCHANGE AGREEMENT MAY BE OBTAINED BY THE REGISTERED HOLDER OF\n         SUCH SHARES FROM HARKEN CAPITAL CORPORATION, WITHOUT CHARGE, UPON\n         REQUEST TO HARKEN CAPITAL CORPORATION AT ITS PRINCIPAL PLACE OF\n         BUSINESS OR REGISTERED OFFICE.'\n\n         Section 2.3.       Permitted Transfers to Subsidiaries.\nNotwithstanding any other provision of this Agreement, each Investor shall have\nthe right, without the prior consent of Harken or the Company, to assign or\notherwise transfer all (but not less than all) of its Company Shares to a\nwholly-owned subsidiary of such Investor for so long as such subsidiary shall\nremain a wholly-owned subsidiary of such Investor and provided that such\nInvestor shall remain personally obligated for its duties and obligations\nhereunder.  Any assignee pursuant to a permitted assignment or transfer of\nCompany Shares under this Section 2.3 must execute, prior to such assignment or\ntransfer, a written acknowledgment, in form and substance satisfactory to\nHarken, that such assignee has become a party to this Agreement as if it had\nbeen the original 'Investor' hereto and that it agrees to be bound by all the\nterms and provisions hereof.\n\n         Section 2.4.       Improper Transfers.  Any attempt by an Investor to\ntransfer or encumber any of its Company Shares not in accordance with the terms\nof this Agreement shall be void and ineffective, and the Company shall not give\nany effect to such attempted transfer or encumbrance in its stock transfer\nrecords or otherwise.\n\n\n                                  ARTICLE III\n\n                               Investors Exchange\n\n         Harken hereby grants to each Investor the option (herein called the\n'Investors' Option') to exchange all (but not less than all) of the Company\nShares owned by such Investor for Harken Shares on the following terms and\nconditions (herein called 'Exchange'):\n\n\n\n\n\n                                      -4-\n\n         Section 3.1.       Exercise of Investors' Option.  The Investors'\nOption can only be exercised by the delivery to Harken within the Exchange\nPeriod of a written notice from an Investor, which notice shall be in the form\nof Exhibit A hereto, stating that such Investor thereby elects to exercise the\nInvestors' Option.  An Investor may exercise the Investors' Option at any time\nduring the Exchange Period, provided, however, that such exercise must be for\nthe exchange of 100% of the Company Shares owned by such Investor.  Such\nexercise shall be irrevocable.  Each Investor shall have the right to exercise\nthe Investors' Option individually and without the joinder of any other\nInvestor.  Upon termination of the Exchange Period, the Investors' Option shall\nterminate and Investors shall have no further right or option to exchange their\nCompany Shares for Harken Shares pursuant to the Investors' Option.  For\npurposes of this Article III, the term 'Exchange Date' shall mean, with respect\nto any Exchange by an Investor pursuant to this Article III, the date of\ndelivery to Harken of Investor's notice of such Exchange pursuant to this\nSection 3.1.\n\n         Section 3.2.       Number of Harken Shares.  The aggregate number of\nHarken Shares to be issued to an Investor upon an Exchange by such Investor\npursuant to this Article III shall be determined pursuant to the following\nformula:\n\n         HS = CC \/ CMP\n\nwhere, for purposes of this Article III:\n\n         'HS'      shall mean the aggregate number of Harken Shares to be\nissued to such Investor upon such Exchange.\n\n         'CC'      shall mean the remainder of (a) the Capital Contribution of\n                   such Investor minus (b) such Investor's Allocated NPI\n                   Payments, together with an amount equal to interest on the\n                   positive balance of such remainder as it exists from time to\n                   time during the period commencing on the Business Day next\n                   following the Effective Date and ending on and including the\n                   Exchange Date at the rate of fifteen percent (15%) per\n                   annum, compounded monthly on the first day of each calendar\n                   month.\n\n         'CMP'     shall mean the Current Market Price per share of the Harken\nShares as of the Exchange Date.  \n\nThe number of Harken Shares determined pursuant to such formula shall be\nrounded up or down to the next whole number, and no fractional Harken Shares\nshall be issued.\n\n         Section 3.3.       Closing of Exchange.  The closing and consummation\nof any Exchange by an Investor pursuant to this Article III shall occur not\nlater than three Business Days following the Exchange Date of such Exchange.\nAt such closing, such Investor shall\n\n\n\n\n\n                                      -5-\n\ntransfer and deliver all of its Company Shares to Harken, and as soon as\npossible after such closing (but in any event not later than 30 days after such\nclosing) Harken shall issue and deliver to such Investor the number of Harken\nShares required for such Exchange pursuant to Section 3.2.\n\n         Section 3.4.       Harken's Cash Option.  Notwithstanding anything to\nthe contrary contained in this Article III, Harken shall have the option to pay\ncash to an Investor upon any Exchange by such Investor pursuant to this Article\nIII in lieu of issuing Harken Shares.  If, in connection with such an Exchange,\nHarken determines to pay cash to an Investor in lieu of issuing Harken Shares,\n(a) it must pay cash for all the Company Shares owned by such Investor and (b)\nit must notify such Investor of such determination within three Business Days\nfollowing Harken's receipt of such Investor's notice of such Exchange.  The\naggregate amount of cash to be paid to such Investor upon such Exchange shall\nbe equal to such Investor's CC for such Exchange.  Such payment shall be made\nto such Investor at the closing of such Exchange by wire transfer in\nimmediately available funds to a bank account designated by such Investor.\n\n\n                                   ARTICLE IV\n\n                                Harken Exchange\n\n         Investors hereby grant to Harken the option (herein called 'Harken's\nOption') to exchange, on a one-time basis, all (but not less than all) of the\nCompany Shares owned by all Investors for Harken Shares or cash on the\nfollowing terms and conditions (herein also called 'Exchange'):\n\n         Section 4.1.       Exercise of Harken's Option.  Harken's Option can\nonly be exercised by the delivery within the Exchange Period to all Investors\nwho have not previously elected to make an Exchange pursuant to Article III of\na written notice from Harken stating that Harken thereby elects to exercise\nHarken's Option and specifying whether such Exchange will be made for Harken\nShares or cash.  Such exercise shall be irrevocable.  Harken may make an\nExchange pursuant to this Article IV solely for Harken Shares or solely for\ncash but not for a combination of Harken Shares and cash (i.e., all such\nInvestors shall receive in such Exchange the same type of consideration).  Upon\ntermination of the Exchange Period, Harken's Option shall terminate and Harken\nshall have no further right or option to exchange Company Shares for Harken\nShares or cash pursuant to Harken's Option.  For purposes of this Article IV,\nthe term 'Exchange Date' shall mean, with respect to any Exchange pursuant to\nthis Article IV, the date of delivery to Investors of Harken's notice of such\nExchange pursuant to this Section 4.1.\n\n         Section 4.2.       Number of Harken Shares.  The aggregate number of\nHarken Shares to be issued to an Investor making an Exchange pursuant to this\nArticle IV (if such Exchange\n\n\n\n\n\n                                      -6-\n\ninvolves the delivery to Investors of Harken Shares) shall be determined\npursuant to the following formula:\n\n         HS = CC \/ CMP\n\nwhere, for purposes of this Article IV:\n\n         'HS'      shall mean the aggregate number of Harken Shares to be\nissued to such Investor upon such Exchange.\n\n         'CC'      shall mean the remainder of (a) the Capital Contribution of\n                   such Investor minus (b) such Investor's Allocated NPI\n                   Payments, together with an amount equal to interest on the\n                   positive balance of such remainder as it exists from time to\n                   time during the period commencing on the Business Day next\n                   following the Effective Date and ending on and including the\n                   Exchange Date at the rate of twenty-five percent (25%) per\n                   annum, compounded monthly on the first day of each calendar\n                   month.\n\n         'CMP'     shall mean the Current Market Price per share of the Harken\nShares as of the Exchange Date.\n\nThe number of Harken Shares determined pursuant to such formula shall be\nrounded up or down to the next whole number, and no fractional Harken Shares\nshall be issued.\n\n         Section 4.3.       Amount of Cash.  The aggregate amount of cash to be\npaid to an Investor making an Exchange pursuant to this Article IV (if such\nExchange involves the payment to Investors of cash) shall be equal to such\nInvestor's CC for such Exchange.\n\n         Section 4.4.       Closing of Exchange.  The closing and consummation\nof any Exchange pursuant to this Article IV shall occur not later than three\nBusiness Days following the Exchange Date of such Exchange.  At such closing,\nall Investors who have not previously elected to make an Exchange pursuant to\nArticle III shall transfer and deliver all their Company Shares to Harken, and\nas soon as possible after such closing (but in any event not later than 30 days\nafter such closing) Harken shall issue and deliver to such Investors the number\nof Harken Shares or pay or cause to be paid to such Investors the amount of\ncash required for such Exchange pursuant to Section 4.2 or 4.3.  Harken's cash\npayment shall be made by wire transfer in immediately available funds to a bank\naccount or accounts designated by Investors.\n\n\n\n\n\n                                      -7-\n\n\n                                   ARTICLE V\n\n                      Issuance of Additional Harken Shares\n\n         As additional consideration for the grant by Investors to Harken of\nHarken's Option, Harken hereby agrees to issue additional Harken Shares to\nInvestors on the following terms and conditions:\n\n         Section 5.1.       Issuance of Additional Shares.  The following\nprovisions shall apply with respect to any Investor that makes an Exchange for\nHarken Shares pursuant to Article III or IV:\n\n         (a)       If, as of such Investor's Deficiency Determination Date, the\nRealized Proceeds with respect to such Investor's Exchange Shares are less than\nthe Invested Amount with respect to such Exchange Shares, then, within 30\nBusiness Days after such Investor's Deficiency Determination Date, Harken shall\nissue and deliver to such Investor additional Harken Shares in an amount equal\nto A divided by B, where 'A' is equal to the Deficiency Amount with respect to\nsuch Exchange Shares, and where 'B' is equal to the Current Market Price per\nshare of the Harken Shares as of such Investor's Deficiency Determination Date.\nThe number of additional Harken Shares determined pursuant to such formula\nshall be rounded up or down to the next whole number, and no fractional Harken\nShares shall be issued.\n\n         (b)       Notwithstanding the foregoing, provided Harken complies with\nall its obligations under the Registration Rights Agreement, an Investor shall\nnot be entitled to receive any additional Harken Shares pursuant to Section\n5.1(a) unless each Exchange Share issued to such Investor is sold by such\nInvestor in an open market transaction prior to the end of the Selling Period\napplicable to such Exchange Share.  Each Investor shall use its reasonable best\nefforts to sell its Exchange Shares in an orderly manner designed not to\nmaterially disrupt the public market for the Harken Shares; provided, however,\nthat public sales by Investors, on a combined basis, of up to an aggregate of\n50,000 Exchange Shares per Trading Day shall not be subject to such manner of\nsale restriction.\n\n         (c)       If the combined public sales by Investors of Exchange Shares\nin any one Trading Day exceeds an aggregate of 50,000 shares, then (i) the\nRealized Proceeds with respect to the Exchange Shares sold on such Trading Day\nin excess of 50,000 shares which are sold by an Investor at a price per share\n(prior to any commissions, fees or costs) less than the Current Market Price at\nwhich such Exchange Shares were issued to such Investor and (ii) that portion\nof such Investor's Invested Amount that is attributable to such Exchange\nShares, shall not be taken into account in determining the number of additional\nHarken Shares issuable to such Investor pursuant to Section 5.1(a).\n\n\n\n\n\n                                      -8-\n\n         Section 5.2.       Certain Definitions.  As used in this Article V:\n\n         (a)       'Deficiency Amount' shall mean, with respect to an\nInvestor's Exchange Shares, A minus B, where 'A' is equal to the Invested\nAmount with respect to such Exchange Shares, and where 'B' is equal to the\nRealized Proceeds with respect to such Exchange Shares.\n\n         (b)       'Deficiency Determination Date' shall mean, with respect to\nan Investor, the Business Day next following the expiration of the Selling\nPeriod applicable to such Investor's  Exchange Shares.\n\n         (c)       'Exchange Shares' shall mean all Harken Shares issued to an\nInvestor as a result of an Exchange pursuant to this Agreement.\n\n         (d)       'Invested Amount' shall mean, with respect to an Investor's\nExchange Shares, the aggregate amount of such Investor's CC (as defined in\nArticles III and IV, respectively) for the Exchange pursuant to which such\nExchange Shares were issued.\n\n         (e)       'Realized Proceeds' shall mean, with respect to an\nInvestor's Exchange Shares, the aggregate gross proceeds actually received by\nsuch Investor (prior to any commissions, fees or costs) from the sale or sales\nof such Exchange Shares.\n\n         (f)       'Selling Period' shall mean, with respect to the Harken\nShares issued to an Investor pursuant to an Exchange, the period of 120 Trading\nDays following the later of (i) the date the Securities Act registration\nstatement covering such Harken Shares filed by Harken pursuant to the\nRegistration Rights Agreement first became effective and (ii) the date of\nissuance of such Harken Shares; provided, however, that if the quotient\nobtained by dividing (x) the total number of Harken Shares issued to all\nInvestors pursuant to such Exchange by (y) 120, is greater than 50,000, then\nsuch 120-Trading Day period shall be extended to equal the number of Trading\nDays (rounded up to the next whole number) determined by dividing (x) the total\nnumber of Harken Shares issued to all Investors pursuant to such Exchange by\n(y) 50,000; and provided, further, that the Selling Period shall be subject to\nfurther extension as provided in Section 5 of the Registration Rights\nAgreement.  If the Selling Period applicable to Harken Shares issued pursuant\nto an Exchange (a 'Later Exchange') overlaps with the Selling Period applicable\nto Harken Shares issued pursuant to a prior Exchange (a 'Prior Exchange'), the\ncalculation called for by the first proviso contained in the immediately\npreceding sentence with respect to the Harken Shares issued pursuant to the\nLater Exchange shall be made by taking into account under each clause (x) of\nsuch proviso, in addition to the Harken Shares issued pursuant to the Later\nExchange, the number of Harken Shares issued pursuant to the Prior Exchange\nthat remain unsold by Investors at the commencement of the Selling Period\napplicable to the Harken Shares issued pursuant to the Later Exchange.\nNotwithstanding the foregoing, in no event shall the Selling Period applicable\nto the Harken Shares issued to an Investor pursuant to an Exchange extend\nbeyond the closing date of the sale of the last of such\n\n\n\n\n\n                                      -9-\n\nHarken Shares to be sold by such Investor.  An Investor shall notify Harken\nwhen such last sale occurs.\n\n\n                                   ARTICLE VI\n\n                Harken Representations, Warranties and Covenants\n\n         Harken hereby represents and warrants to and covenants with Investors\nas follows:\n\n         Section 6.1.       Organization and Corporate Authority.  Harken is a\ncorporation duly incorporated, validly existing and in good standing under the\nlaws of the jurisdiction of its incorporation, with corporate power and\nauthority to carry on its business as now conducted and to own, lease and\noperate all properties and assets now owned, leased or operated by it.\n\n         Section 6.2.       Qualification to do Business.  Harken is duly\nqualified to do business as a foreign corporation and in good standing in each\njurisdiction in which its ownership of property or the conduct of its business\nrequires such qualification, except jurisdictions in which the failure so to\nqualify would not have a material adverse effect on Harken's business,\nproperties, financial condition or results of operations.\n\n         Section 6.3.       Capitalization.  The authorized capital stock of\nHarken consists of 150,000,000 Harken Shares, of which 117,725,284 are issued\nand outstanding, and 10,000,000 shares of preferred stock, par value $1.00 per\nshare, none of which is outstanding.  Harken has 22,822,236 Harken Shares\nreserved for issuance upon exercise of stock options, warrants and other rights\nto acquire Harken Shares.  All of the outstanding shares of capital stock of\nHarken are duly authorized, validly issued, fully paid, nonassessable and free\nof preemptive rights, with no personal liability attaching to the ownership\nthereof.\n\n         Section 6.4.       Finders' Fees.  No broker or finder has acted on\nbehalf of Harken in connection with this Agreement or the transactions\ncontemplated herein.\n\n         Section 6.5.       Authority of Harken.  Harken has the corporate\npower to enter into, and be bound by the terms and conditions of, this\nAgreement and the Registration Rights Agreement and to carry out its\nobligations hereunder and thereunder, and the execution and delivery by Harken\nof this Agreement and the Registration Rights Agreement and the performance by\nHarken of its obligations hereunder and thereunder have been duly authorized by\nall necessary corporate action of Harken.  This Agreement has been duly\nexecuted and delivered by Harken and constitutes, and each other agreement or\ndocument executed or to be executed by Harken in connection with the\ntransactions contemplated hereby has been, or when executed, will be, duly\nexecuted and delivered by Harken and constitutes, or when executed and\ndelivered will constitute, a valid and legally binding obligation of Harken\nenforceable against Harken in accordance with their respective terms, except to\nthe extent\n\n\n\n\n\n                                      -10-\n\nenforcement may be limited (a) by applicable bankruptcy, insolvency,\nmoratorium, reorganization or similar laws from time to time in effect which\naffect creditors' rights generally, (b) by legal and equitable limitations on\nthe availability of equitable remedies, including without limitation specific\nperformance against Harken under or by virtue of this Agreement and (c) by\npublic policy considerations with respect to the rights of indemnification\nunder the Registration Rights Agreement.\n\n         Section 6.6.       Non-Contravention.  The execution, delivery and\nperformance of this Agreement and the Registration Rights Agreement by Harken,\nand the issuance of Harken Shares by Harken in accordance with this Agreement,\nwill not (a) conflict with or result in a violation of any provision of\nHarken's charter or bylaws, (b) conflict with or result in a violation of any\nprovision of, or constitute (with or without the giving of notice or the\npassage of time or both) a default under, or give rise (with or without the\ngiving of notice or the passage of time or both) to any right of termination,\ncancellation, or acceleration under, any bond, debenture, note, mortgage,\nindenture, lease, agreement or other instrument or obligation to which Harken\nis a party or by which Harken or any of its properties or assets may be bound,\nwhich conflict, violation, default, termination, cancellation or acceleration\ncould reasonably have a material adverse effect on Harken's business,\nproperties, financial condition or results of operations, (c) result in the\ncreation or imposition of any lien or incumbrance upon the properties or assets\nof Harken, or (d) result in a violation by Harken of any Law or any judgment,\norder, decree, rule or regulation of any Governmental Authority to which Harken\nis subject; provided, however, that no such representations or warranties are\nmade by Harken with respect to compliance with any foreign securities laws.\n\n         Section 6.7.       Governmental Consents.  Except for (a) those that\nhave been duly obtained, (b) routine filings and orders that may be required\nunder Regulation D promulgated under the Securities Act or under any applicable\nstate securities or Blue Sky laws in connection with the future issuance of\nHarken Shares pursuant to this Agreement, and the approval by the American\nStock Exchange of the listing of such Harken Shares on such exchange (which\nHarken will obtain prior to the issuance of such shares), and (c) those\nrequired under the Securities Act and any applicable state securities or Blue\nSky laws in connection with the performance by Harken of its obligations under\nthe Registration Rights Agreement, no consent, order, approval or authorization\nof, or declaration, filing, or registration with, any Governmental Authority is\nrequired to be obtained or made by Harken in connection with the execution,\ndelivery or performance by Harken of this Agreement or the Registration Rights\nAgreement; provided, however, that no such representations or warranties are\nmade by Harken with respect to compliance with any foreign securities laws.\n\n         Section 6.8.       Reports and Financial Statements of Harken.  Harken\nhas heretofore delivered to Investors true and complete copies of all\ndefinitive Form 10-K annual reports, Form 10-Q quarterly reports and proxy\nstatements filed by Harken with the SEC from and after January 1, 1997 (herein\ncollectively called 'Harken's SEC Filings').  As of their respective dates,\nHarken's SEC Filings did not contain any untrue statement of a material fact\n\n\n\n\n\n                                      -11-\n\nor omit to state a material fact required to be stated therein or necessary to\nmake the statements therein, in light of the circumstances under which they\nwere made, not misleading.  Harken does not have any debts, liabilities, or\nobligations, whether accrued, contingent, unasserted or otherwise, and whether\ndue or to become due, which are not reflected in the financial statements\ncontained in Harken's SEC Filings and would be required to be so reflected\nunder generally accepted accounting principles, except those incurred in the\nordinary course of business since the date of the most recent audited financial\nstatements contained in Harken's SEC Filings.  Since such date and except as\notherwise disclosed in Harken's SEC Filings, Harken has conducted its business\nin the ordinary course consistent with past practice and there has not been any\nmaterial adverse change in the business, properties, financial condition or\nresults of operations of Harken or in its relationship with lenders, suppliers,\ncustomers, employees or others, whether such changes have occurred in the\nordinary course of business or otherwise.\n\n         Section 6.9.       Disclosure.  All written information provided by\nHarken and its officers, directors, agents, representatives and employees to\nInvestors in connection with this Agreement which is not part of Harken's SEC\nFilings has been prepared in good faith by Harken and does not contain any\nuntrue statement of a material fact or, considered in its entirety along with\nHarken's SEC Filings, omit to state therein a material fact (other than those\nfacts generally recognized to be industry risks normally associated with the\noil and gas business) necessary to make the statements made therein not\nmisleading.  Harken does not know of any facts (other than those facts\ngenerally recognized to be industry risks normally associated with the oil and\ngas business) related to its business, properties, financial condition or\nresults of operations which have not been disclosed orally or in writing to\nInvestors and which presently or will materially and adversely affect such\nbusiness, properties, financial condition or results of operations or the\nability of Harken to perform its obligations under this Agreement or the\nRegistration Rights Agreement.\n\n         Section 6.10.      Harken Shares.  The Harken Shares issuable to\nInvestors pursuant to this Agreement have been, or when issued hereunder, will\nhave been, duly authorized for issuance pursuant hereto and, when issued and\ndelivered by Harken pursuant hereto, will be validly issued, fully paid and\nnon-assessable and will be free and clear of any claim, lien, pledge, option,\ncharge, security interest or encumbrance of any nature whatsoever created by\nHarken.  The issuance of Harken Shares under this Agreement is not subject to\nany preemptive rights.  Harken shall, prior to the issuance of Harken Shares\npursuant to this Agreement, cause such Harken Shares to be listed on each\nsecurities exchange or quotation system on which outstanding Harken Shares are\nthen listed.\n\n         Section 6.11.      Absence of Bankruptcy Proceedings.  There are no\nbankruptcy, reorganization or arrangement proceedings pending against, being\ncontemplated by or, to the knowledge of Harken, threatened against Harken or\nany of its subsidiaries that are named in the audited financial statements\ncontained in Harken's SEC Filings.\n\n\n\n\n\n                                      -12-\n\n         Section 6.12.      No Defaults.  Harken is not (a) in violation of any\nprovision of its charter or bylaws, (b) in breach, violation or default, in any\nmaterial respect, of or under any material contract, lease, commitment or\ninstrument to which it is a party or by which it is bound or to which any of\nits properties or assets are subject, and no event has occurred which (whether\nwith or without notice, lapse of time or the happening or occurrence of any\nother event) would constitute such a breach, violation or default or (c) in\nmaterial violation of any Law.\n\n         Section 6.13.      Litigation.  There is no action, suit, proceeding\nor investigation pending or, to the knowledge of Harken, threatened against or\naffecting Harken or any properties or rights of Harken by or before any\nGovernmental Authority that (a) relates to or challenges the legality of this\nAgreement or the Registration Rights Agreement, (b) would reasonably be\nexpected to have a material adverse effect upon the business, properties,\nfinancial condition or results of operations of Harken (except as disclosed in\nHarken's SEC Filings) or (c) would reasonably be expected to impair the ability\nof Harken to perform fully on a timely basis any obligations that it has under\nthis Agreement or the Registration Rights Agreement.\n\n         Section 6.14.      Compliance with Laws.  Harken is in compliance in\nall material respects with all Laws in all jurisdictions in which Harken is\npresently doing business and where the failure to effect such compliance would\nreasonably be expected to have a material adverse effect upon the business,\nproperties, financial condition or results of operations of Harken.\n\n         Section 6.15.      Company Board.  During the Exchange Period, Harken\nwill furnish representatives to serve on the Board of Directors of the Company\nand will cause such representatives to so serve, if elected by the stockholders\nof the Company.\n\n\n                                  ARTICLE VII\n\n              Investors Representations, Warranties and Covenants\n\n         A.        Each Investor hereby severally represents and warrants to\nand covenants with Harken as follows:\n\n         Section 7.1.       Organization and Corporate Authority.  Such\nInvestor is a corporation duly organized, validly existing and in good standing\nunder the laws of its jurisdiction of organization, with corporate power and\nauthority to carry on its business as now conducted and to own, lease and\noperate all properties and assets now owned, leased or operated by it.\n\n         Section 7.2.       Finders' Fees.  No broker or finder has acted on\nbehalf of Investor in connection with this Agreement or the transactions\ncontemplated herein.\n\n\n\n\n\n                                      -13-\n\n         Section 7.3.       Authority of Investor.  Investor has the corporate\npower to enter into, and be bound by the terms and conditions of, this\nAgreement and the Registration Rights Agreement and to carry out its\nobligations hereunder and thereunder, and the execution and delivery by\nInvestor of this Agreement and the Registration Rights Agreement and the\nperformance by Investor of its obligations hereunder and thereunder have been\nduly authorized by all necessary corporate action of Investor.  This Agreement\nhas been duly executed and delivered by Investor and constitutes, and each\nother agreement or document executed or to be executed by Investor in\nconnection with the transactions contemplated hereby has been, or when\nexecuted, will be, duly executed and delivered by Investor and constitutes, or\nwhen executed and delivered will constitute, a valid and legally binding\nobligation of Investor enforceable against Investor in accordance with their\nrespective terms, except to the extent enforcement may be limited (a) by\napplicable bankruptcy, insolvency, moratorium, reorganization or similar laws\nfrom time to time in effect which affect creditors' rights generally, (b) by\nlegal and equitable limitations on the availability of equitable remedies,\nincluding without limitations specific performance against Investor under or by\nvirtue of this Agreement and (c) by public policy considerations with respect\nto the rights of indemnification under the Registration Rights Agreement.\n\n         Section 7.4.       Non-Contravention.  The execution, delivery and\nperformance of this Agreement and the Registration Rights Agreement by Investor\nwill not (a) conflict with or result in a violation of any provision of\nInvestor's organizational documents, (b) conflict with or result in a violation\nof any provision of, or constitute (with or without the giving of notice or the\npassage of time or both) a default under, or give rise (with or without the\ngiving of notice or the passage of time or both) to any right of termination,\ncancellation, or acceleration under, any bond, debenture, note, mortgage,\nindenture, lease, agreement or other instrument or obligation to which Investor\nis a party or by which it or any of its properties or assets may be bound,\nwhich conflict, violation, default, termination, cancellation, or acceleration\nwould have a material adverse effect on the ability of Investor to perform its\nobligations hereunder, (c) result in the creation or imposition of any lien or\nincumbrance upon the properties or assets of Investor, which lien or\nincumbrance would have a material adverse effect on the ability of Investor to\nperform its obligations hereunder, or (d) result in a violation by Investor of\nany Law or any judgment, order, decree, rule or regulation of any Governmental\nAuthority to which Investor is subject.\n\n         Section 7.5.       Governmental Consents.  Except for those that have\nbeen duly obtained, no consent, order, approval or authorization of, or\ndeclaration, filing, or registration with, any Governmental Authority is\nrequired to be obtained or made by Investor in connection with the execution,\ndelivery or performance by Investor of this Agreement.\n\n         Section 7.6.       Investment Intent.  Upon issuance pursuant to this\nAgreement, Investor will acquire the Harken Shares for its own account for\ninvestment and not with a view to, or for sale or other disposition in\nconnection with, any distribution of all or any part of the Harken Shares,\nexcept (a) in an offering covered by a registration statement filed with the\nSEC\n\n\n\n\n\n                                      -14-\n\nunder the Securities Act covering the Harken Shares or (b) pursuant to an\napplicable exemption under the Securities Act.\n\n         Section 7.7.       Disclosure of Information.  Investor represents\nthat it has had an opportunity to ask questions of and receive answers from\nHarken regarding Harken, its businesses, properties, financial condition,\noperations and plan of business, the Harken Shares and all matters relating\nthereto.\n\n         Section 7.8.       Accredited Investor and Experience.  Investor\nacknowledges that it is an Accredited Investor within the meaning of Regulation\nD under the Securities Act, can bear the economic risk of any investment in\nHarken Shares and has such knowledge and experience in financial and business\nmatters that it is capable of evaluating the merits and risks of any investment\nin Harken Shares.  Investor represents that it has not been organized for the\npurpose of acquiring any Harken Shares.\n\n         Section 7.9.       Restricted Securities.  Investor understands that\nany Harken Shares that are issued pursuant to this Agreement will not have been\nregistered pursuant to the Securities Act, any other federal securities law,\nany applicable foreign securities law or any applicable state securities or\nBlue Sky law, that such shares will be characterized as 'restricted securities'\nunder the United States securities laws and that under such laws and applicable\nregulations such shares cannot be sold or otherwise disposed of without\nregistration under the Securities Act or an exemption therefrom.\n\n         Section 7.10.      Legend.  Investor understands and agrees that the\ncertificates representing any Harken Shares issued pursuant to this Agreement\nshall each conspicuously set forth on the face or back thereof a legend in\nsubstantially the following form:\n\n                   'THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN\n                   REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND\n                   MAY NOT BE SOLD OR OTHERWISE TRANSFERRED UNLESS SUCH SHARES\n                   ARE FIRST REGISTERED UNDER SUCH ACT OR UNLESS AN EXEMPTION\n                   FROM SUCH REGISTRATION IS AVAILABLE.'\n\n         Section 7.11.      Title to Company Shares.  Investor is (and at the\nclosing of any Exchange by Investor pursuant to Article III or IV will be) the\nsole record and beneficial owner of, and upon consummation of any such Exchange\nHarken will acquire good, valid and marketable title to, the number of Company\nShares set for opposite the name of such Investor on Annex I, free and clear of\nall liens, charges, pledges, options, security interests, claims, restrictions\nand other encumbrances of any type or description.  Investor has made to the\nCompany the Capital Contribution set forth opposite its name on Annex I hereto.\n\n\n\n\n\n                                      -15-\n\n         B.        Each Investor hereby severally represents and warrants to\nand covenants with Harken that it has not authorized, approved or taken and\nwill not authorize, approve or take, directly or indirectly, in its capacity as\na stockholder of the Company or otherwise, any action that would make any of\nthe following statements in Sections 7.12, 7.13, 7.14, 7.15 and 7.16 inaccurate\nor untrue, and, to the best knowledge of such Investor, all such statements are\ntrue and correct:\n\n         Section 7.12.      Organization and Corporate Authority of Company.\nThe Company is a corporation duly organized, validly existing and in good\nstanding under the laws of the State of Delaware, with corporate power and\nauthority to carry on its business as now conducted and to own, lease and\noperate all properties and assets now owned, leased or operated by it.\n\n         Section 7.13.      Qualification of Company to Business.  The Company\nis duly qualified to do business as a foreign corporation and in good standing\nin each jurisdiction in which its ownership of property or the conduct of its\nbusiness requires such qualification.\n\n         Section 7.14.      Company Charter and Bylaws.  The Company has\ndelivered to Harken accurate and complete copies of (i) the Certificate of\nIncorporation and Bylaws of the Company as currently in effect, (ii) the stock\nrecords of the Company and (iii) the minutes of all meetings of the Company's\nBoard of Directors, any committees of such Board and the Company's stockholders\n(and all consents in lieu of such meetings).  Such records, minutes and\nconsents accurately reflect the stock ownership of the Company and all actions\ntaken by the Company's Board, any committees of such Board and the Company's\nstockholders.\n\n         Section 7.15.      Capitalization of the Company.  The authorized\ncapital stock of the Company consists of 10,000 shares of Common Stock, par\nvalue $.01 per share, of which 7,000 shares are outstanding.  All outstanding\nshares of capital stock of the Company have been validly issued and are fully\npaid and nonassessable, and no shares of capital stock of the Company are\nsubject to, nor have any been issued in violation of, preemptive or similar\nrights.  All issuances and sales by the Company of shares of its capital stock\nhave been effected in compliance with all applicable Laws.  The Company Shares\nset forth on Annex I constitute (and at the closing of any Exchange pursuant to\nArticle III or IV will constitute) all the outstanding shares of capital stock\nof the Company.  Except as set forth on Annex I, there are (and as of the\nclosing of any Exchange pursuant to Article III or IV there will be)\noutstanding (i) no shares of capital stock or other voting securities of the\nCompany, (ii) no securities of the Company convertible into or exchangeable for\nshares of capital stock or other voting securities of the Company, (iii) no\noptions or other rights to acquire from the Company, and no obligation of the\nCompany to issue or sell, any shares of capital stock or other voting\nsecurities of the Company or any securities of the Company convertible into or\nexchangeable for such capital stock or voting securities and (iv) no equity\nequivalents, interests in the ownership or earnings of or other similar rights\nof or with respect to the Company.\n\n\n\n\n\n                                      -16-\n\n         Section 7.16.      No Prior or Future Activities.  The Company was\nformed solely for the purpose of entering into the Development Finance\nAgreement, and, except for liabilities or obligations incurred in connection\nwith its incorporation and maintaining its corporate status and good standing,\nhas not incurred and will not incur, and does not have, any liabilities or\nobligations, has not engaged in and will not engage in any business, activities\nor transactions, and has not entered into and will not enter into any\ncontracts, agreements or arrangements, in each case of any type or kind\nwhatsoever, except for this Agreement and the Development Finance Agreement and\nits obligations and the performance thereof hereunder and thereunder.\n\n         C.        Each Investor agrees that:\n\n         Section 7.17.      Continuing Representations and Warranties.  The\nrepresentations, warranties and covenants of Investor made in this Article VII\nshall remain true and accurate during the period commencing on the Effective\nDate and ending on the Business Day next following the later of (a) the\ntermination of the Exchange Period and (b) the consummation of any Exchange\nmade pursuant to Article III or IV, and Investor shall not take any action nor\npermit any action to be taken which would cause any of such representations,\nwarranties and covenants to become untrue, inaccurate or breached.  Investor\nacknowledges and agrees that Harken may rely on this Section in connection with\nany issuance of Harken Shares pursuant to this Agreement.\n\n\n                                  ARTICLE VIII\n\n                                 Miscellaneous\n\n         Section 8.1.       Assignment by Investors.  Investors shall not\nassign, sell, transfer, convey, mortgage or pledge all or any part of its\nrights and obligations hereunder or create a security interest therein without\nthe prior written consent of Harken.\n\n         Section 8.2.       Adjustments for Consolidation, Merger, Sale of\nAssets, Reorganization, etc.  In case Harken after the Effective Date (a) shall\nconsolidate with or merge into any other person and shall not be the continuing\nor surviving corporation of such consolidation or merger, or (b) shall permit\nany other person to consolidate with or merge into Harken and Harken shall be\nthe continuing or surviving person but, in connection with such consolidation\nor merger, the Harken Shares shall be changed into or exchanged for stock or\nother securities of any other person or cash or any other property, or (c)\nshall transfer all or substantially all of its properties or assets to any\nother person, or (d) shall effect a capital reorganization or reclassification\nof the Harken Shares (other than a subdivision or combination of the\noutstanding Harken Shares into a greater or lesser number of Harken Shares),\nthen, and in the case of each such transaction, proper provision shall be made\nso that, upon the basis and the terms and in the manner provided in this\nAgreement, Investors upon an Exchange for Harken Shares at any time after the\nconsummation of such transaction, shall be\n\n\n\n\n\n                                      -17-\n\nentitled to receive, in lieu of the Harken Shares issuable upon such Exchange\nprior to such consummation, the amount of securities, cash or other property to\nwhich Investors would actually have been entitled as a stockholder upon such\nconsummation if such Exchange had occurred immediately prior thereto; provided,\nhowever, that if the transaction described in clauses (a) through (d) hereof\nprovides an election to receive cash, securities or property, Investors shall,\nwithin 10 Business Days following written request from Harken, notify Harken of\nthe election Investors would have made had they been stockholders of Harken,\nwhich notice shall govern the consideration to be received upon Exchange, and\nif no such notice is received within such 10 Business Days, Harken in its\ndiscretion may determine the consideration to which Investors are entitled as\nif Investors had made any of such elections.  The provisions of this Section\n8.2 shall apply mutatis mutandis to the issuance of Harken Shares pursuant to\nArticle V.\n\n         Section 8.3.       Indemnification.\n\n                   (a)      Harken agrees to indemnify and hold harmless\n         Investors and their directors, officers, employees, agents, partners,\n         shareholders and affiliates from and against any and all claims,\n         damages, losses, liabilities, penalties and expenses (including\n         without limitation reasonable fees and disbursements of counsel) that\n         may be incurred by or asserted against any such person, in each case\n         arising out of or in connection with or by reason of any breach of any\n         representation, warranty, covenant or agreement of Harken contained in\n         this Agreement.  The obligations of Harken under this Section 8.3(a)\n         shall survive the termination of this Agreement and shall continue in\n         effect for a period of three years thereafter, at which time such\n         obligations shall terminate.\n\n                   (b)      Each Investor agrees to indemnify and hold harmless\n         Harken and its directors, officers, employees, agents, partners,\n         shareholders and affiliates from and against any and all claims,\n         damages, losses, liabilities, penalties and expenses (including\n         without limitation reasonable fees and disbursements of counsel) that\n         may be incurred by or asserted against any such person, in each case\n         arising out of or in connection with or by reason of any breach of any\n         representation, warranty, covenant or agreement of such Investor\n         contained in this Agreement.  The obligations of Investors under this\n         Section 8.3(b) shall survive the termination of this Agreement and\n         shall continue in effect for a period of three years thereafter, at\n         which time such obligations shall terminate.\n\n         Section 8.4.       Public Announcements.  Except as set forth in the\nfollowing sentence, the parties to this Agreement agree that prior to making\nany public announcement or statement with respect to the transactions\ncontemplated by this Agreement, the party desiring to make such public\nannouncement or statement shall consult with the other parties and exercise\nreasonable efforts to (a) agree upon the text of a joint public announcement or\nstatement to be made by all the parties or (b) obtain approval of the other\nparties to the text of a public\n\n\n\n\n\n                                      -18-\n\nannouncement or statement to be made solely by Harken or Investors, as the case\nmay be.  Nothing contained in this Section shall be construed to require any\nparty to obtain approval of the other parties to disclose information with\nrespect to any disclosure (a) required by applicable Law or by any applicable\nrules, regulations or orders of any Governmental Authority having jurisdiction\nor (b) necessary to comply with disclosure requirements of any applicable stock\nexchange.  Harken agrees that, prior to making any public announcement or\nstatement with respect to the transactions contemplated by this Agreement that\nnames any Investor, Harken will notify such Investor and furnish it with a copy\nof the text of the proposed public announcement or statement.\n\n         Section 8.5.       Brokers.  Without limiting the parties' respective\nrepresentations in Sections 6.4 and 7.2, each party agrees to indemnify and\nhold the others harmless from and against any claim for a brokerage or finder's\nfee or commission in connection with this Agreement or the transactions\ncontemplated by this Agreement to the extent such claim arises from or is\nattributable to the actions of such indemnifying party.\n\n         Section 8.6.       Notices.  All notices, requests, demands, consents\nand other communications required or permitted to be given or made hereunder\nshall be in writing and shall be deemed to have been duly given or made if\ndelivered personally, or sent by a nationally recognized overnight delivery\nservice or by telecopy or similar facsimile transmission, or mailed by prepaid\nregistered or certified mail, return receipt requested, to the other parties at\nthe respective address set forth below (or to such other address as a party\nshall designate for itself by written notice given or made in accordance\nherewith):\n\n         (a)       if to Harken, at:\n\n                     Harken Energy Corporation\n                     MacArthur Center II\n                     5605 N. MacArthur Blvd., Suite 400\n                     Irving, Texas 75038\n                     Telephone: (972)753-6900\n                     Telecopy: (972) 753-6963\n                     Attention:     Mr. Bruce N. Huff, Senior Vice President and\n                                    Mr. Larry E. Cummings, Vice President and\n                                            General Counsel\n\n\n\n\n\n                                      -19-\n\n         (b)    if to an Investor or Investors, at:\n\n                     Rauscher Pierce &amp; Clark Limited\n                     56 Green Street, London W1Y 3RH\n                     Telephone: 0171 491 2434\n                     Telecopy: 0171 491 9081\n                     Attention: David P. Quint\n\n         Any such notice, request, demand, consent or other communication shall\nbe deemed delivered and given or made on the third Business Day after the date\nof mailing, if mailed by registered or certified mail, or on the first Business\nDay after the date of transmittal, if sent by overnight delivery service or by\ntelecopy or similar facsimile transmission (provided such telecopy or\ntransmission is followed promptly by the mailing of the original of such\nnotice), or on the date of delivery, if delivered personally.\n\n         Section 8.7.       Waivers and Amendments.  This Agreement may be\namended or supplemented only by a written instrument signed by the parties\nhereto.  The terms of this Agreement may be waived only by a written instrument\nsigned by the party waiving compliance.  No delay on the part of any party in\nexercising any right, power or privilege hereunder shall operate as a waiver\nthereof, nor shall any waiver on the part of any party of any such right, power\nor privilege, or any single or partial exercise of any such right, power or\nprivilege, preclude any further exercise thereof or the exercise of any other\nsuch right, power or privilege.  The rights and remedies herein provided are\ncumulative and are not exclusive of any rights or remedies that any party may\notherwise have at law or in equity.\n\n         Section 8.8.       Governing Law.  This Agreement and all actions,\nproceedings and matters arising out of this Agreement shall be governed by, and\nconstrued and enforced in accordance with, the laws of the State of Texas,\nwithout regard to the principles of conflicts of laws.\n\n         Section 8.9.       Binding Effect; No Assignment; No Third Party\nBenefit.  This Agreement shall be binding upon and inure to the benefit of the\nparties and their respective successors and permitted assigns.  Unless\notherwise expressly provided herein, no rights or obligations under this\nAgreement are assignable.  Except as expressly provided in Section 8.3, nothing\nin this Agreement, whether expressed or implied, is intended to confer any\nrights or remedies under or by reason of this Agreement on any person other\nthan the parties to this Agreement and their respective successors and\npermitted assigns.\n\n         Section 8.10.      Entire Agreement.  This Agreement and the\nRegistration Rights Agreement constitute the full and complete agreement of the\nparties hereto with respect to the subject matter hereof, and supersede all\nprevious oral and written and all contemporaneous oral negotiations,\ncommitments, writings and understandings.\n\n\n\n\n\n                                      -20-\n\n         Section 8.11.      Severability.  Every provision of this Agreement is\nintended to be severable.  If any term or provision hereof is determined to be\ninvalid, illegal, or unenforceable for any reason whatsoever, such invalidity,\nillegality, or unenforceability shall not affect the validity, legality and\nenforceability of the remainder of this Agreement.\n\n         Section 8.12.      United States Dollars.  All references in this\nAgreement to dollar amounts are to United States dollars.\n\n         Section 8.13.      Survival of Representations and Warranties.  The\nrepresentations and warranties of the parties made herein shall survive the\nexecution and delivery of this Agreement, the termination of the Exchange\nPeriod and the closing of any Exchange.\n\n         Section 8.14.      Rights as Stockholder.  No adjustment shall be made\nfor dividends on any Harken Shares issued upon an Exchange.  An Investor shall\nhave none of the rights of a stockholder of Harken until Harken Shares are\nactually issued to it.\n\n         Section 8.15.      Counterparts.  This Agreement may be executed in\none or more counterparts (and separately by each party hereto), each of which\nshall be an original and all of which shall constitute but one and the same\ndocument.\n\n         Section 8.16.      Arbitration.  Harken and Investors agree to submit\nto final and binding arbitration any and all disputes, claims, and\/or\ndisagreements concerning the interpretation or application of this Agreement or\nthe Registration Rights Agreement.  Any dispute, claim, and\/or disagreement\nsubject to arbitration pursuant to the terms of this Section shall be resolved\nby arbitration in New York, New York by three arbitrators in accordance with\nthe Commercial Arbitration Rules of the American Arbitration Association or any\nsuccessor organization (the 'Association') then in effect.  Within 10 days of\nthe initiation of an arbitration hereunder, Harken will designate one\narbitrator and Investors, acting as a group, will designate one arbitrator, in\naccordance with the Association's rules.  The appointed arbitrators will\nappoint a neutral arbitrator in the manner prescribed in the Association's\nrules.  Harken and Investors agree that the decision of the three arbitrators\nselected hereunder will be final and binding on all parties.  A judgment on the\naward rendered by the arbitrator may be entered in any court having\njurisdiction, or application may be made to such court for judicial acceptance\nof the award and an order of enforcement, as the case may be.\n\n         Section 8.17.      Consent to Jurisdiction.  Subject to the provisions\nof Section 8.16, Harken and Investors agree that, in addition to any other\ncourts that may have jurisdiction under applicable laws, any action or\nproceeding to enforce or arising out of this Agreement or the Registration\nRights Agreement may be commenced in the Court of the State of Texas for Dallas\nCounty, or in the United States District Court for the Northern District of\nTexas, and Harken and Investors consent and submit in advance to such\njurisdiction and agree that venue will be proper in such courts on any such\nmatter.  Harken and Investors each hereby waives personal service of process\nand agrees that a summons and complaint commencing an action or\n\n\n\n\n\n                                      -21-\n\nproceeding in any such court shall be properly served and shall confer personal\njurisdiction if served by registered or certified mail to it.  The choice of\nforum set forth in this Section shall not be deemed to preclude the enforcement\nof any judgment obtained in such forum, or the taking of any action under this\nAgreement or the Registration Rights Agreement to enforce the same, in any\nappropriate jurisdiction.\n\n         Section 8.18.      Further Assurances.  At any closing of any Exchange\npursuant to Article III or IV, Investors shall execute and deliver to Harken\nsuch assignments, instruments and documents as may be reasonably requested by\nHarken to carry out the intent and purposes of this Agreement.\n\n         Section 8.19.      Expenses.  All fees and expenses (including legal\nfees and expenses) incurred by a party in connection with the negotiation,\npreparation and execution of this Agreement and the Registration Rights\nAgreement shall be the responsibility of such party.\n\n\n\n\n\n                                      -22-\n\n         IN WITNESS WHEREOF, the parties have caused this Agreement to be\nexecuted by the respective officers hereunto duly authorized as of the date\nfirst above written.\n\n\n                                  HARKEN ENERGY CORPORATION\n                                  \n                                  \n                                  By:                                         \n                                     -----------------------------------------\n                                     Name: Larry E. Cummings\n                                     Title:  Vice President and Secretary\n                                  \n                                  \n                                  HARKEN CAPITAL CORPORATION\n                                  \n                                  \n                                  By:                                         \n                                     -----------------------------------------\n                                     Name: Larry E. Cummings\n                                     Title: Vice President and Secretary\n                                  \n                                  \n                                  SIDRO S.A.\n                                  \n                                  \n                                  By:                                         \n                                     -----------------------------------------\n                                     Name:                                    \n                                          ------------------------------------\n                                     Title:                                   \n                                           -----------------------------------\n                                  \n                                  \n                                  LAMBERTINE HOLDINGS LTD\n                                  \n                                  \n                                  By:                                         \n                                     -----------------------------------------\n                                     Name:                                    \n                                          ------------------------------------\n                                     Title:                                   \n                                           -----------------------------------\n\n\n\n\n\n                                      -23-\n\n                                  RAUSCHER PIERCE &amp; CLARK (GUERNSEY) LTD.\n\n\n                                  By:\n                                     -----------------------------------------\n                                     Name:\n                                          ------------------------------------\n                                     Title:\n                                           -----------------------------------\n\n\n\n\n                                      -24-\n\n                                    ANNEX I\n\n\n\n\n<font size=\"2\">\n                                                                 Capital          Number of\n Investor                                                      Contribution     Company Shares\n --------                                                    ---------------    --------------\n                                                                          \n Sidro S.A.  . . . . . . . . . . . . . . . . . . . . . .     $     3,000,000           3,000\n                                                                 \n Lambertine Holdings Ltd.  . . . . . . . . . . . . . . .     $     2,000,000           2,000\n                                                                 \n Rauscher Pierce &amp; Clark (Guernsey) Ltd. . . . . . . . .     $     2,000,000           2,000\n                                                             ---------------     ------------\n\n          Totals . . . . . . . . . . . . . . . . . . . .     $     7,000,000           7,000\n<\/font>\n\n\n<\/pre>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[7721],"corporate_contracts_industries":[9409],"corporate_contracts_types":[9622,9625],"class_list":["post-43399","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-harken-oil---gas-inc","corporate_contracts_industries-energy__exploration","corporate_contracts_types-planning","corporate_contracts_types-planning__exchange"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/43399","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=43399"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=43399"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=43399"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=43399"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}