XXXXXXX 0
Xxxxxxx Xxxxxxxx Agreement
September 6, 2002
Xxxxxx Investments Enterprises Ltd.
000 0xx Xxx., 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxx Xxxxxx
Gentlemen:
Harken Energy Corporation, a Delaware corporation (the "Company"), proposes
to offer up to 95,238,085 shares of the Common Stock, par value $0.01 per share
(the "Common Stock"), of the Company, initially for subscription upon the
exercise of rights (the "Rights") evidenced by non-transferable subscription
certificates (the "Subscription Certificates") to be issued by the Company to
holders of shares of Common Stock of the Company of record at the close of
business on or about November 1, 2002 (the actual date the Board of Directors of
the Company establishes such date hereinafter referred to as the "Record Date")
(all shares issuable upon the exercise of Rights by holders of Common Stock
shall be referred to as the "Shares").
The Rights will expire at 5:00 P.M., New York City time, on or about
December 20, 2002 (the actual date and time on which the Rights expire, the
"Expiration Date"). The Company proposes to sell to Xxxxxx Investments
Enterprises Ltd. ("Purchaser"), a number of Shares which, as of the Expiration
Date, have not been subscribed for by the holders of Common Stock by the
exercise of Rights (the "Securities"). The Company's obligation to sell and
deliver the Securities to Purchaser shall be contingent on Purchaser's
performance of its obligations under this Agreement. The issuance of the Rights,
the offering of the Common Stock to be issued by the Company upon exercise of
the Rights and the subscription and purchase of Common Stock upon the terms
described in the Prospectus (as hereinafter defined), including the purchase of
the Securities pursuant to this Agreement, are herein collectively referred to
as the "Rights Offering." The Rights Offering shall be contingent upon approval
thereof by the stockholders of the Company at the Annual Meeting of Stockholders
presently scheduled to be held on November 19, 2002.
1. Representations and Warranties.
(a) The Company represents and warrants to, and agrees with, Purchaser as
set forth below in this Section 1(a). Certain terms used in Section 1 are
defined in paragraphs (i) and (xix) of this Section 1(a).
(i) The Company meets the requirements for use of Form S-3 under the
Securities Act of 1933, as amended (the "Act"). The Company will file with
the Securities and Exchange Commission (the "Commission") a registration
statement on such Form for the registration under the Act of the offering
of the Rights and the offering and sale of the Securities. The Company will
file with the Commission either (A) prior to effectiveness of such
registration statement, a further amendment to such registration statement
(including the form of a final prospectus) or (B) after effectiveness of
such registration statement, a final prospectus in accordance with Rule
424(b). In the case of clause (B), the Company shall include in such
registration statement, as amended at
the Effective Date, all information required by the Act and the rules
thereunder to be included in the Prospectus with respect to the Rights, the
Securities and the offering thereof. As filed, such amendment and the form
of final prospectus, or such final prospectus, shall contain all required
information with respect to the Rights, the Securities and the offering
thereof and, except to the extent Purchaser shall agree in writing to a
modification, shall be in all substantive respects in the form furnished to
Purchaser prior to the Execution Time or, to the extent not completed at
the Execution Time, shall contain only such specific additional information
and other changes as the Company has advised Purchaser, prior to the
Execution Time, will be included or made therein.
The form of prospectus to be used in connection with the offering of
the Rights and the offering and sale of the Securities as first filed
pursuant to Rule 424(b) or, if no filing pursuant to Rule 424(b) is
required, such form of prospectus included in the Registration Statement at
the Effective Date, is hereinafter called the "Prospectus." The Prospectus
and any related letters from the Company to record or beneficial owners of
Common Stock or Rights, related letters from the Company to securities
dealers, commercial banks, trust companies and other nominees and other
offering materials, in each case disseminated by the Company or by any of
its agents with the Company's prior consent, including, without limitation,
the Certificates for Subscription Rights, the Instructions as to Use of
Rights Certificates, the Notices of Guaranteed Delivery, the Form of Letter
to the Holders of Common Stock, and information that the Company may use or
authorize for use in connection with the Rights Offering, are collectively
referred to hereinafter as the "Offering Materials." Capitalized terms used
herein without definition have the meanings assigned to them in the
Prospectus.
(ii) On the Effective Date, the Registration Statement will, and when
the Prospectus is first filed (if required) in accordance with Rule 424(b)
and on the Closing Date (as hereinafter defined), the Prospectus (and any
supplements thereto) will, comply in all material respects with the
applicable requirements of the Act and the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and the respective rules thereunder; on
the Effective Date, the Registration Statement will not contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements therein not
misleading; and on the Effective Date, the Prospectus, if not required to
be filed pursuant to Rule 424(b), and the Offering Materials did not or
will not, and on the date of any filing pursuant to Rule 424(b) and on the
Closing Date, the Prospectus (together with any supplement thereto) and the
Offering Materials will not, include any untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that the Company makes no
representations or warranties as to the information contained in or omitted
from the Registration Statement or the Prospectus (or any supplement
thereto) in reliance upon and in conformity with information furnished in
writing to the Company by or on behalf of Purchaser or relating to
Purchaser or its affiliates specifically for inclusion in the Registration
Statement or the Prospectus (or any supplement thereto).
(iii) The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement; and this
Agreement has been duly authorized, executed and delivered by the Company
and, assuming due execution and delivery of this Agreement by Purchaser,
constitutes a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms except (A) as
enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws affecting creditors' rights generally
and except as enforcement thereof is subject to general principles of
equity (regardless of whether enforcement is considered in a proceeding in
equity or at law), and (B) as rights to indemnity and contribution
hereunder may be limited by Federal or state securities law and/or public
policy.
(iv) Ernst & Young LLP, which has reported upon the audited financial
statements incorporated by reference in the Registration Statement and the
Prospectus, is an independent public accountant as required by the Act and
the Exchange Act.
(v) The consolidated financial statements and the related notes of the
Company incorporated by reference in the Registration Statement and the
Prospectus present fairly in accordance with generally accepted accounting
principles the consolidated financial position of the Company as of the
dates indicated and the consolidated results of operations and cash flows
of the Company for the periods specified. Such financial statements have
been prepared in conformity with generally accepted accounting principles
applied on a consistent basis throughout the periods involved, except as
otherwise noted therein and subject, in the case of interim statements, to
normal year-end audit adjustments.
(vi) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware with full
corporate power and corporate authority under such laws to own, lease and
operate its properties and conduct its business as described in the
Registration Statement and the Prospectus. The Company is duly qualified to
transact business as a foreign corporation and is in good standing in each
other jurisdiction in which it owns or leases property of a nature, or
transacts business of a type, that would make such qualification necessary,
except to the extent that the failure to so qualify or be in good standing
would not have a material adverse effect on the Company and its
subsidiaries, considered as one enterprise.
(vii) All of the outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid and
non-assessable; no holder thereof is or will be subject to personal
liability by reason of being such a holder; and none of the outstanding
shares of capital stock of the Company was issued in violation of the
preemptive rights of any stockholder of the Company.
(viii) The outstanding shares of Common Stock, the Rights, the
Subscription Certificates and the Securities conform in all material
respects to the descriptions thereof contained or incorporated by reference
in the Registration Statement and the Prospectus.
(ix) The Company had, at the date indicated, the stockholders' equity
set forth in the Consolidated Balance Sheets contained in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 2001.
(x) Prior to or at the Effective Date, the Company will have entered
into a subscription agency agreement (the "Subscription Agency Agreement")
with a subscription agent (the "Subscription Agent"), which Subscription
Agent shall act on behalf of the Company in connection with, among other
things, the issuance, exercise, sale and transfer of Rights as part of the
Rights Offering. When executed by the Company, the Subscription Agency
Agreement will have been duly authorized, executed and delivered by the
Company and, assuming due authorization, execution and delivery by the
Subscription Agent, will constitute a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms,
except as enforcement thereof may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting creditors' rights generally
and except as enforcement thereof is subject to general principles of
equity (regardless of whether enforcement is considered in a proceeding in
equity or at law).
(xi) The Rights, when issued and delivered in accordance with the
terms of the Rights
Offering, will be validly issued, and no holder thereof is or will be
subject to personal liability by reason of being such a holder; the shares
of Common Stock issuable upon the exercise of the Rights and the
Securities, when issued or delivered and paid for in accordance with the
terms of the Rights Offering, will be validly issued, fully paid and
non-assessable, and no holder thereof is or will be subject to personal
liability by reason of being such a holder; and the issuance of the shares
of Common Stock issuable upon the exercise of the Rights and the Securities
will not be subject to the preemptive rights of any stockholder of the
Company.
(xii) The Company has taken all valid corporate action to duly reserve
such number of its authorized and unissued shares of Common Stock as are
deliverable upon consummation of purchases pursuant to the Rights Offering.
(xiii) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as otherwise stated
or described therein, contemplated thereby, or incorporated by reference
therein, there has not been (i) any material adverse change in the
condition (financial or otherwise), results of operations, earnings,
business affairs or business prospects of the Company, whether or not
arising in the ordinary course of business, or (ii) any dividend or
distribution of any kind declared, paid or made by the Company on its
capital stock other than the Rights.
(xiv) Except as otherwise stated in the Prospectus or the documents
incorporated by reference therein, none of the Company or any of its
subsidiaries is in violation of its certificate of incorporation or in
default in the performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other agreement or instrument to which it is a
party or by which it may be bound or to which any of its properties may be
subject, except for such defaults that in the aggregate would not have a
material adverse effect on the condition (financial or otherwise), results
of operations, earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise. The execution
and delivery of this Agreement, the issuance and delivery of the Rights and
the Securities, the consummation of the Rights Offering and the
consummation by the Company of the transaction contemplated in this
Agreement, the Registration Statement and the Prospectus, and compliance by
the Company with terms of this Agreement do not and will not result in any
violation of the charter or by-laws of the Company, and do not and will not
conflict with, or result in a breach of any of the terms or provisions of,
or constitute a default under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the Company
or any of its subsidiaries under (A) any indenture, mortgage, loan
agreement, note, lease or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which each of them or
any of them may be bound or to which any of their respective properties may
be subject or (B) any existing applicable law, rule, regulation, judgment,
order or decree of any government, governmental instrumentality or court,
domestic or foreign, having jurisdiction over the Company or any of its
subsidiaries or any of their respective properties (except, in the case of
(A) and (B) above, where such conflicts, breaches or defaults or liens,
charges or encumbrances in the aggregate would not have a material adverse
effect on the condition (financial or otherwise), results of operations,
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise).
(xv) Except as otherwise disclosed in the Prospectus or the documents
incorporated by reference therein, no authorization, approval, consent or
license of any government, governmental instrumentality or court, domestic
or foreign (other than under the Act and the securities or blue sky law of
the various states), is required for the offer of the Rights, the offer and
sale by the Company of Securities, the consummation of the Rights Offering
as set forth in the Registration Statement and the Prospectus or the
consummation by the Company of the
transactions contemplated in this Agreement and in the Registration
Statement and the Prospectus.
(xvi) Except as disclosed in the Prospectus or the documents
incorporated by reference therein, there is no action, suit or proceeding
before or by any government, governmental instrumentality or court,
domestic or foreign, now pending or, to the knowledge of the Company,
threatened against or affecting the Company or any of its subsidiaries,
that is required to be disclosed in the Registration Statement and the
Prospectus. There are no contracts or documents of a character required to
be described in the Registration Statement or the Prospectus or to be filed
as exhibits to the Registration Statement or the Prospectus that are not
described and filed as required.
(xvii) The Securities, when issued, will be authorized for listing on
the American Stock Exchange, subject only to official notice of issuance.
(xviii) The proceeds of the Rights Offering will be applied as set
forth in the Prospectus. The Rights Offering shall have no
over-subscription privilege.
(xix) The terms which follow, when used in this Agreement, shall have
the meanings indicated. "Effective Date" shall mean the date that the
Registration Statement becomes effective. "Execution Time" shall mean the
date and time that this Agreement is executed and delivered by the parties
hereto. "Registration Statement" shall mean the registration statement
referred to in paragraph (i) above, including exhibits and financial
statements, as amended at the Execution Time (or, if not effective at the
Execution Time, in the form in which it shall become effective) and, in the
event any post-effective amendment thereto becomes effective prior to the
Closing Date, shall also mean such registration statement as so amended.
"Rule 424" refers to such rule under the Act. Any reference herein to the
Registration Statement or the Prospectus shall be deemed to refer to and
include the documents incorporated by reference therein which were filed
under the Exchange Act on or before the Effective Date of the Registration
Statement or the issue date of the Prospectus and any reference herein to
the terms "amend," "amendment" or "supplement" with respect to the
Registration Statement or the Prospectus shall be deemed to refer to and
include the filing of any document under the Exchange Act after the issue
date of the Prospectus deemed to be incorporated therein by reference.
(b) Purchaser represents and warrants to, and agrees with, the Company as
set forth below in this Section 1(b).
(i) Purchaser has all requisite partnership power and authority to
execute, deliver and perform its obligations under this Agreement; and this
Agreement has been duly authorized, executed and delivered by Purchaser
and, assuming due execution and delivery of this Agreement by the Company,
constitutes a legal, valid and binding obligation of Purchaser, enforceable
against Purchaser in accordance with its terms except (A) as enforcement
thereof may be limited by applicable bankruptcy, insolvency, reorganization
or other similar laws affecting creditors' rights generally and except as
enforcement thereof is subject to general principles of equity (regardless
of whether enforcement is considered in a proceeding in equity or at law),
and (B) as rights to indemnity and contribution hereunder may be limited by
Federal or state securities laws and/or public policy.
(ii) To the extent that the Registration Statement contains any
information concerning Purchaser, on the Effective Date the Registration
Statement did or will, and when the prospectus is first filed (if required)
in accordance with Rule 424(b) and on the Closing Date (as hereinafter
defined), the Prospectus (and any supplements thereto) will, comply in all
material
respects with the applicable requirements of the Act and the Exchange Act
and the respective rules thereunder with respect to such information; to
the extent that the Registration Statement contains any information
concerning Purchaser, on the Effective Date, the Registration Statement did
not or will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order
to make the statements therein not misleading with respect to such
information; and on the Effective Date, to the extent that the Registration
Statement contains any information concerning Purchaser, the Prospectus, if
not required to be filed pursuant to Rule 424(b), did not or will not, and
on the date of any filing pursuant to Rule 424(b) and on the Closing Date,
the Prospectus (together with any supplement thereto) will not, include any
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading with respect to
such information.
(iii) The execution and delivery of this Agreement, the purchase of
the shares of Common Stock to be purchased by Purchaser hereunder, the
consummation by Purchaser of the transactions contemplated in this
Agreement, the Registration Statement and the Prospectus and compliance by
Purchaser with the terms of this Agreement do not and will not result in
any violation of the memorandum or articles of association of Purchaser,
and do not and will not conflict with, or result in a breach of any of the
terms or provisions of, or constitute a default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property
or assets of Purchaser or any of its subsidiaries under (A) any indenture,
mortgage, loan agreement, note, lease or other agreement or instrument to
which Purchaser or any of its subsidiaries is a party or by which each of
them or any of them may be bound or to which any of their respective
properties may be subject or (B) any existing applicable law, rule,
regulation, judgment, order or decree of any government, governmental
instrumentality or court, domestic or foreign, having jurisdiction over
Purchaser or any of its subsidiaries or any of their respective properties
(except, in the case of (A) and (B) above, where such conflicts, breaches
or defaults or liens, charges or encumbrances in the aggregate would not
have a material adverse effect on the condition (financial or otherwise),
results of operations, earnings, business affairs or business prospects of
Purchaser and its subsidiaries considered as one enterprise).
(iv) Except as otherwise disclosed in the Prospectus, no
authorization, approval, consent or license of any government, governmental
instrumentality or court, domestic or foreign (other than under the Act and
the securities or blue sky laws of the various states) is required for the
purchase of the shares of Common Stock to be purchased by Purchaser
hereunder as set forth in the Registration Statement and the Prospectus and
the consummation by Purchaser of the transactions contemplated in this
Agreement and in the Registration Statement and the Prospectus.
(v) Described in Schedule 1 hereto are any plans or proposals which
the Purchaser may have in regard to the Company and its governance.
2. Purchase and Sale; Option to Purchase Shares of Common Stock. Subject to
the terms and conditions and in reliance upon the representations and warranties
herein set forth, the Company agrees to sell to Purchaser, and Purchaser agrees
to purchase from the Company at a purchase price per share equal to the
subscription price per share specified in the Registration Statement a number of
shares of Common Stock (the "Standby Shares") equal to the Shortfall (as defined
below) divided by the subscription price per share. The "Shortfall" shall be
equal to the amount by which $10,000,000 ("Offering Price") exceeds the
aggregate subscription price to be paid by stockholders of the Company (other
than the Purchaser) who subscribe for and purchase shares of Common Stock
offered in the Rights Offering on or before the Expiration Date.
As compensation to Purchaser for its commitment hereunder, the Company
agrees to pay to Purchaser on September 18, 2002, a Standby Commitment Fee of
$600,000 (the "Standby Commitment Fee"), in shares of the Company's Common Stock
(the "Standby Commitment Fee Shares"), with each such share being attributed a
value ("Value Per Share") equal to the average Market Price of the Common Stock
for the five Stock Exchange Business Days preceding the date of this Agreement.
"Market Price" means the daily closing sale price of the Common Stock on a Stock
Exchange Business Day of the American Stock Exchange. "Stock Exchange Business
Day" means any day (other than a Saturday or Sunday) on which the American Stock
Exchange is open for business. The Company also agrees to reimburse the
Purchaser $50,000 in cash for its legal fees, which cash payment will also be
made on September 18, 2002.
The Company will notify the Purchaser if the Rights Offering will not
occur, was not approved by the stockholders or was terminated by the Company
(such date of notification, the "Termination Date"), in which event this
Agreement will terminate (except for the applicable provisions of this Section
2, Section 4, and Sections 10 through 16). In such event, Purchaser shall be
entitled to retain one-half of the Standby Commitment Fee Shares. Within thirty
(30) days from the Termination Date, the Purchaser shall either (x) return the
other half of the Standby Commitment Fee Shares to the Company, without payment
therefor by the Company, or (y) retain the other half of the Standby Commitment
Fee Shares and remit to the Company an amount equal to $300,000, to be paid by
the Purchaser by certified or official bank check or by wire transfer and
payable in same day funds to an account or accounts designated by the Company.
The Purchaser may not assign or delegate any of its rights with respect to the
option granted in this Section 2 without the prior written consent of the
Company.
The Purchaser represents and warrants to the Company that (i) it was not
created for the purpose of acquiring the Common Stock and is an "accredited
investor" (as defined in Rule 501 of Regulation D under Act); (ii) it will be
acquiring the Common Stock for its own account, for investment purposes only,
and not with a view to the resale or distribution thereof, except pursuant to
effective registrations or qualifications relating thereto under the Act and
applicable state securities or blue sky laws or pursuant to an exemption
therefrom; provided, however, that in making such representation, the Purchaser
does not agree to hold the Common Stock for any minimum or specific term and
reserves the right to sell, transfer or otherwise dispose of the Common Stock at
any time in accordance with federal and state securities laws applicable to such
sale, transfer or disposition; (iii) it understands that (A) the Common Stock
has not been registered under the Act or the securities laws of any state or
other jurisdiction in reliance upon exemptions from such registration
requirements for non-public offerings; (B) the shares of Common Stock are
"restricted securities" as defined in Rule 144 under the Act and may not be
sold, pledged or otherwise transferred except pursuant to effective
registrations or qualifications relating thereto under the Act and applicable
state securities or blue sky laws or pursuant to an exemption therefrom; and (C)
the Company has no agreement with the Purchaser to register or qualify the
Common Stock under any state or federal securities laws; and (iv) that an
appropriate restrictive legend will be placed on the certificate or certificates
representing the shares of Common Stock that may be issued pursuant to this
Section 2.
3. Delivery and Payment. Delivery and payment for the Securities shall be
made at 10:00 A.M., New York City time, on the sixth (6th) business day
following the Expiration Date, which date and time may be postponed by agreement
between Purchaser and the Company (such date and time of delivery and payment
for the Securities being herein called the "Closing Date"). Delivery of the
Securities shall be made to Purchaser against payment by Purchaser of the
respective aggregate purchase prices of the Securities being sold by the
Company, by certified or official bank check or by wire transfer and payable in
same day funds to an account or accounts designated in writing by the Company at
least two business days before the Closing Date; provided, however, that the
Purchaser may apply all or a portion of the payment for the Securities to the
principal and interest due and owing on the Closing date on the Company's
promissory notes payable to the Purchaser. Purchaser shall notify the Company of
such application and the amount thereof at least two business days prior to the
Closing date, together with
documentation reasonably satisfactory to the Company verifying the amount of
such application. If a note or notes are paid in full, the Purchaser shall
tender the promissory note or notes to the Company for cancellation. Delivery of
the Securities shall be made at such location as Purchaser shall reasonably
designate at least one business day in advance of the Closing Date and payment
for such Securities shall be made at such office as the parties may agree upon.
Certificates for the Securities shall be registered in such names and in such
denominations as Purchaser may request not less than forty-eight hours in
advance of the Closing Date.
4. No Offering by Purchaser. It is understood that Purchaser does not
intend to offer the Common Stock (including, but not limited to, the Securities)
for sale to the public.
5. Agreements.
(a) The Company agrees with Purchaser that:
(i) The Company will use its best efforts to cause the Registration
Statement, and any amendments thereof, including any post-effective
amendment, to become effective as soon as practicable. Prior to the
termination of the offering of the Rights and the Securities, the Company
will not file any amendment to the Registration Statement or supplement to
the Prospectus without Purchaser's prior consent, which consent shall not
be unreasonably withheld or delayed. Subject to the foregoing sentence, if
filing of the Prospectus is otherwise required under Rule 424(b), the
Company will cause the Prospectus, properly completed, and any supplement
thereto to be filed with the Commission pursuant to the applicable
paragraph of Rule 424(b) within the time period prescribed and will provide
evidence satisfactory to Purchaser of such timely filing. The Company will
promptly advise Purchaser (A) when the Registration Statement and any
amendment thereto, shall have become effective, (B) when the Prospectus,
and any supplement thereto, shall have been filed (if required) with the
Commission pursuant to Rule 424(b), (C) when, prior to termination of the
Rights Offering, any amendment to the Registration Statement shall have
been filed or become effective, (D) of any request by the Commission for
any amendment of the Registration Statement or supplement to the Prospectus
or for any additional information, (E) of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration Statement
or the institution or threatening of any proceeding for that purpose, (F)
of the receipt by the Company of any notification with respect to the
suspension of the qualification of the Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose and (G) if any of the representations and warranties contained in
Section 1 hereof becomes inaccurate in any material respect subsequent to
the date hereof. The Company will use its best efforts to prevent the
issuance of any such stop order and, if issued, to obtain as soon as
possible the withdrawal thereof.
(ii) If, at any time when a prospectus relating to the Rights or the
Securities is required to be delivered under the Act, any event occurs as a
result of which the Prospectus as then supplemented would include any
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein in the light of the circumstances
under which they were made not misleading, or if it shall be necessary to
amend the Registration Statement or supplement the Prospectus to comply
with the Act or the rules thereunder (including to comply with Item 512(c)
of Regulation S-K under the Act), the Company promptly will prepare and
file with the Commission, subject to the second sentence of paragraph
(a)(i) of this Section 5, an amendment or supplement which will correct
such statement or omission or effect such compliance.
(iii) The Company will furnish to Purchaser without charge as many
copies of the Prospectus and any supplement thereto as Purchaser may
reasonably request. The Company will
pay the expenses of printing or other production of all documents relating
to the Rights Offering.
(iv) The Company will arrange for the qualification of the Rights for
distribution and offering and the Securities for distribution, offering and
sale under the laws of such domestic jurisdictions as Purchaser may
designate, and will maintain such qualifications in effect so long as
required for the distribution of the Rights or the Securities, as the case
may be.
(v) The Company shall at all times reserve and keep available for
issue upon the exercise of the Rights such number of authorized but
unissued shares of Common Stock deliverable upon the exercise of the Rights
as will be sufficient to permit the exercise in full of all Rights issued.
6. Conditions to Obligations of Purchaser. The obligations of Purchaser to
purchase the Securities shall be subject to the accuracy of the representations
and warranties on the part of the Company contained herein as of the Execution
Time and the Closing Date, to the accuracy of the statements of the Company made
in any certificates pursuant to the provisions hereof, to the performance by the
Company of their obligations hereunder and to the following additional
conditions:
(a) The Registration Statement shall have become effective; if filing of
the Prospectus, or any supplement thereto, is required pursuant to Rule 424(b),
the Prospectus, and any such supplement, will be filed in the manner and within
the time period required by Rule 424(b); and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or threatened.
(b) At the Execution Time and at the Closing Date, the Company shall have
furnished to Purchaser certificates of the Company, dated respectively as of the
Execution Time and the Closing Date and signed by any two executive officers of
the Company, to the effect that the signers of such certificates have carefully
examined the Registration Statement, the Prospectus, any supplements to the
Prospectus and this Agreement and that:
(i) the representations and warranties of the Company in this
Agreement are true and correct in all material respects at and as of the
Execution Time or on and as of the Closing Date, as the case may be, with
the same effect as if made at the Execution Time or on the Closing Date, as
the case may be, and the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied at or
prior to the Execution Time or Closing Date, as applicable;
(ii) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or, to the Company's knowledge, threatened; and
(iii) since the date of the most recent financial statements included
in the Prospectus (exclusive of any supplement thereto), there has been no
material adverse change in the condition (financial or other), earnings,
business, business prospects or properties of the Company and its
subsidiaries, whether or not arising from transactions in the ordinary
course of business, except as set forth in or contemplated in the
Prospectus or the documents incorporated by reference therein (exclusive of
any supplement thereto).
(c) Subsequent to the Execution Time or, if earlier, the date as of which
information is given in the Registration Statement (exclusive of any amendment
thereof) and the Prospectus (exclusive of any supplement thereto), there shall
not have been any change, or any development involving a prospective change, in
or affecting the business (including the results of operations or management) or
properties of
the Company and its subsidiaries the effect of which is, in the reasonable
judgment of Purchaser, so material and adverse as to make it impractical or
inadvisable to proceed with the offering or the delivery of the Securities as
contemplated by the Registration Statement (exclusive of any amendment thereof)
and the Prospectus (exclusive of any supplement thereto).
(d) The Company shall have commenced mailing the Subscription Certificates
to record holders of the Common Stock promptly following the authorization and
approval of the issuance of the Common Stock which may be issued pursuant to the
Rights Offering and the terms hereof and shall have completed such mailing
expeditiously, and shall have offered the Common Stock for subscription in
accordance with the terms and under the conditions set forth in the Prospectus.
The Company shall have advised Purchaser daily during the period when the Rights
are exercisable of the number of shares of Common Stock subscribed for, and
prior to 12:00 Noon, New York City time, on the business day following the
Expiration Date, shall have advised Purchaser of the number of shares of Common
Stock subscribed for and of the number of Securities.
(e) Prior to the Closing Date, the Company shall have furnished to
Purchaser such further information, certificates and documents as Purchaser may
reasonably request.
If any of the conditions specified in this Section 6 shall not have been
fulfilled in all material respects when and as provided in this Agreement, or if
any of the certificates mentioned above or elsewhere in this Agreement shall not
be in all material respects reasonably satisfactory in form and substance to
Purchaser and its counsel, this Agreement and all obligations of Purchaser
hereunder may be canceled at, or at any time prior to, the Closing Date by
Purchaser. Notice of such cancellation shall be given to the Company in writing
or by telephone or telegraph confirmed in writing.
7. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless Purchaser, the
directors, officers, partners, employees and agents of Purchaser and each person
who controls Purchaser within the meaning of either the Act or the Exchange Act
against any and all losses, claims, damages or liabilities, joint or several, to
which they or any of them may become subject under the Act, the Exchange Act or
other Federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in the registration statement for
the registration of the Rights and the Securities as originally filed or in any
amendment thereof, or in the Prospectus or any of the Offering Materials, or in
any amendment thereof or supplement thereto, or arise out of or are based upon
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading or
(ii) the Rights Offering or the engagement of Purchaser pursuant to, and the
performance by Purchaser of the services contemplated by, this Agreement, and
agrees to reimburse each such indemnified party, as incurred, for any reasonable
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability (A) arises out of or is
based upon any such untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with written
information furnished to the Company by Purchaser specifically for inclusion
therein or (B) in the case of clause (a)(ii) of this Section 7, is the result of
the bad faith, willful misconduct, or negligence of such indemnified party or
any party related to an indemnified party or to have resulted from a breach of
this Agreement or a violation of Regulation M under the Exchange Act by the
indemnified party, other than actions performed at the written request or with
the consent of the Company. This indemnity agreement will be in addition to any
liability which Company may otherwise have.
The Company also agrees that no indemnified party shall have any liability
(whether direct or indirect, in contract or tort or otherwise) to the Company or
its security holders or creditors related to or arising out of the engagement of
Purchaser pursuant to, or the performance by Purchaser of the services
contemplated by, this Agreement, except to the extent that any loss, claim,
damage or liability is found in a final judgment by a court to have resulted
from the indemnified party's willful misconduct, bad faith, or negligence or a
breach by Purchaser of its obligations under this Agreement.
(b) Purchaser agrees to indemnify and hold harmless the Company, each of
its directors, each of its officers who signs the Registration Statement, and
each person who controls the Company within the meaning of the Act or the
Exchange Act, to the same extent as the foregoing indemnity from the Company to
Purchaser, but only with reference to written information relating to Purchaser
furnished to the Company by Purchaser specifically for inclusion in the
documents referred to in the foregoing indemnity. This indemnity agreement will
be in addition to any liability which Purchaser may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section 7 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 7, notify the indemnifying party in writing of the commencement thereof;
but the failure so to notify the indemnifying party (i) will not relieve it from
liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided in paragraph (a) or (b)
above. The indemnifying party shall be entitled to appoint counsel of the
indemnifying party's choice at the indemnifying party's expense to represent the
indemnified party in any action for which indemnification is sought (in which
case the indemnifying party shall not thereafter be responsible for the fees and
expenses of any separate counsel retained by the indemnified party or parties
except as set forth below); provided, however, that such counsel shall be
reasonably satisfactory to the indemnified party. Notwithstanding the
indemnifying party's election to appoint counsel to represent the indemnified
party in an action, the indemnified party shall have the right to employ
separate counsel (including local counsel), and the indemnifying party shall
bear the reasonable fees, costs and expenses of such separate counsel if (i) the
use of counsel chosen by the indemnifying party to represent the indemnified
party would present such counsel with a conflict of interest, (ii) the actual or
potential defendants in, or targets of, any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional to those
available to the indemnifying party (it being understood, however, that in
connection with such action the indemnifying party shall not be liable for the
expenses of more than one separate counsel (in addition to local counsel) in any
one action or separate but substantially similar actions in the same
jurisdiction arising out of the same general allegations or circumstances,
representing the indemnified parties who are parties to such action), (iii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after notice of the institution of such action or (iv) the indemnifying
party shall authorize the indemnified party to employ separate counsel at the
expense of the indemnifying party. An indemnifying party will not, without the
prior written consent of the indemnified parties, settle or compromise or
consent to the entry of any judgment with respect to any pending or threatened
claim, action, suit or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified parties are
actual or potential parties to such claim or action) unless (x) such settlement,
compromise or consent includes an unconditional release of each indemnified
party from all liability arising out of such claim, action, suit or proceeding
or (y) such settlement, compromise or consent involves only the payment of money
damages and no other relief.
(d) In the event that the indemnity provided in paragraph (a) or (b) of
this Section 7 is unavailable to or insufficient to hold harmless an indemnified
party for any reason, the Company and Purchaser agree to contribute to the
aggregate losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating or defending same)
(collectively "Losses") to which the Company, on the one hand, and Purchaser, on
the other hand, may be subject in such proportion as is appropriate to reflect
the relative benefits received by the Company, on the one hand, and by
Purchaser, on the other hand, from the purchase of the Securities; provided,
however, that in no case shall Purchaser be responsible for any amount in excess
of the aggregate compensation paid hereunder to Purchaser in respect of the
Securities purchased by Purchaser hereunder. If the allocation provided by the
immediately preceding sentence is unavailable for any reason, the Company, on
the one hand, and Purchaser, on the other hand, shall contribute in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Company, on the one hand, and of Purchaser, on the
other hand, in connection with the statements or omissions which resulted in
such Losses as well as any other relevant equitable considerations. Benefits
received by the Company shall be deemed to be equal to the total net proceeds
from the Rights Offering (before deducting expenses), as set forth on the cover
page of the Prospectus (assuming that all such Rights are exercised), and
benefits received by Purchaser shall be deemed to be equal to the total
compensation paid to Purchaser hereunder. Relative fault shall be determined by
reference to whether any alleged untrue statement or omission relates to
information provided by the Company or Purchaser. The Company and Purchaser
agree that it would not be just and equitable if contribution were determined by
pro rata allocation or any other method of allocation which does not take
account of the equitable considerations referred to above. Notwithstanding the
provisions of this paragraph (d), no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 7, each person who controls
Purchaser within the meaning of either the Act or the Exchange Act and each
director, officer, partner, employee and agent of Purchaser shall have the same
rights to contribution as Purchaser, and each person who controls the Company
within the meaning of either the Act or the Exchange Act, each officer of the
Company who shall have signed the Registration Statement and each director of
the Company shall have the same rights to contribution as the Company, subject
in each case to the applicable terms and conditions of this paragraph (d).
8. Termination. This Agreement shall be subject to termination in the
absolute discretion of Purchaser, by notice given to the Company prior to
delivery of and payment for the Securities, if prior to such time trading in the
Company's Common Stock shall have been suspended by the Commission or the
American Stock Exchange or trading in securities generally on such Exchange
shall have been suspended or limited.
9. Representations and Indemnities to Survive. The respective agreements,
representations, warranties, indemnities and other statements of the Company or
its officers and of Purchaser set forth in or made pursuant to this Agreement
will remain in full force and effect, regardless of any investigation made by or
on behalf of Purchaser or the Company or any of the officers, directors or
controlling persons referred to in Section 7 hereof, and will survive delivery
of and payment for the Securities. The provisions of the third paragraph of
Section 2 hereof and the provisions of Section 7 hereof shall survive the
termination or cancellation of this Agreement.
10. Notices. All communications hereunder will be in writing and effective
only on receipt, and, if sent to Purchaser, will be mailed, delivered or
telegraphed and confirmed to it at:
Xxxxxx Investments Enterprises Ltd.
000 0xx Xxx., 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxx Xxxxxx
Facsimile: 212-231-3939
or at such other address as Purchaser may hereafter designate by notice to the
Company.
If sent to the Company, will be mailed, delivered or telegraphed and confirmed
to it at:
Harken Energy Corporation
000 XxxxXxxx Xxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: A. Xxxxx Xxxxxxxx
Facsimile: (000) 000-0000
or at such other address as the Company may hereafter designate by notice to
Purchaser.
11. Successors. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective successors and the officers and
directors and controlling persons referred to in Section 7 hereof, and no other
person will have any right or obligation hereunder. No party to this Agreement
may assign its rights under this Agreement to any other person without the prior
written consent of the other party hereto, except that Purchaser may assign its
rights hereunder to one or more direct or indirect wholly-owned subsidiaries of
Purchaser, provided that Purchaser shall continue to be obligated to perform all
the obligations to be performed by Purchaser hereunder.
12. Applicable Law. This Agreement will be governed by and construed in
accordance with the laws of the State of Delaware.
13. Business Day. For purposes of this Agreement, "business day" means any
day on which the American Stock Exchange is open for trading.
14. Severablity. If any provision of this Agreement is held to be illegal,
invalid or unenforceable under any present or future law, and if the rights or
obligations of any party hereto under this Agreement will not be materially and
adversely affected thereby, (i) such provision will be fully severable, (ii)
this Agreement will be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part hereof, (iii) the remaining
provisions of this Agreement will remain in full force and effect and will not
be affected by the illegal, invalid or unenforceable provision or by its
severance herefrom and (iv) in lieu of such illegal, invalid or unenforceable
provision, there will be added automatically as a part of this Agreement a
legal, valid and enforceable provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible and mutually acceptable to
the parties herein.
15. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
16. Amendments. This Agreement may only be amended by an instrument in
writing signed by the parties hereto.
* * * * *
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first written above.
HARKEN ENERGY CORPORATION
By: /s/ Xxxxx X. Xxxx
----------------------------------
Name: Xxxxx X. Xxxx
--------------------------------
Title: President
-------------------------------
XXXXXX INVESTMENTS ENTERPRISES LTD.
By: /s/ Xxxx X. Xxxxxx
----------------------------------
Name: Xxxx X. Xxxxxx
--------------------------------
Title: Attorney-in-fact
-------------------------------
SCHEDULE 1
(None.)
