1
SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT, dated as of the date of
acceptance set forth below, by and between HARKEN ENERGY CORPORATION, a
Delaware corporation, with headquarters located at 5605 North MacArthur, Suite
400, Irving, Texas 75038 (the "Company"), and the undersigned (the "Buyer").
W I T N E S S E T H:
WHEREAS, the Company and the Buyer are executing and
delivering this Agreement in reliance upon the exemption from securities
registration afforded by Rule 506 under Regulation D ("Regulation D") as
promulgated by the United States Securities and Exchange Commission (the "SEC")
under the Securities Act of 1933, as amended (the "1933 Act"); and
WHEREAS, the Buyer wishes to subscribe for and purchase shares
of Common Stock, $0.01 par value (the "Common Stock"), of the Company upon the
terms and subject to the conditions of this Agreement, subject to acceptance of
this Agreement by the Company;
NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. AGREEMENT TO SUBSCRIBE; PURCHASE PRICE.
A. SUBSCRIPTION. The undersigned hereby subscribes for
and agrees to purchase the number of shares of Common Stock set forth on the
signature page of this Agreement (the "Shares") at the price per Share set
forth on the signature page of this Agreement. The aggregate purchase price
for the Shares shall be as set forth on the signature page hereto and shall be
payable in United States Dollars.
B. FORM OF PAYMENT. The Buyer shall pay the purchase
price for the Shares by delivering good funds in United States Dollars to the
escrow agent identified in the Joint Escrow Instructions attached hereto as
ANNEX I (the "Escrow Agent"). Such delivery of funds shall be made against
delivery by the Company of a certificate for the Shares. Promptly following
payment by the Buyer to the Escrow Agent of the subscription price for the
Shares, the Company shall deliver a certificate for the Shares to the Escrow
Agent. By signing this Agreement, the Buyer and the Company each agrees to all
of the terms and conditions of, and becomes a party to, the Joint Escrow
Instructions attached hereto as ANNEX I, all of the provisions of which are
incorporated herein by this reference as if set forth in full.
C. METHOD OF PAYMENT. Payment of the purchase price for
the Shares shall be made by wire transfer of funds to:
2
Citibank, N.A.
153 East 53rd Street
New York, New York 10043
ABA#021000089
For Further Credit to A/C#37179446
for credit to the account of Brian W. Pusch Attorney Escrow
Account
Not later than 4:00 p.m., New York City time, on the date which is three New
York Stock Exchange trading days after the Company shall have accepted this
Agreement and returned a signed counterpart of this Agreement to the Buyer, the
Buyer shall deposit with the Escrow Agent the aggregate subscription price for
the Shares.
2. BUYER REPRESENTATIONS, WARRANTIES, ETC.; ACCESS TO
INFORMATION; INDEPENDENT INVESTIGATION.
The Buyer represents and warrants to, and covenants and agrees
with, the Company as follows:
a. The Buyer is purchasing the Shares for its own
account for investment only and not with a view towards the public sale or
distribution thereof;
b. The Buyer is an "Accredited Investor" as that term is
defined in Rule 501 of the General Rules and Regulations under the 1933 Act by
reason of Rule 501(a)(3);
c. All subsequent offers and sales of the Shares by the
Buyer shall be made pursuant to registration of the Shares under the 1933 Act
or pursuant to an exemption from registration;
d. The Buyer understands that the Shares are being
offered and sold to it in reliance on specific exemptions from the registration
requirements of United States federal and state securities laws and that the
Company is relying upon the truth and accuracy of, and the Buyer's compliance
with, the representations, warranties, agreements, acknowledgments and
understandings of the Buyer set forth herein in order to determine the
availability of such exemptions and the eligibility of the Buyer to acquire the
Shares;
e. The Buyer and its advisors, if any, have been
furnished with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Shares which
have been requested by the Buyer. The Buyer and its advisors, if any, have
been afforded the opportunity to ask questions of the Company and have received
complete and satisfactory answers to any such inquiries. Without limiting the
generality of the foregoing, the Buyer has had the opportunity to obtain and to
review the Company's (1) Annual Report on Form 10-K for the year ended December
31, 1993, (2) Quarterly Reports on Form 10-Q for the quarters ended March 31,
-2-
3
June 30, and September 30, 1994, (3) Proxy Statement for the Company's 1994
Annual Meeting and (4) Current Reports on Form 8-K, dated November 4, 1994, in
each case as filed with the SEC. The Buyer understands that its investment in
the Shares involves a high degree of risk;
f. The Buyer understands that no United States federal
or state agency or any other government or governmental agency has passed on or
made any recommendation or endorsement of the Shares; and
g. This Agreement has been duly and validly authorized,
executed and delivered on behalf of the Buyer and is a valid and binding
agreement of the Buyer enforceable in accordance with its terms, subject as to
enforceability to general principles of equity and to bankruptcy or other laws
affecting the enforcement of creditors' rights generally.
3. COMPANY REPRESENTATIONS, ETC.
The Company represents and warrants to the Buyer that:
A. CONCERNING THE SHARES. The Shares, when issued,
delivered and paid for in accordance with this Agreement, will be duly and
validly authorized and issued, fully paid and non-assessable and will not
subject the holder thereof to personal liability by reason of being such
holder. There are no preemptive rights of any stockholder of the Company, as
such, to acquire the Shares.
B. SUBSCRIPTION AGREEMENT. This Agreement has been duly
and validly authorized, executed and delivered on behalf of the Company and is
a valid and binding agreement of the Company enforceable in accordance with its
terms, subject as to enforceability to general principles of equity and to
bankruptcy or other laws affecting the enforcement of creditors' rights
generally.
C. NON-CONTRAVENTION. The execution and delivery of
this Agreement by the Company and the consummation by the Company of the
issuance of the Shares and the other transactions contemplated by this
Agreement do not and will not conflict with or result in a breach by the
Company of any of the terms or provisions of, or constitute a default under,
the certificate of incorporation or by-laws of the Company, or any indenture,
mortgage, deed of trust or other material agreement or instrument to which the
Company is a party or by which it or any of its properties or assets are bound,
or any existing applicable law, rule or regulation or any applicable decree,
judgment or order of any court, United States federal or state regulatory body,
administrative agency or other governmental body having jurisdiction over the
Company or any of its properties or assets.
-3-
4
D. APPROVALS. The Company is not aware of any
authorization, approval or consent of any governmental body which is required
to be obtained by the Company for the issuance and sale of the Shares as
contemplated by this Agreement.
4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.
A. TRANSFER RESTRICTIONS. The Buyer acknowledges that
(1) the Shares to be issued to it hereunder have not been and are not being
registered under the provisions of the 1933 Act (except as provided in the
Registration Rights Agreement referred to in Section 4(c) of this Agreement),
and may not be transferred unless (A) the Shares are subsequently registered
thereunder or (B) the Buyer shall have delivered to the Company an opinion of
counsel, reasonably satisfactory in form, scope and substance to the Company,
to the effect that the Shares may be sold or transferred pursuant to an
exemption from such registration; (2) any sale of the Shares made in reliance
on Rule 144 promulgated under the 1933 Act may be made only in accordance with
the terms of said Rule and further, if said Rule is not applicable, any resale
of such Shares under circumstances in which the seller, or the person through
whom the sale is made, may be deemed to be an underwriter, as that term is used
in the 1933 Act, may require compliance with some other exemption under the
1933 Act or the rules and regulations of the SEC thereunder; and (3) neither
the Company nor any other person is under any obligations to register the
Shares (other than pursuant to the Registration Rights Agreement referred to in
Section 4(c) of this Agreement) under the 1933 Act or to comply with the terms
and conditions of any exemption thereunder.
B. RESTRICTIVE LEGEND. The Buyer acknowledges and
agrees that the certificates for the Shares may bear a restrictive legend in
substantially the following form (and a stop-transfer order may be placed
against transfer of the certificates for the Shares):
The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended. The
shares have been acquired for investment and may not be sold,
transferred or assigned in the absence of an effective
registration statement for these shares under the Securities
Act of 1933, as amended, or an opinion of the Company's
counsel that registration is not required under said Act.
C. REGISTRATION RIGHTS AGREEMENT. The parties hereto
agree to enter into a Registration Rights Agreement in the form attached hereto
as ANNEX II.
D. FORM D. The Company agrees to file a Form D with
respect to the Shares as required under Regulation D.
-4-
5
E. REPORTING STATUS. So long as the Buyer beneficially
owns any of the Shares, the Company shall file all reports required to be filed
with the SEC pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended (the "1934 Act"), and the Company shall not terminate its
status as an issuer required to file reports under the 1934 Act even if the
1934 Act or the rules and regulations thereunder would permit such termination.
5. TRANSFER AGENT INSTRUCTIONS.
Promptly following the delivery by the Buyer of the aggregate
subscription price for the Shares in accordance with Section 1(c) hereof, the
Company's transfer agent will be instructed to issue one or more certificates
for the Shares, bearing the restrictive legend specified in Section 4(b) of
this Agreement, registered in the name of the Buyer or its nominee and in such
denominations to be specified by the Buyer prior to the closing. The Company
warrants that no instruction other than such instructions referred to in this
Section 5 and stop transfer instructions to give effect to Section 4(a) hereof
will be given by the Company to the transfer agent and that the Shares shall
otherwise be freely transferable on the books and records of the Company as and
to the extent provided in this Agreement. Nothing in this Section shall affect
in any way the Buyer's obligations and agreement to comply with all applicable
securities laws upon resale of the Shares. If the Buyer provides the Company
with an opinion of counsel that registration of a resale by the Buyer of any of
the Shares in accordance with clause (1)(B) of Section 4(a) is not required
under the 1933 Act, the Company shall permit the transfer of the Shares and
promptly instruct the Company's transfer agent to issue one or more share
certificates in such name and in such denominations as specified by the Buyer.
6. STOCK DELIVERY INSTRUCTIONS.
The certificate for the Shares shall be delivered by the
Company to the Escrow Agent pursuant to Section 1(b) hereof on a delivery
against payment basis at the closing.
7. CLOSING DATE.
The date and time of the issuance and sale of the Shares (the
"Closing Date") shall be 12:00 noon, New York City time, on the date which is
five New York Stock Exchange trading days after the date on which the Buyer has
deposited the aggregate subscription price for the Shares with the Escrow Agent
in accordance with Section 1(c) hereof, or such other mutually agreed to time.
The closing shall occur on the Closing Date at the offices of the Escrow Agent.
-5-
6
8. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The Buyer understands that the Company's obligation to sell
the Shares to the Buyer pursuant to this Agreement is conditioned upon:
a. The receipt and acceptance by the Company of the
Buyer's subscription for the Shares as evidenced by execution of this Agreement
by the Company;
b. Delivery by the Buyer to the Escrow Agent of good
funds as payment in full of an amount equal to the aggregate subscription price
for the Shares in accordance with Section 1(c) hereof; and
c. The accuracy on the Closing Date of the
representations and warranties of the Buyer contained in this Agreement and the
performance by the Buyer on or before the Closing Date of all covenants and
agreements of the Buyer required to be performed on or before such Closing
Date.
9. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
The Company understands that the Buyer's obligation to purchase the
Shares is conditioned upon:
a. Delivery by the Company to the Escrow Agent of one or
more certificates for the Shares in accordance with this Agreement;
b. The accuracy on the Closing Date of the
representations and warranties of the Company contained in this Agreement and
the performance by the Company on or before the Closing Date of all covenants
and agreements of the Company required to be performed on or before such
Closing Date; and
c. On the Closing Date, the Buyer shall have received an
opinion of counsel for the Company, in form, scope and substance reasonably
satisfactory to the Buyer, to the effect set forth in ANNEX III attached
hereto.
10. GOVERNING LAW; MISCELLANEOUS. This Agreement shall
be governed by and interpreted in accordance with the laws of the State of New
York. A facsimile transmission of this signed agreement shall be legal and
binding on all parties hereto. The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement or the validity or enforceability of this Agreement
in any other jurisdiction. This Agreement may be amended only by an instrument
in writing signed by the party to be charged with enforcement. Any notices
required
-6-
7
or permitted to be given under the terms of this Agreement shall be sent by
mail or delivered personally or by courier and shall be effective five days
after being placed in the mail, if mailed, or upon receipt, if delivered
personally or by courier, in each case addressed to a party at such party's
address shown in the introductory paragraph or on the signature page of this
Agreement or such other address as a party shall have provided by notice to the
other party in accordance with this provision.
-7-
8
IN WITNESS WHEREOF, this Agreement has been duly executed by
the Buyer or one of its officers thereunto duly authorized as of the date set
forth below.
NUMBER OF SHARES: ____________
PRICE PER SHARE: $ ____________(1)
AGGREGATE SUBSCRIPTION PRICE: $ ____________
NAME OF BUYER: ____________________________
SIGNATURE ____________________________
Title: _______________________________
Date: ____________________________
Address: ____________________________
____________________________
____________________________
This Agreement has been accepted as of the date set forth below.
HARKEN ENERGY CORPORATION
By: ________________________
Title: _____________________
Date: _____________________
__________________________________
(1) Closing bid price of the Common Stock on __________ __, 1995, as reported by
NASDAQ/NMS, less 25%.
-8-
9
ANNEX I
TO
SUBSCRIPTION AGREEMENT
JOINT ESCROW INSTRUCTIONS
Dated as of the date of the
Subscription Agreement to
Which These Joint Escrow
Instructions Are Attached
Law Offices of
Brian W. Pusch
Penthouse Suite
29 West 57th Street
New York, New York 10019
Attention: Brian W. Pusch, Esq.
Dear Mr. Pusch:
As Escrow Agent for both Harken Energy Corporation, a Delaware
corporation (the "Corporation"), and the purchaser of shares (the "Shares") of
Common Stock, $0.01 par value, of the Corporation (the "Buyer"), who is named
in the Subscription Agreement between the Corporation and the Buyer (the
"Agreement"), the Escrow Agent is hereby authorized and directed to hold the
documents and funds (together with any interest thereon, the "Escrow Funds")
delivered to the Escrow Agent pursuant to the terms of the Agreement to which a
copy of these Joint Escrow Instructions is attached as Annex I, in accordance
with the following instructions:
1. After receipt of written or oral notice from the
Corporation and the Buyer to the Escrow Agent that their respective conditions
precedent to the purchase and sale of the Shares have been satisfied or waived
by the Corporation and the Buyer, the Escrow Agent shall, after reduction by
the amounts referred to in the next succeeding sentence of this paragraph,
release the Escrow Funds to or upon the order of the Corporation and shall
release the certificates for the Shares to the Buyer. After receipt of such
notice, a portion of the Escrow Funds shall be released by the Escrow Agent as
follows: an amount equal to the fees and expenses due to Tanner, Owen & Co.
Incorporated, a New York corporation ("TOC"), pursuant to the engagement
letter, dated February 1, 1995, between the Corporation and TOC, as amended
from time to time (the "Engagement Letter"), such amount to be specified in
writing by TOC to the Escrow Agent prior to release of the Escrow Funds, shall
be released to or upon the order of TOC. If the Corporation or the Buyer
notifies the Escrow Agent that on the Closing Date (as defined in the
Agreement), the conditions precedent to the obligations of the Corporation or
the Buyer, as the case may be, under the Agreement were not satisfied
10
or waived, then the Escrow Agent shall return the Escrow Funds to the Buyer and
shall return the certificates for the Shares to the Corporation. Prior to
return of the Escrow Funds to the Buyer, the Buyer shall furnish such tax
reporting or other information as shall be appropriate for the Escrow Agent to
comply with applicable United States laws. The Escrow Agent shall deposit all
funds received hereunder in the Escrow Agent's attorney escrow account at
Citibank, N.A.
2. The Escrow Agent's duties hereunder may be altered,
amended, modified or revoked only by a writing signed by the Corporation, the
Buyer and the Escrow Agent.
3. The Escrow Agent shall be obligated only for the
performance of such duties as are specifically set forth herein and may rely
and shall be protected in relying or refraining from acting on any instrument
reasonably believed by the Escrow Agent to be genuine and to have been signed
or presented by the proper party or parties. The Escrow Agent shall not be
personally liable for any act the Escrow Agent may do or omit to do hereunder
as Escrow Agent while acting in good faith, and any act done or omitted by the
Escrow Agent pursuant to the advice of the Escrow Agent's attorneys-at-law
shall be conclusive evidence of such good faith.
4. The Escrow Agent is hereby expressly authorized to
disregard any and all warnings given by any of the parties hereto or by any
other person or corporation, excepting only orders or process of courts of law
and is hereby expressly authorized to comply with and obey orders, judgments or
decrees of any court. In case the Escrow Agent obeys or complies with any such
order, judgment or decree, the Escrow Agent shall not be liable to any of the
parties hereto or to any other person, firm or corporation by reason of such
decree being subsequently reversed, modified, annulled, set aside, vacated or
found to have been entered without jurisdiction.
5. The Escrow Agent shall not be liable in any respect
on account of the identity, authorities or rights of the parties executing or
delivering or purporting to execute or deliver the Agreement or any documents
or papers deposited or called for hereunder.
6. The Escrow Agent shall not be liable for the
outlawing of any rights under the Statute of Limitations with respect to these
Joint Escrow Instructions or any documents or Escrow Funds deposited with the
Escrow Agent.
7. The Escrow Agent shall be entitled to employ such
legal counsel and other experts as the Escrow Agent may deem necessary properly
to advise the Escrow Agent in connection with the Escrow Agent's obligations
hereunder, may rely upon the advice of such counsel, and may pay such counsel
reasonable compensation therefor. The Escrow Agent has acted as legal counsel
for the
I-2
11
Buyer in connection with the transactions contemplated by the Agreement and may
continue to act as legal counsel for the Buyer notwithstanding its duties as
Escrow Agent hereunder.
8. The Escrow Agent's responsibilities as Escrow Agent
hereunder shall terminate if the Escrow Agent shall resign by written notice to
the Corporation and the Buyer. In the event of any such resignation, the Buyer
shall appoint a successor Escrow Agent.
9. If the Escrow Agent reasonably requires other or
further instruments in connection with these Joint Escrow Instructions or
obligations in respect hereto, the necessary parties hereto shall join in
furnishing such instruments.
10. It is understood and agreed that should any dispute
arise with respect to the delivery and/or ownership or right of possession of
the documents or Escrow Funds held by the Escrow Agent hereunder, the Escrow
Agent is authorized and directed to retain in the Escrow Agent's possession
without liability to anyone all or any part of said documents or Escrow Funds
until such disputes shall have been settled either by mutual written agreement
of the parties concerned or by a final order, decree or judgment of a court of
competent jurisdiction after the time for appeal has expired and no appeal has
been perfected, but the Escrow Agent shall be under no duty whatsoever to
institute or defend any such proceedings.
11. The Corporation and the Buyer agree jointly and
severally agree to indemnify and hold harmless the Escrow Agent from any and
all claims, liabilities, costs or expenses in any way arising from or relating
to the duties or performance of the Escrow Agent hereunder other than any such
claim, liability, cost or expense to the extent the same shall have been
determined by final, unappealable judgment of a court of competent jurisdiction
to have resulted from the gross negligence or willful misconduct of the Escrow
Agent.
12. Any notice required or permitted hereunder shall be
given in writing (unless otherwise specified herein) and shall be deemed
effectively given upon personal delivery or three business days after deposit
in the United States Postal Service, by registered or certified mail with
postage and fees prepaid, addressed to each of the other parties thereunto
entitled at the following addresses, or at such other addresses as a party may
designate by ten days advance written notice to each of the other parties
hereto.
CORPORATION: At the address set forth in the introductory
paragraph of the Agreement
I-3
12
BUYER: At the notice address set forth in the
Agreement
ESCROW AGENT: Brian W. Pusch
Penthouse Suite
29 West 57th Street
New York, New York 10019
13. By signing these Joint Escrow Instructions, the
Escrow Agent becomes a party hereto only for the purpose of these Joint Escrow
Instructions; the Escrow Agent does not become a party to the Agreement. The
Corporation and the Buyer have become parties hereto by their execution and
delivery of the Agreement, as provided therein.
14. This instrument shall be binding upon and inure to
the benefit of the parties hereto, and their respective successors and
permitted assigns and shall be governed by the laws of the State of New York.
15. Capitalized terms used herein and not otherwise
defined herein shall have the respective meanings provided in the Agreement.
ACCEPTED BY ESCROW AGENT:
_____________________________
Brian W. Pusch
I-4
13
ANNEX II
TO
SUBSCRIPTION
AGREEMENT
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of ____________,
1995 (this "Agreement"), is made by and among HARKEN ENERGY CORPORATION, a
Delaware corporation (the "Company"), and the person named on the signature
page hereto (the "Initial Investor").
W I T N E S S E T H:
WHEREAS, in connection with the Subscription Agreement, dated
as of ____________, 1995, between the Initial Investor and the Company (the
"Subscription Agreement"), the Company has agreed, upon the terms and subject
to the conditions of the Subscription Agreement, to issue and sell to the
Initial Investor shares (the "Shares") of Common Stock, $0.01 par value (the
"Common Stock"); and
WHEREAS, to induce the Initial Investor to execute and deliver
the Subscription Agreement, the Company has agreed to provide certain
registration rights under the Securities Act of 1933, as amended, and the rules
and regulations thereunder, or any similar successor statute (collectively, the
"Securities Act"), and applicable state securities laws with respect to the
Shares;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants contained herein and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Company and
the Initial Investor hereby agree as follows:
1. DEFINITIONS.
(a) As used in this Agreement, the following terms shall
have the following meanings:
(i) "Investor" means the Initial Investor and any
transferee or assignee who agrees to become bound by the provisions of this
Agreement in accordance with Section 9 hereof.
(ii) "register," "registered," and "registration" refer to
a registration effected by preparing and filing a registration statement or
statements in compliance with the Securities Act and pursuant to Rule 415 under
the Securities Act or any successor rule providing for offering securities on a
continuous basis ("Rule 415"), and the declaration or ordering of effectiveness
of such registration statement by the United States Securities and Exchange
Commission (the "SEC").
14
(iii) "Registrable Securities" means the Shares.
(b) As used in this Agreement, the term Investor includes
(i) each Investor (as defined above) and (ii) each person who is permitted
transferee or assignee of the Registrable Securities pursuant to Section 9 of
this Agreement.
(c) Capitalized terms used herein and not otherwise
defined herein shall have the respective meanings set forth in the Subscription
Agreement.
2. REGISTRATION.
(A) PIGGY-BACK REGISTRATIONS. If at any time the Company
shall determine to register for its own account or the account of others under
the Securities Act any of its equity securities, other than on Form S-4 or Form
S-8 or their then equivalents relating to equity securities to be issued solely
in connection with any acquisition of any entity or business or equity
securities issuable in connection with stock option or other employee benefit
plans, the Company shall send to each Investor, who is entitled to registration
rights under this Section 2(a) written notice of such determination and, if
within twenty (20) days after receipt of such notice, such Investor shall so
request in writing, the Company shall include in such registration statement
all or any part of the Registrable Securities such Investor requests to be
registered, except that if, in connection with any underwritten public offering
for the account of the Company the managing underwriter(s) thereof shall impose
a limitation on the number of shares of Common Stock which may be included in
the registration statement because, in such underwriter(s)' judgment, such
limitation is necessary to effect an orderly public distribution, then the
Company shall be obligated to include in such registration statement only such
limited portion of the Registrable Securities with respect to which such
Investor has requested inclusion hereunder. Any exclusion of Registrable
Securities shall be made pro rata among the Investors seeking to include
Registrable Securities, in proportion to the number of Registrable Securities
sought to be included by such Investors; provided, however, that the Company
shall not exclude any Registrable Securities unless the Company has first
excluded all outstanding securities the holders of which are not entitled by
right to inclusion of securities in such registration statement; and provided
further, however, that, after giving effect to the immediately preceding
proviso, any exclusion of Registrable Securities shall be made pro rata with
holders of other securities having the right to include such securities in the
registration statement. No right to registration of Registrable Securities
under this Section 2(a) shall be construed to limit any registration required
under Section 2(b) hereof. The obligations of the Company under this Section
2(a) may be waived by Investors holding a majority in interest of the
Registrable Securities and shall expire after the Company has afforded the
-2-
15
opportunity for the Investors to exercise registration rights under this
Section 2(a) for two registrations; provided, however, that any Investor who
shall have had any Registrable Securities excluded from any registration
statement in accordance with this Section 2(a) shall be entitled to include in
an additional registration statement filed by the Company the Registrable
Securities so excluded.
(B) DEMAND REGISTRATION. If at any time after the date which
is 30 days after the closing under the Subscription Agreement, Investors who
are entitled to registration rights under this Section 2(b) shall notify the
Company in writing that it or they intend to offer or cause to be offered for
public sale Registrable Securities held by such Investors, the Company shall
cause such of the Registrable Securities as may be requested by any Investor to
be registered, on one occasion only, under the Securities Act and applicable
state laws as expeditiously as possible. Once the right for registration of
any Registrable Securities under this Section 2(b) has been exercised by any
Investor, the Company shall prepare and file a registration statement covering
such Registrable Securities with the SEC within thirty (30) days of the
exercise of such registration right.
(c) If any offering pursuant to a Registration Statement (as
defined herein) pursuant to Section 2(b) hereof involves (at the Company's
election) an underwritten offering, the Investors who hold a majority in
interest of the Registrable Securities subject to such underwritten offering
shall have the right to select one legal counsel and an investment banker or
bankers and manager or managers to administer the offering, which investment
banker or bankers or manager or managers shall be reasonable satisfactory to
the Company. The Investors who hold the Registrable Securities to be included
in such underwriting shall pay all underwriting discounts and commissions and
other fees and expenses of such investment banker or bankers and manager or
managers so selected in accordance with this Section 2(c) (other than fees and
expenses relating to registration of Registrable Securities under federal or
state securities laws which are payable by the Company pursuant to Section 5
hereof) with respect to their Registrable Securities and the fees and expenses
of such legal counsel so selected by the Investors.
(D) PAYMENTS BY THE COMPANY. If the registration statement
covering the Registrable Securities for which a demand for registration has
been made pursuant to Section 2(b) hereof, is not effective within 120 days
after such demand has been made, then the Company will make payments to the
Initial Investor in such amounts and at such times as shall be determined
pursuant to this Section 2(d). The amount to be paid by the Company to the
Initial Investor shall be determined as of each Computation Date, and such
amount shall be equal to (1) in the case of the first Computation Date, two
percent (2%) and (2) in the case of each other Computation Date, three percent
(3%), in each case of the
-3-
16
aggregate subscription price paid by the Initial Investor for the Shares
pursuant to the Subscription Agreement (the "Periodic Amount"); provided,
however, that if any Computation Date is less than 30 days subsequent to
another Computation Date, then the Periodic Amount payable on the later
Computation Date shall be pro rated. The Periodic Amount shall be paid by the
Company within five business days after each Computation Date and shall be
payable in cash; provided, however, that the Company may elect in lieu of
payment of any Periodic Amount in cash to deliver to the Initial Investor
shares of Common Stock having an Aggregate Market Value equal to the amount of
the Periodic Amount if, but only if, such shares are freely tradable by the
Initial Investor without any restriction under the Securities Act or any state
securities or "blue sky" law.
As used in this Section 2(d), the following terms shall have
the following meanings:
"Aggregate Market Value" of any shares of Common Stock as of
any Computation Date means the product obtained by multiplying (a) such number
of shares of Common Stock times (b) the Average Market Price of the Common
Stock for the Measurement Period for such Computation Date.
"Average Market Price" of any security for any period shall be
computed as the mean average of the daily mean average of the high and low
sales prices of such security (or the mean average of the high and low bid
prices for such security on any trading day for which no sales are reported)
for each trading day in such period on the principal trading market for such
security, as reported in The Wall Street Journal.
"Computation Date" means the date which is 120 days after the
exercise of demand registration rights under Section 2(b) and, if the
registration statement required to be filed by the Company pursuant to Section
2(b) has not theretofore been declared effective by the SEC, each date which is
30 days after a Computation Date and, if the registration statement required to
be filed by the Company pursuant to Section 2(b) is not declared effective by
the SEC within 120 days after the exercise of demand registration rights under
Section 2(b), the date on which such registration statement is declared
effective.
"Measurement Period" means the period of ten consecutive
trading days for the Common Stock ending on (or on the last trading day
preceding) each Computation Date.
3. OBLIGATIONS OF THE COMPANY. In connection with the
registration of the Registrable Securities, the Company shall:
(a) prepare promptly and file with the SEC promptly (but in no
event later than 30 days) after a request in accordance with Section 2(b)
hereof a registration statement or statements (the
-4-
17
"Registration Statement") with respect to all Registrable Securities to be
included therein, and thereafter use its best efforts to cause the Registration
Statement to become effective as soon as reasonably possible after such filing,
and keep the Registration Statement effective pursuant to Rule 415 at all times
until such date as is six months after the date such Registration Statement is
first ordered effective by the SEC, which Registration Statement (including any
amendments or supplements thereto and prospectuses contained therein) shall not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein, or necessary to make the statements
therein, in light of the circumstances in which they were made, not misleading;
provided, however, that, subject to the conditions set forth in Section 4(a)
below, each Investor may notify the Company in writing that it wishes to
exclude all or a portion of its Registrable Securities from such Registration
Statement;
(b) prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration Statement and
the prospectus used in connection with the Registration Statement as may be
necessary to keep the Registration Statement effective at all times until such
date as is six months after the date such Registration Statement is first
ordered effective by the SEC, and, during such period, comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities of the Company covered by the Registration Statement
until such time as all of such Registrable Securities have been disposed of in
accordance with the intended methods of disposition by the seller or sellers
thereof as set forth in the Registration Statement;
(c) furnish to each Investor whose Registrable Securities are
included in the Registration Statement, such number of copies of a prospectus,
including a preliminary prospectus, and all amendments and supplements thereto
and such other documents, as such Investor may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such
Investor;
(d) use reasonable efforts to (i) register and qualify the
Registrable Securities covered by the Registration Statement under such other
securities or blue sky laws of such jurisdictions as the Investors who hold a
majority in interest of the Registrable Securities being offered reasonably
request, (ii) prepare and file in those jurisdictions such amendments
(including post-effective amendments) and supplements, (iii) take such other
actions as may be necessary to maintain such registrations and qualifications
in effect at all times until the such date as is the earlier of six months
after the date such Registration Statement is first ordered effective by the
SEC or is three years after the Initial Investor acquired the Shares and (iv)
take all other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions; provided,
-5-
18
however, that the Company shall not be required in connection therewith or as a
condition thereto to (I) qualify to do business in any jurisdiction where it
would not otherwise be required to qualify but for this Section 3(d), (II)
subject itself to general taxation in any such jurisdiction, (III) file a
general consent to service of process in any such jurisdiction, (IV) provide
any undertakings that cause more than nominal expense or burden to the Company
or (V) make any change in its charter or by-laws, which in each case the Board
of Directors of the Company determines to be contrary to the best interests of
the Company and its stockholders;
(e) in the event Investors who hold a majority in interest of
the Registrable Securities being offered in the offering select underwriters
for the offering, enter into and perform its obligations under an underwriting
agreement, in usual and customary form, including, without limitation,
customary indemnification and contribution obligations, with the managing
underwriter of such offering;
(f) as promptly as practicable after becoming aware of such
event, notify each Investor of the happening of any event of which the Company
has knowledge, as a result of which the prospectus included in the Registration
Statement, as then in effect, includes an untrue statement of a material fact
or omits to state material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading, and use its best efforts promptly to prepare a
supplement or amendment to the Registration Statement to correct such untrue
statement or omission, and deliver a number of copies of such supplement or
amendment to each Investor as such Investor may reasonably request;
(g) as promptly as practicable after becoming aware of such
event, notify each Investor who holds Registrable Securities being sold (or, in
the event of an underwritten offering, the managing underwriters) of the
issuance by the SEC of any stop order or other suspension of effectiveness of
the Registration Statement at the earliest possible time;
(h) permit a single firm of counsel designated as selling
stockholders' counsel by the Investors who hold a majority in interest of the
Registrable Securities being sold to review the Registration Statement and all
amendments and supplements thereto a reasonable period of time prior to their
filing with the SEC, and shall not file any document in a form to which such
counsel reasonably objects;
(i) make generally available to its security holders as soon
as practical, but not later than ninety (90) days after the close of the period
covered thereby, an earnings statement (in form complying with the provisions
of Rule 158 under the
-6-
19
Securities Act) covering a twelve-month period beginning not later than the
first day of the Company's fiscal quarter next following the date of the
Registration Statement;
(j) at the request of the Investors who hold a majority in
interest of the Registrable Securities being sold, furnish on the date that
Registrable Securities are delivered to an underwriter for sale in connection
with the Registration Statement (i) a letter, dated such date, from the
Company's independent certified public accountants in form and substance as is
customarily given by independent certified public accountants to underwriters
in an underwritten public offering, addressed to the underwriters; and (ii) an
opinion, dated such date, from counsel representing the Company for purposes of
such Registration Statement, in form and substance as is customarily given in
an underwritten public offering, addressed to the underwriters and the
Investors;
(k) make available for inspection by any Investor, any
underwriter participating in any disposition pursuant to the Registration
Statement, and any attorney, accountant or other agent retained by any such
Investor or underwriter (collectively, the "Inspectors"), all pertinent
financial and other records, pertinent corporate documents and properties of
the Company (collectively, the "Records"), as shall be reasonably necessary to
enable each Inspector to exercise its due diligence responsibility, and cause
the Company's officers, directors and employees to supply all information which
any Inspector may reasonably request for purposes of such due diligence;
provided, however, that each Inspector shall hold in confidence and shall not
make any disclosure (except to an Investor) of any Record or other information
which the Company determines in good faith to be confidential, and of which
determination the Inspectors are so notified, unless (i) the disclosure of such
Records is necessary to avoid or correct a misstatement or omission in any
Registration Statement, (ii) the release of such Records is ordered pursuant to
a subpoena or other order from a court or government body of competent
jurisdiction or (iii) the information in such Records has been made generally
available to the public other than by disclosure in violation of this or any
other agreement. The Company shall not be required to disclose any
confidential information in such Records to any Inspector until and unless such
Inspector shall have entered into confidentiality agreements (in form and
substance satisfactory to the Company) with the Company with respect thereto,
substantially in the form of this Section 3(k). Each Investor agrees that it
shall, upon learning that disclosure of such Records is sought in or by a court
or governmental body of competent jurisdiction or through other means, give
prompt notice to the Company and allow the Company, at its expense, to
undertake appropriate action to prevent disclosure of, or to obtain a
protective order for, the Records deemed confidential. The Company shall hold
in confidence and shall not make any disclosure of information concerning an
Investor provided
-7-
20
to the Company pursuant to Section 4(e) hereof unless (i) disclosure of such
information is necessary to comply with federal or state securities laws, (ii)
the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (iii) the release of
such information is ordered pursuant to a subpoena or other order from a court
or governmental body of competent jurisdiction or (iv) such information has
been made generally available to the public other than by disclosure in
violation of this or any other agreement. The Company agrees that it shall,
upon learning that disclosure of such information concerning an Investor is
sought in or by a court or governmental body of competent jurisdiction or
through other means, give prompt notice to such Investor, at its expense, to
undertake appropriate action to prevent disclosure of, or to obtain a
protective order for, such information;
(l) use its best efforts either to (i) cause all the
Registrable Securities covered by the Registration Statement to be listed on a
national securities exchange and on each additional national securities
exchange on which similar securities issued by the Company are then listed, if
any, if the listing of such Registrable Securities is then permitted under the
rules of such exchange or (ii) secure designation of all the Registrable
Securities covered by the Registration Statement as a National Association of
Securities Dealers Automated Quotations System ("NASDAQ") "national market
system security" within the meaning of Rule 11Aa2-1 of the SEC under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
quotation of the Registrable Securities on the NASDAQ National Market System
or, if, despite the Company's best efforts to satisfy the preceding clause (i)
or (ii), the Company is unsuccessful in satisfying the preceding clause (i) or
(ii), to secure listing on a national securities exchange or NASDAQ
authorization and quotation for such Registrable Securities and, without
limiting the generality of the foregoing, to arrange for at least two market
makers to register with the National Association of Securities Dealers, Inc.
("NASD") as such with respect to such Registrable Securities;
(m) provide a transfer agent and registrar, which may be a
single entity, for the Registrable Securities not later than the effective date
of the Registration Statement;
(n) cooperate with the Investors who hold Registrable
Securities being sold and the managing underwriter or underwriters, if any, to
facilitate the timely preparation and delivery of certificates (not bearing any
restrictive legends) representing Registrable Securities to be sold pursuant to
the Registration Statement and enable such certificates to be in such
denominations or amounts as the case may be, and registered in such names as
the managing underwriter or underwriters, if any, or the Investors may
reasonably request; and
-8-
21
(o) take all other reasonable actions necessary to expedite
and facilitate disposition by the Investor of the Registrable Securities
pursuant to the Registration Statement;
4. OBLIGATIONS OF THE INVESTORS. In connection with the
registration of the Registrable Securities, the Investors shall have the
following obligations:
(a) It shall be a condition precedent to the obligations of
the Company to take any action pursuant to this Agreement with respect to each
Investor that such Investor shall furnish to the Company such information
regarding itself, the Registrable Securities held by it and the intended method
of disposition of the Registrable Securities held by it as shall be reasonably
required to the effect the registration of the Registrable Securities and shall
execute such documents in connection with such registration as the Company may
reasonably request. At least fifteen (15) days prior to the first anticipated
filing date of the Registration Statement, the Company shall notify each
Investor of the information the Company requires from each such Investor (the
"Requested Information") if such Investor elects to have any of such Investor's
Registrable Securities included in the Registration Statement. If within five
(5) business days prior to the filing date the Company has not received the
Requested Information from an Investor (a "Non-Responsive Investor"), then the
Company may file the Registration Statement without including Registrable
Securities of such Non-Responsive Investor;
(b) Each Investor by such Investor's acceptance of the
Registrable Securities agrees to cooperate with the Company as reasonably
requested by the Company in connection with the preparation and filing of the
Registration Statement hereunder, unless such Investor has notified the Company
in writing of such Investor's election to exclude all of such Investor's
Registrable Securities from the Registration Statement;
(c) In the event Investors holding a majority in interest of
the Registrable Securities being registered determine to engage the services of
an underwriter, each Investor agrees to enter into and perform such Investor's
obligations under an underwriting agreement, in usual and customary form,
including, without limitation, customary indemnification and contribution
obligations, with the managing underwriter of such offering and take such other
actions as are reasonably required in order to expedite or facilitate the
disposition of the Registrable Securities, unless such Investor has notified
the Company in writing of such Investor's election to exclude all of such
Investor's Registrable Securities from the Registration Statement;
(d) Each Investor agrees that, upon receipt of any notice from
the Company of the happening of any event of the kind described in Section 3(f)
or 3(g), such Investor will immediately discontinue disposition of Registrable
Securities pursuant to the
-9-
22
Registration Statement covering such Registrable Securities until such
Investor's receipt of the copies of the supplemented or amended prospectus
contemplated by Section 3(f) or 3(g) and, if so directed by the Company, such
Investor shall deliver to the Company (at the expense of the Company) or
destroy (and deliver to the Company a certificate of destruction) all copies in
such Investor's possession, of the prospectus covering such Registrable
Securities current at the time of receipt of such notice; and
(e) No Investor may participate in any underwritten
registration hereunder unless such Investor (i) agrees to sell such Investor's
Registrable Securities on the basis provided in any underwriting arrangements
approved by the Investors entitled hereunder to approve such arrangements, (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements and (iii) agrees to pay its pro rata share of
all underwriting discounts and commissions and other fees and expenses of
investment bankers and any manager or managers of such underwriting and legal
expenses of the underwriter applicable with respect to its Registrable
Securities, in each case to the extent not payable by the Company pursuant to
the terms of this Agreement.
5. EXPENSES OF REGISTRATION. All expenses, other than
underwriting discounts and commissions and other fees and expenses of
investment bankers and other than brokerage commissions, incurred in connection
with registrations, filings or qualifications pursuant to Section 3, including,
without limitation, all registration, listing and qualifications fees, printers
and accounting fees and the fees and disbursements of counsel for the Company,
shall be borne by the Company; provided, however, that the Investors shall bear
the fees and out-of-pocket expenses of the one legal counsel selected by the
Investors pursuant to Section 2(d) hereof.
6. INDEMNIFICATION. In the event any Registrable
Securities are included in a Registration Statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless each Investor who holds such Registrable Securities, the
directors, if any, of such Investor, the officers, if any, of such Investor,
each person, if any, who controls any Investor within the meaning of the
Securities Act or the Exchange Act, any underwriter (as defined in the
Securities Act) for the Investors, the directors, if any, of such underwriter
and the officers, if any, of such underwriter, and each person, if any, who
controls any such underwriter within the meaning of the Securities Act or the
Exchange Act (each, an "Indemnified Person"), against any losses, claims,
damages, expenses or liabilities (joint or several) (collectively, "Claims") to
which any of them may become subject under the Securities Act, the
-10-
23
Exchange Act or otherwise, insofar as such Claims (or actions or proceedings,
whether commenced or threatened, in respect thereof) arise out of or are based
upon any of the following statements, omissions or violations in the
Registration Statement, or any post-effective amendment thereof, or any
prospectus included therein: (i) any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or any
post-effective amendment thereof or 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, (ii) any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus if used
prior to the effective date of such Registration Statement, or contained in the
final prospectus (as amended or supplemented, if the Company files any
amendment thereof or supplement thereto with the SEC) or the omission or
alleged omission to state therein any material fact necessary to make the
statements made therein, in light of the circumstances under which the
statements therein were made, not misleading or (iii) any violation or alleged
violation by the Company of the Securities Act, any state securities law or any
rule or regulation by the Company of the Securities Act, the Exchange Act or
any state securities law (the matters in the foregoing clauses (i) through (iv)
being, collectively, "Violations"). Subject to the restrictions set forth in
Section 6(d) with respect to the number of legal counsel, the Company shall
reimburse the Investors and each such underwriter or controlling person,
promptly as such expenses are incurred and are due and payable, for any legal
fees or other reasonable expenses incurred by them in connection with
investigating or defending any such Claim. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this
Section 6(a) (I) shall not apply to a Claim arising out of or based upon a
Violation which occurs in reliance upon and in conformity with information
furnished in writing to the Company by any Indemnified Person or underwriter
for such Indemnified Person expressly for use in connection with the
preparation of the Registration Statement or any such amendment thereof or
supplement thereto, if such prospectus was timely made available by the Company
pursuant to Section 3(c) hereof; (II) with respect to any preliminary
prospectus shall not inure to the benefit of any such person from whom the
person asserting any such Claim purchased the Registrable Securities that are
the subject thereof (or to the benefit of any person controlling such person)
if the untrue statement or omission of material fact contained in the
preliminary prospectus was corrected in the prospectus, as then amended or
supplemented, if such prospectus was timely made available by the Company
pursuant to Section 3(c) hereof; and (III) shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior
written consent of the Company, which consent shall not be unreasonably
withheld. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of the Indemnified Person and shall
survive the transfer of the Registrable Securities by the Investors pursuant to
Section 9.
-11-
24
(b) In connection with any Registration Statement in which an
Investor is participating, each such Investor agrees to indemnify and hold
harmless, to the same extent and in the same manner set forth in Section 6(a),
the Company, each of its directors, each of its officers who signs the
Registration Statement, each person, if any, who controls the Company within
the meaning of the Securities Act or the Exchange Act, any underwriter and any
other stockholder selling securities pursuant to the Registration Statement or
any of its directors or officers or any person who controls such stockholder or
underwriter within the meaning of the Securities Act or the Exchange Act
(collectively and together with an Indemnified Person, an "Indemnified Party"),
against any Claim to which any of them may become subject, under the Securities
Act, the Exchange Act or otherwise, insofar as such Claim arises out of or is
based upon any Violation, in each case to the extent (and only to the extent)
that such Violation occurs in reliance upon and in conformity with written
information furnished to the Company by such Investor expressly for use in
connection with such Registration Statement; and such Investor will reimburse
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such Claim; provided, however, that the
indemnity agreement contained in this Section 6(b) shall not apply to amounts
paid in settlement of any Claim if such settlement is effected without the
prior written consent of such Investor, which consent shall not be unreasonably
withheld; provided, further, however, that the Investor shall be liable under
this Section 6(b) for only that amount of a Claim as does not exceed the net
proceeds to such Investor as a result of the sale of Registrable Securities
pursuant to such Registration Statement. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of such
Indemnified Party and shall survive the transfer of the Registrable Securities
by the Investors pursuant to Section 9. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this
Section 6(b) with respect to any preliminary prospectus shall not inure to the
benefit of any Indemnified Party if the untrue statement or omission of
material fact contained in the preliminary prospectus was corrected on a timely
basis in the prospectus, as then amended or supplemented.
(c) The Company shall be entitled to receive indemnities from
underwriters, selling brokers, dealer managers and similar securities industry
professionals participating in any distribution, to the same extent as provided
above, with respect to information such persons so furnished in writing by such
persons expressly for inclusion in the Registration Statement.
(d) Promptly after receipt by an Indemnified Person or
Indemnified Party under this Section 6 of notice of the commencement of any
action (including any governmental action), such Indemnified Person or
Indemnified Party shall, if a Claim in
-12-
25
respect thereof is to made against any indemnifying party under this Section 6,
deliver to the indemnifying party a written notice of the commencement thereof
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying parties; provided, however, that an
Indemnified Person or Indemnified Party shall have the right to retain its own
counsel, with the fees and expenses to paid by the indemnifying party, if, in
the reasonable opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person or Indemnified Party
and the indemnifying party would be inappropriate due to actual or potential
differing interests between such Indemnified Person or Indemnified Party and
any other party represented by such counsel in such proceeding. The Company
shall pay for only one separate legal counsel for the Investors; such legal
counsel shall be selected by the Investors holding a majority in interest of
the Registrable Securities. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Section 6, except to the
extent that the indemnifying party is prejudiced in its ability to defend such
action. The indemnification required by this Section 6 shall be made by
periodic payments of the amount thereof during the course of the investigation
or defense, as such expense, loss, damage or liability is incurred and is due
and payable.
7. CONTRIBUTION. To the extent any indemnification by
an indemnifying party is prohibited or limited by law, the indemnifying party
agrees to make the maximum contribution with respect to any amounts for which
it would otherwise be liable under Section 6 to the fullest extent permitted by
law; provided, however, that (a) no contribution shall be made under
circumstances where the maker would not have been liable for indemnification
under the fault standards set forth in Section 6, (b) no seller of Registrable
Securities guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
seller of Registrable Securities who was not guilty of such fraudulent
misrepresentation and (c) contribution by any seller of Registrable Securities
shall be limited in amount to the net amount of proceeds received by such
seller from the sale of such Registrable Securities.
8. REPORTS UNDER EXCHANGE ACT. With a view to making
available to the Investors the benefits of Rule 144 promulgated under the
Securities Act or any other similar rule or regulation of the SEC that may at
any time permit the Investors to sell securities of the Company to the public
without registration ("Rule 144"), the Company agrees to:
-13-
26
(a) make and keep public information available, as those terms
are understood and defined in Rule 144, at all times after ninety (90) days
after the effective date of the registration statement filed by the Company for
the initial public offering of its securities;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange
Act; and
(c) furnish to each Investor so long as such Investor owns
Registrable Securities, promptly upon request, (i) a written statement by the
Company that it has complied with the reporting requirements of Rule 144 (at
any time after ninety (90) days after the effective date of the first
registration statement filed by the company), the Securities Act and Exchange
Act (at any time after it has become subject to such reporting requirements),
(ii) a copy of the most recent annual or quarterly report of the Company and
such other reports and documents so filed by the Company and (iii) such other
information as may be reasonably requested to permit the Investors to sell such
securities without registration pursuant to Rule 144.
9. ASSIGNMENT OF THE REGISTRATION RIGHTS. The rights to
have the Company register Registrable Securities pursuant to this Agreement
shall be automatically assigned by the Investors to transferees or assignees of
all or any portion of such securities only if: (a) the Company is, within a
reasonable time after such transfer or assignment, furnished with written
notice of (i) the name and address of such transferee or assignee and (ii) the
securities with respect to which such registration rights are being transferred
or assigned, (b) immediately following such transfer or assignment the further
disposition of such securities by the transferee or assignee is restricted
under the Securities Act and applicable state securities laws, (c) such
assignment is in accordance with and permitted by all other agreements between
the transferor or assignor and the Company, including, without limitation,
stockholder's agreements, warrants and subscription agreements, and the
transferor or assignor otherwise is not in material default of any obligation
to the Company under any such other agreement and (d) at or before the time the
Company received the written notice contemplated by clause (a) of this sentence
the transferee or assignee agrees in writing with the Company to be bound by
all of the provisions contained herein.
10. AMENDMENT OF REGISTRATION RIGHTS. Any provision of
this Agreement may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and Investors who
hold a majority in interest of the Registrable Securities. Any amendment or
-14-
27
waiver effected in accordance with this Section 10 shall be binding upon each
Investor and the Company.
11. MISCELLANEOUS.
(a) A person or entity is deemed to be a holder of
Registrable Securities whenever such person or entity owns of record such
Registrable Securities. If the Company receives conflicting instructions,
notices or elections from two or more persons or entities with respect to the
same Registrable Securities, the Company shall act upon the basis of
instructions, notice or election received from the registered owner of such
Registrable Securities.
(b) Notices required or permitted to be hereunder shall be in
writing and shall be deemed to be sufficiently given when personally delivered
or sent by registered mail, return receipt requested, addressed (i) if to the
Company, at Harken Energy Corporation, 5605 North MacArthur, Suite 400, Irving,
Texas 75038, Attention: President, (ii) if to the Initial Investor, at the
address set forth under its name in the Subscription Agreement and (iii) if to
any other Investor, at such address as such Investor shall have provided in
writing to the Company, or at such other address as each such party furnishes
by notice given in accordance with this Section 11(b).
(c) Failure of any party to exercise any right or remedy under
this Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof.
(d) This Agreement shall be enforced, governed by and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed entirely within such State. In the event
that any provision of this Agreement is invalid or unenforceable under any
applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any provision hereof
which may prove invalid or unenforceable under any law shall not affect the
validity or enforceability of any other provision hereof.
(e) This Agreement constitutes the entire agreement among the
parties hereto with respect to the subject matter hereof. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein. This Agreement supersedes all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof.
(f) Subject to the requirements of Section 9 hereof, this
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of each of the parties hereto.
-15-
28
(g) All pronouns and any variations thereof refer to the
masculine, feminine or neuter, singular or plural, as the context may require.
(h) The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same agreement. This Agreement, once executed by a
party, may be delivered to the other party hereto by telephone line facsimile
transmission of a copy of this Agreement bearing the signature of the party so
delivering this Agreement.
-16-
29
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed by their respective officers thereunto duly authorized as of
day and year first above written.
HARKEN ENERGY CORPORATION
By__________________________
Name:
Title:
INITIAL INVESTOR:
NAME:_______________________
By__________________________
Name:
Title:
-17-
30
ANNEX III
TO
SUBSCRIPTION
AGREEMENT
[LETTERHEAD OF COMPANY COUNSEL]
[Date of Closing]
[NAME AND ADDRESS OF BUYER]
HARKEN ENERGY CORPORATION
Ladies and Gentlemen:
We have acted as counsel to Harken Energy Corporation, a
Delaware corporation (the "Company"), in connection with the Subscription
Agreement, dated ________________, between you and the Company. Capitalized
terms used herein and not otherwise defined herein shall have the respective
meanings assigned to such terms in the Agreement.
As such counsel, we have reviewed the actions heretofore taken
by the Company in connection with the Agreement and the transactions
contemplated thereby and we have examined originals, or copies certified or
otherwise authenticated to our satisfaction, of all such corporate documents,
records, agreements, certificates and other instruments of the Company and of
such certificates of public officials, and have made such investigations of law
and have discussed with officers and representatives of the Company such
questions of fact as we have deemed necessary or appropriate as the basis for
the opinions hereinafter expressed. We have assumed the accuracy and
completeness of all corporate records and information made available to us by
the Company upon which we have relied.
Based upon the foregoing, we are of the opinion that:
(1) The Shares have been duly authorized and, when issued
and paid for in accordance with the Agreement, will be validly issued,
fully paid and non-assessable; and
(2) The Registration Rights Agreement has been duly and
validly authorized, executed and delivered by the Company and,
assuming the due authorization, execution and delivery thereof by you,
constitutes the legal, valid and binding obligation of the Company
enforceable against the Company in
31
accordance with its terms subject, as to enforcement of remedies, to
applicable bankruptcy, insolvency, moratorium, reorganization, or
similar laws affecting creditors' rights generally and general
principles of equity and except that rights to indemnification may be
limited by public policy.
These opinions are limited to the matters expressly stated
herein and are rendered solely for your benefit and may not be quoted or relied
upon for any other purpose or by any other person.
Very truly yours,
-2-
32
Draft of 4/6/95
SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT, dated as of the date of
acceptance set forth below, by and between HARKEN ENERGY CORPORATION, a
Delaware corporation, with headquarters located at 5605 North MacArthur, Suite
400, Irving, Texas 75038 (the "Company"), and the undersigned (the "Buyer").
W I T N E S S E T H:
WHEREAS, the Company and the Buyer are executing and
delivering this Agreement in reliance upon the exemption from securities
registration afforded by Rule 506 under Regulation D ("Regulation D") as
promulgated by the United States Securities and Exchange Commission (the "SEC")
under the Securities Act of 1933, as amended (the "1933 Act"); and
WHEREAS, the Buyer wishes to subscribe for and purchase shares
of Common Stock, $0.01 par value (the "Common Stock"), of the Company upon the
terms and subject to the conditions of this Agreement, subject to acceptance of
this Agreement by the Company;
NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. AGREEMENT TO SUBSCRIBE; PURCHASE PRICE.
A. SUBSCRIPTION. The undersigned hereby subscribes for
and agrees to purchase the number of shares of Common Stock set forth on the
signature page of this Agreement (the "Shares") at the price per Share set
forth on the signature page of this Agreement. The aggregate purchase price
for the Shares shall be as set forth on the signature page hereto and shall be
payable in United States Dollars.
B. FORM OF PAYMENT. The Buyer shall pay the purchase
price for the Shares by delivering good funds in United States Dollars to the
escrow agent identified in the Joint Escrow Instructions attached hereto as
ANNEX I (the "Escrow Agent"). Such delivery of funds shall be made against
delivery by the Company of a certificate for the Shares. Promptly following
payment by the Buyer to the Escrow Agent of the subscription price for the
Shares, the Company shall deliver a certificate for the Shares to the Escrow
Agent. By signing this Agreement, the Buyer and the Company each agrees to all
of the terms and conditions of, and becomes a party to, the Joint Escrow
Instructions attached hereto as ANNEX I, all of the provisions of which are
incorporated herein by this reference as if set forth in full.
C. METHOD OF PAYMENT. Payment of the purchase price for
the Shares shall be made by wire transfer of funds to:
33
Citibank, N.A.
153 East 53rd Street
New York, New York 10043
ABA#021000089
For Further Credit to A/C#37179446
for credit to the account of Brian W. Pusch Attorney Escrow
Account
Not later than 4:00 p.m., New York City time, on the date which is three New
York Stock Exchange trading days after the Company shall have accepted this
Agreement and returned a signed counterpart of this Agreement to the Buyer, the
Buyer shall deposit with the Escrow Agent the aggregate subscription price for
the Shares.
2. BUYER REPRESENTATIONS, WARRANTIES, ETC.; ACCESS TO
INFORMATION; INDEPENDENT INVESTIGATION.
The Buyer represents and warrants to, and covenants and agrees
with, the Company as follows:
a. The Buyer is purchasing the Shares for its own
account for investment only and not with a view towards the public sale or
distribution thereof;
b. The Buyer is an "Accredited Investor" as that term is
defined in Rule 501 of the General Rules and Regulations under the 1933 Act by
reason of Rule 501(a)(3);
c. All subsequent offers and sales of the Shares by the
Buyer shall be made pursuant to registration of the Shares under the 1933 Act
or pursuant to an exemption from registration;
d. The Buyer understands that the Shares are being
offered and sold to it in reliance on specific exemptions from the registration
requirements of United States federal and state securities laws and that the
Company is relying upon the truth and accuracy of, and the Buyer's compliance
with, the representations, warranties, agreements, acknowledgments and
understandings of the Buyer set forth herein in order to determine the
availability of such exemptions and the eligibility of the Buyer to acquire the
Shares;
e. The Buyer and its advisors, if any, have been
furnished with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Shares which
have been requested by the Buyer. The Buyer and its advisors, if any, have
been afforded the opportunity to ask questions of the Company and have received
complete and satisfactory answers to any such inquiries. Without limiting the
generality of the foregoing, the Buyer has had the opportunity to obtain and to
review the Company's (1) Annual Report on Form 10-K for the year ended December
31, 1994, and (2) Proxy Statement for the Company's 1994 Annual Meeting, in
each
-2-
34
case as filed with the SEC. The Buyer understands that its investment in the
Shares involves a high degree of risk;
f. The Buyer understands that no United States federal
or state agency or any other government or governmental agency has passed on or
made any recommendation or endorsement of the Shares; and
g. This Agreement has been duly and validly authorized,
executed and delivered on behalf of the Buyer and is a valid and binding
agreement of the Buyer enforceable in accordance with its terms, subject as to
enforceability to general principles of equity and to bankruptcy or other laws
affecting the enforcement of creditors' rights generally.
3. COMPANY REPRESENTATIONS, ETC.
The Company represents and warrants to the Buyer that:
A. CONCERNING THE SHARES. The Shares, when issued,
delivered and paid for in accordance with this Agreement, will be duly and
validly authorized and issued, fully paid and non-assessable and will not
subject the holder thereof to personal liability by reason of being such
holder. There are no preemptive rights of any stockholder of the Company, as
such, to acquire the Shares.
B. SUBSCRIPTION AGREEMENT. This Agreement has been duly
and validly authorized, executed and delivered on behalf of the Company and is
a valid and binding agreement of the Company enforceable in accordance with its
terms, subject as to enforceability to general principles of equity and to
bankruptcy or other laws affecting the enforcement of creditors' rights
generally.
C. NON-CONTRAVENTION. The execution and delivery of
this Agreement by the Company and the consummation by the Company of the
issuance of the Shares and the other transactions contemplated by this
Agreement do not and will not conflict with or result in a breach by the
Company of any of the terms or provisions of, or constitute a default under,
the certificate of incorporation or by-laws of the Company, or any indenture,
mortgage, deed of trust or other material agreement or instrument to which the
Company is a party or by which it or any of its properties or assets are bound,
or any existing applicable law, rule or regulation or any applicable decree,
judgment or order of any court, United States federal or state regulatory body,
administrative agency or other governmental body having jurisdiction over the
Company or any of its properties or assets.
D. APPROVALS. The Company is not aware of any
authorization, approval or consent of any governmental body which is required
to be obtained by the Company for the issuance and sale of the Shares as
contemplated by this Agreement.
-3-
35
4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.
A. TRANSFER RESTRICTIONS. The Buyer acknowledges that
(1) the Shares to be issued to it hereunder have not been and are not being
registered under the provisions of the 1933 Act (except as provided in the
Registration Rights Agreement referred to in Section 4(c) of this Agreement),
and may not be transferred unless (A) the Shares are subsequently registered
thereunder or (B) the Buyer shall have delivered to the Company an opinion of
counsel, reasonably satisfactory in form, scope and substance to the Company,
to the effect that the Shares may be sold or transferred pursuant to an
exemption from such registration; (2) any sale of the Shares made in reliance
on Rule 144 promulgated under the 1933 Act may be made only in accordance with
the terms of said Rule and further, if said Rule is not applicable, any resale
of such Shares under circumstances in which the seller, or the person through
whom the sale is made, may be deemed to be an underwriter, as that term is used
in the 1933 Act, may require compliance with some other exemption under the
1933 Act or the rules and regulations of the SEC thereunder; and (3) neither
the Company nor any other person is under any obligations to register the
Shares (other than pursuant to the Registration Rights Agreement referred to in
Section 4(c) of this Agreement) under the 1933 Act or to comply with the terms
and conditions of any exemption thereunder.
B. RESTRICTIVE LEGEND. The Buyer acknowledges and
agrees that the certificates for the Shares may bear a restrictive legend in
substantially the following form (and a stop-transfer order may be placed
against transfer of the certificates for the Shares):
The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended. The
shares have been acquired for investment and may not be sold,
transferred or assigned in the absence of an effective
registration statement for these shares under the Securities
Act of 1933, as amended, or an opinion of the Company's
counsel that registration is not required under said Act.
C. REGISTRATION RIGHTS AGREEMENT. The parties hereto
agree to enter into an Amendment to Registration Rights Agreement in the form
attached hereto as ANNEX II on or before the Closing Date.
D. FORM D. The Company agrees to file a Form D with
respect to the Shares as required under Regulation D.
E. REPORTING STATUS. So long as the Buyer beneficially
owns any of the Shares, the Company shall file all reports required to be filed
with the SEC pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended (the
-4-
36
"1934 Act"), and the Company shall not terminate its status as an issuer
required to file reports under the 1934 Act even if the 1934 Act or the rules
and regulations thereunder would permit such termination.
5. TRANSFER AGENT INSTRUCTIONS.
Promptly following the delivery by the Buyer of the aggregate
subscription price for the Shares in accordance with Section 1(c) hereof, the
Company's transfer agent will be instructed to issue one or more certificates
for the Shares, bearing the restrictive legend specified in Section 4(b) of
this Agreement, registered in the name of the Buyer or its nominee and in such
denominations to be specified by the Buyer prior to the closing. The Company
warrants that no instruction other than such instructions referred to in this
Section 5 and stop transfer instructions to give effect to Section 4(a) hereof
will be given by the Company to the transfer agent and that the Shares shall
otherwise be freely transferable on the books and records of the Company as and
to the extent provided in this Agreement. Nothing in this Section shall affect
in any way the Buyer's obligations and agreement to comply with all applicable
securities laws upon resale of the Shares. If the Buyer provides the Company
with an opinion of counsel that registration of a resale by the Buyer of any of
the Shares in accordance with clause (1)(B) of Section 4(a) is not required
under the 1933 Act, the Company shall permit the transfer of the Shares and
promptly instruct the Company's transfer agent to issue one or more share
certificates in such name and in such denominations as specified by the Buyer.
6. STOCK DELIVERY INSTRUCTIONS.
The certificate for the Shares shall be delivered by the
Company to the Escrow Agent pursuant to Section 1(b) hereof on a delivery
against payment basis at the closing.
7. CLOSING DATE.
The date and time of the issuance and sale of the Shares (the
"Closing Date") shall be 12:00 noon, New York City time, on the date which is
five New York Stock Exchange trading days after the date on which the Buyer has
deposited the aggregate subscription price for the Shares with the Escrow Agent
in accordance with Section 1(c) hereof, or such other mutually agreed to time.
The closing shall occur on the Closing Date at the offices of the Escrow Agent.
-5-
37
8. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The Buyer understands that the Company's obligation to sell
the Shares to the Buyer pursuant to this Agreement is conditioned upon:
a. The receipt and acceptance by the Company of the
Buyer's subscription for the Shares as evidenced by execution of this Agreement
by the Company;
b. Delivery by the Buyer to the Escrow Agent of good
funds as payment in full of an amount equal to the aggregate subscription price
for the Shares in accordance with Section 1(c) hereof; and
c. The accuracy on the Closing Date of the
representations and warranties of the Buyer contained in this Agreement and the
performance by the Buyer on or before the Closing Date of all covenants and
agreements of the Buyer required to be performed on or before such Closing
Date.
9. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
The Company understands that the Buyer's obligation to purchase the
Shares is conditioned upon:
a. Delivery by the Company to the Escrow Agent of one or
more certificates for the Shares in accordance with this Agreement;
b. The accuracy on the Closing Date of the
representations and warranties of the Company contained in this Agreement and
the performance by the Company on or before the Closing Date of all covenants
and agreements of the Company required to be performed on or before such
Closing Date; and
c. On the Closing Date, the Buyer shall have received an
opinion of counsel for the Company, in form, scope and substance reasonably
satisfactory to the Buyer, to the effect set forth in ANNEX III attached
hereto.
10. GOVERNING LAW; MISCELLANEOUS. This Agreement shall
be governed by and interpreted in accordance with the laws of the State of New
York. A facsimile transmission of this signed agreement shall be legal and
binding on all parties hereto. The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement or the validity or enforceability of this Agreement
in any other jurisdiction. This Agreement may be amended only by an instrument
in writing signed by the party to be charged with enforcement. Any notices
required
-6-
38
or permitted to be given under the terms of this Agreement shall be sent by
mail or delivered personally or by courier and shall be effective five days
after being placed in the mail, if mailed, or upon receipt, if delivered
personally or by courier, in each case addressed to a party at such party's
address shown in the introductory paragraph or on the signature page of this
Agreement or such other address as a party shall have provided by notice to the
other party in accordance with this provision.
-7-
39
IN WITNESS WHEREOF, this Agreement has been duly executed by
the Buyer or one of its officers thereunto duly authorized as of the date set
forth below.
NUMBER OF SHARES: ____________
PRICE PER SHARE: $ ____________(1)
AGGREGATE SUBSCRIPTION PRICE: $ ____________
NAME OF BUYER: ____________________________
SIGNATURE ____________________________
Title: _______________________________
Date: ____________________________
Address: ____________________________
____________________________
____________________________
This Agreement has been accepted as of the date set forth below.
HARKEN ENERGY CORPORATION
By: ________________________
Title: _____________________
Date: _____________________
__________________________________
(1) Closing bid price of the Common Stock on __________ __, 1995, as reported by
NASDAQ/NMS, less 25%.
-8-
40
ANNEX II
TO
SUBSCRIPTION
AGREEMENT
AMENDMENT NO.1 TO REGISTRATION RIGHTS AGREEMENT
AMENDMENT NO.1, dated as of April 7, 1995 (this "Amendment")
to Registration Rights Agreement, dated as of March 1, 1995, between HARKEN
ENERGY CORPORATION, a Delaware corporation (the "Company"), and Banque Franck
S.A. (the "Initial Investor").
W I T N E S S E T H :
WHEREAS, the Company and the Initial Investor are parties to a
Registration Rights Agreement, dated as of March 1, 1995 (the "Registration
Rights Agreement"), between the Company and the Initial Investor; and
WHEREAS, the Company and the Initial Investor wish to amend
the Registration Rights Agreement upon the terms and subject to the conditions
set forth herein.
NOW THEREFORE, in consideration of the premises and the
covenants contained in this Amendment and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
1. AMENDMENTS. (a) The first Recital of the
Registration Rights Agreement is hereby amended by deleting the phrase "(the
"Subscription Agreement")" and substituting in lieu thereof the phrase "(the
"Original Subscription Agreement")".
(b) Section 1(a) of the Registration Rights Agreement is
hereby amended by deleting clause (iii) thereof in its entirety and inserting
in lieu thereof the following:
(iii) "Registrable Securities" shall mean the Shares and the
"Shares" as defined in the Second Subscription Agreement.
(iv) "Second Subscription Agreement" shall mean the
Subscription Agreement, dated as of April 7, 1995, between the Company and the
Initial Investor.
(v) "Subscription Agreement" shall mean the Original
Subscription Agreement and the Second Subscription Agreement.
(c) Section 2(a) of the Registration Rights Agreement
shall be amended by deleting the last sentence thereof in its entirety and
inserting in lieu thereof the following new sentence:
The obligations of the Company under this Section 2(a) may be
41
waived by Investors holding a majority in interest of the Registrable
Securities and shall expire after the Company has afforded the
opportunity for the Investors to exercise registration rights under
this Section 2(a) for two registrations for each Subscription
Agreement;provided, however, that any Investor who shall have had any
Registrable Securities excluded from any registration statement in
accordance with this Section 2(a) shall be entitled to include in an
additional registration statement filed by the Company the Registrable
Securities so excluded.
(d) Section 2(b) of the Registration Rights Agreement is
hereby amended by deleting the text thereof in its entirety and inserting in
lieu thereof the following text:
(B) DEMAND REGISTRATION. If at any time after the date which
is 30 days after the closing under a Subscription Agreement, Investors
who are entitled to registration rights under this Section 2(b) shall
notify the Company in writing that it or they intend to offer or cause
to be offered for public sale Registrable Securities sold under such
Subscription Agreement and held by such Investors, the Company shall
cause such of the Registrable Securities as may be requested by any
Investor to be registered, for each Subscription Agreement on one
occasion only, under the Securities Act and applicable state laws as
expeditiously as possible; provided, however, that, if, in the case of
the Registrable Securities issued and sold by the Company pursuant to
the Second Subscription Agreement, the Company has not, on or before
the Closing Date (as defined in the Second Subscription Agreement)
filed with the SEC a registration statement covering the Registrable
Securities issued and sold by the Company pursuant to the Original
Subscription Agreement, then any notice given by any Investor pursuant
to this Section 2(b), whether given before, on or after such Closing
Date, shall be deemed to also include the Registrable Securities
issued and sold by the Company pursuant to the Second Subscription
Agreement, and the Company shall register the Registrable Securities
issued and sold by the Company pursuant to the Second Subscription
Agreement at the same time and on the same terms as the Registrable
Securities issued and sold by the Company pursuant to the Original
Subscription Agreement. Notwithstanding the proviso to the
immediately preceding sentence, the period of 120 days contained in
Section 2(d) hereof shall commence with respect to the Registrable
Securities issued and sold by the Company pursuant to the Second
Subscription Agreement 30 days after the Closing Date (as defined in
the Second Subscription Agreement). Once the right for registration
of any Registrable Securities under this Section 2(b) has been
exercised by any Investor, the Company shall prepare and file a
registration statement covering such Registrable Securities with the
SEC within thirty (30) days of the exercise of such registration
right.
-2-
42
2. EFFECTIVENESS. This Amendment shall become effective
on the date (the "Effective Date") when counterparts hereof shall have been
executed and delivered by the Company and the Initial Investor. From and after
the Effective Date, all references in the Registration Rights Agreement to the
Registration Rights Agreement shall be deemed to be references to such
Registration Rights Agreement as amended hereby.
3. REGISTRATION RIGHTS AGREEMENT. Except as amended by
this Amendment, the Registration Rights Agreement shall remain in effect in
accordance with its terms.
4. MISCELLANEOUS. (a) Capitalized terms used in this
Amendment and defined in the introductory paragraph or recitals of this
Amendment shall have the respective meanings provided therein. Capitalized
terms used in this Amendment and not otherwise defined in this Amendment shall
have the respective meanings provided in the Registration Rights Agreement.
(b) This Amendment shall be construed and interpreted in
accordance with the laws of the State of New York.
(c) This Amendment may be executed in any number of
counterparts and by different parties hereto on separate counterparts, each of
which counterparts when so executed and delivered, shall be deemed to be an
original and all of which counterparts, taken together, shall constitute but
one and the same instrument. This Amendment may be executed and delivered by a
party by a telephone line facsimile transmission bearing a signature on behalf
of such party transmitted by such party to the other party.
(d) Section and paragraph headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose.
(e) Any provision of this Amendment that is prohibited,
unenforceable or not authorized in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or non-authorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of such
provision in any other jurisdiction.
(f) No amendment or waiver of any provision of this
Amendment shall in any event be effective unless the same shall be in writing
and signed by the party to be charged with enforcement thereof and any such
waiver shall be effective only in the specific instance and for the specific
purpose for which given. No failure on the part of any party to exercise, and
no delay in exercising, any right under this Amendment shall operate as a
waiver thereof by such party. No single or partial exercise of any right under
this Amendment shall preclude any other or further exercise thereof or the
exercise of any other right.
-3-
43
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Amendment as of the date first
above written.
HARKEN ENERGY CORPORATION
By_________________________
Name:
Title:
BANQUE FRANCK S.A.
By________________________
Name:
Title:
-4-