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EXHIBIT 10.2

HARKEN ENERGY CORPORATION

Up to US$40,000,000

6.5% Senior Convertible Notes Due 2000

PLACING AGREEMENT

July 19, 1996
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CONTENTS

Clause Heading Page
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1. Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
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2. Release of the Press Announcement and Delivery of Documents . . . . . . . . . . . . . . . . . . . . . . . . 3
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3. Placing of the Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
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4. Representations and Warranties of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
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5. The Placing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
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6. Undertakings of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
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7. Indemnification and Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
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8. Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
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9. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
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10. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
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11. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
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12. Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
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13. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
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14. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
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The Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
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THIS AGREEMENT is made on July 19, 1996, BETWEEN

(1) HARKEN ENERGY CORPORATION (the "Company");

(2) RAUSCHER PIERCE & CLARK, INC. and RAUSCHER PIERCE & CLARK
LIMITED (together "RPC") and HSBC INVESTMENT BANK PLC ("HSBC")
(together with RPC, the "Lead Managers"); and

(3) BANCA DEL GOTTARDO, J. HENRY SCHRODER BANK AG, JEFFERIES
INTERNATIONAL LTD, INVESTMENTBANK AUSTRIA AG and D.E. SHAW
SECURITIES INTERNATIONAL (together with the Lead Managers, the
"Managers").

WHEREAS

(A) The Company has authorised the creation and issue of up to
US$40,000,000 in aggregate principal amount of 6.5% Senior Convertible
Notes Due 2000 (the "Notes"). The Notes will be in bearer form and
are to be convertible into shares of the common stock (the "Common
Stock") of the Company (the "Shares") at the Conversion Price of
$2.50.

(B) The Notes will be in the denominations of U.S. $50,000 and
integral multiples thereof. The Notes will initially be represented
by a temporary global bearer note (the "Global Note") which will be
exchangeable for bearer notes in definitive form ("Bearer Notes"),
with interest coupons ("Coupons") attached, in the circumstances
specified in the Global Note.

(C) The Notes will be subject to and have the benefit of a trust
indenture (the "Trust Indenture"), a draft of which is in the agreed
form and to which will be scheduled the forms of the Global Note and
the Bearer Notes. The Trust Indenture, will be made between the
Company and Marine Midland Bank N.A. (the "Trustee") as trustee for
the holders of the Notes from time to time.

(D) The Company will, in relation to the Notes, enter into a
paying and conversion agency agreement (the "Agency Agreement") with
Midland Bank plc (the "Principal Paying Agent" and "Principal
Conversion Agent") and Banca Del Gottardo (a "Paying Agent" and
"Conversion Agent") and the Trustee, a draft of which is in the agreed
form.

(E) The Lead Managers have conditionally agreed on and subject to
the terms hereof to act as agent for the Company to use their best
efforts to procure Placees for all the Notes. The Issue is not
underwritten.

IT IS AGREED as follows:

1. Interpretation

1.1 Definitions: In this Agreement, in addition to the definitions
contained in the recitals, the following expressions have the
following meanings:

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"agreed form" means that the form of the document in question has been
agreed between the proposed parties thereto and by the parties hereto
prior to the Closing Date and (for the purposes of identification
signed by or on behalf of) each of such parties and that either a copy
thereof has been signed for the purpose of identification on behalf of
Bracewell & Patterson, L.L.P. or such document has been signed on
behalf of the parties thereto and delivered to Bracewell & Patterson,
L.L.P. to be held in escrow pending release on the Closing Date;

"Cedel" means Cedel Bank, societe anonyme;

"Closing Date" means, subject to Clause 9.2, July 30, 1996;

"Conditions" means the terms and conditions of the Notes as scheduled
to the agreed form of the Trust Indenture as the same may be modified
prior to the Closing Date, and any reference to a numbered "Condition"
is to a correspondingly numbered provision thereof;

"Conversion Price" has the meaning given to it in Condition 6;

"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear System;

"Event of Default" means one of those events specified in Condition
11;

"Issue" means the proposed issue of the Notes described in the
Offering Circular;

"Issue Documents" means the Trust Indenture and the Agency Agreement;

"Issue Price" means 100 percent of the aggregate principal amount of
the Notes;

"Lien" has the meaning given to it in the Trust Indenture;

"Offering" means the offering of the Notes pursuant to the Offering
Circular;

"Offering Circular" means the final offering circular, including all
documents incorporated by reference therein to the extent such
documents are not superseded in the Offering Circular prepared in
connection with the Issue, as the same may be amended or supplemented
on or before the Closing Date;

"Placees" has the meaning given to it in Clause 5.1;

"Placement" means the offering of Notes made pursuant to the Offering
Circular;

"Person" has the meaning given to it in the Trust Indenture;

"Press Announcement" means the press announcement to be mutually
agreed by the Company and the Lead Managers;

"Principal Subsidiary" has the meaning given to it in the Trust
Indenture;

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"Securities Act" means the United States Securities Act of 1933, as
amended;

"Stabilising Manager" means HSBC, acting in the capacity as
stabilising manager;

"Subsidiary" has the meaning given to it in the Trust Indenture;

"U.S.$" and "U.S. dollars" denote the lawful currency for the time
being of the United States of America; and

"Warrant Shares" means the shares of Common Stock of the Company
issuable upon exercise of the Lead Manager Warrants and the EnCap
Warrants.

1.2 Clauses and Schedules: Any reference in this Agreement to a
Clause or a Schedule is, unless otherwise stated, to a clause hereof
or a schedule hereto.

1.3 Headings: Headings and sub-headings are for ease of reference
only and shall not affect the construction of this Agreement.

2. Release of the Press Announcement and Delivery of Documents

2.1 On or immediately following the Closing Date, the Company
shall release the Press Announcement in the agreed form to the press
in compliance with Regulation S of the Securities Act.

2.2 The Company shall as soon as practicable following execution
of this Agreement and in any event, subject to Clause 2.3, by no later
than 2.00 p.m. (London time) on the Closing Date, deliver, or procure
that there are delivered, to the Lead Managers, in the agreed form:

(a) the Issue Documents;

(b) a legal opinion of Haynes and Boone, L.L.P.;

(d) the auditors comfort letter.

2.3 The Lead Managers may, in their discretion, waive the
requirement that the Company deliver to them any of the documents
listed in Clause 2.2 or may extend the time for delivery of any of the
documents. Any waiver or extension may be granted by the Lead
Managers subject to such conditions as they determine.

3. Placing of the Notes

3.1 The Company undertakes to the Managers that:

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(a) subject to and in accordance with the provisions of this
Agreement, the Company will issue the Notes on the Closing Date, in
accordance with this Agreement and the Trust Indenture; and

(b) the Company will, execute and deliver the Issue Documents on
the Closing Date.

3.2 In connection with this issue, the Stabilising Manager may
over-allot or effect transactions which stabilise or maintain the
market price of the Notes at a level which might not otherwise
prevail. Such stabilising, if commenced, may be discontinued at any
time. Such stabilising shall be conducted in accordance with all
applicable laws and rules. Any loss or profit sustained as a
consequence of any such over-allotment or stabilising shall, as
against the Company, be for the account of the Managers. The Managers
acknowledge that the Company has not authorised the creation and issue
of Notes in excess of U.S.$40,000,000 in aggregate principal amount.

3.3 Each Manager warrants and represents to the Company and each
other Manager that each contract Note in the agreed form executed by
such Manager selling the Notes shall contain the following legend:

"Neither the Notes nor the Shares of Common Stock issuable upon
conversion of the Notes have been or will be registered under the
United States Securities Act of 1933, as amended (the "Securities
Act"), and the Notes and the Shares may not be offered, sold,
transferred, pledged, converted or otherwise disposed of in the U.S.
or to, or for the account or benefit of, any "U.S. person" unless the
Notes and the Shares have been registered under the Securities Act and
any applicable state securities or blue sky laws or exemptions from
the registration requirements of such laws are available.

Any United States person who holds this obligation will be subject to
limitations under the U.S. income tax laws, including the limitations
provided in Sections 165(j) and 1287(a) of the United States Internal
Revenue Code of 1986, as amended".

4. Representations and Warranties of the Company

4.1 The Company represents and warrants to the Managers, in their
capacity as Managers and as representatives of each of the Holders of
the Notes, that:

(a) the Company is duly incorporated and in good standing under
the laws of the State of Delaware and has the requisite power and
authority to create, issue, offer and sell the Notes, to execute this
Agreement and the Issue Documents and to undertake and perform its
obligations herein and therein;

(b) each Principal Subsidiary of the Company is (i) a corporation
duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation, (ii) has all requisite power and
authority and all necessary licenses and permits to own and operate
its Properties and to carry on its business as now conducted and as
presently proposed to be conducted, except as would not have a
material adverse effect on the Company and the Subsidiaries taken as a
whole, and (iii) is duly licensed or qualified and is authorized to do

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business and is in good standing as a foreign corporation in each
jurisdiction where the character of its Properties or the nature of
its activities makes such licensing or qualification necessary, except
as would not have a material adverse effect on the Company and the
Subsidiaries taken as a whole.

(c) The authorized and outstanding capital stock of the Company is
as set out in the Offering Circular, and all of the issued Shares have
been duly and validly authorized and issued and are fully paid and
non-assessable. All of the outstanding shares of capital stock of the
Subsidiaries have been duly and validly authorized and issued and are
fully paid and non-assessable. All of the outstanding shares of
capital stock of each Principal Subsidiary are owned directly or
indirectly by the Company free and clear of any Liens. Except as
disclosed in the Offering Circular, the Company does not own, directly
or indirectly, any equity or debt securities of any other company,
corporation, partnership, joint venture or other entity which are
material to the business or operations of the Company.

(d) the execution, delivery and performance of this Agreement and
the Issue Documents has been duly authorized by all requisite
corporate action of the Company;

(e) the creation, offer, sale and issue of the Notes, the
execution of this Agreement and the Issue Documents and the
undertaking and performance by the Company of the obligations
expressed to be assumed by it herein and therein will not violate:

(i) the Certificate of Incorporation or By-laws of the
Company ;

(ii) assuming compliance by the Managers with the United
States securities Law requirements set forth in the
Schedule, any law applicable to the Company or any
Principal Subsidiary or any rule, regulation or order
of any court or governmental agency or body having
jurisdiction over the Company or any Principal
Subsidiary or;

(iii) any provision of any indenture, mortgage, agreement,
contract, or other instrument to which the Company or
any Principal Subsidiary is a party or by which the
Company or any Principal Subsidiary is bound or to
which any of the properties or assets of the Company
or any Principal Subsidiary are subject, or be in
conflict with, or result in a breach of or constitute
(upon notice or lapse of time or both) a default
under any such indenture, mortgage, agreement,
contract or other instrument or result in the
creation or imposition of any Lien upon any of the
properties or assets of the Company or any Principal
Subsidiary (except any such violation or conflict
described in herein which would not have a material
adverse effect on the Company and its Subsidiaries,
taken as a whole).

(f) (i) this Agreement constitutes;

(ii) upon due execution by or on behalf of the Company and
the other parties thereto, the Issue Documents will
constitute; and

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(iii) upon due execution of the Trust Indenture, the Global
Note and the Bearer Notes by or on behalf of the
Company and the other parties thereto and due
authentication of the Global Note and the Bearer
Notes and the other parties thereto, the Notes will
constitute

legal, valid, binding and enforceable obligations of the Company,
enforceable against the Company in accordance with their respective
terms, except that the enforceability thereof may be limited by any
applicable bankruptcy, insolvency, reorganisation or other similar
laws relating to or affecting the enforcement of creditors' rights
generally and by equitable principles regardless of whether such
enforceability is considered in a proceeding in equity or at law and
except as rights to indemnity or contribution may be limited under
applicable law;

(g) Each of the Global Note, the Bearer Notes, the Coupons and the
Shares conform in all material respects to the description of such
Global Note, Bearer Notes, the Coupons and Shares contained in the
Offering Circular, and the Shares conform to the terms of the Common
Stock contained in the Certificate of Incorporation; and

(h) upon issuance of the Notes in accordance with the Trust
Indenture, the Notes will constitute direct, general and unconditional
obligations of the Company which:

(i) rank pari passu among themselves and with all present
and future Indebtedness other than Subordinated
Obligations and Indebtedness secured by Liens (all as
defined in the Trust Indenture) of the Company; and

(ii) will rank senior to all existing and future
Subordinated Obligations (all as defined in the Trust
Indenture), except to the extent permitted by the
applicable laws relating to creditors' rights;

(i) the Shares, as and when issued by the Company from time to
time pursuant to conversion of the Notes in accordance with the terms
of the Issue Documents, will be validly issued and outstanding, fully
paid and non-assessable and will not be subject to any pre-emptive or
similar right, and the Holder of each Note will receive good and valid
title to the Shares upon conversion of such Note in accordance with
the terms of the Issue Documents, free and clear of any Lien, except
such as may have been created by the Holder of the Note and such
restrictions on transfer as may be imposed under United States federal
or state securities or blue sky laws. No consent or approval by the
stockholders of the Company or any other Person is required to be
obtained by the Company for the consummation of the issuance of the
Shares by the Company pursuant to conversion of the Notes. As and
from the expiry of the Restricted Period (i) each stock certificate
representing any of the Shares shall be free of any type of
restrictive legend, (ii) the Shares represented by each such stock
certificate shall not be subject to any "stop transfer" or similar
order at the Company's transfer agent for its Common Stock, and (iii)
the Company shall have filed with the AMEX or Alternative Stock
Exchange all necessary filings in respect of the inclusion of the
Shares in the shares of Common Stock of the Company listed for trading
on the AMEX or Alternative Stock Exchange.

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(j) upon delivery to the Lead Managers and EnCap, respectively,
the Lead Manager Warrants and the EnCap Warrants (as defined in Clause
8.2 hereof) will be duly issued and will constitute the legal, valid
and binding obligations of the Company, enforceable against the
Company in accordance with their terms, except as the enforceability
thereof may be limited by any applicable bankruptcy, insolvency,
reorganization or other similar laws relating to or affecting the
enforcement of creditors' rights, regardless of whether such
enforceablilty is considered in a proceeding in equity or at law. The
shares of Common Stock issuable upon exercise of any of the Lead
Manager Warrants and the EnCap Warrants have been duly and validly
authorized and reserved for issuance. The shares of Common Stock
issuable upon exercise of Lead Manager Warrants and the EnCap
Warrants, as and when issued and delivered in accordance with the
terms thereof, and upon receipt by the Company of the exercise price
therefor, will be duly and validly issued and outstanding, fully paid
and non-assessable, and will not be subject to any pre-emptive or
similar right.

(k) assuming compliance by the Managers with the United States
securities law requirements as set out in the Schedule, all
authorizations, consents and approvals required by the Company for or
in connection with the creation and issue of the Notes, the execution
of this Agreement and the Issue Documents, the performance by the
Company of the obligations undertaken by it herein and therein and the
distribution of the Offering Circular in accordance with the
provisions set out in the Schedule have been obtained and are in full
force and effect;

(l) neither the nature of the Company or of any Subsidiary, or of
any of their respective businesses or Properties, nor any relationship
between the Company or any Subsidiary and any other Person, nor any
circumstance in connection with the execution and delivery of the
Indenture or the offer, issue, sale or delivery of the Global Note, or
the Bearer Notes, or the Shares is such as to require a consent,
approval or authorization of, or filing, registration or qualification
with, any governmental authority on the part of the Company as a
condition to the execution and delivery of this Indenture or the
offer, issue, sale or delivery of the Global Note or the Bearer Notes
or the issuance of Shares pursuant to conversion of the Notes.

(m) the Offering Circular sets forth a description of the business
conducted and proposed to be conducted as of the date thereof by the
Company and its Principal Subsidiaries and the principal Properties of
the Company and its Principal Subsidiaries, which description is true
and correct in all material respects.

(n) each of the Company and its Principal Subsidiaries has (i)
Good Title to its Oil and Gas Properties and (ii) good and defensible
title to all other material Properties and assets described in the
Offering Circular as owned by it, in the case of such other Properties
and assets free and clear of all Liens, except as disclosed in the
Offering Circular or which are not material to the business of the
Company and its Subsidiaries taken as a whole or which will not
conflict with the obligations of the Company under this Agreement, the
Issue Documents and the Notes. Each of the Company and its
Subsidiaries has a valid, subsisting lease for the real Property
(other than its Oil and Gas Properties, subject to clause (i) of this
sentence) described in the Offering Circular as leased by it. To the
knowledge of the Company's management, except as otherwise disclosed
in the Offering Circular, the Company and each of its Subsidiaries
owns or possesses or is the valid licensee of all patents, trademarks,
service marks, trade names, copyrights and other intellectual property
necessary to carry on its business as described in the Offering
Circular, and

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neither the Company nor any Subsidiary has received any notice of
infringement of or conflict with asserted rights of others with
respect to any of the foregoing which, if the subject of an
unfavourable decision, ruling or finding, would result, individually
or in the aggregate, in any material adverse change in, or which would
materially and adversely affect the business, operations, financial
position or business prospects of, the Company and its Subsidiaries
taken as a whole.

(o) based on the laws currently in effect and subject to the
provisos set forth in the Offering Circular, all payments of principal
and interest in respect of the Notes and the Coupons, and all other
payments that may become due and payable under the terms of the Notes
or the Coupons may be made free and clear of, and without withholding
or deduction for, any taxes, duties, assessments or governmental
charges of any nature whatsoever imposed, levied, collected, withheld
or assessed by United States federal and state taxing authorities or
any political subdivision or authority thereof or therein having power
to tax other than in the case of payments to be made by the Company to
U.S. persons in circumstances where the Company is obliged to withhold
payments due to U.S. back-up withholding tax but not gross-up under
Condition 8;

(p) the Offering Circular is true and accurate in all material
respects and is not misleading in any material respect; any opinions,
predictions or intentions expressed in the Offering Circular are
honestly held or made and are not misleading in any material respect;
the Offering Circular does not omit to state any material fact
necessary to make such information not misleading in any material
respect; provided that this representation and warranty shall not
apply to any statement or omission relating to matters of foreign law
or made in reliance and in conformity with information furnished in
writing to the Company by any Manager for use in the Offering
Circular;

(q) the Company will use the proceeds from the sale of the Notes
for the purposes described in the Offering Circular.

(r) neither the Company nor any of its Subsidiaries is, directly
or indirectly, controlled by, or acting on behalf of any Person which
is, an "investment company" or an "affiliated person" of, "promoter"
or "principal" of an "investment company," within the meaning of the
Investment Company Act of 1940, as amended.

(s) neither the Company nor any of its Subsidiaries is a "holding
company" within the meaning of the Public Utility Holding Company Act
of 1935, as amended or a "public utility" within the meaning of the
Federal Power Act, as amended.

(t) except as disclosed in the Offering Circular at the date
hereof or at the date when this representation is deemed to be
repeated, as the case may be, there are no actions, suits,
investigations or proceedings pending to which the Company or any
Principal Subsidiary is a party before or by any court or governmental
agency or body, which would result, individually or in the aggregate,
in any material adverse change in the financial condition or results
of operations of the Company and its Subsidiaries, taken as a whole,
or which would materially and adversely affect the properties or
assets of the Company, and to the knowledge of the Company, no such
actions, suits, investigations or proceedings are threatened by any
Person;

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(u) except as disclosed in the Offering Circular and since
December 31, 1995 there has been no adverse change, or any development
reasonably likely to involve an adverse change, in the condition
(financial or otherwise) or general affairs of the Company that is
material in the context of the issue of the Notes; and

(v) to the knowledge of the Company, no event has occurred which
is or would (with the passage of time, the giving of notice, the
making of any determination or otherwise) become an Event of Default.

4.2 The Company's consolidated audited financial statements
including its statement of operations for its three fiscal years ended
December 31, 1993, December 31, 1994 and December 31, 1995,
respectively, and its balance sheets at December 31, 1993, December
31, 1994 and December 31, 1995, and the related consolidated
statements of operations, stockholders' equity and cash flows of the
Company and its Subsidiaries for the fiscal years ended on such dates
were prepared in accordance with generally accepted accounting
principles in the United States consistently applied and present
fairly (in conjunction with the notes thereto) the financial condition
of the Company and its Subsidiaries (taken as a whole) as at the date
they were prepared and the results of the operations of the Company
and its Subsidiaries (taken as a whole) during the respective fiscal
years then ended. Except as set forth in the Offering Circular, since
December 31, 1995, there has been no change in the properties,
business, profits or condition (financial or otherwise) of the Company
and its Subsidiaries except changes in the ordinary course of
business, none of which individually or in the aggregate have had a
material adverse effect on the properties, business, assets, profits
or financial condition of the Company and its Subsidiaries taken as a
whole.

4.3 The Company shall forthwith notify the Lead Managers of
anything which at any time prior to payment of the net proceeds into
the Segregated Account of the issue of the Notes to the Company on the
Closing Date has or may have rendered, or will or may render, untrue
or incorrect in any respect any representation and warranty by the
Company in this Agreement as if it had been made or given at such time
with reference to the facts and circumstances then subsisting.

4.4 The representations and warranties in Clause 4.1 which refer
to the Offering Circular shall be deemed to be repeated (with
reference to the relevant text of the Offering Circular and to the
facts and circumstances then subsisting) on each date falling on or
before the Closing Date on which the Offering Circular is amended or
supplemented and distributed by the Managers.

5. The Placing

5.1 The Lead Managers, relying on the representations and
warranties given by the Company herein, hereby undertake to the
Company that, subject to and in accordance with the provisions of this
Agreement they will act as agent for the Company (which appointment
the Company hereby confirms) to use their best efforts to procure
qualified subscribers ("Placees") to subscribe for all of the Notes on
the Closing Date at the Issue Price free from all Liens and with all
rights attached thereto. Neither of the Lead Managers shall have any
obligations themselves to subscribe for any Notes.

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5.2 The Company hereby confirms that the foregoing appointment
confers on the Lead Managers all powers, authorities and discretions
on behalf of the Company which are reasonably necessary for or
reasonably incidental to the making of the Issue on the basis set out
in this Agreement, the Offering Circular and the Trust Indenture and
hereby agrees to ratify and confirm everything which the Lead Managers
shall lawfully and properly do in the exercise of, or in accordance
with, such appointment, powers, authorities and discretions.

5.3 The Lead Managers shall by no later than July 30, 1996 (or
such later date as the Lead Managers and the Company may agree) notify
the Company of the number of Notes, with an aggregate principal amount
of up to U.S.$40,000,000, in respect of which subscription commitments
have been obtained ("Placed Notes").

5.4 Sums payable pursuant to this Clause 5 shall be paid by the
Company not later than the second business day following the date of
termination of this Agreement (other than for the surviving clauses).

6. Undertakings of the Company

6.1 The Company shall deliver to the Managers on the date hereof
and hereafter from time to time as requested as many copies of the
Offering Circular as the Lead Managers may reasonably request.

6.2 Without prejudice to their obligations under applicable law,
the Company shall at the request of the Lead Managers at any time
prior to payment of the net proceeds of the issue of the Notes to the
Company on the Closing Date amend or supplement the Offering Circular
in order to correct any untrue statement of a material fact required
to be stated therein or necessary to make the statements therein in
the light of the circumstances under which they were made not
misleading and the Company shall deliver to the Managers from time to
time as many copies of the relevant amendment or supplement as the
Managers may reasonably request.

6.3 Except as requested by the Managers in connection with the
sale of the Notes, neither the Company or any affiliate of the
Company nor anyone acting on behalf of the Company or any such
affiliate, other than the Managers shall, directly or indirectly,
offer or sell, or attempt to offer, sell or dispose of, any of the
Notes, or solicit any offer to buy, or otherwise approach or negotiate
in respect of, any of the Notes.

6.4 The Company shall furnish such information, execute such
instruments and take such action, if any, as may be required to effect
the placement of the Notes under the securities laws of each
jurisdiction in which the Notes are offered for sale or sold;
provided, however, that the Company shall not be required to qualify
to do business in any jurisdiction where it is not now so qualified or
which would subject the Company to taxation or to take any action that
would subject it to general or unlimited service of process in any
jurisdiction where it is not now so subject.

6.5 The Company shall furnish or make available to the Lead
Managers or their counsel such additional documents and information
regarding the Company and its affairs as the Lead Managers may from
time to time request, including any and all documentation reasonably

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requested in connection with their due diligence efforts regarding
information in the Offering Circular and in order to evidence the
accuracy or completeness of any of the conditions contained in this
Agreement; and all actions taken by the Company to authorize the
issuance and sale of the Notes and to reserve for issuance the shares
of Common Stock issuable upon exercise of the Lead Manager Warrants
and the EnCap Warrants shall be reasonably satisfactory in form and
substance to the Lead Managers.

6.6 The Company shall, at all times upon reasonable request from
the date hereof through the Closing Date, (i) make available to each
purchaser or its advisers, or both, prior to acceptance of its
subscription, such information (in addition to that contained in the
Offering Circular concerning the Offering, the Company and any other
relevant matters as it possesses or can acquire without unreasonable
effort or expense, and (ii) provide each purchaser or its advisers, or
both, the opportunity to ask questions of, and receive answers from,
the Company with respect to such matters.

6.7 The Company shall not offer or sell any securities of the same
class as the Notes until a period of six (6) months has elapsed from
the Closing Date of the Offering, unless the Company shall have
provided the Lead Managers with a satisfactory opinion from the
Company's legal counsel to the effect that the proposed offer or sale
will not result in any violation of the Securities Act, any state
securities or blue sky laws, and any rules or regulations promulgated
thereunder.

6.8 From the date hereof to and including the Closing Date, the
Company shall not, make any press release or other public announcement
(i) without the prior written consent of the Lead Managers, (ii) prior
to having furnished each of the Lead Managers with a copy of the
proposed form of the press release or public announcement and giving
the Lead Managers and their counsel a reasonable opportunity to review
and comment upon the same or (iii) in a manner to which the Lead
Managers or their counsel shall reasonably object, unless the Company
is required to do so by applicable law.

6.9 The Company shall make arrangements reasonably satisfactory to
the Lead Managers to ensure that the Bearer Notes are delivered to the
Trustee or the Authenticating Agent for authentication in the form
required by, and otherwise in accordance with, the Issue Documents.

6.10 The Company shall use all reasonable endeavours to procure the
listing of the Shares and for the Warrant Shares on the American Stock
Exchange and to maintain the same until none of the Notes are
outstanding.

7. Indemnification and Contribution

7.1 The Company agrees to defend, indemnify, and hold each of the
Managers and their respective officers, directors, agents, employees
and controlling persons (each, an "Indemnified Person") harmless from
and against any losses, claims, damages, or liabilities (including,
without limitation, court costs and reasonable attorneys' fees) to
which any Indemnified Person may become subject insofar as the same
arises from an action which alleges or is based upon:

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(a) any alleged untrue statement of a material fact contained in
the Offering Circular, or omission of a material fact, or any other
violation of applicable securities or other laws, rules and
regulations;

(b) the performance by each of the Managers of its obligations and
services, or the performance by any other Indemnified Person on behalf
of the Managers of any obligations hereunder in accordance with this
Agreement or otherwise in connection with the subject matter hereof,
including the issue of any material provided by the Company, or after
having been approved by, the Managers; or

(c) any breach or alleged breach of or failure to comply with, the
laws or regulations of the United States or of any other State thereof
by the Company or any Affiliate resulting from the release of the
Press Announcement, and the preparation and distribution of the
Offering Circular; or

(d) any material breach or alleged material breach of any of the
representations and warranties, or any of the undertakings or
obligations of the Company; or

(e) the creation, allotment, offer, sale, issue and placing of the
Notes irrespective of the role or concurrent negligence of such
Indemnified Person, by the Company or its officers, directors, agents,
employees and controlling persons and to reimburse such Indemnified
Person for any legal or other expenses reasonably incurred by them in
connection with investigating, settling or defending any action or
claim in connection therewith (including, without limitation, court
costs and reasonable attorneys' fees) up until such time as the
Company assumes the defense of any such action or claim; provided,
however, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage or liability (i) directly or
indirectly results from any untrue statement of a material fact or
omission of a material fact made in the Offering Circular in reliance
upon and in conformity with written information provided to the
Company by or on behalf of the Managers specifically for inclusion in
such Offering Circular or (ii) is found in a final judgment of a court
of competent jurisdiction to have resulted from the Indemnified
Person's gross negligence or bad faith in performing their services
hereunder. If for any reason the foregoing indemnification is
unavailable to the Indemnified Person or insufficient to hold the
Indemnified Person harmless, then the Company shall contribute to the
amount paid or payable by the Indemnified Person as a result of such
loss, claim, damage, or liability in such proportion as is appropriate
to reflect not only the relative benefits received by the Company on
the one hand and the Indemnified Person on the other hand but also the
relative fault of the Company and the Indemnified Person, as well as
any relevant equitable considerations. The Company agrees to
reimburse the Indemnified Person within ten days after presentation of
any statement by the Indemnified Person of all reasonable expenses
(including without limitation of the generality of the foregoing, the
reasonable fees and expenses of attorneys selected by the Indemnified
Person) incurred in connection with any testimony the Indemnified
Person or its employees are required to give (in court, before a
regulatory agency, by deposition or otherwise) in any regulatory or
court proceeding (including depositions), whether or not the
Indemnified Person is a party, and which related directly or
indirectly to the proposed Placement. This indemnity shall be without
prejudice to any other rights of any other Indemnified Person.

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7.2 With respect to the foregoing Clause 7.1 of the
indemnification, the Company agrees that an Indemnified Person shall
not be deemed to have been grossly negligent for reasonably relying
upon any written untrue statement or alleged omission of a material
fact necessary to make the statements, in light of the circumstances
in which such statements were made, not misleading, contained in or
omitted from any information provided to the Indemnified Person by or
on behalf of the Company (including, without limitation of the
generality of the foregoing, any accountant or attorney employed or
retained by the Company). The indemnification provided in the
foregoing Clause 7.1 hereof shall extend upon the same terms and
conditions to each Person, if any, who may be deemed to control the
Indemnified Person and shall be applicable, to the extent set forth
herein, whether or not negligence of the person entitled to
indemnification is alleged or proven.

7.3 Each Indemnified Person shall, in the event any action (with
respect to which indemnity or reimbursement from the Company may be
sought by the Indemnified Person on account of agreements contained
herein) shall be brought or threatened against such Indemnified
Person, prompt notice will be given to the Company in writing of such
action, together with a copy of all papers served on, or received by,
the Indemnified Person in connection with such action provided that
failure to give such notice shall not affect the Indemnified Person's
right under these indemnification provisions, unless, and only to the
extent that, such failure results in the Company's forfeiture of
substantive rights or defenses. If such an event occurs the Company
shall assume the defense of such action, including the employment of
counsel and the payment of all expenses. The Indemnified Person shall
have the right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of the Indemnified Person unless (a)
the employment thereof has been specifically authorized by the Company
in writing; (b) the Company has failed to assume the defense and
employ counsel; or (c) the named parties, or parties threatened to be
named, to any such action (including any impleaded parties or parties
threatened to be impleaded) include both the Indemnified Person and
the Company, and the Indemnified Person has been advised by such
counsel that there may be one or more legal defenses available to the
Indemnified Person which are different from or additional to those
available to the Company (in which cases the Indemnified Person shall
have the right to employ their own counsel and in such cases any
reasonable fees and expenses of such counsel shall be paid by the
Company).

7.4 The obligations under this Clause 7 shall survive any
termination of this Agreement, in whole or in part.

8. Fees and Expenses

8.1 The Company shall, on the Closing Date, pay to HSBC:

(i) for the account of the Managers a placement fee of six
percent (6%) of the aggregate principal amount of the Placed Notes,
which shall be allocated as between themselves, and any Managers of
the Issue as the Lead Managers see fit; and

(ii) for the account of EnCap a fee of one percent (1%) of the
aggregate principal amount of the Placed Notes.

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Such commissions and fees shall be deducted from the Issue Price.

8.2 The Company shall issue to the Lead Managers or their
respective designees on the Closing Date warrants (the "Lead Manager
Warrants") pursuant to Regulation S to purchase an aggregate number of
shares of Common Stock equal in number to eight percent (8%) of the
total number of Shares issuable upon conversion of the Notes less
fifty thousand (50,000) shares, at an initial exercise price equal to
$2.50, which shall be issued in the form of Lead Manager warrant
certificates (the "Lead Manager Warrant Certificates"), a draft of
which is in the agreed form. The Company shall issue to EnCap or its
designee on the Closing Date warrants (the "EnCap Warrants") to
purchase fifty thousand (50,000) shares of Common Stock, which shall
be issued in the form of a warrant certificate (the "EnCap Warrant
Certificate"), a draft of which is in the agreed form. Each Lead
Manager Warrant and EnCap Warrant shall entitle the holder to purchase
one share at an initial exercise price equal to the Conversion Price
of the Notes, and having a term of three (3) years, and may be
exercised as to all or any lesser number of shares of Common Stock
covered thereby, commencing six months after the date of issuance.

8.3 The Company is responsible for paying:

(a) the fees and expenses of the legal, accountancy and other
professional advisers instructed by the Company in connection with the
creation and issue of the Notes and the preparation of the Offering
Circular;

(b) the costs incurred in connection with the preparation and
execution of this Agreement and the Issue Documents;

(d) the fees and expenses of the other parties to the Issue
Documents; and

(e) the cost of any advertising agreed between the Company, RPC
and HSBC.

8.4 In addition, the Company shall reimburse RPC and HSBC for all
legal fees and expenses and any travelling, communication, courier,
postage and other out-of-pocket expenses incurred by them in
connection with the management of the issue of the Notes and any
amount due to RPC or HSBC under this sub-clause may be deducted from
the Issue Price or paid direct by the Company to any third party to
whom such moneys are payable; provided, however, that such expenses
are estimated not to exceed U.S.$200,000 (including the cost of
printing described in Clause 8.3(c), two due diligence visits by the
Lead Managers, costs associated with production of a research report
on the Company to be issued following the Closing, roadshow expenses,
and post-closing advertisements, but excluding the fees and expenses
of the Company's legal counsel). Such reimbursement is not contingent
upon the successful completion of the Placement.

8.5 All payments in respect of the obligations of the Company
hereunder shall be made free and clear of and without withholding or
deduction for, any taxes, duties, assessments or governmental charges
of whatsoever nature imposed, levied, collected, withheld or assessed
by United States federal or state taxing authorities or any political
subdivision or any authority

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thereof or therein having power to tax, unless such withholding or
deduction is required by law. In that event, the Company shall pay
such additional amounts as will result in the receipt by the relevant
Person of such amounts as would have been received by it if no such
withholding or deduction had been required provided that such Person
is not a U.S. Person or entity.

8.6 The Company shall pay all stamp, registration and other taxes
and duties (including any interest and penalties thereon or in
connection therewith) which may be payable upon or in connection with
the creation, sale and issue of the Notes, and the execution of this
Agreement and the Issue Documents, and the Company shall indemnify
each Manager against any claim, demand, action, liability, damages,
cost, loss or expense (including, without limitation, legal fees)
which it may incur as a result or arising out of or in relation to any
failure to pay or delay in paying any of the same.

9. Closing

9.1 Subject to this Agreement not having been terminated pursuant
to Clause 10 and subject to Clause 9.3, the closing of the Issue shall
take place on the Closing Date, whereupon, subject to and in
accordance with the terms of this Agreement and the Trust Indenture:

(a) the Company shall deliver the Global Note (in respect of the
number of Bearer Notes), duly executed on behalf of the Company and
authenticated in accordance with the Trust Indenture, to a common
depositary designated for the purpose by Euroclear and Cedel for
credit on the Closing Date to the accounts of Euroclear and Cedel with
such common depositary; and

(b) against such delivery of the Global Note referred to in Clause
9.1 the Lead Managers shall upon receipt of moneys from each Placee
make payment of such net proceeds received from the issue of the Notes
(namely the Issue Price less the fees and expenses that are to be
deducted pursuant to Clause 8) to the Segregated Account by wire
transfer in U.S. dollars either for same day value or on the business
day immediately thereafter together with interest at an annual rate of
six and one-half percent (6.5%) to such account as the Company has
designated to the Lead Managers.

9.2 The Company and the Lead Managers may agree to postpone the
Closing Date to another date not later than August 8, 1996, whereupon
all references herein to the Closing Date shall be construed as being
to that later date.

9.3 The Lead Managers shall only be under obligation to proceed
with the foregoing if:

(a) the Lead Managers receive on or before the Closing Date:

(i) a legal opinion dated the Closing Date and addressed
to the Lead Managers and the Trustee from Haynes and
Boone, L.L.P in substantially the agreed form;

(ii) closing certificates dated the Closing Date,
addressed to the Lead Managers and signed by a duly
authorised signatory on behalf of the Company in
substantially the agreed form; and

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(iii) a closing auditors comfort letter dated the Closing
Date and addressed to the Managers from Arthur
Andersen L.L.P. in substantially the agreed form.

(b) the Issue Documents are executed on or before the Closing Date
by or on behalf of all parties thereto in substantially the agreed
form;

(c) there has, since the date of this Agreement, been no adverse
change, or any development reasonably likely to involve an adverse
change, in the condition (financial or otherwise) or general affairs
of the Company, or any Subsidiary that is material in the context of
the offer, sale or issue of the Notes; and

(d) the representations and warranties by the Company in this
Agreement are true and correct on the date of this Agreement in all
material respects and on each date on which they are deemed to be
repeated and would be true and correct if they were repeated on the
Closing Date with reference to the facts and circumstances then
subsisting.

10. Termination

10.1 Either of the Lead Managers may give a termination notice to
the Company at any time prior to the Closing if:

(a) any representation and warranty by the Company in this
Agreement is or proves to be untrue or incorrect in any material
respect (in the opinion of the Lead Managers) after consultation with
their legal counsel on the date of this Agreement or on any date on
which it is deemed to be repeated;

(b) the Company fails to perform any of its obligations hereunder
which in the opinion of the Lead Managers after consultation with
their legal counsel is material;

(d) since the date of this Agreement there has been, in the
opinion of either of the Lead Managers (after such consultation with
the Company as may be reasonably practicable in the circumstances),
such a change in national or international financial, political or
economic conditions, currency exchange rates or exchange controls on
the U.S. or international oil and gas markets as would in its view be
likely to prejudice materially the success of the offering and
distribution of the Notes or dealings in the Notes in the secondary
market.

10.2 The Company may give a termination notice to the Lead Managers
at any time prior to the delivery by the Company of the Global Note to
the common depositary on the Closing Date, if any of the Lead Managers
fails to perform any of its obligations hereunder or comply with any
of the terms hereof which in either case is material in the opinion of
the Company after consultation with its legal counsel.

10.3 Upon the giving of a termination notice under Clause 10.1 or
10.2 and subject to Clause 10.4:

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(a) the Company shall be discharged from performance of its
obligations under Clauses 3. 1 and 7. 1;

(b) the Managers shall be discharged from performance of their
respective obligations hereunder; and

10.4 A discharge pursuant to Clause 10.2 shall not affect the other
obligations of the parties hereto and shall be without prejudice to
accrued liabilities.

11. Survival

The provisions of this Agreement shall continue in full force and
effect notwithstanding the completion of the arrangements set out
herein for the issue of the Notes and regardless of any investigation
by any party hereto.

12. Time

Any date or period specified herein may be postponed or extended by
mutual written agreement among the parties but as regards any date or
period originally fixed or so postponed or extended, time shall be of
the essence.

13. Notices

13.1 All notices and other communications hereunder shall be made
in writing and in English (by letter, telex or fax) and shall be sent
as follows:

(a) if to the Company, to it at:

5605 North MacArthur Boulevard
Suite 400
Irving, Texas 75038

Attention: Bruce N. Huff
Senior Vice President and Chief
Financial Officer

Fax: (214) 753 6926

With a copy
to: Larry E. Cummings
Vice President, Secretary and General Counsel

Fax: (214) 753 6963

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(b) if to RPC, to it at:

56 Green Street
London WlY 3RH

Fax: 0171 491 9081

Attention: David P. Quint
Managing Director

Thames Exchange
10 Queen Street Place
London EC4R 1BL

Telex: 888866
Fax: 0171 929 1520

Attention: Simon Eagles
Equity Capital Markets

13.2 Every notice or other communication sent in accordance with
Clause 13.1 shall be effective as follows:

(a) if sent by letter or fax, upon receipt by the addressee; and

(b) if sent by telex, upon receipt by the sender of the
addressee's answerback at the end of transmission;

provided that any such notice or other communication which would
otherwise take effect after 4.00 p.m. on any particular day shall not
take effect until 10.00 a.m. on the immediately succeeding business
day in the place of the addressee.

14. Governing Law

This Agreement shall be governed by and construed in accordance with
the laws of the State of New York without regard to the conflict of
laws provisions thereof.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorised representatives as of the day and year
first above written.

HARKEN ENERGY CORPORATION