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As filed with the Securities and Exchange Commission on October 4, 1995
Registration No. 33-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
____________________
HARKEN ENERGY CORPORATION
(Exact name of registrant as specified in its charter)
____________________
DELAWARE 95-2841597
(State or other jurisdiction of (I.R.S. employer identification number)
incorporation or organization)
HARKEN ENERGY CORPORATION
5605 NORTH MACARTHUR BLVD., SUITE 400
IRVING, TEXAS 75038
(214) 753-6900
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
________________________________
GREGORY S. PORTER
VICE PRESIDENT - LEGAL
HARKEN ENERGY CORPORATION
5605 NORTH MACARTHUR BLVD., SUITE 400
IRVING, TEXAS 75038
(214) 753-6900
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
________________________________
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the effective date of this Registration Statement.
________________________________
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: [ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [ ] __________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [ ] __________
If delivery of the Prospectus is expected to be made pursuant to Rule
434, please check the following box: [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Proposed Maximum Proposed Maximum
Title of each Class of Amount to be Offering Price Per Aggregate Offering Amount of
Securities to be Registered Registered Unit(1) Price(1) Registration Fee
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $0.01 1,600,000 $1.875 $3,000,000 $1,034
per share
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) based on the average of the high and low sales
prices of the common stock as reported by the American Stock Exchange on
September 28, 1995.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
CROSS REFERENCE SHEET
BETWEEN ITEMS OF FORM S-3 AND THE PROSPECTUS
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<CAPTION>
Item
No. Prospectus Caption or Page
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<S> <C> <C>
1 Forepart of the Registration Statement Facing Page; Cross-Reference Sheet;
and Outside Front Cover Pages of Outside Front Cover Page of Prospectus
Prospectus
2 Inside Front and Outside Back Cover Pages Inside Front Cover Pages of Prospectus
of Prospectus
3 Summary Information, Risk Factors and Outside Front Cover Page of Prospectus;
Ratio of Earnings to Fixed Charges Risk Factors
4 Use of Proceeds Use of Proceeds
5 Determination of Offering Price *
6 Dilution *
7 Selling Security Holders Selling Stockholder
8 Plan of Distribution Plan of Distribution
9 Description of Securities to be *
Registered
10 Interests of Named Experts and Counsel *
11 Material Changes *
12 Incorporation of Certain Information by Inside Front Cover Pages of Prospectus
Reference
13 Disclosure of Commission Position on *
Indemnification for Securities Act
Liabilities
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</TABLE>
* Not Applicable
<PAGE> 3
PROSPECTUS
1,600,000 Shares
HARKEN ENERGY CORPORATION
Common Stock
____________________
The 1,600,000 shares (the "Shares") of common stock, par value $0.01
per share ("Common Stock"), of Harken Energy Corporation, a Delaware
corporation ("Harken" or the "Company"), offered hereby are being offered by
the stockholders of the Company named herein (the "Selling Stockholders").
The Company will not receive any of the proceeds from the sale of the Shares,
but the Company has agreed to bear certain expenses of registration of the
Shares under the federal and state securities laws (currently estimated to be
$25,000), and of any offering and sale hereunder not including certain expenses
such as commissions and discounts of underwriters, dealers or agents. See
"Selling Stockholders" and "Use of Proceeds."
The Common Stock is traded on the American Stock Exchange, under the
symbol "HEC." On October , 1995, the closing sales price of the Common
Stock as reported on the American Stock Exchange was $ per share.
The Shares may be offered and sold from time to time by the Selling
Stockholders directly or through broker-dealers or underwriters who may act
solely as agents, or who may acquire the Shares as principals. The
distribution of the Shares may be effected in one or more transactions that may
take place through the American Stock Exchange or any other national securities
exchange on which the Common Stock is approved for listing in the future,
including block trades or ordinary broker's transactions, or through privately
negotiated transactions, or through an underwritten public offering, or through
a combination of any such methods of sale, at such prices as may be obtainable.
Usual and customary or specially negotiated brokerage fees or commissions may
be paid by the Selling Stockholders in connection with such sales. See "Plan
of Distribution."
To the extent required, the specific shares of Common Stock to be
sold, the purchase price, public offering price, names of any agent, dealer or
underwriter, and any applicable commission or discount with respect to a
particular offering will be set forth in an accompanying Prospectus Supplement.
The aggregate proceeds to the Selling Stockholders from the sale of the Shares
will be the purchase price thereof less the aggregate agents' commissions and
underwriters' discounts, if any, and other expenses of distribution not borne
by the Company.
The Selling Stockholders and any broker-dealers, agents or
underwriters that participate with the Selling Stockholders in the distribution
of any of the Shares may be deemed to be "underwriters" within the meaning of
the Securities Act of 1933, as amended (the "Securities Act"), and any
commission received by them and any profit on the resale of the Shares
purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act. See "Plan of Distribution" for indemnification
arrangements.
PROSPECTIVE INVESTORS SHOULD CONSIDER AND REVIEW THE INFORMATION UNDER
THE CAPTION "RISK FACTORS" BEGINNING ON PAGE 4 PRIOR TO AN INVESTMENT IN THE
SHARES OFFERED HEREBY.
____________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
____________________
The date of this Prospectus is October , 1995.
<PAGE> 4
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company may be inspected and
copied, at prescribed rates, at the public reference facilities of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, Room 1024, as
well as at the regional offices of the Commission at Seven World Trade Center,
13th Floor, New York, New York 10048, and Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60601. Copies of such material
may also be obtained at prescribed rates by writing to the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549.
The Common Stock is listed on the American Stock Exchange. Reports, proxy
statements and other information described above may also be inspected and
copied at the offices of the American Stock Exchange at 86 Trinity Place, New
York, New York 10006.
The Company has filed with the Commission a registration statement on
Form S-3 (the "Registration Statement") under the Securities Act, with respect
to the Shares offered hereby. This Prospectus, which constitutes a part of the
Registration Statement, does not contain all the information set forth in the
Registration Statement and the exhibits thereto. For further information with
respect to the Company and the Common Stock, reference is hereby made to such
Registration Statement and exhibits. Statements contained herein concerning
the provisions of any documents are necessarily summaries of those documents,
and each statement is qualified in its entirety by reference to the copy of the
applicable document filed with the Commission. The Registration Statement and
any amendments thereto, including exhibits filed as a part thereof, are
available for inspection and copying as set forth above.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
Available Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Incorporation of Certain Documents by Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Selling Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY, THE SELLING STOCKHOLDERS OR ANY OTHER PERSON.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH IT RELATES OR
ANY OFFER TO OR SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY
CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents which have been filed with the Commission are
incorporated herein by reference:
(1) The Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1994;
(2) The Company's Quarterly Report on Form 10-Q, for the quarterly
period ended March 31, 1995;
(3) The Company's Quarterly Report on Form 10-Q, for the quarterly
period ended June 30, 1995.
(4) The Company's Proxy Statement for the Annual Meeting of
Stockholders of Harken held on June 16, 1995;
(5) The description of the Common Stock contained in the Company's
Registration Statement on Form 8-A, as amended, including all
amendments and reports filed for the purpose of updating such
description;
(6) The Company's Current Report on Form 8-K dated November 4,
1994, as amended by the Company's Current Report on Form 8-K/A
filed on January 3, 1995;
(7) The Company's Current Report on Form 8-K dated April 27, 1995,
reporting the results on an exploration well in Colombia,
South America;
(8) The Company's Current Report on Form 8-K dated May 16, 1995,
reporting the placement of its 8% Senior Convertible Notes due
May 1998; and
(9) The Company's Current Report on Form 8-K dated June 2, 1995,
reporting the acquisition of Search Exploration, Inc., as
amended by the Company's Current Report on Form 8-K/A filed on
August 3, 1995.
All documents filed by Harken pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering made hereby shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of the filing of such documents. Any statement contained in this
Prospectus, in a supplement to this Prospectus or in a document incorporated or
deemed to be incorporated by reference herein, shall be deemed to be modified
or superseded for purposes of this Prospectus to the extent that a statement
contained herein, or in any subsequently filed supplement to this Prospectus or
in any document that also is or is deemed to be incorporated by reference
herein, modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company will furnish without charge to each person to whom a copy
of this Prospectus has been delivered, upon written or oral request, a copy of
any or all documents incorporated by reference in this Prospectus, other than
exhibits to such documents unless such exhibits are specifically incorporated
by reference in such documents. Written or oral requests for such copies
should be directed to Gregory S. Porter, Harken Energy Corporation, 5605 North
MacArthur Blvd., Suite 400, Irving, Texas 75038 (Telephone: (214) 753-6900).
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THE COMPANY
Harken is engaged in oil and gas exploration, development and
production operations both domestically and internationally through its various
wholly-owned subsidiaries and joint venture investments. Harken's domestic
operations include oil and gas exploration and production operations in the
Aneth Field and Blanding Sub-Basin portions of the Paradox Basin in Utah,
Arizona and New Mexico, in the Western Paradox Basin in Utah, and in Texas and
Louisiana. Harken's international operations include four exclusive Colombian
Association Contracts between Harken's wholly-owned subsidiary, Harken de
Colombia, Ltd., and Empresa Colombiana de Petroleos ("Ecopetrol"), as well as a
production sharing agreement between Harken's wholly-owned subsidiary, Harken
Bahrain Oil Company, and the Bahrain National Oil Company ("Banoco"). Harken's
international operations currently consist solely of exploration activities,
however, management is continuing to pursue international opportunities in all
areas of Harken's operations.
Harken was incorporated in 1973 in the State of California and
reincorporated in 1979 in the State of Delaware. Harken's principal offices
are located at 5605 North MacArthur Blvd., Suite 400, Irving, Texas 75038 and
its telephone number is (214) 753-6900.
RISK FACTORS
Prior to making an investment decision, prospective investors should
consider carefully all of the information set forth in this Prospectus and, in
particular, should evaluate the following risk factors.
LOSSES FROM CONTINUING OPERATIONS
Harken reported losses from continuing operations for the fiscal years
ended December 31, 1993 and 1994 and the six months ended June 30, 1995, in the
amounts of $1,797,000, $8,211,000 and $297,000, respectively. There can be no
assurance that Harken will not continue to report losses.
EFFECT OF SALES OF COMMON STOCK ON MARKET PRICE
As of September 12, 1995, there were 66,696,846 shares of Common Stock
outstanding. Harken has previously registered with the Commission an aggregate
of 3,386,308 shares of Common Stock for resale by certain stockholders of the
Company, in addition to the 1,600,000 shares of Common Stock registered for
resale pursuant to the Registration Statement of which this Prospectus forms a
part. In addition, pursuant to the terms of an Agreement and Plan of Merger
among Harken, Search Exploration, Inc. ("Search") and a wholly-owned subsidiary
of Harken (the "Search Acquisition"), Harken may be required to issue up to
approximately 8.8 million shares of Common Stock, in addition to the
approximately 2.2 million shares of Common Stock that were issued upon the
consummation of the Search Acquisition in May 1995. Of the approximately 8.8
million shares of Common Stock which may be required to be issued in connection
with the Search Acquisition, (i) approximately 730,000 shares of Common Stock
may be issued upon the exercise of certain warrants issued by Harken, and (ii)
up to 8.1 million shares of Common Stock may be issued on or about September
30, 1996, to the holders of record at the effective time of the merger of
certain securities of Search and overriding royalty interests in certain
properties held by Search, based in part upon the increase that may
subsequently be realized in the value of a group of undeveloped leases and
properties of Search. Furthermore, Harken has $15,000,000 in principal amount
of 8% Senior Convertible Notes (the "Notes") outstanding which are presently
convertible by the holders thereof into 10,000,000 shares of Common Stock.
There can be no assurance that the sale of (i) the 1,600,000 shares registered
for resale by the Selling Stockholders pursuant to the Registration Statement,
(ii) the 3,386,308 shares of Common Stock previously registered for resale,
(iii) the shares of Common Stock which may be required to be issued in
connection with the Search Acquisition, or (iv) the shares of Common Stock
which may be issued in connection with the conversion of the Notes into Common
Stock will not have a material adverse effect on the then prevailing market
price of the Common Stock.
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VOLATILITY OF HARKEN COMMON STOCK TRADING PRICE
The daily closing prices of the Common Stock as reported by the
American Stock Exchange has fluctuated significantly over the past 18 months,
ranging from a high of $2 3/4 per share on September 14, 1994, to a low of
$15/16 on April 10, 1995. Management believes that the price fluctuations and
trading activity in the Common Stock during the past 18 months are attributable
to a number of factors, including Harken's international exploration
activities. In the event that Harken's international exploration activities
are unsuccessful, there can be no assurance that such results will not have a
substantial adverse effect on the then prevailing market price of the Common
Stock.
CONTINGENT LIABILITIES OF HARKEN
Harken has certain contingent liabilities that could have a material
adverse affect on its financial condition if Harken were required to satisfy
these liabilities, including the following:
Harken Southwest Corporation ("HSW") owns an interest in the Aneth Gas
Plant. The Aneth Gas Plant facility was in operation for many years prior to
HSW becoming an owner. The operations at the Aneth Gas Plant previously used
open, unlined drip pits for storage of various waste products. The current
plant owners have replaced all of the open ground pits currently being used
with steel tanks. The plant owners are currently in the process of closing the
open ground pits.
Texaco, the plant's operator, received a letter from the Environmental
Protection Agency ("EPA") dated July 21, 1991 and a subsequent letter dated
June 8, 1992, in which the EPA requested certain information in order to
determine if hazardous substances had been released into the environment at the
Aneth Gas Plant. Texaco has advised HSW that certain information was supplied
to the EPA pursuant to this request. Subsequently, core samples in and around
certain pit areas were jointly taken by the EPA and Texaco. The EPA has
responded to the initial sampling of the drip pits, and Texaco is now
completing a Phase II environmental investigation to provide further test
results in response to evaluation procedures required by the EPA related to the
drip pits.
The prior owner of the Aneth Gas Plant facility has agreed to accept
financial responsibility for a portion of this remediation work. Texaco and
the other current plant owners, including HSW, are presently negotiating a
formal agreement with the prior owner to allocate the costs of the remediation
work. At this time, however, it is impossible for HSW to estimate the costs of
the cleanup at the Aneth Gas Plant facility or the amount of indemnification
the prior owner will provide to the present owners, including HSW, for the
costs of the remediation work.
PREFERRED STOCK AUTHORIZED FOR ISSUANCE
Harken has ten million shares of preferred stock available for
issuance. The Board of Directors is authorized to issue such preferred stock
in one or more series and to set the designations, preferences, powers and
relative rights and restrictions thereof without further approval by the
stockholders of the Company. Presently, Harken has three series of preferred
stock authorized, of which only one has any shares currently outstanding. Such
shares have certain preferences over the shares of Common Stock with respect to
the payment of dividends and upon liquidation, dissolution, winding-up and in
certain instances, voting. The Board of Directors of Harken also may authorize
additional series of preferred stock in the future that have similar or
additional preferences over the shares of Common Stock.
RISKS RELATED TO INTERNATIONAL OPERATIONS
Harken presently conducts international operations and anticipates
that it will conduct significant international operations in the future.
Foreign properties, operations or investments may be adversely affected by
local political and economic developments, exchange controls, currency
fluctuations, royalty and tax increases, retroactive tax claims, renegotiation
of contracts with governmental entities, expropriation, import and export
regulations and other foreign laws or policies governing operations of
foreign-based companies, as well as by laws and policies of the
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United States affecting foreign trade, taxation and investment. In addition,
as certain of Harken's operations are governed by foreign laws, in the event of
a dispute, Harken may be subject to the exclusive jurisdiction of foreign
courts or may not be successful in subjecting foreign persons to the
jurisdiction of courts in the United States. Harken may also be hindered or
prevented from enforcing its rights with respect to a governmental
instrumentality because of the doctrine of sovereign immunity. Exploration and
production activities in areas outside the United States are also subject to
the risks inherent in foreign operations, including loss of revenue, property
and equipment as a result of hazards such as expropriation, nationalization,
war, insurrection and other political risks.
Harken anticipates that full development of reserves in the Alcaravan
area of the Llanos Basin and the Bocachico area of the Middle Magdalena Basin
of Colombia may take several years and may require extensive production
facilities which could require significant additional capital expenditures.
The ultimate amount of such expenditures cannot be presently predicted. Harken
anticipates that amounts required to fund international activities, including
those in Colombia, will be funded from existing cash balances, asset sales,
stock issuances, operating cash flows and potentially from industry partners;
however, there can be no assurances that Harken will have adequate funds
available to it to fund its international activities without participation from
industry partners or that industry partners can be obtained to fund such
international activities.
INDUSTRY RISKS
Oil and Gas Price Volatility. The revenues generated by Harken are
highly dependent upon the prices of crude oil and natural gas. Fluctuations in
the energy market make it difficult to estimate future prices of oil and
natural gas. Fluctuations in energy prices are caused by a number of factors,
including regional, domestic and international demand, energy legislation,
federal or state taxes (if any) on sales of crude oil and natural gas,
production guidelines established by the Organization of Petroleum Exporting
Countries, and the relative abundance of supplies of alternative fuel such as
coal. Additionally, changing international economic and political conditions
may have a dramatic impact upon crude oil and natural gas prices. Many of
these factors are beyond the control of Harken.
Business Risks. Harken must continually acquire or explore for and
develop new oil and gas reserves to replace those being depleted by production.
Without successful drilling or acquisition ventures, Harken's oil and gas
assets, properties and revenues derived therefrom will decline over time. To
the extent Harken engages in drilling activities, such activities carry the
risk that no commercially viable oil or gas production will be obtained. The
cost of drilling, completing and operating wells is often uncertain. Moreover,
drilling may be curtailed, delayed or canceled as a result of many factors,
including title problems, weather conditions, shortages of or delays in
delivery of equipment, as well as the financial instability of well operators,
major working interest owners and drilling and well servicing companies. The
availability of a ready market for Harken's oil and gas depends on numerous
factors beyond its control, including the demand for and supply of oil and gas,
the proximity of Harken's natural gas reserves to pipelines, the capacity of
such pipelines, fluctuation in seasonal demand, the effects of inclement
weather, and government regulation. New gas wells may be shut-in for lack of a
market until a gas pipeline or gathering system with available capacity is
extended into the area.
Operating Hazards and Uninsured Risks. The operations of Harken are
subject to the inherent risks normally associated with exploration for and
production of oil and gas, including blowouts, cratering, pollution and fires,
each of which could result in damage to or destruction of oil and gas wells or
production facilities or damage to persons and property. As is common in the
oil and gas industry, Harken is not fully insured against these risks, either
because insurance is not available or because Harken has elected to self-insure
due to high premium costs. The occurrence of a significant event not fully
insured against could have a material adverse effect on Harken's financial
condition.
Environmental Regulation. The activities of Harken are subject to
various Navajo, federal, state, and local laws and regulations covering the
discharge of material into the environment or otherwise relating to protection
of the environment. In particular, Harken's oil and gas exploration,
development, production, its activities in connection with storage and
transportation of liquid hydrocarbons and its use of facilities for treating,
processing, recovering, or otherwise handling hydrocarbons and wastes therefrom
are subject to stringent environmental regulation by
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governmental authorities. In addition to these domestic laws and regulations,
Harken's international operations are subject to the laws, regulations and
governmental approvals of each foreign country in which it conducts activities
including, but not limited to, environmental laws and regulations governing oil
and gas operations. Such domestic and foreign laws and regulations have
increased the costs of planning, designing, drilling, installing, operating and
abandoning Harken's oil and gas wells and other facilities.
Imprecise Nature of Reserve Estimates. Reserve estimates are
imprecise and may be expected to change as additional information becomes
available. Furthermore, estimates of oil and gas reserves, of necessity, are
projections based on engineering data, and there are uncertainties inherent in
the interpretation of such data as well as the projection of future rates of
production and the timing of development expenditures. Reserve engineering is
a subjective process of estimating underground accumulations of oil and gas
that cannot be measured in an exact way, and the accuracy of any reserve
estimate is a function of the quality of available data and of engineering and
geological interpretation and judgment.
Competition. The oil and gas industry is competitive in all its
phases. Competition is particularly intense respecting the acquisition of
desirable producing properties and the sale of oil and natural gas production.
Harken's competitors in oil and gas exploration, development and production,
include major oil companies and numerous independent oil and gas companies, and
individual producers and operators. Many of Harken's competitors possess and
employ financial and personnel resources substantially greater than those which
are available to Harken, and may, therefore, be able to pay greater amounts for
desirable leases and to define, evaluate, bid for and purchase a greater number
of producing prospects than the financial or personnel resources of Harken will
permit.
Extensive Regulation. The production of oil and gas is subject to
extensive Navajo, federal and state laws, rules, orders and regulations
governing a wide variety of matters, including the drilling and spacing of
wells, allowable rates of production, prevention of waste and pollution and
protection of the environment. In addition to these domestic laws and
regulations, Harken's international operations are subject to the laws,
regulations and governmental approvals of each foreign country in which it
conducts activities including, but not limited to, environmental laws and
regulations governing oil and gas operations. Such laws, rules and regulations
are subject to change. Any such change in any law, rule or regulation could
have the effect of increasing the Company's cost of exploration or production
or may limit the Company's revenues by regulating the level of oil and gas
production, either of which could have a material adverse effect on the
financial condition of the Company.
USE OF PROCEEDS
Harken will not receive any part of the proceeds from the sale of
Shares by the Selling Stockholders.
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SELLING STOCKHOLDERS
This Prospectus covers the offer and sale of the Shares by the Selling
Stockholders. Set forth below are the names of each Selling Stockholder, the
nature of any position, office or other material relationship that a Selling
Stockholder has had within the last three years with the Company or any of its
predecessors or affiliates, the number of shares of Common Stock owned by each
Selling Stockholder as of the date of this Prospectus, the number of shares of
Common Stock which may be offered by each Selling Stockholder pursuant to this
Prospectus, and the number of shares of Common Stock and the percentage of the
outstanding shares of Common Stock to be owned by each Selling Stockholder upon
completion of the offering if all of the Shares held by such Selling
Stockholder are sold. Any or all of the Shares listed below may be offered for
sale by the Selling Stockholders from time to time.
<TABLE>
<CAPTION>
Shares Owned Shares Owned Percent of Common
Selling Prior to the Shares Offered After the Stock Owned After
Stockholders Offering Hereby Offering(1) the Offering(1)
------------ ------------- -------------- ------------- -----------------
<S> <C> <C> <C> <C>
Harold E. Vanberg 700,000 700,000 -0- 0.0%
Aeneas Venture 8,061,473(2)(4) 506,321 7,555,152(2)(4) 11.3%(2)
Corporation
Phemus Corporation 321,679(2) 321,679 -0-(2) 0.0%(2)
Harvard Master 468,367(2) 46,800 421,567(2) (2)(3)
Trust
Harvard - Yenching 234,204(2) 25,200 209,004(2) (2)(3)
Institute
</TABLE>
- --------------------
(1) Assumes no other disposition or acquisition of Common Stock and all
Shares included herein are sold.
(2) Michael R. Eisenson, a director of the Company, is an officer and
director of Aeneas Venture Corporation ("Aeneas") and Phemus
Corporation ("Phemus"). In addition, Aeneas, Phemus, Harvard Master
Trust and Harvard - Yenching Institute (collectively, the "Harvard
Group") may be considered to be a group for purposes for Rule 13d-5
promulgated under the Securities Exchange Act of 1934. If all of the
shares of Common Stock offered by the Harvard Group pursuant to this
Prospectus are sold, the Harvard Group will collectively beneficially
own 8,185,723 shares of Common Stock or 12.3% of the outstanding
Common Stock. Mr Eisenson shares voting and investment power over
the shares of Common Stock owned by Aeneas and Phemus with the other
officers and directors of Aeneas and Phemus and may be deemed to have
beneficial ownership of such shares. Mr. Eisenson has no investment
or voting power over the shares owned by Harvard Master Trust and
Harvard - Yenching Institute.
(3) Less than 1%.
(4) Includes 25,000 shares of Common Stock that may be acquired through the
exercise of options exercisable at $5.625 per share, which options were
transferred to Aeneas from Michael R. Eisenson, a director of the
Company, effective March 1, 1991.
8
<PAGE> 11
PLAN OF DISTRIBUTION
The Company will not receive any proceeds from the sale of Common
Stock owned by the Selling Stockholders. It is anticipated that the Selling
Stockholders will offer the Shares in the manner set forth on the cover page of
this Prospectus, from time to time, directly or through broker-dealers or
underwriters who may act solely as agents or may acquire the Shares as
principals, in all cases as designated by the Selling Stockholders. Such
underwriters or broker-dealers acting either as principal or as agent, may
receive compensation in the form of usual and customary or specifically
negotiated underwriting discounts, concessions or commissions from the Selling
Stockholders or the purchasers of the securities offered hereby for whom they
may act as agent.
The net proceeds to the Selling Stockholders from the sale of Common
Stock so offered will be the purchase price of the Common Stock sold less the
aggregate agents' commissions and underwriters' discounts, if any, and other
expenses of issuance and distribution not borne by the Company. The Selling
Stockholders and any dealers or agents that participate in the distribution of
Common Stock may be deemed to be "underwriters" within the meaning of the
Securities Act.
At any time a particular offer of Common Stock is made, to the extent
required, the specific shares of Common Stock to be sold, the purchase price,
public offering price, the names of any such agent, dealer or underwriter and
any applicable commission or discount with respect to a particular offering
will be set forth in an accompanying Prospectus Supplement. Such Prospectus
Supplement may, if necessary, be in the form of a post-effective amendment to
the Registration Statement of which this Prospectus is a part, and will be
filed with the Commission to reflect the disclosure of additional information
with respect to the distribution of such securities.
Pursuant to the terms of a Private Placement Subscription Agreement
between the Company and Harold E. Vanberg, the Company has agreed to file a
"shelf" registration statement pursuant to Rule 415 under the Securities Act
covering the sale of 700,000 shares of Common Stock held by Mr. Vanberg, and to
use diligent efforts to maintain the effectiveness of such registration
statement for the shorter of (i) one year from the date of effectiveness of
such registration statement, or (ii) the date on which all of the shares have
been sold by Mr. Vanberg.
Pursuant to a Stock Purchase Agreement dated October 31, 1986 between
the Company and Aeneas, the members of the Harvard Group have requested that
the Company file a "shelf" registration statement pursuant to Rule 415 under
the Securities Act covering the sale of an aggregate of 900,000 shares of
Common Stock held by the members of the Harvard Group. The Company has agreed
to use diligent efforts to maintain the effectiveness of such registration
statement for the shorter of (i) 180 days from the date of effectiveness of
such registration statement, or (ii) the date on which all of the shares have
been sold by the Harvard Group.
Under the terms of the Private Placement Subscription Agreement and
the Stock Purchase Agreement, the Company has agreed to bear certain expenses
of registration of the Shares under the federal and state securities laws
(currently estimated to be $25,000) and of any offering and sale hereunder not
including certain expenses such as commissions or discounts of underwriters,
dealers or agents attributable to the sale of such Common Stock.
Pursuant to the Private Placement Subscription Agreement and the Stock
Purchase Agreement, the Company has agreed to indemnify the Selling
Stockholders against certain liabilities, including liabilities under the
Securities Act, or to contribute to payments the Selling Stockholders may be
required to make in respect thereof.
To comply with the securities laws of certain jurisdictions, the
securities offered hereby may be offered or sold in such jurisdictions only
through registered or licensed brokers or dealers. In addition, in certain
jurisdictions the securities offered hereby may not be offered or sold unless
they have been registered or qualified for sale in such jurisdictions or an
exemption from registration or qualification is available and is complied with.
The Selling Stockholders and any other person participating in such
distribution will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including, without limitation, Rules
10b-2,
9
<PAGE> 12
10b-6 and 10b-7, which provisions may limit the timing of purchases and sales
by each Selling Stockholder and any other such person. Furthermore, under Rule
10b-6 under the Exchange Act, any person engaged in a distribution of the
Common Stock may not simultaneously engage in market making activities with
respect to such securities for a period of two business days prior to the
commencement of such distribution. All of the foregoing may affect the
marketability of the securities offered hereby.
LEGAL MATTERS
The validity of the Shares will be passed upon for Harken by Gregory
S. Porter, Esq.
EXPERTS
The (i) consolidated financial statements and schedules of the Company
included in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994, and (ii) financial statements of the CHAP Venture as of
December 31, 1993, included in the Company's Current Report on Form 8-K dated
November 4, 1994, as amended by the Company's Current Report on Form 8-K/A
filed on January 3, 1995, each of which are incorporated by reference herein,
have been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their reports with respect thereto, and are incorporated by
reference herein in reliance upon the authority of said firm as experts in
accounting and auditing in giving said reports.
The consolidated financial statements of Search for the year ended
December 31, 1994, included in the Company's Current Report on Form 8-K dated
June 2, 1995, as amended by the Company's Current Report on Form 8-K/A filed on
August 3, 1995, which is incorporated by reference herein, have been audited by
Hein + Associates LLP, independent public accountants, as indicated in their
report with respect thereto, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said reports.
10
<PAGE> 13
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses to be paid by the Company in connection with the offering
described in this Registration Statement are estimated as follows:
<TABLE>
<S> <C>
Commission Registration Fee . . . . $ 1,034.00
AMEX Listing Fee . . . . . . . . . 17,500.00
Printing and Engraving Expenses . . 2,000.00
Accounting Fees and Expenses . . . 3,000.00
Blue Sky Fees and Expenses . . . . 1,000.00
Miscellaneous . . . . . . . . . . . 466.00
-----------
Total . . . . . . . . $ 25,000.00
===========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Under Section 145 of the General Corporation Law of the State of
Delaware ("Delaware Law"), a Delaware corporation may indemnify its directors,
officers, employees and agents against expenses (including attorneys fees),
judgments, fines and settlements in nonderivative suits, actually and
reasonably incurred by them in connection with the defense of any action, suit
or proceeding in which they or any of them were or are made parties or are
threatened to be made parties by reason of their serving or having served in
such capacity. Delaware law, however provides that such person must have acted
in good faith and in a manner they reasonably believed to be in or not opposed
to the best interests of the corporation, and in the case of a criminal action,
such person must have had no reasonable cause to believe his or her conduct was
unlawful. Section 145 further provides that in connection with the defense or
settlement of any action by or in the right of the corporation, a Delaware
corporation may indemnify its directors and officers against expenses actually
and reasonably incurred by them if, in connection with the matters in issue,
they acted in good faith, in a manner they reasonably believed to be in or not
opposed to the best interests of the corporation, except that no
indemnification may be made with respect to any claim, issue or matter as to
which such person has been adjudged liable for negligence or misconduct unless
the Court of Chancery or the court in which such action or suit is brought
approves such indemnification. Section 145 further permits a Delaware
corporation to grant its directors and officers additional rights of
indemnification through bylaw provisions and otherwise, and to purchase
indemnity insurance on behalf of its directors and officers. Indemnification
is mandatory to the extent a claim, issue or matter has been successfully
defended.
Article Ten of the Company's Certificate of Incorporation and Article
VII of the Company's bylaws provide, in general, that the Company shall
indemnify its directors and officers under certain of the circumstances defined
in Section 145. The Company has entered into agreements with each member of
its Board of Directors pursuant to which it will advance to each director costs
of litigation in accordance with the indemnification provisions of the
Company's Certificate of Incorporation and bylaws.
II-1
<PAGE> 14
ITEM 16. EXHIBITS.
<TABLE>
<S> <C>
4.1 - Form of certificate representing shares of Harken common stock, par value $.01 per share (filed as
Exhibit 1 to Harken's Registration Statement on Form 8-A, File No. 0-9207, and incorporated by
reference herein).
4.2 - Certificate of the Designations, Powers, Preferences and Rights of Series C Cumulative Convertible
Preferred Stock, $1.00 par value of Harken Energy Corporation (filed as Exhibit 4.3 to Harken's
Annual Report on Form 10-K for fiscal year ended December 31, 1989, File No. 0-9207, and incorporated
by reference herein).
*5.1 - Opinion of Gregory S. Porter, Esq.
*23.1 - Consent of Arthur Andersen LLP
*23.2 - Consent of Gregory S. Porter, Esq. (included in opinion filed as Exhibit 5.1)
*23.3 - Consent of Hein + Associates LLP
*24.1 - Powers of Attorney.
*99.1 - Private Placement Subscription Agreement between Harken and Harold Vanberg.
99.2 - Stock Purchase Agreement between Aeneas Venture Corporation and Harken, dated October 31, 1986 (filed
as Exhibit 10.28 to Harken's Annual Report on Form 10-K for the fiscal year ended December 31, 1989,
and incorporated by reference herein).
</TABLE>
_____________
* Filed herewith.
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act, each filing of
the Registrant's Annual Report pursuant to Section 13(a) or Section 15(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(b) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the
Registration Statement (or the most recent
post-effective amendment thereto) which,
individually or in the aggregate, represent a
fundamental change in the information set forth in
the Registration Statement. Notwithstanding the
foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of
securities offered would not exceed that which was
registered) and any deviation from the low or high
end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price
represent no more than a 20% change in the maximum
aggregate offering price set forth in the
"Calculation of Registration Fee" table in the
effective Registration Statement;
II-2
<PAGE> 15
(iii) To include any material information with respect to
the plan of distribution not previously disclosed
in the Registration Statement or any material
change to such information in the Registration
Statement;
provided, however, that paragraphs (i) and (ii) above do not apply if the
registration statement is on Form S-3 or Form S-8, and the information required
to be included in a post-effective amendment by those paragraphs is contained
in periodic reports filed by the Registrant pursuant to Section 13 or Section
15(d) of the Exchange Act that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability
under the Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered which remain
unsold at the termination of the offering.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the provisions described under Item 15 above, or
otherwise, the Registrant has been advised that, in the opinion of the
Commission, such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
II-3
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Irving, State of Texas, on October 4, 1995.
HARKEN ENERGY CORPORATION
*
------------------------------------------
Mikel D. Faulkner, Chairman of the Board
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- ------------------------------- ------------------------------------- ---------------
<S> <C> <C>
*
--------------------------- Chairman of the Board and Chief October 4, 1995
Mikel D. Faulkner Executive Officer (Principal
Executive Officer)
*
--------------------------- President and Chief Operating October 4, 1995
Richard H. Schroeder Officer and Director
/s/ Bruce N. Huff October 4, 1995
--------------------------- Senior Vice President and Chief
Bruce N. Huff Financial Officer (Principal
Accounting Officer and Principal
Financial Officer)
*
--------------------------- Director October 4, 1995
Michael M. Ameen, Jr.
*
--------------------------- Director October 4, 1995
Michael R. Eisenson
</TABLE>
II-4
<PAGE> 17
<TABLE>
<S> <C> <C>
* Director October 4, 1995
---------------------------
Edwin C. Kettenbrink, Jr.
* Director October 4, 1995
---------------------------
Talat M. Othman
* Director October 4, 1995
---------------------------
Donald W. Raymond
* Director October 4, 1995
---------------------------
Gary B. Wood
</TABLE>
* Bruce N. Huff, by signing his name hereto, does hereby sign this Registration
Statement on behalf of Harken Energy Corporation and each of the above-named
officers and directors of such Company pursuant to powers of attorney, executed
on behalf of the Company and each officer and director.
/S/ BRUCE N. HUFF
Bruce N. Huff,
Attorney-in-Fact
II-5
<PAGE> 18
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Sequentially
Exhibit No. Exhibit Numbered Page
------------------------------------------------------------ -------------
<S> <C>
4.1 Form of certificate representing shares of Harken common
stock, par value $.01 per share (filed as Exhibit 1 to
Harken's Registration Statement on Form 8-A, File No. 0-
9207, and incorporated by reference herein).
4.2 Certificate of the Designations, Powers, Preferences and
Rights of Series C Cumulative Convertible Preferred Stock,
$1.00 par value of Harken Energy Corporation (filed as
Exhibit 4.3 to Harken's Annual Report on Form 10-K for the
fiscal year ended December 31, 1989, File No. 0-9207, and
incorporated by reference herein).
*5.1 Opinion of Gregory S. Porter, Esq.
*23.1 Consent of Arthur Andersen LLP
*23.2 Consent of Gregory S. Porter, Esq. (included in opinion
filed as Exhibit 5.1)
*23.3 Consent of Hein + Associates LLP
*24.1 Powers of Attorney
*99.1 Private Placement Subscription Agreement between Harken and
Harold Vanberg.
99.2 Stock Purchase Agreement between Aeneas Venture Corporation
and Harken, dated October 31, 1986 (filed as Exhibit 10.28
to Harken's Annual Report on Form 10-K for the fiscal year
ended December 31, 1989, and incorporated by reference
herein).
- -----------------
</TABLE>
* Filed herewith
<PAGE> 1
EXHIBIT 5.1
October 4, 1995
Harken Energy Corporation
5605 N. MacArthur Blvd
Suite 400
Irving, TX 75038
Re: Registration Statement on Form S-3
Gentlemen:
I have acted as counsel to Harken Energy Corporation, a Delaware
corporation (the "Company"), in connection with the registration under the
Securities Act of 1933, as amended (the "Act"), of the offer and sale of an
aggregate of 1,600,000 shares (the "Shares") of common stock, $.01 par value
per share, of the Company ("Common Stock") pursuant to a Registration Statement
on Form S-3 of the Company (the "Registration Statement") to which this opinion
letter is an exhibit.
In reaching the opinion set forth herein, I have reviewed (a) the
Registration Statement, (b) the Certificate of Incorporation of the Company, as
amended, (c) the Bylaws of the Company, (e) records of proceedings of the Board
of Directors and stockholders of the Company and (f) except as set forth below,
such other agreements, certificates of public officials and officers of the
Company, records, documents and matters of law that I deemed relevant.
Based on and subject to the foregoing and subject further to the
assumptions, exceptions and qualifications hereinafter stated, I am of the
opinion that, subject to compliance with federal and state securities laws (as
to which I express no opinion), the Shares were duly authorized and validly
issued and are fully paid and nonassessable.
The opinion expressed above is subject in all respects to the
following assumptions, exceptions and qualifications:
a. I have assumed that (i) all signatures on all documents
examined by me are genuine, (ii) all documents submitted to me
as originals are accurate and complete, (iii) all documents
submitted to me as copies are true and correct copies of the
originals thereof, (iv) all information submitted to me is
accurate and complete as of the date hereof, (v) all persons
executing and delivering documents reviewed by me were
competent to execute and to deliver such documents and (vi)
that all persons signing, in a representative capacity,
documents reviewed by me had authority to sign in such
capacity.
b. I have assumed that there are no agreements, indentures,
mortgages, deeds of trust or instruments that affect the
ability of the Company to issue the Shares.
The opinions expressed above are limited to the laws of the State of
Texas, the General Corporation Law of the State of Delaware and the federal
laws of the United States of America. You should be aware that I am not
admitted to the practice of law in the State of Delaware and my opinion herein
as to the General Corporation Law of the State of Delaware is based solely upon
the unofficial compilation thereof contained in Prentice Hall Information
Services Corporation Statutes.
<PAGE> 2
Harken Energy Corporation
October 4, 1995
Page 2
This opinion letter may be filed as an exhibit to the Registration
Statement. In giving this consent, I do not thereby admit that I come into the
category of persons whose consent is required under Section 7 of the Act or the
rules and regulations of the Securities and Exchange Commission promulgated
thereunder.
I disclaim any duty to advise you regarding any changes in, or to
otherwise communicate with you with respect to, the matters addressed herein.
Very truly yours,
/s/ Gregory S. Porter
Gregory S. Porter, Esq.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement on Form S-3 of our report dated
February 10, 1995, included in Harken Energy Corporation's Form 10-K for the
year ended December 31, 1994, and of our report dated December 22, 1994, on the
financial statements of the CHAP Venture as of and for the year ended December
31, 1993, included in Harken Energy Corporation's Form 8-K/A dated January 3,
1995, and to all references to our Firm included in this registration
statement.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Dallas, Texas
October 3, 1995
<PAGE> 1
EXHIBIT 23.3
INDEPENDENT AUDTOR'S CONSENT
We consent to the incorporation by reference in the Registration Statement on
Form S-3 of Harken Energy Corporation of our report dated February 10, 1995,
accompanying the consolidated financial statements of Search Exploration, Inc.
incorporated by reference in such Registration Statement, and to the use of our
name and the statements with respect to us, as appearing under the heading
"Experts" in the Registration Statement.
/s/ HEIN + ASSOCIATES LLP
HEIN + ASSOCIATES LLP
Octber 2, 1995
Dallas, Texas
<PAGE> 1
Exhibit 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints Mikel D. Faulkner, Bruce N. Huff, Larry E. Cummings and Gregory S.
Porter, or any of them (with full power of each of them to act alone), his true
and lawful attorney-in-fact and agent, with full power of substitution, for him
and on his behalf and in his name, place and stead, in any and all capacities,
to sign, execute and file a Registration Statement on Form S-3 under the
Securities Act of 1933, as amended, and any or all amendments (including
without limitation, post-effective amendments and any amendment or amendments
increasing the amount of securities for which registration is being sought),
with all exhibits and any and all documents required to be filed with respect
thereto, with the Securities and Exchange Commission and/or any regulatory
authority relating to the registration of 1,600,000 shares of Common Stock,
$0.01 par value, of Harken Energy Corporation, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises in order to effectuate the same, as fully and to all
intents and purposes as he himself might or could do of personally present,
hereby ratifying and confirming all that the said attorneys-in-fact and agents,
or any of them, or their substitute or substitutes, may lawfully do or cause to
be done.
IN WITNESS WHEREOF, this Power of Attorney has been signed by the following
persons in the capacities indicated on the 28th day of September, 1995.
<TABLE>
<CAPTION>
NAME CAPACITIES
<S> <C>
/s/ Mikel D. Faulkner Chairman of the Board, Director and
- ---------------------------------- Chief Executive Officer
Mikel D. Faulkner (Principal Executive Officer)
/s/ Bruce N. Huff Senior Vice President and
- ---------------------------------- Chief Financial Officer
Bruce N. Huff (Principal Financial and Accounting Officer)
/s/ Richard H. Schroeder President, Chief Operating Officer
- ---------------------------------- and Director
Richard H. Schroeder
</TABLE>
<PAGE> 2
POWER OF ATTORNEY
September 28, 1995
Page 2
<TABLE>
<S> <C>
/s/ Michael M. Ameen, Jr. Director
- ----------------------------------
Michael M. Ameen, Jr.
/s/ Michael R. Eisenson Director
- ----------------------------------
Michael R. Eisenson
/s/ Talat M. Othman Director
- ----------------------------------
Talat M. Othman
/s/ Donald W. Raymond Director
- ----------------------------------
Donald W. Raymond
/s/ Edwin C. Kettenbrink, Jr. Director
- ----------------------------------
Edwin C. Kettenbrink, Jr.
/s/ Gary B. Wood Director
- ----------------------------------
Gary B. Wood
</TABLE>
<PAGE> 1
A PROSPECTIVE SUBSCRIBER SHOULD CONSIDER AND REVIEW THE INFORMATION UNDER THE
CAPTION "RISK FACTORS" BEGINNING ON PAGE 4 OF EXHIBIT "A" ATTACHED AND
INCORPORATED HEREIN BY REFERENCE IN CONNECTION WITH HIS DECISION CONCERNING THE
SUBSCRIPTION OF SECURITIES DESCRIBED HEREIN.
PRIVATE PLACEMENT
SUBSCRIPTION AGREEMENT
THIS PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT (the "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").
WITNESSETH:
WHEREAS, the Company and the Buyer are executing and delivering this
Agreement in reliance upon one or more exemptions from securities registration,
including, but not limited to, the exemptions afforded by Rule 506 under
Regulation D ("Regulation D") as promulgated by the United States Securities
and Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "1933 Act") and Rule 504 of Regulation D; and
WHEREAS, the Buyer wishes to subscribe for and purchase shares of
Common Stock, $.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. SUBSCRIPTION PRICE. The subscription price (the
"Subscription Price") per share of the Common Stock shall be based upon the
average closing market price (the "Average Price") for the Common Stock as
listed on the American Stock Exchange for the five (5) trading
<PAGE> 2
Private Placement Subscription Agreement
August 15, 1995
Page 2
days immediately prior to August 4, 1995. The Subscription Price per share
shall be determined as the Average Price less a twenty five percent (25%)
discount.
c. FORM OF PAYMENT. The Buyer shall pay the Subscription
Price for the Shares by delivering good funds in United States Dollars to the
Company's bank account identified in item l,d below. Promptly following payment
by the Buyer to the Company of the Subscription Price for the Shares, the
Company shall deliver a certificate for the Shares to the Buyer.
d. METHOD OF PAYMENT. Payment of the purchase price for
the Shares shall be made by wire transfer of funds to:
Company: Harken Energy Corporation
Bank: First Interstate Bank, Houston
Account No.: 400-02-2358-6
ABA No.: 113001064
Telephone No.: 1-800-365-5850
Not later than 4:00 p.m., Dallas, Texas time, on the date which is three
business days after the date on which the Company shall have accepted this
Agreement and returned a signed counterpart of this Agreement to the Buyer, the
Buyer shall deposit with the Company's bank 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 his own account, not as
nominee or agent, 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 Regulation D by reason of Rule 501(a)(5) or (6);
c. The Buyer has substantial experience in evaluating and
investing in private placement investments of Securities in companies similar
to the Company or has engaged his own advisors for advice and counsel
concerning Buyer's purchase of the Shares, so that he is capable of evaluating
the merits and risks of his investment in the Company and has the capability to
protect his own interests.
d. All subsequent offers and sales of the Shares by the Buyer
shall be made
<PAGE> 3
Private Placement Subscription Agreement
August 15, 1995
Page 3
pursuant to registration of the Shares under the 1933 Act or pursuant to a
valid exemption from registration;
e. The Buyer understands that the Shares are being
offered and sold to him 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 representation, 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:
f. The Buyer and/or his advisors have been furnished
with all materials relating to the business, management, 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 his advisors have
been afforded the opportunity to ask questions of the officers 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, (2) quarterly Reports on Form 10-Q
for the quarters ended March 31, June 30, and September 30, 1994, March 31
and June 30, 1995, (3) Proxy Statement dated April 26, 1995 for the Company's
1995 Annual Meeting and (4) Current Reports on Form 8-K, dated November 4, 1994
as amended on January 3, 1995, and dated April 27, 1995, May 16, 1995, and June
2, 1995, amended on August 3 , 1995, in each case as filed with the Commission.
The Buyer understands that its investment in the Shares involves a high degree
of risk and Buyer is relying solely upon its own knowledge and experience in
making its decision to purchase the Shares and in this regard has received and
read a document entitled "Harken Energy Corporation Supplemental Information"
dated August 14, 1995, which is attached hereto on Exhibit "A";
g. 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
h. 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.
i Buyer acknowledges that the Shares must be held
indefinitely unless subsequently registered under the 1933 Act or unless an
exemption from such registration is available. It is aware of the provisions of
Rule 144 promulgated under the 1933 Act which permit limited resale of shares
purchased in a private placement subject to the satisfaction of certain
<PAGE> 4
Private Placement Subscription Agreement
August 15, 1995
Page 4
conditions, including, among other, things, the existence of a public market
for the shares, the availability of certain current public information about
the Company, the resale occurring not less than two years after a party has
purchased and paid for the security to be sold, the sale being effected through
a "broker's transaction" or in transactions directly with a "market maker" and
the number of shares being sold during any three-month period not exceeding
specified limitations.
3. COMPANY REPRESENTATIONS.
The Company represents and warrants to the Buyer that:
a. ORGANIZATION AND GOOD STANDING. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and is qualified to do business in the State of
Texas. The Company has full power and authority to enter into this Agreement
and consummate the transactions contemplated by this Agreement. The execution
and delivery of this Agreement by the Company and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Company, and this Agreement is a valid and
binding obligation of the Company enforceable in accordance with its terms.
b. FINANCIAL CONDITION. That since the June 30, 1995
10-Q, there has been no material adverse change in the financial condition of
the Company.
c. 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 nonaccessible 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.
d. SUBSCRIPTION AGREEMENT. This Agreement, when accepted
by the Company, shall have been duly and validly authorized , executed and
delivered on behalf of the Company and shall be 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 1.7 the enforcement of creditors' rights generally.
e. 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,
<PAGE> 5
Private Placement Subscription Agreement
August 15, 1995
Page 5
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.
f. 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 to the
Buyer as contemplated by this Agreement other than the filing of a listing
application covering the Shares with the American Stock Exchange, Inc.
4. CERTAIN COVENANTS AND ACKNOWLEDGEMENTS.
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 procedures set forth in Section 5 of this Agreement), and may not
be transferred unless (A) the Shares are subsequently registered under the 1933
Act 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 a valid 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 Commission thereunder; and (3) neither the
Company or any other person is under any obligation to register the Shares
(other than pursuant to the registration procedure referred to in Section 5 of
this Agreement) under the 1933 Act or any state Securities regulations 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
counsel acceptable to the Company that registration is not required
under said Act.
c. FORM D. The Company agrees to file a Form D with
respect to the Shares as required under Regulation D.
<PAGE> 6
Private Placement Subscription Agreement
August 15, 1995
Page 6
5. REGISTRATION PROCEDURES.
a. Within 60 days from the date of Closing Date (as
defined in Section 7) the Company shall prepare and file or cause to be filed
with the Securities and Exchange Commission ("Commission") a registration
statement (the "Registration Statement") with respect to all of the Shares
(such Shares being registered are referred to as "Registrable Shares"). The
Company shall thereafter use its best efforts in attempting to cause the
Registration Statement to be declared effective by the Commission and shall
thereafter use diligence to maintain the effectiveness of the Registration
Statement for the shorter of (i) one year from the date of effectiveness; or
(ii) the date on which all of the Registerable Shares have been sold by Buyer.
b. Following effectiveness, the Company shall furnish to
each Buyer a prospectus as well as such other documents, in connection with his
sale of the Shares, as the Buyer may reasonably request and the Company may
lawfully deliver.
c. The Company shall use diligent efforts to (i)
register and qualify the Registrable Shares covered by the Registration
Statement under such other Securities or blue sky laws of such jurisdictions as
the Buyer may 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 when the Registration Statement is
likewise maintained effective, (iv) take all other actions reasonably necessary
or advisable to qualify the Registerable Shares for sale in such jurisdictions;
provided however, that the Company shall not be required in connection
therewith or as a condition thereto (I) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 5(c), (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 bylaws, 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;
d. The Company shall, following effectiveness of the
Registration Statement, as promptly as practicable after becoming aware of such
event, notify the Buyer 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 Buyer or as Buyer may reasonably request;
<PAGE> 7
Private Placement Subscription Agreement
August 15, 1995
Page 7
e. Following effectiveness of the Registration
Statement, the Company, as promptly as practicable after becoming aware of such
event, will notify the Buyer of the issuance by the Commission of any stop
order or other suspension of effectiveness of the Registration Statement at the
earliest possible time;
f. Following effectiveness the Company will use
diligence either to (i) cause all the Registrable Shares 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 Shares is then
permitted under the rules of such exchange or (ii) secure designation of all
the Registerable Shares 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 llAa2-1 of the
Commission under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the quotation of the Registerable Shares 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 Registerable 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 Registerable Securities;
g. Provide a transfer agent and registrar, which may be
a single entity, for the Shares not later than the effective date of the
Registration Statement;
h. Take all other reasonable actions necessary to
expedite and facilitate disposition by the Buyer of the Registerable Shares
pursuant to the Registration Statement;
i. In the event that the Company shall have failed to
prepare and file the Registration Statement with the Commission within the time
period set forth under Section 5(a) above, then the Buyer may engage
independent legal counsel to prepare and file a registration statement covering
the Shares and the Company shall bear the reasonable costs and expenses of such
independent counsel in connection therewith.
j. It shall be a condition precedent to the obligations
of the Company to take any action pursuant to this Section 5 that the Buyer
shall furnish to the Company such information regarding itself, the Shares held
by it and the intended method of disposition of the Registerable Shares held by
it as shall be reasonably required to the effect the registration of the Shares
and shall execute such documents in connection with such registration as the
Company may reasonably request.
<PAGE> 8
Private Placement Subscription Agreement
August 15, 1995
Page 8
k. The Buyer agrees to cooperate with the Company in any
manner reasonably requested by the Company in connection with the preparation
and filing of the Registration Statement hereunder unless such Buyer shall
elect in writing to the Company to exclude all of such Buyer's Shares from the
Registration Statement;
l. The Buyer agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind described in Section
5(d) or 5(e), Buyer will immediately discontinue disposition of Registerable
Shares pursuant to the Registration Statement covering such Registrable Shares
until such Buyer's receipt of the copies of the supplemented or amended
prospectus and, if so directed by the Company, 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 Buyer's possession of the prospectus
covering such Shares current at the time of receipt of such notice; and
m. All expenses, including fees of investment bankers
engaged by the Company, incurred in connection with registrations, filings or
qualifications pursuant to this Section 5, including, without limitation, all
registration, listing and qualification fees, printers and accounting fees and
the fees and disbursements of counsel to the Company, shall be borne by the
Company, including in the event of the applicability of Section 5(i) the costs
of Buyer's independent legal counsel, except for any costs, fees or expenses
related to Buyers sale of the Shares including but not limited to any brokerage
commissions and underwriting discounts and commissions.
n. To the extent permitted by law, the Company will
indemnify and hold harmless each Buyer who holds such Registerable Shares, the
directors, if any, of such Buyer, the officers, if any, of such Buyer, each
person, if any, who controls any Buyer within the meaning of the Securities
Act or the Exchange Act, any underwriter (as defined in the 1933 Act) for the
Buyer, 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 1933 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 1933 Act, the 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
there 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 Commission) or the omission or
alleged omission to state therein any material fact necessary to
<PAGE> 9
Private Placement Subscription Agreement
August 15, 1995
Page 9
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 1933 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
5(p) with respect to the number of local counsel, the Company shall reimburse
the Buyer 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 5(n) (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; (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; 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 reasonably 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 Shares by
the Buyers.
o. In connection with any Registration Statement in
which Buyer is participating, such Buyer agrees to indemnify and hold harmless,
to the same extent and in the same manner set forth in Section 5(n), 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 1933 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 1933 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 1933 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 Buyer expressly for use in
connection with such Registration Statement; and such Buyer 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 5(o) shall not apply to amounts
paid in settlement of any Claim if such settlement is effected without the
prior written consent of such Buyer, which consent shall not be
<PAGE> 10
Private Placement Subscription Agreement
August 15, 1995
Page 10
unreasonably withheld; provided, further, however, that the Buyer shall be
liable under this Section 5(o) for only that amount of a Claim as does not
exceed the net proceeds to such Buyer as a result of the sale of Registrable
Shares pursuant to such Registration Statement. Such investigation made by or
on behalf of such Indemnified Party and shall survive the transfer of the
Registrable Shares by the Buyers. Notwithstanding anything to the contrary
contained herein the indemnification agreement contained in this Section 5(o)
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.
p. Promptly after receipt by an Indemnified Person or
Indemnified Party under this Section 5(n) and 5(o) of notice of the
commencement of any action (including any governmental action), such
Indemnified Person or Indemnified Party shall, if a Claim in respect thereof is
made against any indemnifying party under this Section 5, 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 be 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 Buyer(s); such legal
counsel shall be selected by the Buyer(s) 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 5, except to the
extent that the indemnifying party is prejudiced in its ability to defend such
action. The indemnification required by this Section 5 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.
<PAGE> 11
Private Placement Subscription Agreement
August 15, 1995
Page 11
6. TRANSFER AGENT INSTRUCTIONS.
Promptly following the delivery by the Buyer of the aggregate
subscription price for the Shares in accordance with Section I(c) hereof, the
Company's transfer agent will be instructed by the Company to issue one or more
certificates representing in total the Shares, bearing the restrictive legend
specified in Section 4(b) of this Agreement, registered in the name of the
Buyer or his nominee and in such denominations as shall be specified in writing
by the Buyer prior to the Closing Date. The Company warrants that no
instruction other than such instructions referred to in this Section 6 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 reasonably satisfactory in form, scope and substance to the Company
that registration of a resale by the Buyer of any of the Shares in accordance
with Section 4(a) is not required under the 1933 Act, the Company shall permit
the transfer agent to issue one or more share certificates in such name and in
such denominations as specified by the Buyer.
7. CLOSING DATE.
The effective date and time of the issuance and sale of the Shares
(the "Closing Date") shall be 9:00 a.m. , Dallas time, on the first business
day following the date on which the Buyer has paid the aggregate subscription
price for the Shares in accordance with Section 1(c) hereof, to the Company and
the Company shall have delivered the Shares to the Buyer in accordance with
Section 1(d) hereof
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 in its sole and absolute discretion
by the Company of this Subscription Agreement from the Buyer for the Shares as
evidenced solely by the execution and delivery to Buyer of this Agreement by
the Company;
b. Timely delivery by the Buyer to the Company of good funds as
payment in full of an amount equal to the aggregate subscription price for the
Shares in accordance with Section 1(d) hereof, and
c. The accuracy on the Closing Date of the representations and
warranties of the Buyer
<PAGE> 12
Private Placement Subscription Agreement
August 15, 1995
Page 12
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 Registerable Shares is conditioned upon:
a. Delivery by the Company to the Buyer of this Agreement duly
executed by the Company in acceptance thereof;
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 from the Company, in the form as set forth in Annex I attached
hereto.
10. GOVERNING LAW; MISCELLANEOUS. This Agreement shall be governed
by and interpreted in accordance with the laws of the State of Texas. 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 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 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 (5) 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 in accordance
with this provision.
11. NO OFFER TO SELL. This Agreement shall not be construed nor
interpreted as any offer by the Company to sell the Shares. The Company shall
have no obligation to accept this Subscription Agreement if offered by the
Buyer and may in the Company's sole discretion elect to reject this
Subscription Agreement. The Company shall have no obligation nor liability to
the Buyer nor any other party should the Company in its sole and absolute
discretion not accept this Subscription Agreement.
<PAGE> 13
Private Placement Subscription Agreement
August 15, 1995
Page 13
12. ENTIRE UNDERSTANDING. This Agreement (including the
attachments hereto) constitutes the entire understanding of the parties hereto
with respect to the subject matter hereof and supersedes any and all prior
agreements, whether written or oral. This Agreement may be amended only in a
written document duly executed by both parties hereto.
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: 700,000
PRICE PER SHARE: $1.125
AGGREGATE SUBSCRIPTION PRICE: $787,500
NAME OF BUYER: Harold E. Vanberg
SIGNATURE: /s/ HAROLD E. VANBERG
Title: HAROLD E. VANBERG
Date: August 19, 1995
Address: 7425 Axminster Ct.
Dallas, TX 75214
IRS TAXPAYER NO.: ###-##-####
<PAGE> 14
Private Placement Subscription Agreement
August 15, 1995
Page 14
This Agreement has been accepted by the Company as of the date
set forth below (the "Acceptance Date").
HARKEN ENERGY CORPORATION
By: /s/ BRUCE N. HUFF
Title: Sr. Vice President
Date: August 21, 1995
- ---------------------------------
(1) The Average Price as defined in Section 1(b) was $1.50.
