Document:

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                                                                    EXHIBIT 10.5

                         STRATEGIC ALLIANCE AGREEMENT

     This Strategic Alliance Agreement (this "Agreement") is entered into this
                                              ---------
16th day of February, 2000, by and between IMS Health Incorporated, a Delaware
corporation ("IMS"), and Allscripts, Inc., a Delaware corporation
              ---
("Allscripts").
  ----------

     WHEREAS, IMS is engaged in, among other things, the business of providing
information solutions to the pharmaceutical and healthcare industries;

     WHEREAS, Allscripts is engaged in, among other things, the business of
providing physicians with Internet and client/server medical management
solutions designed to improve the quality and cost effectiveness of
pharmaceutical healthcare;

     WHEREAS, as soon as practicable after the date hereof, IMS and Allscripts
intend to organize a limited liability company pursuant to the laws of the State
of Delaware (such entity being referred to herein as "JV") and to enter into a
                                                      --
limited liability company agreement with respect to the operation of JV;

     WHEREAS, on the date hereof, IMS and Allscripts are entering into a
Subscription Agreement pursuant to which IMS will purchase shares of common
stock, par value $0.01 per share, of Allscripts for an aggregate purchase price
of $10,000,000;

     WHEREAS, the parties to this Agreement desire to enter into a strategic
alliance pursuant to the terms and conditions set forth in this Agreement; and

     WHEREAS, certain capitalized terms used herein shall have the meanings
ascribed to such terms in Annex A hereto.
                          -------

     NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this Agreement, the parties hereto agree as follows:

                                   ARTICLE I

                              Service Commitments

Section 1.01  Formation of JV; Development of Business Plan.
              ---------------------------------------------

  (a)  As soon as practicable after the date hereof, IMS and Allscripts agree to
       cooperate in order to organize JV. IMS and Allscripts shall (i) each
       receive a 50% membership interest in JV and (ii) jointly manage JV. Upon
       the formation of JV, IMS and Allscripts shall amend and restate this
       Agreement in order to provide that JV shall become a party to this
       Agreement.

  (b)  All rights, obligations and duties of JV contained herein shall become
       effective and binding on JV upon the execution of an amendment and
       restatement of this
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       Agreement pursuant to which JV becomes a party hereto and bound by the
       terms and provisions hereof.

  (c)  IMS and Allscripts agree to use their respective reasonable best efforts
       to agree in writing upon a business plan (the "Business Plan") for JV
                                                      -------------
       within 90 days of the date hereof. The Business Plan shall set forth: (i)
       the business objectives of JV; (ii) the financial plan and operating
       budget of JV for calendar year 2000 and financial projections for
       calendar years 2001 and 2002; (iii) the manner in which revenues derived
       from the sale, license or other distribution of data products jointly
       developed by IMS and Allscripts shall be shared among IMS, Allscripts and
       JV; and (iv) such other matters as IMS and Allscripts shall mutually
       agree upon. IMS and Allscripts acknowledge and agree that it is their
       intent that the Business Plan shall also provide that: (i) JV shall
       derive revenues from the sale, license or other distribution of any
       product developed by JV; (ii) IMS and Allscripts shall mutually agree
       upon which new products JV will design, develop, implement and market;
       and (iii) if, subsequent to December 31, 2001, JV and/or IMS derives
       revenues from the sale, license or other distribution of any product
       which incorporates substantial Allscripts data or technology, IMS and
       Allscripts shall agree on an appropriate sharing of revenues derived from
       such products.

Section 1.02  Technology, Research & Development.
              ----------------------------------

  (a)  Related Goals.  The parties agree to cooperate with each other: (i) to
       -------------
       facilitate the commercialization of the information assets generated by
       the TouchScript Service; (ii) to leverage the TouchScript Service as an
       enabling technology for promotion, research and interactive communication
       with physicians; and (iii) to develop next generation products using the
       TouchScript Service platform for use by pharmaceutical companies,
       insurance companies and other payors, and healthcare providers, including
       physicians (together, the "Tech/R&D Goals"). Such next generation
                                  --------------
       products may include, but are not limited to, potential next generation
       products that relate to the following: (1) daily data and longitudinal
       prescription data; (2) diagnosis to prescription "click" data; (3)
       physician prescribing feedback and benchmark data; (4) rapid disease and
       related therapy monitoring; (5) physician research data; (6) patient
       compliance program enrollment; (7) sponsor programs; (8) prescription
       sample request and fulfillment; and (9) e-Commerce. It is understood that
       "e.Detailing" shall not be within the scope of this Agreement.

  (b)  Commitments of Resources.  (i) In seeking to achieve the Tech/R&D Goals,
       ------------------------
       Allscripts hereby agrees to provide the resources, among other things,
       (1) to develop new TouchScript Service application software; (2) to
       ensure data is centrally stored at a physical location; (3) to ensure the
       secure transmission of data (VPN) to IMS on a nightly (or potentially on
       a transaction-by-transaction) basis; (4) to manage reference files used
       on TouchScript devices; (5) to modify databases as necessary by
       applications; (6) to perform ongoing product

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       engineering; (7) to incorporate changes to the software used on the
       TouchScript Service to include the data fields and design specifications
       mutually agreed to by Allscripts and IMS to generate source data for new
       products and services; and (8) to collaborate with IMS in developing
       interfaces between the Allscripts I/T systems and the IMS I/T systems to
       permit the transmission of data from Allscripts to IMS.

       (ii) In seeking to achieve the Tech/R&D Goals, IMS hereby agrees to
       provide the resources, among other things, (1) to collect the User Data
       from a central location on a nightly (or potentially on a transaction-by-
       transaction) basis; (2) to ensure the secure receipt of the User Data
       (VPN); (3) to standardize, scrub and edit the User Data to enable its use
       in a data-based product; (4) to store the User Data; (5) to merge the
       User Data with reference and client data; (6) to utilize statistical
       analysis to project the data (if the parties deem it reasonably
       necessary); (7) to provide input and advice to Allscripts relating to
       data fields and the design specifications that would generate source data
       for new information products and services in connection with Allscripts's
       development of TouchScript Service applications software; (8) to provide
       technical input and resources to Allscripts in connection with product
       engineering; and (9) to collaborate with Allscripts in developing
       interfaces between the Allscripts I/T systems and the IMS I/T systems
       (including IMS and Erisco) to permit the transmission of data from
       Allscripts to IMS.

  (c)  Dedicated Employees. In seeking to achieve the Tech/R&D Goals, Allscripts
       -------------------
       and IMS shall mutually agree upon the number of full-time equivalent
       employees per year to be dedicated by each of Allscripts and IMS to the
       Tech/R&D efforts.

Section 1.03  Sales and Marketing.
              -------------------

 (a)  Related Goals.  The parties agree to cooperate with each other (i) to
      -------------
      expand market opportunities resulting in new revenue for Allscripts and
      IMS and (ii) to accelerate the market penetration rate of Allscripts and
      its existing TouchScript Service product offerings (together, the "Sales
                                                                         -----
      and Marketing Goals").
      -------------------
 (b)  Contributions.  In seeking to achieve the Sales and Marketing Goals, each
      -------------
      of Allscripts and IMS agrees to cooperate with the other in the sales and
      marketing of existing and future TouchScript Service product offerings.
      Allscripts's primary marketing target will be physicians; and IMS's
      primary marketing target will be pharmaceutical and biotechnology
      companies. In marketing to their respective target constituencies, each of
      Allscripts and IMS agrees to commit a dedicated sales force (as further
      described in subsection (c) below) and conduct sales presentations
      (including joint presentations) in furtherance of the Sales and Marketing
      Goals. In addition to the foregoing, and in furtherance of the Sales and
      Marketing Goals, Allscripts agrees, among other things: (1) to create end-
      deliverables; (2) to deliver end results to Users; and (3) to process
      orders (web-

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      enabled); and IMS agrees to provide to JV and Allscripts profile
      information for high prescribing physicians.

 (c)  Dedicated Employees.  In seeking to achieve the Sales and Marketing Goals,
      -------------------
      Allscripts and IMS shall mutually agree upon the number of full-time
      equivalent employees per year to be dedicated by each of Allscripts and
      IMS to the Sales and Marketing efforts.

Section 1.04  Support Services.
              ----------------

 (a)  Related Goals.  The parties agree to cooperate with each other to support
      -------------
      the efforts of each other in achieving the Tech/R&D Goals and the Sales
      and Marketing Goals in respect of both existing and next generation
      product offerings (together, the "Support Goals").
                                        -------------
 (b)  Commitments of Resources. (i) In seeking to achieve the Support Goals,
      ------------------------
      Allscripts hereby agrees to provide the resources, among other things, (1)
      to manage TouchScript Service inventories; (2) to provide help desk
      support for TouchScript Service applications and hardware; (3) to
      establish a joint management panel of physicians with IMS for recruitment,
      obtaining data rights and reporting; (4) to provide 24-hour/7-day support
      of data collection from TouchScript users and transmission of that data
      from the users; and (5) to provide upgrades and enhancements to the
      TouchScript Service as necessary in order to maintain Allscripts as a
      Leading Provider.

      (ii) In seeking to achieve the Support Goals, IMS hereby agrees to provide
      the resources, among other things, (1) to support and facilitate the
      transmission to, and receipt by, pharmaceutical companies of any User Data
      customized by IMS; (2) to provide support to ensure network interfacing
      and data exchange between Allscripts and IMS; and (3) to establish a joint
      management panel of physicians with Allscripts for recruitment, obtaining
      data rights and reporting.

 (c)  Dedicated Employees.   In seeking to achieve the Support Goals, Allscripts
      -------------------
      and IMS shall mutually agree upon the number of full-time equivalent
      employees per year to be dedicated by each of Allscripts and IMS to the
      support efforts.

Section 1.05  Access to Doctors. Each of the parties agrees to commit all
              -----------------

resources and efforts reasonably necessary to design, develop, implement, market
and support new technologies to facilitate access to Users by IMS including
enabling interactive communications with physicians.  Such interactive
communications are designed to facilitate, among other things, research
projects, on behalf of pharmaceutical and biotechnology companies, promotions,
on behalf of Sponsoring Entities, and providing data and other information to
such Users.

Section 1.06  Licenses of User Data.
              ---------------------

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 (a)  Allscripts hereby grants to JV a perpetual, worldwide, TRANSFERABLE,
      EXCLUSIVE and sub-licensable license to use and license any User Data
      generated during the term of this Agreement for the purpose of the (i)
      granting of a license pursuant to subsection (b) of this Section 1.06 and
      (ii) development of  products utilizing the User Data as agreed between
      Allscripts and IMS; provided, that Allscripts shall retain the rights to
                         --------
      use the User Data for its internal administrative purposes and for
      incidental purposes in connection with its sales and marketing efforts.
      Without limiting the generality of the foregoing, Allscripts agrees that
      during the term of this Agreement Allscripts shall not sell, license or
      provide the User Data to any party other than JV.  The license granted to
      JV pursuant to this Section 1.06(a) shall include the right to sell,
      license, create derivative works and sub-license the User Data and such
      works to IMS; provided, however, that the parties acknowledge that JV's
                    --------  -------
      ability to sell, license or provide any individual patient data to IMS may
      be limited by applicable laws.

  (b) JV hereby grants to IMS a perpetual, worldwide, TRANSFERABLE, EXCLUSIVE
      sub-license to use any User Data generated during the term of this
      Agreement for any business purpose. Without limiting the generality of the
      foregoing, JV agrees that during the term of this Agreement (i) JV shall
      not sell, license or provide the User Data to any party other than IMS
      except in accordance with the terms of the Business Plan and (ii) (as
      against IMS) JV's sole right to the User Data shall be to develop products
      as mutually agreed between Allscripts and IMS in the Business Plan. The
      license granted to IMS in this Section 1.06(b) shall include the right to
      sell, license, create derivative works and sub-license the User Data and
      such works to third parties; provided, however, that the parties
                                   --------  -------
      acknowledge that IMS's ability to sell, license or provide any individual
      patient data to third parties may be limited by applicable laws.

 (c)  Notwithstanding anything to the contrary contained in subsections (a) and
      (b) of this Section 1.06, nothing herein shall impair the rights of the
      sources, related payor or associated pharmacy benefit manager of User Data
      with respect to the portion of the User Data attributable to them.

 (d)  Subject to Section 4.01, Allscripts acknowledges and agrees that nothing
      herein shall in any manner limit or restrict IMS from acquiring and/or
      commercializing any data of any type (including data of a similar
      character to the User Data) from any other third party or source.

 (e)  The parties hereto shall collaborate in the design and development of
      processes in order to provide for the collection, storage and transmission
      on a daily basis of the User Data for such day from Allscripts to JV and
      from JV to IMS.

Section 1.07  Working Capital.  The parties will evaluate and discuss the
              ---------------

working capital needs of JV prior to commencement of any activities by JV.  If
so agreed upon by the parties, IMS shall enter into a working capital facility
with JV on terms and

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conditions to be mutually agreed upon by the parties; provided, that in no event
                                                      --------
shall IMS's commitment pursuant to such facility exceed $10,000,000.

                                  ARTICLE II

                            Physician Sponsorships

Section 2.01  General.
------------  -------
 (a) IMS agrees to use its reasonable best efforts in order to solicit
     manufacturers and distributors of pharmaceutical products to enter into
     Sponsorship Agreements upon terms and conditions mutually agreed upon by
     IMS and the applicable pharmaceutical or drug company and reasonably
     acceptable to Allscripts.

 (b) Allscripts agrees to provide the Service to Sponsored Physicians, at an
     agreed upon cost to such Sponsored Physicians, in the manner and for the
     period specified in the applicable Sponsorship Agreement.

 (c) Upon termination of the period during which a Sponsored Physician is to
     receive the Service pursuant to the applicable Sponsorship Agreement,
     Allscripts shall offer such physicians the opportunity to subscribe to the
     Service on the same terms as Allscripts offers the Service to physicians
     other than Sponsored Physicians.

Section 2.02  Reports and Payments for Physician Sponsorships.
------------  -----------------------------------------------
 (a) On a quarterly basis, IMS shall provide JV and Allscripts with a report
     that sets forth the terms of each Sponsorship Agreement then in effect.
     Simultaneously with the delivery of such report, Allscripts shall be
     entitled to receive a percentage (to be mutually agreed upon by Allscripts
     and IMS) of the total revenues received as sponsorship fees pursuant to
     Physician Sponsorship Agreements (the "Sponsorship Agreement Net
                                            -------------------------
     Proceeds").
     --------

 (b) Immediately upon receipt of the Sponsorship Agreement Net Proceeds from
     IMS, JV shall promptly pay Allscripts such funds received from IMS in
     consideration for Allscripts's provision of the Service to the Sponsored
     Physicians.

 (c) Allscripts agrees to cooperate with IMS and to take all actions necessary
     to ensure that the Sponsorship Agreements comply with all applicable laws
     including, without limitation, all laws requiring full disclosure.

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                                  ARTICLE III

                         Conduct of Business; Support

Section 3.01  Conduct of Allscripts Business. During the term of this Agreement,
              ------------------------------
Allscripts shall carry on its business in compliance with all applicable laws
and regulations and use its reasonable best efforts consistent with past
practices and policies (i) to preserve its relationships with existing Users
(subject to customary attrition); and (ii) to solicit additional Users.

Section 3.02  Conduct of IMS Business.  During the term of this Agreement, IMS
              -----------------------
shall carry on its business as it relates to the activities arising out of this
Agreement in compliance with all applicable laws and regulations.

Section 3.03  Costs and Expenses.  Except as expressly contemplated hereby,
              ------------------
Allscripts shall bear all costs and expenses in connection with the conduct of
its business and providing the Service, and shall not be entitled to any
additional compensation from IMS or JV in connection therewith.

Section 3.04  Market Penetration of Service.  Allscripts agrees that on December
              -----------------------------
31, 2000 it will have 4,250 Active Users utilizing the Service and on December
31, 2001 it will have 8,000 Active Users utilizing the Service.

                                  ARTICLE IV

                    Fees, Compensation and Indemnification

Section 4.01  Fees and Compensation. In consideration for all obligations of
              ---------------------
Allscripts under Article I for calendar years 2000 and 2001, JV shall pay
Allscripts fees in the amount of $1,500,000 by December 31, 2000 and an
additional $2,000,000 by December 31, 2001 plus such other compensation as may
be agreed upon by IMS and Allscripts, and for periods subsequent to 2001 any
such compensation shall be as mutually agreed upon by Allscripts and IMS;
provided, that in the event that Allscripts fails to achieve its Active User
--------
target set forth in Section 3.04 in a particular year, such fact shall be taken
into account in assessing the amount of consideration to be paid to Allscripts
for the following year (including 2001).  In consideration for all obligations
of IMS pursuant to Article I, JV shall pay IMS such compensation as may be
agreed upon by IMS and Allscripts.  As set forth in Section 1.01, the terms
pursuant to which Allscripts and IMS shall share revenues with respect to future
products developed jointly by Allscripts and IMS that utilize the User Data
shall be mutually agreed upon by Allscripts and IMS.

Section 4.02  Indemnification.
              ---------------

 (a) Allscripts, at its own expense, shall indemnify and hold harmless JV, IMS
     and each of their respective directors, officers, employees and agents from
     and defend

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     any action brought against the same with respect to any claim,
     demand, cause of action, debt or liability, including reasonable attorneys'
     fees, relating to any claim arising out of any breach of Allscripts's
     representations, warranties, covenants, licenses and agreements set forth
     in this Agreement.

(b)  IMS, at its own expense, shall indemnify and hold harmless JV, Allscripts
     and each of their respective directors, officers, employees and agents from
     and defend any action brought against the same with respect to any claim,
     demand, cause of action, debt or liability, including reasonable attorneys'
     fees, relating to any claim arising out of any breach of IMS's
     representations, warranties, covenants, licenses and agreements set forth
     in this Agreement.

                                   ARTICLE V

                                 Nonpromotion

Section 5.01  Nonpromotion.  Except as otherwise set forth herein, each of
              ------------
Allscripts and IMS agrees that at all times during the term of this Agreement,
neither it nor any of its respective Affiliates shall sell, distribute or
otherwise promote any services in the United States that are similar to the
Service being provided by Allscripts hereunder using a technology similar to the
TouchScript Service  (the "Competitive Services").  Notwithstanding the
                           --------------------
foregoing, (i) if at any time during the term of this Agreement, Allscripts is
not a Leading Provider, IMS shall have the right to sell, distribute or
otherwise promote Competitive Services and (ii) the parties agree to discuss
business opportunities involving the prescription information industry outside
of the United States that may arise from time to time.

Section 5.02  Competitor Business Combinations.  In the event that IMS enters
              --------------------------------
into a business combination with a direct competitor (a "Competitor") of
                                                         ----------
Allscripts, then Allscripts shall have the right, upon 10 days' prior written
notice (and within 90 days of the consummation of such business combination) to
elect to convert IMS's exclusive right to the User Data to a non-exclusive right
to the User Data, in which event, (i) Allscripts shall have the right to sell
and market User Data to third parties; (ii) IMS shall have the right to sell,
distribute or otherwise promote Competitive Services; and (iii) IMS shall have
the right to license the User Data from Allscripts during the term of this
Agreement at the lowest price paid by any third party (under comparable terms
and conditions) to Allscripts for the User Data or similar non-exclusive data
streams.  In the event that Allscripts enters into a business combination with a
Competitor of IMS, then IMS shall have the right, upon 10 days' prior written
notice (and within 90 days of the consummation of such business combination),
(i) to extend the term of this Agreement (including the exclusivity provisions
contained herein) to the later of (x) the date that is two years from the date
of such election and (y) the then current termination date; and (ii) to sell,
distribute or otherwise promote Competitive Services.  Either party may dispute
the claim that the third party with whom it has entered into a business
combination is, in fact, a Competitor of the other party, by delivering to the
other party a notice of dispute

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within 10 days of receiving the notice from such other party referred to in this
Section 5.02. Such a dispute will be settled according to the procedures
specified in Section 8.11. The sole issue in such dispute shall concern whether
the Competitor is, in fact, a direct competitor of the party not entering into a
business combination.

                                  Article VI

                             Term and Termination

Section 6.01  Term.  The term of this Agreement and the licenses and rights
              ----
granted hereunder shall be for five (5) years from the date hereof, and for
successive one (1) year periods thereafter unless either party gives written
notice to the other party of its intention not to renew this Agreement at least
30 days prior to the expiration of the original term or any such one (1) year
renewal period.

Section 6.02  Termination.  Notwithstanding anything to the contrary contained
              -----------
in Section 6.01, this Agreement may be terminated:

     (a)  if one party breaches the contractual obligations established herein,
          and fails to cure such breach within a period of 30 days from the date
          on which the breaching party receives written notice from the non-
          breaching party regarding such breach, the non-breaching party shall
          have the right to terminate this Agreement; and

     (b)  if one party enters judicial or extrajudicial liquidation or
          reorganization proceedings, or files for bankruptcy, the other party
          shall have the right to terminate this Agreement.

                                  Article VII

                        Representations and Warranties

Section 7.01  Representations and Warranties of Allscripts.  Allscripts hereby
              --------------------------------------------
represents and warrants to each of JV and IMS as follows:

     (a)  Allscripts has the full power and authority to execute, deliver and
          perform this Agreement.

     (b)  This Agreement has been duly and validly authorized, executed and
          delivered by Allscripts and constitutes a valid and binding obligation
          of Allscripts enforceable against it in accordance with its terms.

     (c)  The execution, delivery and performance by Allscripts of this
          Agreement as contemplated hereby will not (i) conflict with, or result
          in the breach or termination of, or constitute a default under, any
          agreement of any kind or any judgment or decree, to which Allscripts
          is in any way bound, except for such

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          conflicts, breaches or defaults as would not, in the aggregate, have a
          material adverse effect on the ability of Allscripts to perform its
          obligations under this Agreement or (ii) constitute a violation by
          Allscripts of any applicable law or regulation of any governmental
          body, or any rule or written policy of any industry association of
          competent jurisdiction, or require Allscripts to obtain or make any
          consent, approval, or filing of any kind with, or notification to, any
          person or governmental body.

     (d)  Allscripts has the rights to or owns, free and clear of any legal or
          contractual encumbrances, all of the User Data and any Intellectual
          Property Rights therein, and has all rights necessary to grant the
          licenses and make the transfers under this Agreement under the terms
          and conditions provided herein without the approval or consent of any
          other party, subject to restrictions on the disclosure and
          sublicensing of immaterial data.

     (e)  Allscripts is not, and will use its reasonable best efforts to not
          become, subject to any contractual or other obligation or restriction
          that prohibits or would prohibit, or impairs or would impair, its
          grants of license and transfers or the performance of its obligation
          under this Agreement, subject to restrictions on the disclosure and
          sublicensing of immaterial data.

     (f)  The User Data and the use of the User Data by JV or IMS will not in
          any material manner contravene, breach or constitute an unauthorized
          use, infringement or misappropriation of any Intellectual Property
          Right or any proprietary or property right of any other party.

     (g)  When the User Data is licensed to JV, JV will have all of the rights
          necessary to grant the license to IMS hereunder on the terms and
          conditions provided herein without the approval or consent of any
          third party.

Section 7.02  Representations and Warranties of IMS.  IMS hereby represents and
              -------------------------------------
warrants to each of JV and Allscripts as follows:

     (a)  IMS has the full power and authority to execute, deliver and perform
          this Agreement.

     (b)  This Agreement has been duly and validly authorized, executed and
          delivered by IMS and constitutes a valid and binding obligation of IMS
          enforceable against it in accordance with its terms.

     (c)  The execution, delivery and performance by IMS of this Agreement as
          contemplated hereby will not (i) conflict with, or result in the
          breach or termination of, or constitute a default under, any agreement
          of any kind or any judgment or decree to which IMS is in any way
          bound, except for such conflicts, breaches or defaults as would not,
          in the aggregate, have a material adverse effect on the ability of IMS
          to perform its obligations under this Agreement or (ii)

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     constitute a violation by IMS of any applicable law or regulation of any
     governmental body, or any rule or written policy of any industry
     association of competent jurisdiction, or require IMS to obtain or make any
     consent, approval, or filing of any kind with, or notification to, any
     person or governmental body.

                                 Article VIII

                                 Miscellaneous

Section 8.01  Notices.  All notices and other communications hereunder shall be
              -------
in writing and shall be deemed given if delivered personally or by commercial
delivery service, or sent via facsimile (receipt confirmed) to the parties at
the following addresses or facsimile numbers (or at such other address or
facsimile numbers for a party as shall be specified by like notice):

          if to IMS, to:

              IMS Incorporated
              200 Nyala Farms
              Westport, CT 06880
              Attention:  Chief Executive Officer
              Telephone:  (203) 222-4245
              Facsimile:  (203) 222-4247

          with copies to:

              IMS Incorporated
              200 Nyala Farms
              Westport, CT 06880
              Attention:  David Stevens
                          Jared Finkelstein
              Telephone:  (203) 222-4368
              Facsimile:  (203) 222-4268

          and

              Alan J. Sinsheimer, Esq.
              Keith A. Pagnani, Esq.
              Sullivan & Cromwell
              125 Broad Street
              New York, NY 10004
              Telephone:  (212) 558-4000
              Facsimile:  (212) 558-3588

          if to Allscripts, to:

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               Allscripts, Inc.
               2401 Commerce Drive
               Libertyville, IL 60048
               Attention:  Chief Executive Officer
               Telephone:  (847) 860-3515
               Facsimile:  (847) 680-3721

          with a copy to:

               Jeffrey A. Schumacher, Esq.
               Sachnoff & Weaver, Ltd.
               30 South Wacker Drive - 29th Floor
               Chicago, IL 60606
               Telephone:  (312) 207-1000
               Facsimile:  (312) 207-6400

Section 8.02   Counterparts.  This Agreement may be executed in one or more
               ------------
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.

Section 8.03   Entire Agreement; Third Party Beneficiaries.  This Agreement and
               -------------------------------------------
Annex A hereto (a) constitute the entire agreement among the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof; and (b) are not intended to confer upon any other person
any rights or remedies hereunder.

Section 8.04   Severability.  In the event that any provision of this Agreement
               ------------
or the application thereof becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.

Section 8.05   Remedies.  Except as otherwise provided herein, any and all
               --------
remedies herein expressly conferred upon a party will be deemed cumulative with
and not exclusive of any other remedy conferred hereby, or by law or equity upon
such party, and the exercise by a party of any one remedy will not preclude the
exercise of any other remedy.

Section 8.06  Governing Law.  This Agreement shall be governed by and construed
              -------------
in accordance with the laws of the State of New York, regardless of the laws
that might otherwise govern under applicable principles of conflicts of law
thereof.

                                       12
<PAGE>

Section 8.07  Rules of Construction.  The parties hereto agree that they have
              ---------------------
been represented by counsel during the negotiation and execution of this
Agreement and, therefore, waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.

Section 8.08   Assignment. Neither party may assign either this Agreement or any
               ----------
of its rights, interests, or obligations hereunder without the prior written
consent of the other party; provided, however, that in the event of dissolution
                            --------  -------
of JV, all rights of JV hereunder shall vest in and accrue to the party
ultimately benefited thereby prior to such dissolution. Subject to the preceding
sentence, this Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and permitted assigns.

Section 8.09   Survival. The rights and obligations of the parties pursuant to
               --------
Sections 1.06 and 8.13 hereof shall survive the termination of this Agreement
indefinitely.

Section 8.10   Further Assurances. From and after the date hereof, each of the
               ------------------
parties hereto further agrees to take such actions as may reasonably be required
in order to more fully effectuate the intent of the parties hereto.

Section 8.11   Dispute Resolution.
               ------------------

     (a)  In the event of any controversy or claim arising from or relating to
          this Agreement or the breach thereof, including a claim under Section
          5.02 (each, a "Claim"), IMS, on the one hand, and Allscripts, on the
                         -----
          other hand, shall use commercially reasonable efforts to resolve the
          Claim. To this end, representatives of each party shall consult and
          negotiate with each other in good faith and, recognizing their mutual
          interests, attempt to reach a just and equitable solution satisfactory
          to all parties. If they do not reach such solution within a period of
          10 days from the date of their first meeting, such Claim shall be
          referred to the chief executive officers of each of IMS and
          Allscripts, who shall consult and negotiate with each other in good
          faith and, recognizing their mutual interests, attempt to reach an
          agreement to resolve the Claim. If such agreement is not reached by
          such chief executive officers within 20 days from the date of their
          first meeting, then the parties shall commence an arbitration in
          accordance with this Section 8.11.

     (b)  If the Claim is not resolved by negotiation by the conclusion of the
          negotiation periods referred to above, such Claim shall be resolved by
          final and binding arbitration administered by the American Arbitration
          Association (the "AAA") in accordance with its Commercial Arbitration
                            ---
          Rules and Title 9 of the U.S. Code. Judgment on the award rendered by
          the arbitrators may be entered in any court having jurisdiction
          thereof. The place of arbitration shall be New York, New York.

     (c)  Any party desiring to commence arbitration shall send a written notice
          (an "Arbitration Notice") to the other party and to the AAA describing
               ------------------
          the dispute
                                       13
<PAGE>

          and setting forth the matters to be resolved by the arbitration.
          Within 20 days of the date of such notice (the "Notice Period"), the
                                                          -------------
          other party may, if such party does not agree with the description or
          statement of matters to be resolved, send an Arbitration Notice to the
          other party and to the AAA describing the dispute and setting forth
          the matters to be resolved by the arbitration. Within 10 days of the
          end of the Notice Period, the parties shall, if they can agree, select
          an arbitrator to resolve the dispute. In the event that the parties
          have not selected an arbitrator within 10 days of the end of the
          Notice Period, then the dispute shall be resolved by majority decision
          of a panel of three arbitrators, selected by the AAA in accordance
          with its rules.

     (d)  In selecting arbitrators, the parties or the AAA shall select persons
          who are experienced in and knowledgeable about the information
          technology and healthcare industries and are rendering no advice or
          services to, and within the past two years have rendered no material
          advice or services to, either party to this Agreement.

Section 8.12  Allscripts Inspection Right.  Allscripts shall have the right, at
              ---------------------------
its sole expense, to inspect and audit the accounts, books and records of IMS
pertaining to Sponsored Physicians and Sponsored Agreements, upon reasonable
notice and during reasonable business hours.

Section 8.13  Public Announcements.  IMS and Allscripts shall consult with each
              --------------------
other prior to issuing any press release or otherwise making any public
statement regarding this Agreement or the transactions contemplated hereby and,
except as otherwise required by law or by obligations pursuant to any listing
agreement with, or rules of, any national securities exchange or national
securities interdealer quotation service, neither IMS nor Allscripts shall issue
any such press release or make any such public statement without the prior
written consent of the other party.

                                       14
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized respective officers as of the date first
written above.

                              IMS HEALTH INCORPORATED

                              By: /s/ Craig Kussman
                                  -------------------------------------
                                   Name:  Craig Kussman
                                   Title:

                              ALLSCRIPTS, INC.

                              By: /s/ David B. Mullen
                                  -------------------------------------
                                  Name:  David B. Mullen
                                  Title: President and Chief Financial
                                         Officer
<PAGE>

                                    Annex A

                                  DEFINITIONS

     As used in the Agreement, the following terms shall have the respective
meanings set forth below:

     "Active User" shall mean a User who has not remained inactive during any
      -----------
four-month period.

     "Affiliate" shall mean, with respect to any person, any other person or
      ---------
entity that directly or indirectly through one or more intermediaries controls
or is controlled by or is under common control with such person.

     "Intellectual Property Right" shall mean any U.S. patent or patent
      ---------------------------
application, copyright, trademark, service mark (and any application or
registration respecting the foregoing), trade secret, know-how and other
intellectual property right of any type.

     "Leading Provider" shall mean one of the top two providers of services
      ----------------
similar to the Service in the United States, based on the number of active user
physicians subscribing to a service similar to the Service.

     "Service" shall mean the equipment and software offered by Allscripts to
      -------
physicians which collectively enable electronic prescribing, routing of
prescription information and capturing of prescription data at the point of
care.

     "Sponsored Physicians" shall mean any physician who is provided the Service
      --------------------
pursuant to a Sponsorship Agreement.

     "Sponsoring Entities" shall mean any pharmaceutical or drug manufacturer or
      -------------------
distributor that has entered into a Sponsorship Agreement.

     "Sponsorship Agreement" shall mean an agreement between IMS and a
      ---------------------
pharmaceutical or drug manufacturer or distributor pursuant to which such
manufacturer or distributor agrees to pay for all or a portion of the amounts
for the provision of the Service to physicians, as set forth more particularly
in such Sponsorship Agreement.

     "Subscriber Agreement" shall mean an agreement between a physician and
      --------------------
Allscripts pursuant to which such physician subscribes to the Service.

     "TouchScript Service" shall mean the personal digital assistant based on
      -------------------
the Microsoft CE operating system and associated software.

     "User Data" shall mean any data provided by Users in connection with their
      ---------
use of the Service.
<PAGE>

     "User" shall mean a physician who has executed a Subscriber Agreement, but
      ----
shall not include any physician whose Subscriber Agreement has been cancelled or
terminated.

                                      17<PAGE>   1
                                                                    EXHIBIT 4.8

                           CERTIFICATE OF DESIGNATIONS
                                       OF
                      SERIES G1 CONVERTIBLE PREFERRED STOCK
                                       OF
                            HARKEN ENERGY CORPORATION

         Harken Energy Corporation, a Delaware corporation, DOES HEREBY CERTIFY:

         That, pursuant to the authority conferred upon the Board of Directors
of said corporation by virtue of its certificate of incorporation as amended and
in accordance with Section 151 of the General Corporation Law of the State of
Delaware (the "DGCL"), said Board of Directors has duly adopted a resolution at
a special meeting of the Board of Directors held on August 25, 2000, providing
for the issuance of a series of preferred stock, par value $1.00 per share,
designated as Series G1 Convertible Preferred Stock, which resolution reads as
follows:

         "RESOLVED, that the Board of Directors (the "BOARD OF DIRECTORS") of
Harken Energy Corporation (the "CORPORATION") hereby authorizes the issuance of
a series of preferred stock and fixes its designation, powers, preferences and
relative, participating, optional or other special rights, and qualifications,
limitations and restrictions thereof, as follows:

         Section 1. Designation. The distinctive serial designation of said
series shall be "SERIES G1 CONVERTIBLE PREFERRED STOCK" (hereinafter called
"SERIES G1 PREFERRED STOCK"). Each share of Series G1 Preferred Stock shall be
identical in all respects with all other shares of Series G1 Preferred Stock.

         Section 2. Number of Shares. The number of authorized shares of Series
G1 Preferred Stock shall be, in aggregate, 200,000 shares. The number of
authorized shares of Series G1 Preferred Stock may be increased or reduced by
the Board of Directors of the Corporation by the filing of a certificate
pursuant to the provisions of the DGCL stating that the change has been so
authorized. When shares of Series G1 Preferred Stock are purchased or otherwise
acquired by the Corporation or converted into Common Stock, par value $0.01 per
share, of the Corporation (the "COMMON STOCK"), the Corporation shall take all
necessary action to cause the shares of Series G1 Preferred Stock so purchased
or acquired to be canceled and reverted to authorized but unissued shares of
Series G1 Preferred Stock undesignated as to series.

         Section 3. Rank. The Series G1 Preferred Stock shall, with respect to
dividend rights and rights on liquidation, winding-up and dissolution, rank (i)
junior to all claims of creditors, including holders of the Corporation's
outstanding debt securities, (ii) junior to all obligations of the Corporation's
Subsidiaries (as defined in Section 13 below), (iii) senior to all classes of
Common Stock and to each other class of preferred stock established hereafter by
the Board of Directors of the Corporation, the terms of which expressly provide
that it ranks junior to the Series G1 Preferred Stock as to dividend rights and
rights on liquidation, winding-up and dissolution of the Corporation
(collectively referred to, together with all classes of Common Stock of the
Corporation, as "JUNIOR STOCK"), and (iv) on a parity with each other class of
preferred stock established or issued hereafter by the Board of Directors of the
Corporation the terms of which expressly provide that such class or series shall
rank on a parity with the Series G1 Preferred Stock as to dividend rights and
rights on liquidation, winding-up and dissolution (collectively referred to as
"PARITY STOCK"). The Corporation may authorize the issuance of any amount of
Parity Stock (which may provide for the payment of dividends in additional
shares of Parity Stock in lieu of cash dividends) without the approval of the
holders of the Series G1 Preferred Stock.

         Section 4. Dividends.

         (a) The holders of record, as of the Record Date therefor, of the
outstanding shares of Series G Preferred Stock shall be entitled to receive,
when, as and if declared by the Board of Directors of the Corporation, out of
funds legally available therefor, dividends on the Series G Preferred Stock at
an annual rate equal to $8.00 per share (equivalent to 8% of the liquidation
preference annually), payable semi-annually in arrears in cash or, at the option
of the Corporation, in Freely Tradeable shares of the Corporation's Common
Stock. If and when the Corporation shall elect

<PAGE>   2

from time to time to pay such dividends in shares of Common Stock, such shares
will be valued at $1.25 per share; provided, however, that the Corporation may
elect to pay such dividends in shares of the Corporation's Common Stock only if
such shares of Common Stock would upon issuance be Freely Tradeable (as defined
in Section 13 below) by the Corporation; and, provided further, that (i) if the
outstanding shares of Common Stock shall be subdivided into a greater number of
shares of Common Stock, such $1.25 per share valuation shall be proportionately
reduced on the day upon which such subdivision becomes effective, and (ii) if
the outstanding shares of Common Stock shall be combined into a smaller number
of shares of Common Stock, such $1.25 per share valuation shall be
proportionately increased on the day such combination becomes effective. In case
the Corporation shall take any action affecting the Common Stock, other than the
aforementioned adjustments, which in the Board of Directors would materially
adversely affect the conversion right of the holders of the shares of Series G
Preferred Stock, such $1.25 valuation may be adjusted, to the extent permitted
by law, in such manner, if any, and at such time, as the Board of Directors may
determine to be equitable in the circumstances; provided, however, that in no
event shall the Board of Directors be required to take such action.

         (b) All dividends shall be cumulative, whether or not earned or
declared, and shall accrue from the date of issuance of the Series G1 Preferred
Stock and shall be payable semi-annually in arrears, when, as and if declared by
the Board of Directors. Such dividends will be payable on December 30 and June
30 of each year (a "DIVIDEND PAYMENT DATE"), commencing on June 30, 2001;
provided, however, that if a Dividend Payment Date is not a Stock Exchange
Business Day, then the dividend shall be payable on the first immediately
succeeding Stock Exchange Business Day. Dividends shall be paid to the holders
of record of the Series G1 preferred Stock as their names appear on the stock
transfer records of the Corporation on the date designated by the Board of
Directors ("RECORD DATE"), provided, however, that such Record Date may not
precede the date upon which the resolution fixing the Record Date is adopted,
and which Record Date may not be more than sixty (60) days prior to the Dividend
Payment Date. The amount of the dividends payable on the Series G1 Preferred
Stock for each semi-annual dividend period shall be computed by dividing by two
(2) the annual rate per share set forth in subsection (a) above. Dividends shall
be computed on the basis of a 360-day year of twelve 30-day months.

         (c) No dividends may be declared or paid or funds set apart for the
payment of dividends on any Parity Stock for any period unless full cumulative
dividends shall have been or contemporaneously are declared and paid in full or
declared and a sum in cash or shares of Common Stock sufficient for such payment
set apart for such payment on the Series G1 Preferred Stock. If full dividends
are not so paid, the Series G1 Preferred Stock shall share dividends pro rata
with the Parity Stock. No dividends may be paid or set apart for such payment on
Junior Stock (except dividends on Junior Stock payable in additional shares of
Junior Stock) and no Junior Stock or Parity Stock may be repurchased or
otherwise retired for value nor may funds be set apart for payment with respect
thereto, if cumulative dividends have not been paid in full on the Series G1
Preferred Stock in cash or shares of Common Stock; provided, however, that the
Corporation may repurchase Junior Stock (i) in the open market from time to time
as and to the fullest extent permitted by Rule 10b-18 promulgated under the
Securities Exchange Act of 1934, as amended (240 C.F.R. ss. 10b-18), or
corresponding rule from time to time in effect, and (ii) in a private purchase
or in an "issuer tender offer" as defined in Rule 13e-4 under the Exchange Act
from time to time so long as such repurchases do not exceed ten percent (10%) of
the then outstanding shares of Junior Stock. Dividends on account of arrears for
any past dividend period may be declared and paid at any time without reference
to any regular Dividend Payment Date, to holders of record on a date not more
than forty-five (45) calendar days prior to the payment thereof, as may be fixed
by the Board of Directors of the Corporation. No interest shall be payable with
respect to any dividend payment that may be in arrears. Except as provided
above, so long as any shares of the Series G1 Preferred Stock are outstanding,
the Corporation shall not make payment on account of the purchase or other
retirement of any Parity Stock or Junior Stock, and shall not permit any
corporation or other entity directly or indirectly controlled by the Corporation
to purchase any Parity Stock, Junior Stock or any warrants, rights, calls or
options unless full cumulative dividends determined to be in accordance herewith
on the Series G1 Preferred Stock have been paid (or are deemed paid) in full.

         (d) All dividends payable on the Series G1 Preferred Stock shall be
paid net of withholding tax, if any, under all applicable laws (including
applicable income tax treaties). The Corporation will, subject to certain
exceptions and limitations set forth below, pay, as additional dividends, such
additional amounts (the "ADDITIONAL AMOUNTS") to the holder of any Series G1
Preferred Stock as may be necessary in order that every net payment of the
principal or

                                       2
<PAGE>   3

dividends on such Series G1 Preferred Stock, after withholding for or on account
of any present or future tax, duty, assessment or governmental charge imposed or
levied upon or as a result of such payment by or on behalf of the United States
(or any political subdivision, authority or agency thereof or therein having the
power to tax) (collectively, "TAXES"), will not be less than the amount such
holder would have received if such Taxes had not been withheld, provided that no
Additional Amounts will be payable with respect to a payment which is subject to
such Taxes by reason of such holder being connected with the United States (or
any political subdivision thereof) otherwise than by the mere holding of the
Series G1 Preferred Stock or the receipt of payments made under or with respect
to the Series G1 Preferred Stock. In addition, the Corporation will indemnify
and hold harmless each holder of the Series G1 Preferred Stock (subject to the
exclusion set forth above) and will, upon written request of each holder
(subject to the exclusion set forth above), and provide that reasonable
supporting documentation is provided, reimburse each other holder for the amount
of any Taxes levied or imposed by the United States and paid by or on behalf of
the holder as a result of payments made under or with respect to the Series G1
Preferred Stock. Any payment made pursuant to this paragraph shall be considered
and Additional Amount. If the Corporation becomes generally subject at any time
to any taxing jurisdiction other than or in addition to the United States,
references in this Certificate of Designations to the United States shall be
read and construed as reference to the United States and/or such other
jurisdiction.

         Section 5.  Preference on Liquidation.

         (a) Upon any voluntary or involuntary liquidation, dissolution or
winding-up of the Corporation, holders of Series G1 Preferred Stock shall be
entitled to be paid, out of the assets of the Corporation available for
distribution to stockholders, the liquidation preference of $100.00 per share of
Series G1 Preferred Stock, plus, without duplication, an amount in cash equal to
all accrued and unpaid dividends thereon to the date fixed for liquidation,
dissolution or winding-up (including an amount equal to a prorated dividend for
the period from the last Dividend Payment Date, or if such event is prior to the
first Dividend Payment Date, from the Closing Date, to the date fixed for
liquidation, dissolution or winding-up), before any distribution is made on any
Junior Stock, including, without limitation, any class of common stock of the
Corporation.

         (b) If, upon any voluntary or involuntary liquidation, dissolution or
winding-up of the Corporation, the amounts payable with respect to the Series G1
Preferred Stock and all Parity Stock are not paid in full, then the assets of
the Corporation available for distribution among the holders of the Series G1
Preferred Stock and any Parity Stock shall bear to each other the same ratio
that the full amounts payable on liquidation, dissolution or winding-up of the
Corporation to the holders of shares of Series G1 Preferred Stock and any Parity
Stock bear to each other.

         (c) After payment of the full amount of the liquidation preference and
accumulated and unpaid dividends to which they are entitled, the holders of
shares of Series G1 Preferred Stock shall not be entitled to any further
participation in any distribution of assets of the Corporation.

         (d) Neither the sale, conveyance, exchange or transfer (for cash,
shares of stock, securities or other consolidation) of all or substantially all
of the property or assets of the Corporation nor the consolidation or merger of
the Corporation with one or more entities shall be deemed to be or constitute a
liquidation, dissolution or winding-up of the Corporation.

         (e) Notice of any payment to the holders of Series G1 Preferred Stock
as a result of the liquidation, dissolution or winding-up of the Corporation,
stating the payment date or dates when and the place or places where the amounts
distributable in such circumstances shall be payable, shall be given not more
than sixty (60) but not less than thirty (30) days prior to any payment date
stated therein, to the holders of shares of Series G1 Preferred Stock as
provided in Section 11 herein.

         Section 6. Voting. The holders of Series G1 Preferred Stock shall have
no voting rights except as required by law. In exercising any voting rights,
each outstanding share of Series G1 Preferred Stock shall be entitled to one
vote.

                                       3
<PAGE>   4

         Section 7.  Holder Conversion Rights.

         (a) Each holder of shares of Series G1 Preferred Stock shall have the
right ("CONVERSION RIGHT"), subject as provided herein and to any applicable
laws and regulations, at any time and from time to time at the holder's option
to convert each share of Series G1 Preferred Stock into shares of Common Stock
at the conversion price (subject to adjustment as described in Section 8 below)
of $1.25 per share of underlying Common Stock (the "CONVERSION PRICE") for each
$100.00 liquidation value per share of Series G1 Preferred Stock plus the amount
of any accrued and unpaid dividends (whether or not earned or declared) on the
Series G1 Preferred Stock delivered for conversion as specified herein
(including an amount equal to a prorated dividend from the immediately preceding
Dividend Payment Date to the date of such conversion, or, if such conversion is
prior to the first Dividend Payment Date, from the Closing Date to the date of
such conversion); provided, however, that the Corporation may, at its sole
discretion, pay any or all of such accrued and unpaid dividends in cash. Subject
to the provisions of the DGCL, no fractional shares of Common Stock shall be
issued upon conversions but, the number of shares shall be rounded up or down to
the nearest whole number.

         (b) If the Corporation elects to pay any accrued and unpaid dividends
in cash, the amount of any such accrued and unpaid dividends shall be promptly
sent to the holder thereof by means of check or other means provided by the
Corporation after the receipt of the notice and funds, if any, referred to in
Sections 7(d) and 7(e) below.

         (c) As promptly as practicable after the surrender of certificates for
shares of the Series G1 Preferred Stock for conversion and the receipt of the
notice and funds, if any, as described in Sections 7(d) and 7(e) below, the
Corporation shall issue and shall deliver to such holder, or on such holder's
written order, a certificate or certificates for the number of shares of Common
Stock issuable upon the conversion of such shares of the Series G1 Preferred
Stock in accordance with the provisions of this Section 7, together with
certificates representing the number of shares of Common Stock in payment of any
accrued but unpaid dividends if the Corporation elects to pay such dividends in
Common Stock. Each conversion with respect to such shares of the Series G1
Preferred Stock shall be deemed to have been effected immediately prior to the
close of business on the date on which the certificates for shares of the Series
G1 Preferred Stock shall have been surrendered and such notice shall have been
received by the Corporation as aforesaid, and the Person or Persons entitled to
receive the Common Stock issuable upon such conversion shall be deemed for all
purposes to be the record holder or holders of such Common Stock upon that date.

         (d) In order to exercise the conversion right, the holder of each share
of Series G1 Preferred Stock to be converted shall surrender that certificate
representing such shares, duly endorsed or assigned to the Corporation or in
blank, at the office of the transfer agent for the Series G1 Preferred Stock and
shall give written notice to the Corporation in the form of Exhibit A attached
hereto. Such notice shall also state the name or names (with address) in which
the shares of Common Stock which shall be issuable upon such conversion shall be
issued. Each share surrendered for conversion shall, unless the shares issuable
on conversion are to be issued in the same name as the name in which such shares
of the Series G1 Preferred Stock is registered, be duly endorsed by, or
accompanied by, instruments of transfer (in each case, in form reasonably
satisfactory to the Corporation), duly executed by the holder or such holder's
duly authorized attorney-in-fact.

         (e) If a holder converts shares of the Series G1 Preferred Stock, the
Corporation shall pay any and all documentary, stamp or similar issue or
transfer tax payable in respect of the issue or delivery of the shares of the
Series G1 Preferred Stock (or any other securities issued on account thereof
pursuant hereto) or Common Stock upon the conversion; provided, however, the
Corporation shall not be required to pay any such tax that may be payable
because any such shares are issued at the request of the holder in a name other
than the name of the holder. In the event that the shares are to be issued in a
name other than that of the holder, the holder shall provide funds necessary to
pay any and all of the foregoing taxes, if any shall be applicable.

         (f) The Corporation shall reserve out of its authorized but unissued
Common Stock or its Common Stock held in treasury enough shares of Common Stock
to permit the conversion of all of the outstanding shares of the Series G1
Preferred Stock, but in no event shall the Corporation be required to reserve
sufficient shares of Common Stock to permit the conversion of any accrued and
unpaid dividends on the Series G1 Preferred Stock. The Corporation shall from
time to time, in accordance with the DGCL, increase the authorized amount of its
Common Stock if at any time

                                       4
<PAGE>   5

the authorized amount of its Common Stock remaining unissued shall not be
sufficient to permit the conversion of all shares of the Series G1 Preferred
Stock at the time outstanding. If any shares of Common Stock required to be
reserved for issuance upon conversion of shares of the Series G1 Preferred Stock
hereunder require registration with or approval of any governmental authority
under any federal or state law before the shares may be issued upon conversion,
the Corporation shall in good faith and as expeditiously as possible endeavor to
cause the shares to be so registered or approved. All shares of Common Stock
delivered upon conversion of the shares of the Series G1 Preferred Stock will,
upon delivery, be duly authorized and validly issued, fully paid and
nonassessable, free from all taxes, liens and charges with respect to the issue
thereof.

         Section 8.  Conversion Price Adjustments.

         (a) Subdivision of Common Stock. In case outstanding shares of Common
Stock shall be subdivided into a greater number of shares of Common Stock, the
Conversion Price in effect at the opening of business on the day following the
day upon which such subdivision becomes effective shall be proportionately
reduced, and, conversely, in case outstanding shares of Common Stock shall each
be combined into a smaller number of shares of Common Stock, the Conversion
Price in effect at the opening of business on the day following the day upon
which such combination becomes effective shall be proportionately increased,
such reduction or increase, as the case may be, to become effective immediately
after the opening of business on the day following the day upon which such
subdivision or combination becomes effective.

         (b) Certificate of Adjustment and Notice. Whenever the Conversion Price
is adjusted as herein provided, the Corporation shall promptly file with the
transfer agent for the Series G1 Preferred Stock a certificate of an officer of
the Corporation setting forth the Conversion Price after the adjustment and
setting forth a brief statement of the facts requiring such adjustment and a
computation thereof. The Corporation shall promptly cause a notice of the
adjusted Conversion Price be given to the holders of shares of the Series G1
Preferred Stock as provided in Section 11 herein.

         (c) Adjustment in Conversion Price in Case of Certain Events. In case
the Corporation shall take any action affecting the Common Stock, other than
actions described in Section 7 or this Section 8, which in the opinion of the
Board of Directors would materially adversely affect the conversion right of the
holders of the shares of the Series G1 Preferred Stock, the Conversion Price may
be adjusted, to the extent permitted by law, in such manner, if any, and at such
time, as the Board of Directors may determine to be equitable in the
circumstances; provided, however, that in no event shall the Board of Directors
be required to take any such action.

         (d) Registration of Conversion Shares. The Corporation shall file a
registration statement on Form S-3 (or such other form as the Corporation may
determine is appropriate) with respect to the Conversion Shares at the earliest
practicable date, but in any event prior to 90 days following the receipt by the
Company of the first notice of conversion from a holder of Series G1 Preferred
Stock in respect of all the Common Stock that may be issuable at any time upon
the conversion of any of the Series G1 Preferred Stock ("CONVERSION SHARES").
The Corporation shall use its best efforts to cause the Commission to declare
such registration statement (and any necessary amendments thereto) effective.
The Corporation shall also use its best efforts to maintain the effectiveness of
such registration statement, and to refile such a registration statement from
time to time in the event its effectiveness lapses, until all Conversion Shares
either issued or that may be issued are Freely Tradeable (as defined in Section
13 below) in the United States.

         Section 9. Mandatory Conversion by Corporation.

         (a) At any time after the earlier of (i) the registration statement
referred to in subsection (d) above has been declared effective, or (ii) the
Conversion Shares are Freely Tradeable, the Corporation may, at its option,
cause all of the outstanding Series G Preferred Stock to be converted into
shares of Common Stock, in accordance with Section 9(b), at any time and from
time to time, if the average of the Market Prices of the Common Stock over the
Stock Exchange Business Days in any twenty (20) consecutive calendar day period
ending not more than five (5) days prior to the giving of the notice referred to
below equaled or exceeded the Target Price (as defined below).

                                       5
<PAGE>   6

         The "TARGET PRICE" shall initially equal the Conversion Price
multiplied by 110%. On the first day following the first anniversary of the
Closing Date, the Target Price shall be reduced to an amount equal to (x) the
Conversion Price less $0.10 (the "ADJUSTED CONVERSION PRICE") multiplied by (y)
110%. On the first day following each anniversary of the Closing Date
thereafter, the Target Price shall be reduced to an amount equal to (x) the
Adjusted Conversion Price then in effect less $0.10 multiplied by (y) 110%.
Notwithstanding the preceding, (i) if the outstanding shares of Common Stock
shall be subdivided into a greater number of shares of Common Stock, such $0.10
amount described in the preceding two sentences shall be proportionately reduced
on the day upon which such subdivision becomes effective, and (ii) if the
outstanding shares of Common Stock shall be combined into a smaller number of
shares of Common Stock, such $0.10 amount described in the preceding two
sentences shall be proportionately increased on the day such combination becomes
effective. In case the Corporation shall take any action affecting the Common
Stock, other than the aforementioned adjustments, which in the Board of
Directors would materially adversely affect the conversion right of the holders
of the shares of Series G Preferred Stock, such $1.25 valuation may be adjusted,
to the extent permitted by law, in such manner, if any, and at such time, as the
Board of Directors may determine to be equitable in the circumstances; provided,
however, that in no event shall the Board of Directors be required to take such
action. In no event shall the Target Price be less than $0.81; provided,
however, that (A) if the outstanding shares of Common Stock shall be subdivided
into a greater number of shares of Common Stock, such $0.81 amount shall be
proportionately reduced on the day upon which such subdivision becomes
effective, and (ii) if the outstanding shares of Common Stock shall be combined
into a smaller number of shares of Common Stock, such $0.81 amount shall be
proportionately increased on the day such combination becomes effective. By way
of example only, the initial Target Price shall be $1.375 (or $1.25 - $0 x
110%), and on the first day following the first anniversary of the Closing Date,
the Target Price shall be $1.265 (or ($1.25 - $0.10) x 110%), and on the first
day following the second anniversary of the Closing Date, the Target Price shall
be $1.155 (or ($1.15 - $0.10) x 110%).

         (b) Each share of Series G1 Preferred Stock shall be converted into a
number of shares of Common Stock equal to: (x) each $100.00 liquidation value
per share of Series G1 Preferred Stock plus the amount of any accrued and unpaid
dividends (whether or not earned or declared) on the Series G1 Preferred Stock
(including an amount equal to a prorated dividend from the immediately preceding
Dividend Payment Date, or if such conversion is prior to the first Dividend
Payment Date, from the Closing Date, to the date of such conversion) divided by
(y) the Conversion Price.

         Notwithstanding the preceding, the Corporation may, at its sole
discretion, pay any or all of the accrued and unpaid dividends in cash. Subject
to the provisions of the DGCL, no fractional shares of Common Stock shall be
issued the optional conversion but, the number of shares shall be rounded up or
down to the nearest whole number. The amount of any accrued and unpaid dividends
that the Corporation elects to pay in cash shall be promptly sent to the holder
thereof by means of check or other means provided by the Corporation.

         (c) The Corporation shall give thirty (30) days notice as provided in
Section 11 hereof of its intent to convert in accordance with this Section 9 no
later than thirty (30) calendar days from the end of the twenty (20) day period
described above. Upon the giving of the notice referred to above, the
Corporation shall be bound to convert the Series G1 Preferred Stock as to which
notice has been provided. During the 30 day notice period, holders of the Series
G1 Preferred Stock will retain their right to convert their shares of Series G1
Preferred Stock in accordance with Section 7 above.

         Section 10. Optional Redemption by Corporation.

         (a) Optional Redemption. In addition to its right to redeem the Series
G1 Preferred Stock as provided in Section 9 above, the Corporation shall have
the option to redeem the Series G1 Preferred Stock in whole or in part in cash
at any time, and from time to time, unless the holder thereof shall have
converted such stock into Common Stock pursuant to Section 7 prior to the date
of redemption hereof, at a redemption price ("REDEMPTION PRICE") equal to (i)
$100.00 per share and (ii) accrued and unpaid dividends (whether or not
declared), such dividends being payable in cash or Freely Tradeable Common Stock
(including an amount equal to a prorated dividend from the immediately preceding
Dividend Payment Date, or if such conversion is prior to the first Dividend
Payment Date, from the Closing Date, to the redemption date).

                                       6
<PAGE>   7

         (b)      Procedures for Redemption.

                  (i) In case of redemption of less than all shares of Series G1
         Preferred Stock at the time outstanding, the shares to be redeemed
         shall be selected pro rata, at random, or by lot or a method that
         complies with the requirements of any national stock exchange on which
         Series G1 Preferred Stock is listed as determined by the Board of
         Directors in its sole discretion.

                  (ii) Notice of any redemption shall be given as provided in
         Section 11 by or on behalf of the Corporation not more less than thirty
         (30) days prior to the date of redemption hereof; provided, however,
         that such notice of redemption may be a conditional notice of
         redemption which may condition the redemption upon making the
         redemption subject to the prior conversion of the Series G1 Preferred
         Stock before the redemption date; and provided further, that no failure
         to give such notice or any defect therein or in the transmission or
         mailing thereof shall affect the validity of the proceedings for the
         redemption of any shares of Series G1 Preferred Stock except as to the
         holder to whom the Corporation has failed to give notice or except as
         to the holder to whom notice was defective. In addition to any
         information required by law, such notice shall state: such redemption
         is being made pursuant to the optional redemption provisions hereof;
         the date of redemption; the Redemption Price; the number of shares of
         Series G1 Preferred Stock to be redeemed and, if less than all shares
         held by such holder are to be redeemed; the number of such shares to be
         redeemed; the place or places where certificates for such issued shares
         are to be surrendered for payment of the Redemption Price; and that
         dividends on the shares to be redeemed shall cease to accrue on the
         date of redemption. Upon the expiry of the notice so given, except with
         respect to the conditions specified above, the Corporation shall become
         obligated to redeem at the time of redemption specified thereon all
         shares called for redemption.

                  (iii) If notice has been given in accordance with Section
         10(b)(ii) above and provided that on or before the date of redemption
         specified in such notice, all funds necessary for such redemption shall
         have been set aside by the Corporation, separate and apart from its
         other funds in trust for the pro rata benefit of the holders of the
         shares so called for redemption, so as to be, and to continue to be
         available therefor, then, from and after the date of redemption,
         dividends on the shares of the Series G1 Preferred Stock so called for
         redemption shall cease to accrue, and said shares shall no longer be
         deemed to be outstanding and shall not have the status of shares of
         Series G1 Preferred Stock, and all rights of the holders thereof as
         shareholders of the Corporation (except the right to receive from the
         Corporation the Redemption Price) shall cease. Upon surrender, in
         accordance with said notice, of the certificates for any issued shares
         so redeemed (properly endorsed or assigned for transfer, if the
         Corporation shall so require and the notice shall so state), such
         shares shall be redeemed by the Corporation at the Redemption Price by
         mailing a check to such holder's last registered address listed on the
         stock transfer records of the Corporation, or as otherwise agreed by
         the holders of Series G1 Preferred Stock and the Corporation. In case
         fewer than all the shares represented by any such certificate are
         redeemed, a new certificate or certificates shall be issued
         representing the unredeemed shares without cost to the holder thereof.

                  (iv) Any funds deposited with a bank or trust corporation for
         the purpose of redeeming Series G1 Preferred Stock shall be irrevocable
         except that: the Corporation shall be entitled to receive from such
         bank or trust company the interest or other earnings, if any, earned on
         any money so deposited in trust, and the holders of any shares redeemed
         shall have no claim to such interest or other earnings; and any balance
         of monies so deposited by the Corporation and unclaimed by the holders
         of the Series G1 Preferred Stock entitled thereto at the expiration of
         two years from the applicable date of redemption shall be repaid,
         together with any interest or other earnings earned thereon, to the
         Corporation, and after any such repayment, the holders of the shares
         entitled to the funds so repaid to the Corporation shall look only to
         the Corporation for payment without interest or other earnings.

                                       7
<PAGE>   8

                  (v) No Series G1 Preferred Stock may be redeemed except with
         funds legally available for the payment of the Redemption Price.

                  (vi) Holders of Series G1 Preferred Stock shall retain the
         conversion rights described in Section 7 hereof until the date of any
         redemption of the shares of Series G1 Preferred Stock in accordance
         with this Section 10.

         (c) Redemption by Conversion. In addition to the rights of conversion
pursuant to Section 9 hereof, on or after June 1, 2004, the Corporation may
further elect, in any six (6) month period, to redeem up to 50% of the
outstanding Series G1 Preferred Stock in accordance with this Section 10(c) by
requiring their redemption on thirty (30) days notice pursuant to the terms of
this Section 10(c) (the "REDEMPTION BY CONVERSION OPTION"). The redemption price
for purposes of this Section 10(c) shall be equal to the average Market Price of
the Common Stock during the twenty (20) consecutive Stock Exchange Business Days
ending not more than five (5) Stock Exchange Business days prior to the date
notice is given by the Corporation concerning its exercise of this Redemption by
Conversion Option, subject to appropriate adjustments to account for the effects
of dividends, distributions, stock splits, recapitalizations and similar events.
If the Market Capitalization of the Corporation is less than $300 million on the
date the notice by the Corporation of its exercise of this Redemption by
Conversion Option is given, then each share of Series G1 Preferred Stock will be
redeemed for the number of shares of Common Stock equal to 110% of the $100.00
liquidation value per share (the "REDEMPTION Value") divided by the redemption
price. If the Market Capitalization of the Corporation is $300 million or more
on the date the notice by the Corporation of its exercise of this Redemption by
Conversion Option is given, then each share of Series G1 Preferred Stock will be
redeemed for the number of shares of Common Stock equal to 105% of the
Redemption Value divided by the redemption price. The amount of the accrued and
unpaid dividends (whether or not earned or declared) accrued by the Series G1
Preferred Stock delivered for redemption as specified above (computed to the end
of the day the Series G1 Preferred Stock is so redeemed) shall be sent to the
holder thereof by means of check or other means established by the Corporation,
if the dividend is in cash, or if the dividend is in shares of Common Stock,
each as determined by the Corporation, by such means as selected by the
Corporation.

         Section 11. Notice. Where this Certificate of Designations provides for
notice of any event to the holders of the Series G1 Preferred Stock by the
Corporation or any other Person, such notice shall be sufficiently given (unless
otherwise herein specifically provided) if published in the Authorized
Newspapers.

         Section 12. General Provisions Relating to the Series G1 Preferred
Stock.

         (a) Form. The Series G1 Preferred Stock shall be issued in fully
registered form in the form satisfactory to the Corporation.

         (b) Compliance with United States Securities Laws. Nothing contained
herein shall be deemed to authorize any transfers of certificates of the Series
G1 Preferred Stock otherwise than accordance with the Securities Act. Neither
the Corporation or its transfer agent shall recognize or give effect to any
attempt to transfer (by book entry or otherwise) or convert any Series G1
Preferred Stock or any interest therein in violation of either the Securities
Act. The certificates representing the Series G1 Preferred Stock and the
Conversion shares shall bear restrictive legends thereon recommend by legal
counsel for the Corporation regarding the restrictions on the transferability
thereof to ensure compliance the Securities Act until the Series G1 Preferred
Stock and/or the Conversion shares, as the case may be become Freely Tradeable.

         Section 13. Certain Definitions.

         "Alternative Stock Exchange" means any other national or regional stock
exchange or quotation service such as the Nasdaq Market System or any similar
quotation service maintained by the National Quotation Bureau or any successor
thereto.

         "Authorized Newspapers" means the Luxembourg Wort of Luxembourg and The
Financial Times (European Edition) of London, England. If either such newspaper
shall cease to be published, the Corporation shall substitute for

                                       8
<PAGE>   9

it another newspaper in Europe, customarily published at least once a day for at
least five (5) days in each calendar week, of general circulation. If, because
of temporary suspension of publication or general circulation of either such
newspaper or for any other reason, it is impossible or, in the opinion of the
Corporation, impracticable to make any publication of any notice required by
this Certificate of Designations in the manner herein provided, such publication
or other notice in lieu thereof which is made by the Corporation in the exercise
of its reasonable discretion shall constitute a sufficient publication of such
notice.

         "Capital Stock" of any Person means the Common Stock or preferred stock
of such Person. Unless otherwise stated herein or the context otherwise
requires, "Capital Stock" means Capital Stock of the Corporation

         "Closing Date" means the date of which the Series G1 Preferred Stock is
sold to the holders thereof.

         "Commission" means the Securities and Exchange Commission.

         "Common Stock Valuation Method" has the meaning given to it in Section
4(a) hereof.

         "Conversion Agent" means any Person (including the Corporation acting
as Conversion Agent) authorized by the Corporation to effect conversions of the
Series G1 Preferred Stock on behalf of the Corporation.

         "Dividend Payment Date" has the meaning given to it in Section 4(b)
hereof.

         "Freely Tradeable" means, with respect to the Common Stock issuable
upon the conversion of or the payment of a dividend upon the Series G1 Preferred
Stock, that under the Securities Act the holders thereof may then offer and sell
any amount of such outstanding securities to the public in the United States in
transactions that are not brokers' transactions (as defined in the Securities
Act) either (i) pursuant to an effective registration statement then in effect
or (ii) pursuant to Rule 144(k). For purposes of determining whether such
securities are Freely Tradeable, it shall be assumed that no affiliate of the
issuer has ever held such securities from and after their issuance.

         "Group" means the Corporation and all its Principal Subsidiaries.

         "Market Capitalization" means, on any date, the average, over the
thirty (30) calendar day period commencing thirty-five (35) calendar days prior
to such date, of the product of the Market Price of the Common Stock and the
number of shares of Common Stock of the Corporation issued and outstanding on
such date; provided, however, that appropriate adjustments shall be made to the
Market Prices and number of shares used in determining such Market
Capitalization to account fairly for the effect of dividends payable in equity
securities of the Corporation or any other Person, spin-offs of subsidiaries,
mergers in which the Corporation or a Principal Subsidiary is a constituent
party, and similar events.

         "Market Price" means the closing sales price on the American Stock
Exchange or any Alternative Stock Exchange on any Stock Exchange Business Day.

         "Person" means any individual, corporation, partnership, association,
trust or other entity or organization, including a government or political
subdivision or any agency or instrumentality thereof.

         "Principal Subsidiary" means a Subsidiary of either the Corporation or
any Principal Subsidiary:

         (a) whose gross assets represent 10 percent or more of the consolidated
gross assets of the Group as calculated by reference to the then latest audited
financial statements of the Group; or

         (b) to which is transferred all or substantially all of the business,
undertaking and assets of a Subsidiary of the Corporation which immediately
prior to such transfer is a Principal Subsidiary, whereupon the transferor
Subsidiary shall immediately cease to be a Principal Subsidiary and the
transferee Subsidiary shall cease to be a

                                       9
<PAGE>   10

Principal Subsidiary under the provisions of this sub-paragraph (b) (but without
prejudice to the provisions of sub-paragraph (a) above), upon publication of its
next audited financial statements.

         "Property" means any kind of property or asset, whether real, personal,
mixed, or tangible or intangible, and any interest therein.

         "Securities Act" means the United States Securities Act of 193 as in
effect on the date of the filing of this Certificate with the Secretary of State
of Delaware or as such act may hereafter be amended.

         "Series G1 Preferred Stock" means the Corporation's Series G1
Convertible Preferred Stock, $1.00 par value.

         "Stock Exchange Business Day" means as any day (other than a Saturday
or Sunday) on which the American Stock Exchange or the Alternative Stock
Exchange, as the case may be, is open for business.

         "Subsidiary" of any Person means any Corporation of which at least a
majority of the shares of stock having by the terms thereof ordinary voting
power to elect a majority of the Board of Directors of such Corporation
(irrespective of whether or not at the time stock of any other class or classes
of such Corporation shall have voting power by reason of the happening of any
contingency) is directly or indirectly owned or controlled by any one of or any
combinations of the Corporation or one or more of its Subsidiaries."

                                    * * * * *

                                       10
<PAGE>   11
         IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
duly executed on its behalf by its undersigned Assistant Secretary this 19th day
of October, 2000.

                                          HARKEN ENERGY CORPORATION,
                                          a Delaware corporation

                                          By:  /s/ Karen Kerr-Johnson
                                               -----------------------------
                                          Name:  Karen Kerr-Johnson
                                          Title:  Assistant Secretary

                                       11
<PAGE>   12

                                    EXHIBIT A

                              NOTICE OF CONVERSION

To:      Harken Energy Corporation

To:      [Conversion Agent]

                  The undersigned holder of the Series G1 Convertible Preferred
Stock, par value U.S. $1.00 (the "PREFERRED STOCK") of Harken Energy Corporation
(the "CORPORATION") in the aggregate liquidation preference value of U.S.
$100.00 irrevocably exercises the option to convert [INSERT NUMBER] shares of
Preferred Stock into shares of Common Stock of the Corporation, par value U.S.
$0.01 (the "COMMON STOCK"), in accordance with the terms of the Certificate of
Designations relating to the issuance by the Corporation of the Preferred Stock
and directs that the Common Stock issuable and deliverable upon such conversion
be issued and delivered to the undersigned in the name and at the address set
forth below.

                  If the Common Stock is not Freely Tradeable at the date
hereof, the undersigned holder hereby certifies to the Corporation that it:

                  (1)(a) is an "accredited investor" (as defined in Rule 501 of
Regulation D under the U.S. Securities Act of 1933, as amended (the "SECURITIES
ACT")), or (b) is acquiring the Common Stock in a transaction exempt from the
registration requirements of the Securities Act; and

                  (2) acknowledges that the Common Stock has not been registered
under the Securities Act and are "restricted securities" within the meaning of
the Securities Act; and

                  (3) understands and agrees that if within two years after the
date of the original issuance of the Preferred Stock or within three months
after it ceases to be an affiliate (within the meaning of Rule 144 under the
Securities Act) of the Corporation, upon conversion thereof the Common Stock may
be resold, pledged, or transferred only (i) to the Corporation, (ii) pursuant to
an exemption from the registration requirements of the Securities Act provided
by Rule 144 (if applicable) under the Securities Act, or (iii) pursuant to an
effective registration statement under the Securities Act, in each case in
accordance with any applicable securities law of any state of the United States;
and

                  (4) it understands that the certificates representing the
Common Stock will bear a restrictive legend describing the foregoing restriction
on transfer, unless otherwise agreed by the Corporation.

                  If the Common Stock is to be issued in the name of a person
other than the undersigned or a nominee of the undersigned, the undersigned will
pay all transfer taxes payable with respect thereto and is delivering herewith a
certificate in proper form that the applicable restrictions on transfer have
been complied with.

                  All terms not otherwise defined herein shall have the
respective meanings set forth in the Certificate of Designations relating to the
Preferred Stock.

                                     * * * *
<PAGE>   13

DATE:                                        ----------------------------------
      ----------------------------------     Name of Holder

                                             ----------------------------------
                                             Signature(s) of Holder

Address for Delivery of Shares:
                                             ----------------------------------
                                             ----------------------------------
                                             ----------------------------------
                                             ----------------------------------

Name for Registration of Shares (if
different than Holder):
                                             ----------------------------------

                                       A-2

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