SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
SABA PETROLEUM COMPANY
(Name of Issuer)
Common Stock, $.001 par value
(Title of Class of Securities)
785152109
(CUSIP Number)
Horizontal Ventures, Inc.
630 Fifth Avenue, Suite 1501
New York, NY 10111
(212) 218-4680
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
October 8, 1998
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is filing
this schedule because of Sections 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g),
check the following box [ ].
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Section 240.13d-7(b) for
other parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class
of securities, and for any subsequent amendment containing information
which would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of
that section of the Act but shall be subject to all other provisions of
the Act (however, see the Notes).
1) Names of Reporting Persons I.R.S. Identification Nos. of Above
Persons (entities only)
Horizontal Ventures, Inc. ("HVI")
International Publishing Holding s.a. ("IPH")
2) Check the Appropriate Box if a Member of a Group (See Instructions)
(a) X
(b)__________________________________________________________________
(3) SEC Use Only_________________________________________________________
(4) Source of Funds (See Instructions) OO
(5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e)
(6) Citizenship or Place of Organization
HVI - Colorado; IPH - Luxembourg
Number of (7) Sole Voting Power HVI: 5,620,000; IPH: 0
Shares Bene-
ficially (8) Shared Voting Power HVI: 500,000; IPH: 500,000
Owned by
Each (9) Sole Dispositive Power HVI: 5,620,000; IPH: 0
Report-
ing Person (10) Shared Dispositive Power HVI: 500,000; IPH: 500,0000
With:
(11) Aggregate Amount Beneficially Owned by Each Reporting Person
HVI: 6,120,000; IPH: 500,000
(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions)
(13) Percent of Class Represented by Amount in Row (11) HVI: 36.9%; IPH 3.0%
(14) Type of Reporting Person (See Instructions) HVI-CO; IPH-CO
Item 1. Security and Issuer.
Common Stock, $.001 par value (the "Common Stock"), of Saba Petroleum
Company, a Delaware corporation ("Saba"). The address of the principal
executive offices of Saba is 3201 Airpark Drive, Suite 201, Santa Maria,
CA 93455.
Item 2. Identity and Background.
HVI is a Colorado corporation engaged primarily in the business of
exploiting proven producing reservoirs by utilizing a low cost
proprietary horizontal drilling technology to increase production rates.
The address of the principal executive offices of HVI is 630 Fifth
Avenue, Suite 1501, New York, NY 10111. IPH is a Luxembourg corporation
and a significant shareholder of HVI that has agreed to assist HVI in its
efforts to acquire securities of Saba. The principal business address of
IPH is c/o Mr. Joseph G. B. Platvoet, Hans Memlingdreef 20, 3920 Lommel,
Belgium. The principal business of IPH is to make, hold and dispose of
investments.
Neither HVI nor IPH, nor any executive officer or director of HVI or IPH,
has during the last five years been convicted in a criminal proceeding or
been subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal
or state securities laws or finding any violation with respect to such
laws.
Information with regard to the name, citizenship, residence or business
address, present principal occupation or employment and the name,
principal business and address of any corporation or other organization
in which such employment is conducted for each executive officer and
director of HVI and IPH is attached to this Schedule 13D as Schedule I
and incorporated herein by reference.
Item 3. Source and Amount of Funds or Other Consideration.
To complete the purchase of the securities of Saba in the transactions
described herein, HVI intends to use capital raised in a private
placement of shares of HVI Series A Convertible Preferred Stock for
aggregate gross proceeds of approximately $15 million. In connection
with such planned private placement, HVI has agreed to pay Jefferies &
Company, Inc., its investment banking representative in the private
placement, fees equal to six percent of the amount raised, plus certain
reimbursable expenses.
Item 4. Purpose of Transaction.
HVI, with the assistance of IPH, is acquiring the securities of Saba for
the purpose of gaining control of Saba.
(a) HVI has entered into the following transactions which relate to
the acquisition of securities of Saba:
On October 6, 1998, HVI entered into a Preferred Stock Transfer
Agreement (the "Preferred Stock Transfer Agreement") with RGC
International Investors, LDC ("RGC"), pursuant to which HVI
acquired on October 6, 1998 690 shares of the 8,000 shares of
issued and outstanding Series A Convertible Preferred Stock (the
"Series A Preferred Stock") of Saba held by RGC in exchange for
cash in the amount of $750,000, of which $500,000 was borrowed
from IPH. HVI has executed a Promissory Note to repay the
$500,000 to IPH without interest on or before December 31, 1998
in the form of cash or shares of Saba Series A Preferred Stock
held by HVI. The Promissory Note is secured by a pledge of two-
thirds of the Saba Series A Preferred Stock held by HVI. Under
the Preferred Stock Transfer Agreement, HVI has the exclusive
right until November 6, 1998 to acquire from RGC up to an
additional 6,310 shares of Saba Series A Preferred Stock held by
RGC in exchange for cash in the amount of approximately
$6,859,000, and such exclusive right can be extended for an
additional thirty days by HVI's payment of $500,000, which is
nonrefundable but if the option is exercised within the extended
thirty day period is applied to the acquisition price. In
addition, HVI has the exclusive right to acquire any remaining
shares of Saba Series A Preferred Stock held by RGC after it
converts a sufficient number of shares of Saba Series A Preferred
Stock to cover RGC's short position with respect to 653,000
shares of Saba Common Stock. The 690 shares of Saba Series A
Preferred Stock acquired by HVI and the minimum of 6,310 shares
of Saba Series A Preferred Stock which HVI has the exclusive
right to acquire from RGC, along with the accrued but unpaid
dividends thereon, are convertible into an estimated aggregate of
3,040,000 shares of Saba Common Stock.
On October 8, 1998 HVI entered into a Common Stock Purchase
Agreement (the "Common Stock Purchase Agreement") pursuant to
which Saba will sell and issue to HVI by November 30, 1998 an
aggregate of 2,500,000 shares of Saba Common Stock in exchange
for cash in the aggregate amount of $7,500,000.
Pursuant to an Option Agreement dated July 22, 1998 (the "Option
Agreement") between HVI and IPH, HVI holds a call option to
acquire the 500,000 shares of Saba Common Stock held by IPH at an
exercise price equal to the cost to IPH of acquiring such shares
plus twenty percent, which is estimated to be approximately
$1,020,000. HVI has the option of paying such exercise price to
IPH in the form of cash or shares of HVI common stock. All of
the 500,000 shares of Saba Common Stock currently held by IPH
were acquired within the sixty days immediately preceding the
date of this filing, with most of the shares acquired in open
market purchases during August 1998 at an average price of $1.75
per share.
Within the sixty days immediately preceding the date of this
filing, HVI has acquired 80,000 shares of Saba Common Stock in
open market purchases at prices ranging from $0.75 to $1.25 per
share.
HVI may consider a plan to acquire the remaining shares of issued
and outstanding Saba common stock in a tender offer transaction.
(b) HVI may consider a plan to effectuate a merger of HVI and Saba
into a single corporate entity once HVI acquires a controlling
interest in Saba.
(c) HVI has not developed any plans or proposals to sell or transfer
a material amount of assets of Saba or any of its subsidiaries.
(d) Upon the execution of the Common Stock Purchase Agreement,
Randeep S. Grewal, a director and executive officer of HVI, was
appointed to the Saba board of directors. Upon the closing of
the Common Stock Purchase Agreement, a second director designated
by HVI is to be appointed to the Saba board of directors. In
addition, the Preferred Stock Transfer Agreement provides that
upon the closing thereof a third director designated by HVI shall
be appointed to the Saba board of directors.
(e) Except as discussed in Item 4(b) above, HVI does not currently
have any plans or proposals for any material change in the
present capitalization or dividend policy of Saba.
(f) Except as discussed in Item 4(b) above, HVI does not currently
have any plans or proposals for any other material change in
Saba's business or corporate structure.
(g) Except as discussed in Item 4(b) above, HVI does not currently
have any plans or proposals for changes in Saba's charter, bylaws
or instruments corresponding thereto or other actions which may
impede the acquisition of control by Saba by any person.
(h) If the possible tender offer transaction or merger with HVI
discussed in Item 4(a)-(b) above is completed, it is anticipated
that Saba common stock will be delisted from the American Stock
Exchange.
(i) Except as discussed in Item 4(a)-(b), HVI does not currently have
any plans or proposals for causing the Saba common stock to
become eligible for termination of registration pursuant to
Section 12(g)(4) of the Act.
(j) None.
Item 5. Interest in Securities of the Issuer.
(a) HVI and IPH beneficially own approximately 6,120,000 shares and
500,000 shares of Saba Common Stock, respectively, which
represent 36.9% and 3.0%, respectively, of the issued and
outstanding shares of Saba Common Stock, consisting of the
following:
HVI: (i) An aggregate of approximately 3,040,000 shares of Saba
Common Stock into which the (a) 690 shares of Saba Series A
Preferred Stock acquired by HVI from RGC under the Preferred Stock
Transfer Agreement and (b) 6,310 shares of Series A Preferred
Stock held by RGC but which HVI has the exclusive right to acquire
under the Preferred Stock Transfer Agreement, along with the
accrued but unpaid dividends on such shares of Series A Preferred
stock, are convertible, (ii) 2,500,000 shares of Saba Common
Stock which are to be issued to HVI under the Common Stock
Purchase Agreement, (iii) 500,000 shares of Saba Common Stock
held by IPH and subject to a call option by HVI under the Option
Agreement, and (iv) 80,000 shares of Saba Common Stock held
directly by HVI.
IPH: 500,000 shares of Saba Common Stock that IPH
currently holds and which are subject to a call option
in favor of HVI.
(b) HVI has the sole power to vote or to direct the vote of and to
dispose or direct the disposition of the (i) aggregate of
approximately 3,040,000 shares of Saba Common Stock into which the
(a) 690 shares of Saba Series A Preferred Stock acquired by HVI
from RGC under the Preferred Stock Transfer Agreement and (b) 6,310
shares of Series A Preferred Stock held by RGC but which HVI has
the exclusive right to acquire under the Preferred Stock Transfer
Agreement, along with the accrued but unpaid dividends on such
shares of Series A Preferred stock, are convertible, (ii) 2,500,000
shares of Saba Common Stock which are to be issued to HVI under the
Common Stock Purchase Agreement, and (iii) 80,000 shares of Saba
Common Stock held directly by HVI.
HVI has the shared power with IPH by virtue of HVI's call option
under the Option Agreement to vote or to direct the vote of and to
dispose or direct the disposition of the 500,000 shares of Saba
Common Stock held by IPH.
IPH has the shared power with HVI by virtue of HVI's call option
under the Option Agreement to vote or to direct the vote of and to
dispose or to direct the disposition of the 500,000 shares of Saba
Common Stock that IPH currently holds.
(c) Other than as set forth herein, there have been no transactions in
Saba Common Stock effected by HVI or IPH during the past 60 days.
(d) No other person is known to have the right to receive or the power
to direct the receipt of dividends from, or the proceeds from the
sale of, the Saba Common Stock beneficially owned by HVI and IPH.
(e) Not applicable.
Item 6. Contract, Arrangements, Understandings or Relationships With Respect
to Securities of the Issuer.
Except as discussed in Item 4 above, HVI and IPH are not parties to any
contract, arrangement, understanding or relationship (legal or otherwise)
with respect to any securities of the issuer, including but not limited
to agreements to transfer or voting of any of the securities, finder's
fees, joint ventures, loan or option arrangements, put or calls,
guarantees of profits, division of profits or loss or the giving or
withholding of proxies.
Item 7. Material to be Filed as Exhibits.
7.1 Preferred Stock Transfer Agreement dated October 7, 1998 between
HVI and RGC.
7.2 Common Stock Purchase Agreement dated October 8, 1998 between
Saba and HVI.
7.3 Option Agreement dated July 22, 1998 between IPH and HVI.
7.4 Promissory Note by HVI payable to the order of IPH.
7.5 Pledge Agreement between HVI and IPH.
Signatures
After reasonable inquiry and to the best of our knowledge and belief, the
undersigned certify that the information set forth in this statement is true,
complete and correct.
October 14, 1998
Date
HORIZONTAL VENTURES, INC.
By:/S/ RANDEEP S. GREWAL
Randeep S. Grewal, Chairman and CEO
INTERNATIONAL PUBLISHING HOLDING S.A.
By:/S/ VINCENT P. KAMER
Vincent P. Kamer, Chairman of the
Board of Directors
SCHEDULE I
EXECUTIVE OFFICERS AND DIRECTORS OF HVI AND IPH
HVI:
Randeep S. Grewal
Chairman of the Board, Chief Executive Officer and Director
10815 Briar Forest Drive, Houston, TX 77042/ 630 Fifth Avenue, Suite 1501, New
York, NY 10111
Present principal occupation or employment: Executive officer of HVI
Principal business and address of organization where employment conducted: HVI
is engaged primarily in the business of exploiting oil wells with declining
production levels by utilizing low cost horizontal drilling technology to
increase production rates; 630 Fifth Avenue, Suite 1501, New York, NY 10111
Citizenship: India
Dr. Jan F. Holtrop
Director
Van Alkemadelaan, 2596 AS, The Hague, The Netherlands
Present principal occupation or employment: Senior Production Technology
professor at the Delft University of Technology within the Faculty of
Petroleum Engineering and Mining in The Hague, Netherlands
Principal business and address of organization where employment conducted:
Education;
Van Alkemadelaan, 2596 AS, The Hague, The Netherlands
Citizenship: Dutch
Dirk Van Keulen
Director
Heemraadslag 14, 2805 DP Gauda, The Netherlands
Present principal occupation or employment: Private investor
Principal business and address of organization in which employment conducted:
Investment management; Heemraadslag 14, 2805 DP Gauda, The Netherlands
Citizenship: Dutch
George Andrews
Director
7899 West Frost Drive
Littleton, CO 80123
Present principal occupation or employment: Consultant and private investor
Principal business and address of organization in which employment conducted:
Consulting; 7899 West Frost Drive
Littleton, CO 80123
Citizenship: U.S.
<PAGE>
IPH:
IPH is managed by a board of directors consisting of three individuals, namely,
(1) Vincent Pieter Kamer ("Kamer"), (ii) Joseph G. B. Platvoet ("Platvoet") and
(iii) Hans M. Koppenaal ("Koppenaal").
1. Kamer is of German and Dutch nationality and resides at Groenedaalse
Steenweg 135, 1560 Hoeilaart, Belgium. Mr. Kamer's principal
occupation is to serve as a division director of a European
subsidiary of a multi-national pharmaceutical company that is not
associated or connected in any way with IPH.
2. Platvoet is of Dutch nationality and resides at Hans Memlingdreef
20, 3920 Lommel, Belgium. Platvoet is a retired, private investor.
3. Koppenaal is of Dutch nationality and resides at Tolhutterweg 22,
72621 KT Ruurlo, the Netherlands. Koppenaal is the owner and
manager of Makotex BV, an import/export textile company, as well as
Mekolux Investments V.V., a private investment company, both having
the same address at Ruurlo, the Netherlands.
EXHIBIT 7.1
PREFERRED STOCK TRANSFER AGREEMENT
THIS PREFERRED STOCK TRANSFER AGREEMENT (this "Agreement") is
entered into as of this 5th day of October, 1998 by and between RGC
INTERNATIONAL INVESTORS, LDC ("RGC") and HORIZONTAL VENTURES, INC. ("HVI") and
consented to by SABA PETROLEUM COMPANY ("SABA").
W I T N E S S E T H:
WHEREAS, RGC owns 8,000 shares of Series A Convertible Preferred
Stock, par value $0.001 per share, of SABA (the "Series A Preferred");
WHEREAS, RGC desires to sell, and HVI desires to buy, up to 7,000
shares of the Series A Preferred (the "Preferred Shares"), in exchange for
cash in an amount equal to 104% of the stated value thereof, plus an
additional cash amount representing all accrued and unpaid dividends thereon
through the closing of the transactions contemplated hereby (which dividends
aggregated $319,890.41 through the close of business on October 5, 1998 and
will continue to accrue at the rate of $1,150.68 per day for each day
thereafter); and
WHEREAS, the shares of Series A Preferred not being sold to HVI
hereunder may be converted into Common Stock of SABA in accordance with the
terms of the Certificate of Designations, Preferences and Rights governing the
Series A Preferred (the "Certificate of Designations") subsequent to the later
to occur of (i) the approval by the shareholders of SABA of the issuance of
shares of Common Stock in excess of 20% of SABA's outstanding Common Stock
pursuant to the conversion of shares of Series A Preferred (the "Shareholder
Approval Date") and (ii) the declaration by the Securities and Exchange
Commission of the effectiveness of SABA's Registration Statement on Form S-1
covering the resale of the shares underlying such Series A Preferred (File No.
333-45023) (the "Effective Date"); provided, however, that any portion thereof
not immediately convertible as a result of the 4.9% limitation set forth in
the Certificate of Designations will be converted as soon thereafter as
practicable.
NOW, THEREFORE, in consideration of the mutual premises and
covenants contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, it is mutually
agreed and covenanted by and between the parties to this Agreement as follows:
1. Initial Sale and Purchase of the Preferred Shares.
Subject to the terms and conditions of this Agreement, on the date
hereof, RGC hereby agrees to transfer, sell and assign to HVI, and HVI hereby
agrees to buy from RGC, the First Closing Shares (as defined herein), in
exchange for, and upon receipt of certificates representing the First Closing
Shares (as defined herein) (the "First Closing Preferred Certificates"), an
aggregate purchase price (the "First Closing Purchase Price") of $750,000.00.
The "First Closing Shares" shall mean the number of shares of Series A
Preferred equal to (i) 721.15 minus (ii) the quotient of (A) all accrued and
unpaid dividends on the First Closing Shares through the date hereof divided
by (B) 1,040; e.g. the Final Shares were 690.8 shares of Series A Preferred as
of October 5, 1998.
2. Subsequent Sale and Purchase of the Preferred Shares.
(a) On or before the thirtieth (30th) day following the First
Closing (as defined herein), HVI shall have the exclusive option to buy from
RGC all of RGC's right, title and interest in the Final Shares (as defined
herein) in exchange for, and upon receipt of certificates representing the
Final Shares (the "Final Preferred Certificates"), an aggregate purchase price
equal to $1,040.00 for each Final Share (or fraction thereof) plus all accrued
and unpaid dividends on each such Final Share (or fraction thereof) through
the date of such purchase (the "Final Purchase Price"), provided, however,
that HVI may extend the exclusive option set forth above for an additional
30-day period by paying to RGC, on or before the thirtieth (30th) day
following the First Closing, the amount of $500,000 as a nonrefundable deposit
(the "Deposit") toward the purchase of the Final Shares. In the event that
HVI elects to pay the Deposit, then, on or before the thirtieth (30th) day
following the date of such payment, HVI shall have the option to buy from RGC
all of RGC's right, title and interest in the Final Shares for an amount equal
to the Final Purchase Price, less the amount of the Deposit. The "Final
Shares" shall mean the number of shares equal to 7,000 minus the First Closing
Shares.
(b) If HVI fails to exercise its option to purchase the Final
Shares prior to the expiration of the first 30-day period or if, after payment
of the Deposit, HVI fails to exercise its option prior to the expiration of
the second 30-day period, (i) RGC shall be entitled to keep the Deposit (to
the extent such amount was paid in exchange for the additional 30-day period)
and shall be free to sell the Final Shares and the Retained Shares (as defined
below) to any third party and (ii) RGC shall have an option for 15 business
days following the expiration of any such 30-day option period to reacquire
the First Closing Shares for the First Closing Purchase Price.
(c) HVI further agrees that it will not sell or convert any of
the First Closing Shares until the earlier of (i) its purchase of the Final
Shares from RGC and (ii) in the event HVI fails to exercise its option, the
date on which RGC's option to reacquire the First Closing Shares expires.
3. Delivery of Preferred Certificates and Purchase Price.
At the closing of the transactions contemplated by Section 1 of
this Agreement (the "First Closing") and at the closing of the transactions
contemplated by Section 2(a) of this Agreement, RGC will deliver the
appropriate First Closing Preferred Certificates and the Final Preferred
Certificates, as the case may be, to HVI and HVI will deliver the First
Closing Purchase Price and the Final Purchase Price, as the case may be, to
RGC, by wire transfer to RGC's account, in accordance with RGC's written
instructions.
4. Obligation to Unwind Short Position.
RGC currently holds a short position of 653,000 shares of Common
Stock of SABA (the "Short Position"). Following the consummation of the
transactions contemplated by this Agreement, RGC will continue to own 1,000
shares of Series A Preferred (the "Retained Shares"). RGC agrees that,
following the later to occur of (i) the Shareholder Approval Date and (ii) the
Effective Date, it will use its commercially reasonable efforts to unwind the
Short Position. RGC agrees that it will only convert such number of the
Retained Shares as is necessary to unwind the Short Position. In the event
that, following the unwinding of the Short Position, RGC continues to own any
shares of Series A Preferred, HVI will have the right, exercisable within 15
business days after its receipt of written notice from RGC that RGC has
unwound the Short Position, to buy such shares of Series A Preferred for the
purchase price of $1,040 per share, plus any accrued and unpaid dividends
thereon.
5. Representations and Warranties of RGC.
(a) RGC has the power and authority to execute, deliver and
perform this Agreement. This Agreement constitutes RGC's valid and legally
binding obligation, enforceable against it in accordance with its terms,
except as such enforceability may be limited by general principles of equity
or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
or similar laws relating to, or affecting generally, the enforcement of
creditors' rights and remedies.
(b) RGC represents and warrants to HVI that the Preferred
Shares and the Retained Shares are owned by RGC and, when sold and delivered
to HVI in accordance with the terms hereof, will be transferred free and clear
of all liens and encumbrances created by RGC; provided, however, that the
Preferred Shares and the Retained Shares are subject to (i) the terms of that
certain Securities Purchase Agreement, dated as of December 31, 1997 (the
"Purchase Agreement"), pursuant to which such shares were issued, as well as
all of the documents executed in connection therewith, and (ii) the terms of
that certain letter agreement, dated June 1, 1998, by and among RGC, SABA and
OMIMEX, INC. ("OMIMEX") regarding, among other things, the grant by RGC to
OMIMEX of the right to purchase up to 4,000 shares of Series A Preferred in
accordance with the terms thereof (the "Letter Agreement" and, collectively
with the documents referred to in (i) above, the "Series A Documentation").
6. Representations and Warranties of HVI.
(a) HVI has the power and authority to execute, deliver and
perform this Agreement. This Agreement constitutes HVI's valid and legally
binding obligation, enforceable against it in accordance with its terms,
except as such enforceability may be limited by general principles of equity
or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
or similar laws relating to, or affecting generally, the enforcement of
creditors' rights and remedies.
(b) HVI is purchasing the Preferred Shares (and to the extent
any Retained Shares are purchased pursuant to Section 3 hereof, the Retained
Shares) for its own account for investment only and not with a present view
towards the public sale or distribution thereof, except pursuant to sales
registered or exempted from registration under the Securities Act of 1933, as
amended (the "Act").
(c) HVI is an "accredited investor," as that term is defined
in Rule 501(a) of Regulation D under the Act.
(d) HVI acknowledges that neither the Preferred Shares, the
Retained Shares nor the shares of common stock into which the Preferred
Shares and the Retained Shares are convertible have been registered under the
Act and may not be transferred or sold in the absence of an effective
registration statement or an exemption from the registration requirements
under the Act.
(e) HVI acknowledges that it has read and understands all of
the Series A Documentation, including but not limited to the Purchase
Agreement and the Registration Rights Agreement, each dated as of December 31,
1997, the Certificate of Designations and the Letter Agreement.
7. Other Agreements.
(a) HVI hereby acknowledges and agrees that, upon the
consummation of the transactions contemplated hereby, it will own the
Preferred Shares (and to the extent any Retained Shares are purchased pursuant
to Section 3 hereof, the Retained Shares) subject to the terms of the Series A
Documentation, including any rights OMIMEX may have to purchase up to 4,000
shares of Series A Preferred under the Letter Agreement.
(b) RGC agrees that, following the closing of the sale of the
Final Shares to HVI and the receipt by RGC of the Final Purchase Price (the
"Final Closing"), RGC will waive any default by SABA occurring prior to the
Final Closing under any of the provisions of the documents comprising the
Series A Documentation, provided that such waiver shall not apply to any
defaults thereunder arising after the date of the Final Closing or which are
in existence as of the Final Closing and continue thereafter.
8. Notices.
Notices under this Agreement shall be in writing and sent by
registered or certified mail, return receipt requested, postage paid, to HVI
and RGC at their respective principal offices or at such other address as each
such party shall notify the other in writing.
9. Severability.
The various provisions of this Agreement are severable from each
other and from the rest of the Agreement and, in the event that any part of
this Agreement shall be held to be invalid or unenforceable by a court of
competent jurisdiction, the remainder of this Agreement shall be fully
effective, operative and enforceable.
10. Binding Effect.
This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns.
11. Governing Law.
This Agreement shall be construed and interpreted in accordance
with the laws of the Commonwealth of Pennsylvania.
12. Entire Agreement.
This Agreement contains the entire agreement of the parties and
may not be changed orally but only by an agreement in writing signed by RGC
and HVI. This Agreement shall supersede all prior agreements between RGC and
HVI relating to the subject matter hereof.
13. Counterparts.
This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original and all of which shall be deemed to be
one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, RGC has duly executed this Agreement on the day
and year first above written; provided, however, that RGC's execution shall be
rescinded and this Agreement shall be null, void and unenforceable against
RGC, unless HVI shall have executed this Agreement and returned a fully
executed copy hereof via facsimile to RGC at (610) 617-0570, on or before 5:00
p.m., Philadelphia time, Tuesday, October 6, 1998.
RGC INTERNATIONAL INVESTORS, LDC
By: Rose Glen Capital Management, L.P.,
Investment Manager
By: RGC General Partner Corp.,
as General Partner
/s/ Wayne Block
__________________________________
By: Wayne Block
Title: Managing Director
HORIZONTAL VENTURES, INC.
/s/ Randeep S. Grewal
__________________________________
By: Randeep S. Grewal
Title: President & C.E.O.
Date: October 5, 1998
ACCEPTED AND AGREED for all purposes, evidencing SABA's right to consent
pursuant to Section 8(g) of the Purchase Agreement:
SABA PETROLEUM COMPANY
/s/ Ilyas Chaudhary
__________________________________
By: Ilyas Chaudhary
Title: President
Date: October 6, 1998
EXHIBIT 7.2
COMMON STOCK
PURCHASE AGREEMENT
THIS COMMON STOCK PURCHASE AGREEMENT (hereinafter called the "Agreement")
is entered into this 8th day of October, 1998 between Saba Petroleum Company,
a Delaware corporation (the "Company"), and Horizontal Ventures, Inc., a
Colorado corporation, hereinafter referred to as the "Purchaser" or "HVI".
RECITALS
WHEREAS, the Company intends to authorize the sale and issuance of an
aggregate of 2,500,000 Shares of its $0.001 par value common stock (the
"Common Stock") to the Purchaser; and
WHEREAS, Purchaser desires to purchase the Shares, and the Company
desires to issue and sell the Shares to the Purchaser, on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises hereinafter set forth, the parties hereto agree as follows:
ARTICLE 1
AGREEMENT TO SELL AND PURCHASE
Section 1.1 Authorization of Shares. On or prior to the Closing (as defined
in Section 2.1 below), the Company shall have authorized the sale and issuance
to the Purchaser of the Shares.
Section 1.2 Sale and Purchase. Subject to the terms and conditions hereof,
at the Closing (as hereinafter defined) and the Interim Closing (as provided
in Section 2.2) the Company hereby agrees to issue and sell to the Purchaser,
and the Purchaser agrees to purchase from the Company an aggregate of
2,500,000 Shares of Common Stock at a purchase price of $3.00 per share of
Common Stock.
ARTICLE 2
CLOSING AND DELIVERY
Section 2.1 Closing. The final closing under this Agreement (the "Closing")
shall take place at 10:00 a.m. local time on the 4th day of December, 1998, at
the offices of Cohen Brame & Smith Professional Corporation, 1700 Lincoln
Street, Suite 1800, Denver, Colorado 80203, or at such other time or place as
the Company and the Purchaser may mutually agree (such date is hereinafter
referred to as the "Closing Date"). Should the final closing not occur on the
Closing Date, this Agreement shall then terminate without relieving a party
from responsibility for breach of covenant.
Section 2.2 Interim Closing. On or before November 6, 1998 HVI shall
deliver to the Company $1,000,000, in immediately available funds and in
exchange receive a certificate representing 333,333 Shares of the Common Stock
therefore (the "Interim Closing"). The performance by HVI of its obligations
under this Section 2.2 is a condition precedent to all further obligations of
the Company under this Agreement.
Section 2.3 Delivery. At the Closing, subject to the terms and conditions
hereof, the Company will deliver to the Purchaser one or more certificates
representing 2,166,667 Shares purchased at the Closing by Purchaser against
payment of the purchase price therefor by wire transfer payable to the order
of the Company in the final amount of $6,500,000.
Section 2.4 Use of Proceeds. Proceeds of the Closing shall be generally
allocated as follows: (a) approximately $4.4 million for payment of the Omimex
debt under the Termination Agreement with the Company, and (b) approximately
$3.1 million for working capital.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations and Warranties of the Company. The Company
hereby represents and warrants that, except as listed on Schedule 3.1 attached
hereto or as described in filings heretofore made by the Company under the
Securities Exchange Act of 1934:
(1) Organization and Standing of the Company. The Company is a
corporation duly organized and validly existing and in good standing under the
laws of the State of Delaware. It has all requisite corporate power and
authority to carry on its business as now being conducted, to enter into this
Agreement and to carry out and perform the terms and provisions of this
Agreement. The Company is duly qualified to do business and is in good
standing in each jurisdiction in which the failure to be so qualified would
have a material adverse effect on the condition (financial or otherwise),
business, net worth, assets (including intangible assets), properties or
operations ("Material Adverse Effect") of the Company. The Company has no
direct or indirect interest, either by way of stock ownership or otherwise, in
any other firm, corporation, association, or business excepting partnerships,
operating agreements, farmout agreements, unitization, pooling agreements and
other customary oil and gas industry arrangements.
(2)(a) Capitalization and Indebtedness for Borrowed Moneys. At or
prior to Closing, the Company will be duly and lawfully authorized by its
Certificate of Incorporation, as amended, to issue 150 million Shares of
Common Stock of which 11,052,393 Shares are issued and outstanding as of the
date hereof. Additionally, the Company is authorized to issue 50 million
shares of preferred stock, $0.001 par value, of which 8,000 shares are
designated Series A Convertible Preferred and are issued and outstanding. The
Company has no treasury stock and no other authorized series or class of
stock. All the outstanding shares of Common Stock and Series A Convertible
Preferred Stock have been duly authorized and validly issued and are fully
paid and nonassessable and free of preemptive rights. Except as listed on
Schedule 3.1(2)(a) attached hereto, the Company is not obligated to issue any
additional common or preferred stock as a result of any options, warrants,
rights, conversion rights, obligations upon default, subscription agreement
or other obligation of any kind. All Shares to be issued pursuant to this
Agreement to the Purchaser shall be duly authorized by all other necessary
corporate action, validly issued, fully paid, nonassessable, issued in
compliance with state and federal securities laws and based upon the
representation of the Purchaser herein in compliance with the exemptions
promulgated under the Securities Act of 1933, as amended (the "Securities
Act"), and will be issued with a restrictive legend.
(b) The Company is not presently liable on account of any
indebtedness for borrowed moneys, except as reflected in the Financial
Statements (as hereinafter defined).
(3) The Company's Authority. The execution, delivery, and
performance of this Agreement shall have been duly authorized by all requisite
corporate action. This Agreement constitutes a valid and binding obligation
of the Company enforceable in accordance with its terms (except as limited by
bankruptcy, insolvency, or other laws affecting the enforcement of creditors'
rights). The execution, delivery and performance of this Agreement will not
conflict with any provision of the Certificate of Incorporation and any
amendments thereto, Bylaws and any amendments thereto of the Company, or of
any contract to which the Company is a party or otherwise bound.
(4) Financial Statements. The Company has furnished to the
Purchaser its audited balance sheet as of December 31, 1997 and its statement
of income and retained earnings, and cash flows for each of the two years
ended December 31, 1997, and its unaudited balance sheet as of June 30, 1998
and its statements of income and retained earnings and cash flows for the
period then ended (collectively, the "Financial Statements"). All of Financial
Statements present fairly the financial position of the Company as of the
respective balance sheet dates, and the results of its operations for the
respective periods therein specified. The Financial Statements were prepared
in accordance with generally accepted accounting principles applied upon a
basis consistent with prior accounting periods.
(5) Present Status. Subject to the terms of Section 3.4, the
Company has not, since June 30, 1998 and will not prior to the Closing Date
without the prior written consent of HVI which consent shall not be
unreasonably withheld, delayed, and shall be based in part on HVI's judgment
relative to the best interests of the Company's stockholders as a whole.
(a) Incurred any obligations or liabilities, absolute,
accrued, contingent, or otherwise and whether due or to become due, except
liabilities incurred in the ordinary course of business;
(b) Enter into any agreement obligating it to issue any equity
securities except as required by this Agreement.
(c) Discharged or satisfied any liens or encumbrances, or paid
any obligation or liability, absolute, accrued, contingent, or otherwise and
whether due or to become due, other than current liabilities reflected on the
Financial Statements and current liabilities incurred since the close of
business on the date of the Financial Statements, in each case, in the
ordinary course of business;
(d) Declared or made any payment or distribution to its
stockholders or purchased or redeemed, or obligated itself to purchase or
redeem, any of its shares of Common Stock or other securities except with
respect to its Series A Preferred Stock and except as may be required by is 9
% Convertible Debentures;
(e) Voluntarily mortgaged, pledged, or subjected to lien, or
any other encumbrances or charges, any of its assets, tangible or intangible;
(f) Sold or transferred any of its material assets, or
canceled any material debt or claim;
(g) Suffered any material damage, destruction, or loss
(whether or not covered by insurance) affecting the properties of the Company,
or waived any rights of substantial value;
(h) Except with respect to this Agreement, any transaction
regarding the sale, lease or encumbrance of any asset, the settlement of any
obligation or enter into any other material transaction other than in the
ordinary course of business.
(6) Litigation. Except as disclosed in the Financial Statements
or in Schedule 3, there are no legal actions, suits, arbitrations, or other
legal or administrative proceedings pending or threatened against the Company
which would reasonably be expected to have a material adverse effect upon it,
its properties, assets, or business; and the Company is not aware of any facts
which to its knowledge would reasonably be expected to result in any action,
suit, arbitration, or other proceeding which in turn would reasonably be
expected to result in any material adverse change in the business or condition
(financial or otherwise) of the Company or its properties or assets. The
Company is not in default of any judgment, order, or decree, of any court or,
in any material respect of any government agency or instrumentality, except as
set forth in the Financial Statements.
(7) Compliance With the Law and Other Instruments. To the best of
the Company's knowledge, the business operations of the Company have been and
are being conducted in substantial compliance with all applicable laws, rules,
and regulations of all authorities. The Company is not in violation of, or in
default under, any term or provision of its Certificate of Incorporation, as
amended, or its Bylaws, as amended, or in any material respect of any lien,
mortgage, lease, agreement, instrument, order, judgment, or decree, or subject
to any restriction, contained in any of the foregoing, of any kind or
character which materially adversely affects the business, properties, assets,
or prospects of the Company, or which would prohibit the Company from entering
into this Agreement or prevent consummation of the issuance of securities
contemplated by this Agreement.
(8) Title to Properties and Assets. The Company has good and
marketable title to all of its material properties and assets, including
without limitation those reflected in the Financial Statements and those used
or located on property controlled by the Company in its business (except
assets leased or sold in the ordinary course of business), subject to no
mortgage, pledge, lien, charge, security interest, encumbrance, or restriction
except those which (a) are disclosed in the Financial Statements as securing
specified liabilities; or (b) do not materially adversely affect the use
thereof.
(9) Contracts and Other Obligations. The Company is not a party
to or otherwise bound by, any material written or oral:
(a) Contract or agreement not made in the ordinary course of
business;
(b) Employment or consultant contract which is not terminable
at will without cost or other liability to the Company or any successor;
(c) Contract with any labor union;
(d) Bonus, pension, profit-sharing, retirement, share
purchase, stock option, hospitalization, group insurance, or similar plan
providing employee benefits;
(e) Advertising contract or contract for public relations
services;
(f) Purchase, supply, or service contracts in excess of
$100,000 each, or in the aggregate of $500,000 for all such contracts whether
below or above $100,000;
(g) Deed of trust, mortgage, conditional sales contract,
security agreement, pledge agreement, trust receipt, or any other agreement or
arrangement whereby any of the assets or properties of the Company are
subjected to a lien, encumbrance, charge, or other restriction;
(h) Material contract or other material commitment continuing
for a period of more then thirty days and which is not terminable without cost
or other liability to the Company or its successor; or
(i) Any material contract, agreement, lease or other binding
arrangement with which the Company is not in substantial compliance therewith.
(j) Nothing herein shall prohibit or restrict the Company from
making expenditures required under operating agreements, joint venture
agreements, unit, pooling, farmout agreements or expenditure necessitated by
emergency conditions to protect or preserve life or property or expenditures
required by law or administrative authority or performing its existing
commitments.
(10) Records. The books of account, minute books, stock
certificate books, and stock transfer ledgers of the Company are complete and
correct, and there have been no transactions involving the business of the
Company which properly should have been set forth in said respective books,
other than those set forth therein.
(11) Brokers or Finders. All negotiations on the part of the
Company relative to this Agreement and the transactions contemplated hereby
have been carried on by the Company without the intervention of any person or
as the result of any act of the Company in such manner as to give rise to any
valid claim for a brokerage commission, finder's fee, or other like payment.
(12) Absence of Certain Changes or Events. Since June 30, 1998,
there has not been any material adverse change in, or event or condition
materially and adversely affecting, the condition (financial or otherwise),
properties, assets, liabilities or, to the knowledge of the Company, the
business or prospects of the Company, except for conditions generally
affecting the segments of the oil and gas industry in the locales in which the
Company conducts its business.
(13) Taxes. The Company has duly filed all federal, state, county
and local income, franchise, excise, real and personal property and other tax
returns and reports (including, but not limited to, those relating to social
security, withholding, unemployment insurance, and occupation (sales) and use
taxes) required to have been filed by the Company up to the date hereof. All
of the foregoing returns are true and correct in all material respects and the
Company has paid or provided for all taxes, interest and penalties shown on
such returns or reports as being due. The Company has no liability for any
material amount of taxes, interest or penalties of any nature whatsoever,
except for those taxes which may have arisen up to the Closing Date in the
ordinary course of business and are properly accrued on the books of the
Company as of the Closing Date.
(14) Environmental Matters. The Company is aware of no actions,
proceedings or investigations pending or, to the actual knowledge of the
Company, threatened before any federal or state environmental regulatory body,
or before any federal or state court, alleging noncompliance by the Company
with CERCLA or any other Environmental Laws. To the actual knowledge of the
Company: (i) there is no reasonable basis for the institution of any action,
proceeding or investigation against the Company under any Environmental Law;
(ii) the Company is not responsible under any Environmental Law for any
release by any person at or in the vicinity of real property of any hazardous
substance (as defined by CERCLA), caused by the spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
dumping or disposing of any such hazardous substance into the environment;
(iii) the Company is not responsible for any costs of any remedial action
required by virtue of any release of any toxic or hazardous substance,
pollutant or contaminant into the environment including, without limitation,
costs arising from security fencing, alternative water supplies, temporary
evacuation and housing and other emergency assistance undertaken by any
environmental regulatory body; (iv) the Company is in substantial compliance
with all applicable Environmental Laws; and (v) no real property used, owned,
managed or controlled by the Company contains any toxic or hazardous substance
including, without limitation, any asbestos, PCBs or petroleum products or
byproducts in any form, the presence, location or condition of which
(a) violates any Environmental Law, or (b) otherwise would pose any
significant health or safety risk unless remedial measures were taken.
(15) Full Disclosure. To the Company's knowledge and belief, this
Agreement, the Company's periodic reports, and any schedules and certificates
delivered by the Company in connection herewith or with the transactions
contemplated hereby, taken as a whole neither contain any untrue statement of
a material fact nor omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. To the Company's
knowledge and belief, there are no facts which (individually or in the
aggregate) materially adversely affect the business, assets, liabilities,
financial condition or operations of the Company that have not been set forth
in the Agreement, the Schedules hereto, the public reports of the Company or
in other documents delivered by the Company in connection herewith or
disclosed orally by an executive officer of the Company.
When used in this Agreement, the term "knowledge" and words of
similar import means knowledge actually possessed by an officer or director of
the Company, whether by personal discovery or communication received from a
subordinate, but does not include imputed or vicarious knowledge.
Section 3.2 Representations and Warranties by Purchaser. The Purchaser
represents and warrants to the Company as of the Closing Date as follows:
(1) Investment Representations. Purchaser understands that the
Shares have not been registered under the Securities Act. Purchaser also
understands that the Shares are being sold pursuant to an exemption from
registration under Section 4(2) of the Securities Act. Purchaser represents
and warrants that it is acquiring the Shares with investment intent and not
with the intent of further distribution. Purchaser further understands that
the following restrictive legend will be on the certificates for all
securities received as a result of this Agreement:
The Shares represented by the certificate have not been registered
under the Securities Act of 1933 ("the Act") and are "restricted securities"
as that term is defined in Rule 144 under the Act. The Shares may not be
offered for sale, sold or otherwise transferred except pursuant to an
effective registration statement under the Act or pursuant to an exemption
from registration under the Act, the availability of which is to be
established to the satisfaction of the Company.
(2) Purchaser Bears Economic Risk. The Purchaser has substantial
experience in evaluating and investing in private placement transactions of
securities in companies similar to the Company so that he is capable of
evaluating the merits and risks of its investment in the Company and has the
capacity to protect his own interests. The Purchaser must bear the economic
risk of this investment. Accordingly, the Shares represent an illiquid
investment. Purchaser also understands that circumstances such as a lack of
any market for the Shares may be such that the Purchaser cannot transfer all
or any portion of the Shares in the amounts or at the times the Purchaser
might propose.
(3) Acquisition for Own Account. Purchaser is acquiring the
Shares for the Purchaser's own account and not with intent to dispose of the
Shares.
(4) Purchaser Can Protect Its Interest. Purchaser represents that
by reason of his business or financial experience, Purchaser has the capacity
to protect its own interests in connection with the transactions contemplated
in this Agreement. Further, Purchaser is aware of no publication or any
advertisement in connection with the transactions contemplated in the
Agreement.
(5) Company Information. Purchaser has received and read the
Company's 10K and 10Q's and Financial Statements and has had an opportunity to
discuss the Company's business, management and financial affairs with
directors, officers and management of the Company and has had the opportunity
to review the Company's operations and facilities. Purchaser has also had the
opportunity to ask questions of and receive answers from, the Company and its
management regarding the terms and conditions of this investment and Purchaser
desires no additional information with respect to the Company and this
investment.
(6) Brokers or Finders. All negotiations on the part of the
Purchaser relative to this Agreement and the transactions contemplated hereby
have been carried on by the Purchaser without the intervention of any person
or as the result of any act of the Purchaser in such manner as to give rise to
any valid claim for a brokerage commission, finder's fee, or other like
payment.
(7) Organization and Standing of the HVI. HVI is a corporation
duly organized and validly existing and in good standing under the laws of the
State of Colorado. It has all requisite corporate power and authority to
carry on its business as now being conducted, to enter into this Agreement and
to carry out and perform the terms and provisions of this Agreement. HVI is
duly qualified to do business and is in good standing in each jurisdiction in
which the failure to be so qualified would have a material adverse effect on
the condition (financial or otherwise), business, net worth, assets (including
intangible assets), properties or operations ("Material Adverse Effect") of
HVI. Except with respect to Calox, Inc., HVI Cat Canyon, Inc. and American
Energy Corporation, all of which are wholly owned subsidiaries, HVI has no
direct or indirect interest, either by way of stock ownership or otherwise, in
any other firm, corporation, association, or business excepting partnerships,
operating agreements, Farmout agreements, unitization, pooling agreements and
other customary oil and gas industry arrangements.
(8) HVI's Authority. The execution, delivery, and performance of
this Agreement shall have been duly authorized by all requisite corporate
action. This Agreement constitutes a valid and binding obligation of HVI
enforceable in accordance with its terms (except as limited by bankruptcy,
insolvency, or other laws affecting the enforcement of creditors' rights).
The execution, delivery and performance of this Agreement will not conflict
with any provision of the Certificate of Incorporation and any amendments
thereto, Bylaws and any amendments thereto of the Company, or of any contract
to which HVI is a party or otherwise bound.
Section 3.4 Certain Restrictions on Dispositions. Without the prior written
consent of Purchaser, which consent shall not be unreasonably withheld or
delayed, until the Closing Date the Company shall not enter into a processing
agreement covering its Santa Maria Refinery as presently proposed in
invitations for tenders, copies of which have been supplied to Purchaser, nor
sell or otherwise voluntarily dispose of the Refinery or any interest therein,
nor sell or otherwise voluntarily dispose of any of the material assets of
Saba Energy Company of Texas, Inc. Should the Company prior to the Interim
Closing desire to do any of the foregoing, it shall give written notice to
Purchaser of the Company's intent, which notice shall describe the salient
terms of the proposed transaction, including the consideration to be received
by the Company and the proposed closing date of the transaction. Within five
days of Purchaser's receipt of such notice should the Purchaser wish to object
to the transaction, Purchaser shall purchase the shares described in Section
2.2. Should Purchaser not complete the Interim Closing as provided in the
preceding sentence during the five day period, the Company shall be free to
enter into and consummate the proposed transaction on substantially the same
terms as described in the notice. After completion of the Interim Closing and
prior to the Closing Date, no transaction referenced herein may be completed
without the prior written approval of HVI as aforesaid.
ARTICLE 4
CONDITIONS TO CLOSING
Section 4.1 Conditions to Closing. These conditions do not apply to the
interim closing described in Section 2.2. Except as may be waived in writing
by the Parties, all of the obligations of the Parties under this Agreement are
subject to the fulfillment, prior to or at the Closing on the Closing Date, of
each of the following conditions:
(1) Representations and Warranties True. The representations and
warranties of the Company and the Purchaser set forth in Sections 3.1 and 3.2,
respectively, shall be true and correct in all material respects as of the
Closing Date, subject to any changes contemplated by this Agreement.
(2) Opinion of the Company's Counsel. The Company shall have
delivered to the Purchaser the opinion, dated the Closing Date, of the
Company's in house counsel in form the attached hereto as Schedule 4.1(2).
(3) Necessary Approvals. Consummation of the transactions
contemplated herein shall have been approved by the Board of Directors at a
meeting of the Board of Directors to be held for the purpose of obtaining such
approval or by unanimous written consent.
(4) Third-Party Consents. On or before the Closing Date, all
material consents or approvals by any third party, if any, which are required
to be obtained by the Company in connection with the execution, delivery or
performance of this Agreement or the consummation of the transactions
contemplated herein shall have been obtained.
(5) Compliance with Agreements. The Company and Purchaser shall
have performed and complied with all agreements or conditions required by this
Agreement to be performed and complied with by it prior to or on the Closing
Date.
(6) No Contracts Terminated. The Company shall not have had any
contract or contracts, which in the aggregate would materially and adversely
affect its business, terminated prior to the Closing Date, save the Processing
Agreement with PetroSource.
(7) No Damage to Assets. At the Closing Date the machinery,
equipment, inventory, or other tangible property of the Company shall not have
suffered non-insured or non-indemnified loss or damage on account of fire,
flood, accident, act of war, civil commotion, or any other cause or event
beyond the reasonable power and control of the Company (whether or not similar
to the foregoing), to an extent which substantially affects the value of the
properties and assets of the Company . Loss or damage shall be considered to
affect substantially the value of said properties and assets within the
meaning of this paragraph if the book value of such properties and assets so
lost or damaged exceeds five percent (5%) in book value of all such tangible
properties and assets.
(8) Certificate of Officer. The Company shall have delivered to
the Purchaser a certificate dated the Closing Date, executed in its corporate
name by, and verified by, the oath of its President certifying to the
fulfillment of the conditions specified in this Section 5.1.
(9) Listing on AMEX. The Company shall use its best efforts to
maintain its listing on the American Stock Exchange in good standing unless
waived by agreement of the parties to avoid the requirement of shareholder
approval.
(10) Post-Closing Board of Directors. Upon the closing, the
authorized size of the Board of Directors of the Company shall be five members
and the Board shall consist of three persons elected at the most recent
annual meeting of shareholders, Randeep Grewal shall be appointed on the date
of this agreement, and one person appointed by HVI at Closing, each of which
shall be deemed to be designees of Purchaser.
Section 4.2 Obligation to Register Common Shares. The Company shall
authorize and file a registration statement on whatever form is available to
it to register the Common Shares sold hereby and the Common Shares underlying
the Conversion rights authorized by the Series A Convertible Preferred Stock.
The Company further commits to use its commercially reasonable efforts to have
said registration statement declared effective at the earliest practicable
date and to maintain the effectiveness of said registration statement during
any period that no other exemption for the sale of unrestricted securities is
available to the Purchaser. HVI shall take over responsibility for preparing
the registration statement, which shall comport with the requirements
applicable thereto, with full and accessible assistance from the Company and
its in-house counsel. The Company agrees to execute and sign the registration
statement at such time as the Company's auditors provide their consent and
they are requested to by HVI.
Section 4.3 Authority to Permit Conversion of Series A Convertible
Preferred. If necessary or if not waived by HVI, at or before Closing, the
Company shall have filed its Proxy Statement with the Securities and Exchange
Commission seeking shareholder approval for the issuance of the Common Stock
underlying the rights of Conversion granted in the Designation of Rights and
Preferences for the Series A Convertible Preferred Stock. Additionally, to
the extent required as a result of this Stock Purchase Agreement shareholder
approval shall also have been sought.
ARTICLE 5
NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES:
All statements of fact contained herein, any certificate or schedule
delivered by or on behalf of the Company or the Purchaser pursuant to the
terms hereof, shall be deemed representations and warranties made by the
Company and HVI, respectively, to each other under this Agreement. The
representations and warranties of the parties shall survive the Closing for a
period of one year.
ARTICLE 6
MISCELLANEOUS
Section 6.1 Announcement. The parties agree to draft an announcement
relating to this transaction and other related transactions within 48 hours of
execution which announcement shall be released as a joint announcement through
the business new wire services.
Section 6.2 Amendment. This Agreement may be amended in any manner as may be
determined in the judgment of the respective Board of Directors of the Company
and the Purchaser to be necessary, desirable, or expedient in order to clarify
the intention of the parties hereto or to effect or facilitate the purpose and
intent of this Agreement, subject to the provision herein that any amendment
shall be ineffective unless in writing and executed by the parties hereto.
Section 6.3 Counterparts and Facsimile Signatures. In order to facilitate
the execution of this Agreement, the same may be executed in any number of
counterparts and signature pages may be delivered by telefax.
Section 6.4 Waiver of Conditions. Either party may waive any condition
precedent, term or condition of this agreement in favor of such party but such
a waiver shall be ineffective unless in writing and executed by an authorized
representative of a party hereto.
Section 6.5 Assignment. Neither this Agreement nor any right created hereby
shall be assignable by the Company or the Purchaser without the prior written
consent of the other parties. Nothing in this Agreement, express or implied,
is intended to confer upon any person, other than the parties hereby and their
respective successors, assigns, heirs, executors, administrators, or personal
representatives, any rights or remedies under or by reason of this Agreement.
Section 6.6 Entire Agreement. This Agreement, the Schedules hereto, and the
other documents delivered pursuant hereby constitute the full and entire
understanding and agreement between the parties with regard to the subject
hereof and no party shall be liable or bound to any other in any manner by any
representations, warranties, covenants or agreements except as specifically
set forth herein. All prior agreements and understandings are superseded by
this Agreement and the Exhibits thereto.
Section 6.7 Governing Law. This Agreement shall be governed by the laws of
the State of Colorado, except that the Delaware General Corporate Law shall
govern as to matters of corporate law pertaining to the Company. Any action
brought to enforce this Agreement or any term thereof shall be brought in a
court of competent jurisdiction in Denver, Colorado and each party hereto
affirmatively agrees to submit to the jurisdiction in that city and state.
Section 6.8 Severability. In case any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
Section 6.9 Notices. Any notice, communication, request, reply, or advice,
hereinafter severally and collectively called "notice," in this Agreement
provided or permitted to be given, made or accepted by either party to the
other must be in writing and may be given by personal delivery or U.S. mail,
or confirmed telefax. If given by mail, such notice must be sent by
registered or certified mail, postage prepaid, mailed to the party at the
respective address set forth below, and shall be effective only if and when
received by the party to be notified. For purposes of notice, the addresses
of the parties shall, until changed as hereinafter provided, be as follows:
(1) If to the Purchaser:
Horizontal Ventures, Inc.
Attention: Randeep Grewal
630 Fifth Avenue, Suite 1501
New York, NY 10111
Telefax: (212) 218-4679
With a copy to:
Cohen Brame & Smith
Attention: Roger V. Davidson
1700 Lincoln Street, Suite 1800
Denver, CO 80203
Telefax: (303) 894-0475
(2) If to the Company:
Saba Petroleum Company
3201 Airport Drive, Suite 201
Santa Maria, CA 93455
Telefax: (805) 347-1072
or at such other address or telefax number as any party may have advised the
others in writing.
With a copy to:
Rodney C. Hill, Esq.
2010 Birnam Wood Drive
Santa Barbara, CA 93108
Telefax (805) 565-5884
Section 6.10 Attorney Fees. If any action at law or in equity, including an
action for declaratory relief, is brought to enforce or interpret the
provisions of this Agreement, the prevailing party shall be entitled to
recover reasonable attorney fees from the other party or parties, which fees
shall be in addition to any other relief which may be awarded.
IN WITNESS WHEREOF, this Agreement is hereby duly executed by each party
hereto as of the date first written above.
COMPANY:
SABA PETROLEUM COMPANY
/s/ Ilyas Chaudhury
By: ________________________________
Printed Name: Ilyas Chaudhary
Title: Chairman and CEO
PURCHASER:
HORIZONTAL VENTURES, INC.
a Colorado corporation
/s/ Randeep Grewal
By:_______________________
Printed Name: Randeep Grewal
Title: Chairman and CEO
Exhibit 7.3
OPTION AGREEMENT
THIS AGREEMENT entered into this 22nd day of July, 1998, by and between
International Publishing Holding s.a. ("IPH"), a Luxembourg corporation whose
offices are located at 1 Place Dargent, 1413 Luxembourg, Grand-Duchy of
Luxembourg, and Horizontal Ventures, Inc. ("HVI"), a Colorado corporation,
whose offices are at 630 Fifth Avenue, Suite 1501, New York, NY 10111, USA;
WITNESSETH:
WHEREAS, HVI has given consideration to acquiring a substantial interest in
Saba Petroleum Company ("Saba"); having its headquarters in Santa Barbara,
California, and quoted on the American Exchange ("AMEX") under the symbol SAB;
and
WHEREAS, IPH is the largest shareholder of HVI and is desirous of assisting
HVI in its efforts in purchasing shares of Saba in the open market or directly
from holders of Saba securities, and to make securities so purchased available
to HVI under the conditions of this Agreement;
NOW THEREFORE, in consideration of the mutual covenants contained herein, the
parties hereto agree as follows:
1) Issues regarding Section 13 of the Securities Exchange Act of 1934: The
parties acknowledge that as a result of this Agreement they are acting
in concert with respect to the acquisition of the securities of Saba
and that as such they are mutually liable for any violation of Section
13 and therefore must work in close and constant communication with
regard thereto.
2) Call Option: HVI shall have the right to call for purchase from IPH all
of the Saba securities in possession of IPH at the moment of such upon
the following terms and conditions:
(2.1) Exercise: This call may be exercised at any time but no later
than June 30, 1999.
(2.2) Purchase price: HVI will pay to IPH its purchase price including
all costs of the Saba securities plus 20% (twenty percent), upon
exercise of this call at no later than December 31, 1998; or plus
30% (thirty percent) if the call is exercised after that date.
(2.3) Payment: HVI will pay IPH the purchase price in cash or at the
option of HVI, partly or in whole in newly to be issued common
shares of HVI calculated at a price per share equivalent to the
average of the closing price of HVI shares on the Nasdaq Small
Cap Market during the thirty trading days preceding the date of
exercise by HVI of this Call Option, but in any case at no more
than USD 15 (fifteen United States dollars) per share of HVI.
(2.4) Additional condition: HVI may only exercise this call if in so
acquiring the Saba securities purchased by IPH, it will realize
the purpose of this Agreement, i.e. to obtain a substantial
interest in Saba.
3) Put Option: As of April 1, 1999, and no later than June 30, 1999, IPH
has the right to sell the Saba securities purchased by it under this
Agreement to HVI for the same purchase price and for the same form of
payment to be elected by HVI, as agreed to in Article 2 above.
4) Procedures for Executing Options: Exercise of the Call Option can only
be done for the total number of Saba securities that IPH will have in
its possession at the time of exercise. If HVI wishes to exercise its
rights under this Call Option, it shall give IPH both a verbal and a
faxed written notice at the place for notices set forth hereinafter.
Subsequent to the receipt of the faxed notice, IPH will instruct its
custodian(s) holding the Saba securities bought by IPH under this
Agreement to deliver these securities to HVI, at an account so directed
by HVI against simultaneous payment by HVI, in cash or in common shares
of HVI, to that custodian or at any other account directed by IPH. IPH
shall give HVI both a verbal and a faxed written notice of its wish to
sell the Saba securities held by it to HVI at the place for notices set
forth hereinafter. Subsequent to the receipt of the faxed notice, HVI
shall arrange that it can receive such shares in an account directed by
it in such a way that against delivery by IPH of the Saba securities
simultaneously payment in the way elected by HVI under this Agreement
will be executed. Upon exercise of the Call Option by HVI or the Put
Option by IPH, HVI should give immediately notice to IPH which form of
payment it has elected, i.e. shares or cash or a combination and, if in
shares, the number thereof and the computation of the value thereof.
5) Registration Rights: Subject to the provisions of this article 5, IPH
agrees to take and hold any shares of HVI received from HVI under
Articles 2 and 3 for investment and not with a view to distribution
within the meaning of the Securities Act of 1933, as amended. HVI
hereby commits to amend its S-3 Registration Statement on file with the
Securities and Exchange Commission within thirty days of executing one
of the above referenced options, if payment in shares of HVI is
elected, to provide for the registration of the shares issued to IPH in
exchange for the Saba shares and to have said amendment declared
effective at the earliest practicable date subsequent to the amendment.
If such registration through amendment appears impossible, HVI is
obliged to obtain the same effect in favor of IPH by any other manner
of registration permitted by applicable law.
6) Relief from Delivery Requirements under Certain Circumstances: HVI
shall be relieved from delivery of its shares to IPH under this Option
Agreement only if such delivery would violate the Nasdaq rules without
shareholder approval. Under such circumstances HVI shall deliver that
number of shares that it is able to deliver immediately and register
all shares including those that it may not deliver without shareholder
approval in accordance with the above mentioned registration rights
clause. If shareholder approval is required for any of the certificates
to be issued to IPH, HVI shall conscientiously prepare a proxy
statement therefor, file same with the Securities and Exchange
Commission and obtain necessary clearance for holding the shareholders'
meeting at the earliest practicable date. Additionally, HVI shall
authorize the transfer agent to issue the shares in IPH's name for
deliver immediately upon receipt of shareholder approval and HVI shall
use diligence in obtaining the required shareholder approval therefor.
To the extent that HVI elects to pay any portion of the purchase price
for the Saba securities in shares of HVI (the "Non-Cash Portion"), at
the closing, HVI will deliver a full recourse promissory note to IPH,
dated the closing date and payable within 180 days thereafter, in an
amount equal to the Non-Cash Portion. The amount outstanding under the
promissory note will bear interest (payable in monthly installments on
the first date of each month) at an annual interest rate equal to 2%
over Libor, in effect on the date of closing. Such note will be
surrendered to HVI against the delivery to IPH of the HVI shares in
payment of the Non-Cash Portion, which at that moment must be
registered and such registration been declared effective, as agreed in
Section 5 above.
7) Notices: All notices under this Option Agreement will be issued to (a)
IPH: Attn: Reink H. Kamer, P.O. Box 84019, 2508 AA The Hague, The
Netherlands, telephone (31) 70 3588322, facsimile (31) 70 3586664, and
(b) HVI: Attn: Randeep S. Grewal, Chairman and CEO, 630 Fifth Avenue,
Suite 1501, New York, NY 10111, telephone (1) 212-2184680, facsimile
(1) 212-2184679.
8) This Agreement: (i) constitutes the entire agreement of the parties
relating to the subject matter hereto and supersedes all prior
agreements, understandings and arrangements; (ii) shall be governed by
New York law; (iii) may not be amended or discharged except in writing;
and (iv) may be executed in counterparts.
Dated this 22nd day of July, 1998.
International Publishing Holding s.a.
/s/ Reink H. Kamer
_____________________________________
By: Reink H. Kamer, Head of Investments
Horizontal Ventures Inc.
/s/ Randeep Grewal
_____________________________________
By: Randeep S. Grewal, Chairman & CEO
EXHIBIT 7.4
PROMISSORY NOTE
$500,000 October ____, 1998
Payment. FOR VALUE RECEIVED, the undersigned, Horizontal
Ventures, Inc., a Colorado corporation ("Maker"), hereby promises to pay to
the order of International Publishing Holding, S.A., a Luxembourg corporation,
or its designee ("Holder"), at 1, Place Dargent, L-1413 Luxembourg, Grand
Duchy of Luxembourg, the principal sum of Five Hundred Thousand and No/100
Dollars ($500,000.00), without interest, on December 31, 1998 ("Maturity
Date") as follows: (i) if Maker receives adequate financing proceeds to
acquire all outstanding shares of Series A Convertible Preferred Stock of Saba
Petroleum Company (the "Series A Stock") on or before the Maturity Date, then
Maker shall pay the principal amount of this Promissory Note in cash or (ii)
if Maker does not receive such financing proceeds on or before the Maturity
Date, then Maker shall pay the principal amount of this Promissory Note in the
form of $500,000 worth of Series A Stock, which shares shall be valued for
such purpose at the purchase price paid for such shares by Maker on the date
hereof. All payments (whether in cash or stock) shall be delivered to Holder
at the address set forth above or at such other place as Holder shall
hereafter designate in writing.
Security. Maker's obligation to pay Holder under this Promissory
Note is secured by a pledge of certain shares of Series A Stock in accordance
with the Pledge Agreement of even date herewith between Maker and Holder. In
the event of a default by Maker under the Pledge Agreement, Holder may, at its
option, declare all or part of the principal under this Promissory Note
immediately due and payable; provided, however, that if this Promissory Note
is in default and Maker has filed for bankruptcy protection, Holder shall be
deemed to have declared this Promissory Note to be immediately due and payable
without further action.
Prepayment. Maker may prepay any or all of the amounts due under
this Promissory Note at any time, and from time to time, without penalty.
Attorneys' Fees. Maker shall promptly reimburse Holder for all
costs and expenses, including reasonable attorneys' fees and court costs,
incurred to enforce this Promissory Note.
No Waiver. No failure on the part of Holder to exercise, and no
delay in exercising any right hereunder shall operate as a waiver of such
right; nor shall any single or partial exercise by Holder of any right
hereunder preclude the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law or
in equity.
Waiver. Maker hereby waives presentment, demand for payment,
protest for nonpayment, notice of dishonor, diligence in collection, and all
other indulgences.
New York Law. This Promissory Note shall be governed by and
interpreted in accordance with the laws of the State of New York.
General Provisions. This Promissory Note may not be amended,
modified, or changed unless set forth in an instrument in writing and signed
by Holder and Maker. Whenever used herein, the words "Maker" and "Holder"
shall be deemed to include their respective successors and assigns.
IN WITNESS WHEREOF, the undersigned has duly executed this
Promissory Note as of the day and year first above written.
MAKER:
HORIZONTAL VENTURES, INC.
a Colorado corporation
BY: __________________________
Randeep Grewal, Chairman and
Chief Executive Officer
EXHIBIT 7.5
PLEDGE AGREEMENT
This Pledge Agreement ("Agreement") is dated this _____ day of October,
1998 by and between Horizontal Ventures, Inc., a Colorado corporation
("Pledgor"), and International Publishing Holding, S.A., a Luxembourg
corporation ("Lender").
RECITALS
A. Pledgor is indebted to Lender in the amount of $500,000 pursuant to
a Promissory Note of even date herewith (the "Note") made by Pledgor to
Lender. The obligations of Pledgor under the Note, including any extensions,
renewals, amendments and replacements thereof are hereinafter referred to as
the "Obligations."
B. As security for the Obligations, Pledgor has agreed to pledge two-
thirds of the shares of Series A Convertible Preferred Stock of Saba Petroleum
Company (the "Shares") owned by it, pursuant to the terms and conditions of
this Agreement.
NOW, THEREFORE, it is hereby agreed as follows:
1. Pledge. Pledgor hereby delivers, deposits and pledges the Shares to
Lender and hereby grants and conveys to Lender a continuing security interest
in the Shares. Pledgor will duly endorse, in blank, each and every instrument
constituting the Shares by signing a separate assignment or other documents of
transfer, if and when required by Lender, and will at all times hereafter
perform such other acts as Lender may request to establish, maintain, perfect
and enforce Lender's security interest in the Shares and rights under this
Agreement.
2. Ownership and Liens. Pledgor represents and warrants to Lender that
it has good title to and will at all times keep the Shares free of all liens
and encumbrances, except the security interest created hereby and any
restrictive legend appearing on any instrument constituting the Shares, and
Pledgor has full power and authority to execute this Agreement and perform
Pledgor's obligations hereunder.
3. Voting Rights. Pledgor shall have the right to exercise any and all
voting rights with respect to the Shares prior to the occurrence of an Event
of Default (hereinafter defined), and from and after the occurrence of an
Event of Default, Lender shall have the right to exercise any voting rights
with respect to the Shares.
4. Dividends and Distributions. Pledgor shall have the right to
receive any and all dividends and distributions with respect to the Shares
prior to the occurrence of an Event of Default, and from and after the
occurrence of an Event of Default, Lender shall have the right to receive all
such dividends and distributions.
<PAGE>
5. Lender's Obligations. Lender's duty of care with respect to the
Shares in its possession shall be deemed fulfilled if Lender exercises
reasonable care in physically safekeeping such Shares or, in the case of
Shares in the custody or possession of a bailee or other third party,
exercises reasonable care in the selection of the bailee or other third party,
and Lender need not otherwise preserve, protect, insure or care for the
Shares. Lender shall not be obligated to preserve any rights which Pledgor
may have against prior parties or to realize on the Shares at all or in any
particular manner or order.
6. Defense of Collateral. Lender in the name of Pledgor or otherwise,
whether or not an Event of Default has occurred, shall have the authority (but
shall not be obligated) to settle, prosecute and discontinue any suits or
proceedings in respect to any or all of the Shares; take any action which
Lender may deem necessary or desirable in order to realize on the Shares,
including, without limitation, the power to perform any contract; to transfer
any of the Shares into its name or out of its nominee; and to apply any
proceeds of any Shares against the Obligations, all at the expense of Pledgor.
7. Events of Default. The occurrence of any of the following events
shall constitute an event of default ("Event of Default") under this
Agreement: (a) failure of Pledgor, or any co-maker, endorser, surety or
guarantor to pay when due any of the Obligations; (b) failure to perform any
agreement of Pledgor contained herein; (c) any statement, representation or
warranty of Pledgor made herein or at any time furnished in writing to Lender
is untrue in any material respect as of the date made; or (d) the occurrence
of any default or event of default under the Note or under any other document
or instrument evidencing or securing all or any portion of the Obligations.
8. Acceleration. Whenever an Event of Default shall exist, Lender may,
at its option, declare all or any part of the Obligations immediately due and
payable, and Lender may exercise, in addition to the rights and remedies
granted hereby, all rights and remedies of a secured party under the Uniform
Commercial Code or any other applicable law, including the right (but not the
obligation) to exercise all voting and other rights as a holder of the Shares
and the right to offer and sell the Shares privately to purchasers who will
agree to take the Shares for investment and not with a view to distribution
and who will agree to the imposition of restrictive legends on the
certificates representing the Shares, and the right to arrange for a sale
which would otherwise qualify as exempt from registration under the Securities
Act of 1933, as amended.
9. Miscellaneous. Pledgor may not assign its rights or obligations
under this Agreement without the written consent of Lender. This Agreement
shall be binding upon and inure to the benefit of Pledgor and Lender and the
respective successors and permitted assigns. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York and,
unless the context otherwise requires, all terms used herein which are defined
in the Uniform Commercial Code, as in effect in New York, shall have the
meanings therein stated.
PLEDGOR:
HORIZONTAL VENTURES, INC.
By: ________________________________
Randeep Grewal, Chairman and
Chief Executive Officer
LENDER:
INTERNATIONAL PUBLISHING HOLDING, S.A.
By: _________________________________
Title: ______________________________
