As filed with the Securities and Exchange Commission on December ___, 1998
Securities Act Registration No. 333-
Securities Exchange Act
Registration No. 0-20760
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4
AMENDMENT NO. 1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
HORIZONTAL VENTURES, INC.
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
Colorado 1311 84-1091986
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
630 Fifth Avenue, Suite 1501, New York, NY 10111
(212) 218-4680
(Address, including ZIP Code, and telephone number, including area
code, of registrant's principal executive offices)
Randeep S. Grewal
Chairman and Chief Executive Officer
Horizontal Ventures, Inc.
630 Fifth Avenue, Suite 1501
New York, NY 10111
(212) 218-4680
(Name, address, including ZIP Code, and telephone number,
including area code, of agent for service)
Copies to:
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<S> <C>
Roger V. Davidson, Esq. Susan M. Whalen, Esq.
Cohen Brame & Smith Professional Corporation Saba Petroleum Company
1700 Lincoln Street, Suite 1800 3201 Airpark Drive, Suite 201
Denver, CO 80203 Santa Maria, CA 93455
(303) 837-8800 (805) 347-8700
(303) 894-0475 (FAX) (805) 347-1072 (FAX)
</TABLE>
Approximate date of commencement of proposed sale of the
securities to the public: As soon as practicable after the effective date of
this Registration Statement and all other conditions to the merger contemplated
by the Agreement and Plan of Merger dated December 18, 1998 described in the
enclosed Joint Proxy Statement/Prospectus have been satisfied or waived.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering.[ ]
<PAGE>
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<CAPTION>
Calculation of Registration Fee
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=================================== ------------------ -------------------- -------------------- ===================
Title of each class of securities Amount to be Proposed maximum Proposed maximum
to be registered Registered offering price per Aggregate Amount of
share(1) Offering price Registration
Fee
=================================== ================== ==================== ==================== ===================
Common Stock, no par value 1,300,000 (1) N/A $7,800,000(2) $2,169
=================================== ================== ==================== ==================== ===================
<FN>
(1)......Represents the estimated number of shares of common stock, no par value
per share, of the Registrant ("HVI Common Stock") issuable upon
consummation of the merger (the "Merger") of a subsidiary of the
Registrant with and into Saba Petroleum Company ("Saba"), assuming
exercise of all outstanding options and warrants to purchase common
stock, par value $.001 per share, of Saba ("Saba Common Stock"). The
Registrant does not expect the number of shares actually issued in the
Merger to exceed the number indicated.
(2)......Estimated solely for purposes of calculating the registration fee
required by Section 6(b) of the Securities Act of 1933, as amended (the
"Securities Act"), and computed pursuant to Rules 457(f)(1) and 457(c)
under the Securities Act on the basis of $1.00 (the average of the high
and low prices of Saba Common Stock as reported on the American Stock
Exchange for December 18, 1998) multiplied by 7,800,000 (the maximum
aggregate number of shares of Saba Common Stock to be acquired in the
Merger, including approximately 60,000 shares subject to issuance
pursuant to outstanding stock options and warrants).
</FN>
</TABLE>
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE
REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES
THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN
ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE
COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
<PAGE>
Amendment No. 1
Horizontal Ventures, Inc.
HVI S-4
The sole purpose of this pre-effective Amendment No. 1 to a registration
statement on Form S-4 is to file Exhibit No. 2.1, Agreement and Plan of Merger
between Saba Petroleum Company and Horizontal Ventures, Inc. which was
inadvertently omitted from the original filing. Exhibit 2.1 also is Annex I to
the Prospectus and Joint Proxy Statement.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the
registrant has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized , in the City
of New York, State of New York, on December 22, 1998.
HORIZONTAL VENTURES, INC.
By:___/s/ Randeep S. Grewal________
Pursuant to the requriements of the Securities Act of 1933,
this registration staement has been signed by the following persons in
the capacities and on the dates indicated.
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<S> <C>
Date: December 22, 1998 _/s/ Randeep S. Grewal_____________
----------------------
Randeep S. Grewal, Chairman and Chief
Executive Officer and a Director
Date: December 22, 1998 _/s/ Dr. Jan F. Holtrop______________
-----------------------
Dr. Jan F. Holtrop, a Director
Date: December ___, 1998 ________________________________
Dirk Van Keulen, a Director
Date: December 22, 1998 _/s/ George Andrews _____________
-----------------------
George Andrews, a Director
</TABLE>
<PAGE>
INDEX OF EXHIBITS TO
REGISTRATION STATEMENT ON FORM S-4
HORIZONTAL VENTURES, INC.
Exhibit No. Exhibit Description
2.1 Agreement and Plan of Merger dated December 18, 1998 (See Annex I)*
3.1 Restated Articles of Incorporation of HVI (filed as Exhibit 3A to HVI's
Quarterly Report on Form 10-QSB for the quarter ended June 30, 1998 (File
No. 0-20760) and incorporated herein by reference)
3.2 By-Laws of HVI (incorporated by reference to Exhibit No. 3 to the HVI's
Registration Statement (#33-24265-LA)
4.1 Specimen Common Stock Certificates of HVI (incorporated by reference to
Exhibit Nos. 1A and 1B of HVI's Form 8-A/A Registration Statement (File
#0-20760)
5.1 Opinion of Cohen Brame & Smith Professional Corporation**
10.1.....Post-Petition Loan Agreement (incorporated by reference to Exhibit 10E
to HVI's Annual Report on Form 10-KSB for the year ended December 31,
1996).
10.2 Amended Post-Petition Loan Agreement (incorporated by reference to Exhibit
10-F to HVI's Annual Report on Form 10-KSB for the year ended December 31,
1996).
10.3.....Horizontal Drilling Services Letter Agreement (incorporated by
reference to Exhibit 10-G to HVI's Annual Report on Form 10-KSB for the
year ended December 31, 1996).
10.4.....Agreement and Plan of Acquisition (incorporated by reference to Exhibit
10.1 to HVI's Current Report on Form 8-K for event dated August 11, 1997).
10.5 Randeep S. Grewal Employment Agreement (incorporated by reference to
Exhibit 10.1 to HVI's Current Report on Form 8-K for event dated August 28,
1997).
10.6.....Post Petition Loan Agreement (incorporated by reference to Exhibit 10.1
to HVI's Current Report on Form 8-K for event dated August 28, 1997.
10.7.....Cat Canyon Lease Purchase Agreement (filed as Exhibit 10K to HVI's
Annual Report on Form 10-KSB for the year ended December 31, 1997 (File No.
0-20760) and incorporated herein by reference).
10.8.....Employment Agreement with Ilyas Chaudhary (filed as Exhibit 10.3 to
Saba's Registration Statement on Form SB-2 (File No. 33-94678) and
incorporated herein by reference)
10.9.....Employment Agreement with Walton C. Vance (filed as Exhibit 10.31 to
Saba's annual report on Form 10-KSB for the year ended December 31, 1996
(File No. 001-13880) and incorporated herein by reference)
10.10....First Amendment, Letter Agreement with Bradley T. Katzung (filed as
Exhibit 10.33 to Saba's annual report on Form 10-KSB for the year ended
December 31, 1996 (File No. 001-13880) and incorporated herein by
reference)
10.11....Second Amendment to Employment Agreement with Bradley T. Katzung (Filed
as Exhibit 10.5 to Saba's annual report on Form 10-K for the year ended
December 31, 1997 (File No. 001-13880) and incorporated herein by
reference)
10.12....Employment Agreement with Burt Cormany (filed as Exhibit 10.1 to Saba's
quarterly report on Form 10-QSB for the quarter ending March 31, 1997 (File
No. 001-13880) and incorporated herein by reference)
10.13....Employment Agreement with Alex Cathcart, dated March 1, 1997, (filed as
Exhibit 10.38 to Saba's Quarterly Report Form 10-Q for the quarter
ended June 30, 1997 (file No.001-13880) and incorporated herein by
reference)
10.14....Retainer Agreement with Rodney C. Hill, A Professional Corporation,
dated March 16, 1997 (filed as Exhibit 10.39 to Saba's Quarterly
Report Form 10-Q for the quarter ended June 30, 1997(File No.
001-13880) and incorporated herein by reference)
10.15....Amendment to Retainer Agreement with Rodney C. Hill, A Professional
Corporation dated March 13, 1998 (Filed as Exhibit 10.9 to Saba's
annual report on Form 10-K for the year ended December 31, 1997
(File No. 001-13880) and incorporated herein by reference)
10.16....Saba Petroleum Company 1996 Equity Incentive Plan (filed as Exhibit 4.4
to Saba's Registration Statement on Form S-8, dated August 21, 1997 (File
No. 333-34035) and incorporated herein by reference)
10.17....Saba Petroleum Company 1997 Stock Option Plan for Non-Employee
Directors (filed as Exhibit 4.5 to Saba's Registration Statement on Form
S-8, dated August 21, 1997 (File No. 333-34035) and incorporated herein by
reference)
10.18....First Amended and Restated Loan Agreement between Saba and Bank One,
Texas, N.A. (filed as Exhibit 10.1 to Saba's quarterly report on Form
10-QSB for the quarter ended September 30, 1996 (File No. 001-13880) and
incorporated herein by reference)
10.19....Amendment Number One to First Amended and Restated Loan Agreement
between Saba and Bank One, Texas, N.A. (filed as Exhibit 10.20 to Saba's
annual report on Form 10-KSB for the year ended December 31, 1996 (File No.
1-12322) and incorporated herein by reference)
10.20....Amendment Number Two to First Amended and Restated Loan Agreement
between Saba and Bank One, Texas, N.A. (filed as Exhibit 10.1 to Saba's
quarterly report on Form 10-Q for the quarter ended September 30, 1997
(File No. 001-13880) and incorporated herein by reference)
10.21....Amendment Number Three to First Amended and Restated Loan Agreement
between Saba and Bank One, Texas, N.A. (filed as Exhibit 10.2 to Saba's
quarterly report on Form 10-Q for the quarter ended September 30, 1997
(File No. 001-13880) and incorporated herein by reference)
10.22....Amendment Number Four to First Amended and Restated Loan Agreement
between Saba and Bank One, Texas, N.A. (filed as Exhibit 10 to Saba's
Current Report on Form 8-K filed September 24, 1997 (File No. 001-13880)
and incorporated herein by reference)
10.23....Corrections relating to Second Amendment dated August 28, 1997, and
Fourth Amendment dated September 9, 1997 to the First Amended and
Restated Loan Agreement between Saba and Bank One, Texas, N.A.
(filed as Exhibit 10.4 to Saba's quarterly report on Form 10-Q for
the quarter ended September 30, 1997 (File No. 001-13880) and
incorporated herein by reference)
10.24....Amendment Number Five to First Amended and Restated Loan Agreement
between Saba and Bank One, Texas, N.A. (filed as Exhibit 10.4 to Saba's
Current Report on Form 8-K filed January 15, 1998 (File No. 001-13880) and
incorporated herein by reference)
10.25....Consent Letter to Preferred Stock Transaction by Bank One, Texas, N.A.
dated December 31, 1997 (filed as Exhibit 10.2 to Saba's Current Report on
Form 8-K filed January 15, 1998 (File No. 001-13880) and incorporated
herein by reference)
10.26....Amendment of the First Amended and Restated Loan Agreement between Saba
and Bank One, Texas, N.A., dated December 31, 1997 (filed as Exhibit 10.3
to Saba's Report Form 8-K filed January 15, 1998 (File No. 001-13880) and
incorporated herein by reference)
10.27....Amendment Number Seven to First Amended and Restated Loan Agreement
between Saba and Bank One, Texas, N.A. (Filed as Exhibit 10.21 to Saba's
annual report on Form 10-K for the year ended December 31, 1997 (File No.
001-13880) and incorporated herein by reference)
10.28....Stock Purchase Agreement (filed as an exhibit to Saba's Current Report
on Form 8-K dated January 10, 1995 (File No. 1-12322) and incorporated
herein by reference)
10.29....Processing Agreement between Santa Maria Refining Company and Petro
Source Refining Corporation (filed as Exhibit 10.6 to Saba's Registration
Statement on Form SB-2 (File No. 33-94678) and incorporated herein by
reference)
10.30....Agreement among Saba Petroleum Company, Omimex de Colombia, Ltd. and
Texas Petroleum Company to acquire Teca and Nare fields (filed as Exhibit
10.7 to Saba's Registration Statement on Form SB-2 (File No. 33-94678) and
incorporated herein by reference)
10.31....Agreement among Saba Petroleum Company, Omimex de Colombia, Ltd. and
Texas Petroleum Company to acquire Cocorna Field (filed as Exhibit 10.8 to
Saba's Registration Statement on Form SB-2 (File No. 33-94678) and
incorporated herein by reference)
10.32....Agreement among Saba Petroleum Company and Cabot Oil and Gas
Corporation to acquire Cabot Properties (filed as Exhibit 10.9 to Saba's
Registration Statement on Form SB-2 (File No. 33-94678) and incorporated
herein by reference)
10.33....Agreement among Saba Petroleum Company, Beaver Lake Resources
Corporation and Capco Resource Properties Ltd. (filed as Exhibit 10.10 to
Saba's Registration Statement on Form SB-2 (File No. 33-94678) and
incorporated herein by reference)
10.34....Amendment to Agreement among Saba, Omimex de Colombia, Ltd. and Texas
Petroleum Company to acquire the Teca and Nare fields (filed as Exhibit 2.2
to Saba's Current Report on Form 8-K dated September 14, 1995 (File No.
1-12322) and incorporated herein by reference)
10.35....Promissory Notes of Saba (filed as Exhibit 10.13 to Saba's Registration
Statement on Form SB-2 (File No. 33-94678) and incorporated herein by
reference)
10.36....CRI Stock Purchase Termination Agreement (filed as Exhibit 10.14 to
Saba's Registration Statement on Form SB-2 (File No. 33-94678) and
incorporated herein by reference)
10.37....Form of Common Stock Conversion Agreement between Capco and Saba (filed
as Exhibit 10.15 to Saba's Registration Statement on Form SB-2 (File No.
33-94678) and incorporated herein by reference)
10.38....Form of Agreement regarding exercise of preemptive rights between Capco
and Saba (filed as Exhibit 10.16 to Saba's Registration Statement on Form
SB-2 (File No. 33-94678) and incorporated herein by reference)
10.39....Letter Agreement, as amended, between Omimex de Colombia, Ltd. and Saba
(filed as Exhibit 10.17 to Saba's Registration Statement on Form SB-2 (File
No. 33-94678) and incorporated herein by reference)
10.40....Promissory Note of Mr. Chaudhary (filed as Exhibit 10.2 to Saba's
quarterly report on Form 10-QSB for the quarter ended June 30, 1996 (File
No. 001-13880) and incorporated herein by reference)
10.41....Form of Stock Option Agreements between Mr. Chaudhary and Messrs.
Hickey and Barker (filed as Exhibit 10.3 to Saba's quarterly report on Form
10-QSB for the quarter ended June 30, 1996 (File No. 001-13880) and
incorporated herein by reference)
10.42....Form of Stock Option Termination Agreements between Saba and Messrs.
Hagler and Richards (filed as Exhibit 10.4 to Saba's quarterly report on
Form 10-QSB for the quarter ended June 30, 1996 (File No. 001-13880) and
incorporated by reference)
10.43....Agreement Minutes concerning Colombia oil sales contract between Omimex
as operator and Ecopetrol (filed as Exhibit 10.21 to Saba's annual
report on Form 10-KSB for the year ended December 31, 1996 (File
No. 001-13880) and incorporated herein by reference)
10.44....Operating Agreement between Omimex and Sabacol-Velasquez property
(filed as Exhibit 10.22 to Saba's annual report on Form 10-KSB for
the year ended December 31, 1996 (File No. 001-13880) and
incorporated herein by reference)
10.45....Operating Agreement between Omimex and Sabacol-Cocorna and Nare
properties (filed as Exhibit 10.23 to Saba's annual report on Form
10-KSB for the year ended December 31, 1996 (File No. 001-13880)
and incorporated herein by reference)
10.46....Operating Agreement between Omimex and Sabacol-Velasquez-Galan Pipeline
(filed as Exhibit 10.24 to Saba's annual report on Form 10-KSB for
the year ended December 31, 1996 (File No. 001-13880) and
incorporated herein by reference)
10.47....Operating Agreement between Omimex and Sabacol-Cocorna Concession
property (filed as Exhibit 10.25 to Saba's annual report on Form
10-KSB for the year ended December 31, 1996 (File No. 001-13880)
and incorporated herein by reference)
10.48....Lifeinsurance contract on life of Ilyas Chaudhary (filed as Exhibit
10.26 to Saba's annual report on Form 10-KSB for the year ended
December 31, 1996 (File No. 001-13880) and incorporated herein by
reference)
10.49....Lifeinsurance contract on life of Ilyas Chaudhary (filed as Exhibit
10.27 to Saba's annual report on Form 10-KSB for the year ended
December 31, 1996 (File No. 001-13880) and incorporated herein by
reference)
10.50....Agreement for Assignment of Leases between Saba and Geo Petroleum, Inc.
(filed as an exhibit to Saba's amended annual report on Form 10-KSB/A for
the year ended December 31, 1996 (File No. 001-13880) and incorporated
herein by reference)
10.51....Amendment to Agreement for Assignment of Leases between Saba and Geo
Petroleum, Inc. (Filed as Exhibit 10.45 to Saba's annual report on Form
10-K for the year ended December 31, 1997 (File No. 001-13880) and
incorporated herein by reference)
10.52....Agreement to Provide Collateral between Capco and Saba Petroleum
Company (filed as Exhibit 10.29 to Saba's annual report on Form
10-KSB for the year ended December 31, 1996 (File No. 001-13880)
and incorporated herein by reference)
10.53....Purchase and Sale Agreement between DuBose Ventures, Inc., Rockbridge
Oil & Gas, Inc., Saba Energy of Texas, Incorporated and Energy
Asset Management Corporation to acquire properties in Jefferson
Parish, LA (filed as Exhibit 10.30 to Saba's annual report on Form
10-KSB for the year ended December 31, 1996 (File No. 001-13880)
and incorporated herein by reference)
10.54....Beaver Lake Resources Corporation March 1997 Re-Financing Agreement
(filed as Exhibit 10.3 to Saba's quarterly report on Form 10-QSB
for the quarter ending March 31, 1997 (File No. 001-13880) and
incorporated herein by reference)
10.55....Production Sharing Contract between Perusahaan Pertambangan Minyak Dan
Gas Bumi Nagara (Pertamina) and Saba Jatiluhur Limited (filed as
Exhibit 10.5 to Saba's quarterly report on Form 10-Q for the
quarter ended September 30, 1997 (File No.
001-13880) and incorporated herein by reference)
10.56....Agreements among Saba, Amerada Hess Corporation and Hamar Associates
II, LLC dated November 1, 1997 (Filed as Exhibit 10.50 to Saba's
annual report on Form 10-K for the year ended December 31, 1997
(File No. 001-13880) and incorporated herein by reference)
10.57....Agreements among Saba, Chevron U.S.A. Production Company and Nahama
Natural Gas (Filed as Exhibit 10.51 to Saba's annual report on Form
10-K for the year ended December 31, 1997 (File No. 001-13880) and
incorporated herein by reference)
10.58....Exchange Agreement between Saba and Energy Asset Management Company,
L.L.C. dated March 6, 1998 (Filed as Exhibit 10.52 to Saba's annual report
on Form 10-K for the year ended December 31, 1997 (File No. 001-13880) and
incorporated herein by reference)
10.59....Office Lease Agreement, 3201 Airpark Drive, Santa Maria, California
(filed as Exhibit 10.2 to Saba's quarterly report on Form 10-QSB
for the quarter ending March 31, 1997 (File No. 001-13880) and
incorporated herein by reference)
10.60....Office Lease Agreement, 17526 Von Karman Avenue, Irvine, California
(Filed as Exhibit 10.54 to Saba's annual report on Form 10-K for
the year ended December 31, 1997 (File No. 001-13880) and
incorporated herein by reference)
10.61....Purchase and Sale Agreement between Saba and Statoil Exploration (US)
Inc. dated August 19, 1997 (filed as an exhibit to Saba's Current Report on
Form 8-K dated September 24, 1997 (File No. 001-13880) and incorporated
herein by reference)
10.62....Securities Purchase Agreement dated December 31, 1997 (filed as Exhibit
10.1 to Saba's Report Form 8-K filed January 15, 1998 (File No. 001-13880)
and incorporated herein by reference)
10.63....Registration Rights Agreement dated as of December 31, 1997(filed as
Exhibit 3(I).1(a) to Saba's Registration Statement on Form S-1,
dated January 27, 1998 (File No. 333-45023) and incorporated herein
by reference)
10.64....Stock Purchase Warrant (Closing Warrant) dated December 31, 1997(filed
as Exhibit 3(I).1(a) to Saba's Registration Statement on Form S-1,
dated January 27, 1998 (File No. 333-45023) and incorporated herein
by reference)
10.65....Stock Purchase Warrant (Redemption Warrant) dated December 31,
1997(filed as Exhibit 3(I).1(a) to Saba's Registration Statement on
Form S-1, dated January 27, 1998 (File No. 333-45023) and
incorporated herein by reference)
10.66....Finder Agreement dated as of December 31, 1997 (Filed as Exhibit 10.60
to Saba's annual report on Form 10-K for the year ended December 31, 1997
(File No. 001-13880) and incorporated herein by reference)
10.67....Stock Purchase Warrant (Finder Warrant) dated as of December 31, 1997
(Filed as Exhibit 10.61 to Saba's annual report on Form 10-K for
the year ended December 31, 1997 (File No. 001-13880) and
incorporated herein by reference)
10.68....Preliminary Agreement To Enter Into A Business Combination dated March
18, 1998 by and among Saba and Omimex Resources, Inc. (filed as Exhibit
10.1 to Saba's Current Report on Form 8-K dated March 30, 1998 (File No.
001-13880) and incorporated herein by reference)
10.69....Press Release announcing the Proposed Combination between Saba and
Omimex Resources, Inc. dated March 18, 1998 (filed as Exhibit 10.2 to
Saba's Current Report on Form 8-K dated March 30, 1998 (File No. 001-13880)
and incorporated herein by reference)
10.70....Preferred Stock Transfer Agreement dated October 7, 1998 between HVI
and RGC (filed as Exhibit 10.1 to HVI's Quarterly Report on Form
10-QSB for the quarter ended September 30, 1998 and incorporated
herein by reference).
10.71....Common Stock Purchase Agreement dated October 8, 1998 between HVI and
Saba (filed as Exhibit 10.2 to HVI's Quarterly Report on Form
10-QSB for the quarter ended September 30, 1998 and incorporated
herein by reference).
10.72....Option Agreement dated July 22, 1998 between HVI and IPH (filed as
Exhibit 10.3 to HVI's Quarterly Report on Form 10-QSB for the quarter ended
September 30, 1998 and incorporated herein by reference).
10.73....Promissory Note dated October 6, 1998 payable by HVI to IPH (filed as
Exhibit 10.4 to HVI's Quarterly Report on Form 10-QSB for the
quarter ended September 30, 1998 and incorporated herein by
reference).
10.74....Pledge Agreement dated October 6, 1998 between HVI and IPH (filed as
Exhibit 10.5 to HVI's Quarterly Report on Form 10-QSB for the quarter ended
September 30, 1998 and incorporated herein by reference).
10.75....Promissory Note dated November 4, 1998 payable by HVI to IPH (filed as
Exhibit 10.6 to HVI's Quarterly Report on Form 10-QSB for the
quarter ended September 30, 1998 and incorporated herein by
reference).
10.76....Pledge Agreement dated November 4, 1998 between HVI and IPH (filed as
Exhibit 10.7 to HVI's Quarterly Report on Form 10-QSB for the quarter ended
September 30, 1998 and incorporated herein by reference).
10.77....Agreement and Plan of Reorganization dated as of June 1, 1998 by and
among Saba and Ominex Resources, Inc. et al. (filed as Exhibit 10.1 to
Saba's Curretn Report on Form 8-K dated June 16, 1998 (File No. 001-13880)
and incorporated herein by reference).
10.78....Consent letter to provisions of Section 1.7 of the Agreement and Plan
of Reorganization by Bank One, Texas, NA, dated June 2, 1998 (filed
as Exhibit 10.2 to Saba's Current Report on Form 8-K dated June 16,
1998 (File No. 001-13880) and incorporated herein by reference).
10.79....Amendment ot First Amended and Restated Loan Agreement dated September
23, 1996, as amended among Saba et al. And Bank One, Texas, NA
dated June 9, 1998 (filed as Exhibit 10.3 to Saba's Current Report
on Form 8-K dated June 16, 1998 (File No.
001-13880) and incorporated herein by reference).
10.80....Mutual Termination and Release Agreement dated September 15, 1998 by
and among Saba, Saba Acquisition, Inc., Omimex Resources, Inc., the Omimex
Resources, Inc. stockholders and Ilyas Chaudhary (filed as Exhibit 10.67 to
Amendment No. 2 to Saba's Registration Statement on Form S-1 dated December
23, 1998 (File No. 333-45023) and incorporated herein by reference).
10.81....Letter Agreement dated October 8, 1998 between Saba and HVI (filed as
Exhibit 10.3 to Saba's Current Report on Form 8-K dated October 6, 1998
(File No. 001-138807) and incorporated herein by reference).
10.82....Employment Agreement with Imran Jattala dated July 23, 1998 (filed as
Exhibit 10.71 to Amendment No. 2 to Saba's Registration Statement
on Form S-1 dated December 23, 1998 (File No. 333-45023) and
incorporated herein by reference).
10.83....Stock Exchange Agreement dated November 23, 1998 among HVI and the
Shareholders of Saba Acquisub, Inc. *
10.84....Extension and Amendment to Preferred Stock Transfer Agreement dated
December 4, 1998 among RGC International Investors, LDC, HVI and Saba*
10.85....First Amendment to Common Stock Purchase Agreement dated October 8,
1998 between Saba and HVI dated December 4, 1998 (filed as Exhibit
10.1 to Saba's Current Report on Form 8-K dated December 18, 1998
(File No. 001-13880) and incorporated herein by reference).
21.1.....Subsidiaries of HVI.*
21.2.....Subsidiaries of Saba (filed as Exhibit 21.1 to Saba's Registration
Statement on Form S-1 dated January 21, 1998 and incorporated herein by
reference).
23.1 Consent of Bateman & Co., Inc., P.C., Independent Certified Public
Accountants, related to the financial statements for Horizontal
Ventures, Inc.*
23.2.....Consent of PricewaterhouseCoopers, LLP, Independent Certified Public
Accountants, related to the financial statements for Saba Petroleum
Company*
23.3.....Consent of Netherland, Sewell & Associates, Inc.*
23.4.....Consent of Sproule Associates Limited*
23.5.....Consent of Cohen Brame & Smith Professional Corporation (contained in
Exhibit 5.1)**
99.1.....Form of HVI Proxy*
99.2 Form of Saba Proxy*
* Filed herewith.
** To be filed by amendment.
<PAGE>
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is entered into
this 18th day of December, 1998 among Horizontal Ventures, Inc., a Colorado
corporation ("HVI"), HVI Acquisition Corporation, a Delaware corporation and
wholly owned subsidiary of HVI ("Merger Sub"), and Saba Petroleum Company, a
Delaware corporation ("Saba").
RECITALS
WHEREAS, HVI has entered into certain transactions to acquire an
aggregate of 3,953,298 shares of the common stock, $.001 par value per share, of
Saba ("Saba Common Stock"), which will represent approximately 35% of the issued
and outstanding shares of Saba Common Stock immediately after consummation of
such transactions;
WHEREAS, Merger Sub has been formed for the sole purpose of enabling
HVI to acquire the remaining issued and outstanding shares of Saba Common Stock
and Merger Sub has not conducted any operations that were not related to, and
for the purpose of, such acquisition;
WHEREAS, in furtherance of the acquisition by HVI of the remaining
issued and outstanding shares of Saba Common Stock, the respective Boards of
Directors of HVI, Merger Sub and Saba have approved the merger of Saba with and
into Merger Sub, as set forth below (the "Merger"), on the terms and subject to
the conditions set forth in this Agreement, whereby each issued and outstanding
share of Saba Common Stock, other than shares of Saba Common Stock owned
directly or indirectly by HVI, will be converted into the right to receive
shares of common stock, no par value per share, of HVI ("HVI Common Stock") as
set forth in Section 2.1; and
WHEREAS, HVI, Merger Sub and Saba desire to make certain
representations, warranties, covenants and agreements in connection with the
transactions contemplated hereby and also to set forth various conditions to the
transactions contemplated hereby.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements set forth herein, and intending to be legally bound
hereby, the parties hereto agree as follows:
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ARTICLE I
THE MERGER
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Amendment No. 1.doc
Section 1.1 The Merger. Upon the terms and subject to the conditions set forth
in this Agreement, and in accordance with the Delaware General Corporation Law
(the "DGCL"), Saba shall be merged with and into Merger Sub at the Effective
Time (as defined in Section 1.3). Following the Merger, the separate corporate
existence of Saba shall cease and Merger Sub shall continue as the surviving
corporation (the "Surviving Corporation") under the name "Saba Petroleum
Company" and shall succeed to and assume all the rights and obligations of
Merger Sub in accordance with the DGCL.
Section 1.2 Closing. The closing of the Merger (the "Closing") will take place
at 10:00 a.m. Santa Maria, California time on the second business day after the
satisfaction or waiver (subject to applicable law) of the conditions set forth
in Article V of this Agreement (the "Closing Date"), at the offices of Saba
Petroleum Company at 3201 Airpark Drive, Suite 201, Santa Maria, California,
unless another date or place is agreed to in writing by the parties hereto. The
parties agree to use all reasonable efforts to close the Merger as soon as
practicable, subject to Article V hereof.
Section 1.3 Effective Time. As soon as practicable following the Closing, the
parties shall execute and file a certificate of merger or other appropriate
documents (in any such case, the "Certificate of Merger") in accordance with the
relevant provisions of the DGCL and shall make all other filings or recordings
required under the DGCL. The Merger shall become effective at such time as the
Certificate of Merger is duly filed with the Delaware Secretary of State, or at
such subsequent time as the parties shall agree, which subsequent time shall be
specified in the Certificate of Merger (the time the Merger becomes effective
being hereinafter referred to as the "Effective Time").
Section 1.4 Effects of the Merger. At and after the Effective Time, the Merger
shall have the effects set forth in the DGCL. Without limiting the generality of
the foregoing, and subject thereto, at the Effective Time all the property,
rights, privileges, powers and franchises of Saba and Merger Sub shall be vested
in the Surviving Corporation, and all debts, liabilities and duties of Saba and
Merger Sub shall become the debts, liabilities and duties of the Surviving
Corporation.
Section 1.5 Certificate of Incorporation. At the Effective Time, the certificate
of incorporation of the Surviving Corporation shall be amended in accordance
with the DGCL such that the certificate of incorporation of the Surviving
Corporation shall consist of the provisions of the certificate of incorporation
of Merger Sub, except that Article I of the certificate of incorporation of the
Surviving Corporation shall be amended to read in its entirety as follows: "The
name of the corporation shall be Saba Petroleum Company."
Section 1.6 Bylaws. The bylaws of Merger Sub as in effect at the Effective Time
shall be the bylaws of the Surviving Corporation until thereafter changed or
amended as provided therein or by applicable law.
Section 1.7 Directors. The directors of Merger Sub immediately prior to the
Effective Time shall be the directors of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
Section 1.8 Officers. The officers of Merger Sub immediately prior to the
Effective Time shall be the officers of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS;
EXCHANGE OF CERTIFICATES
Section 2.1 Effect on Capital Stock. At the Effective Time, by virtue of the
Merger and without any action on the part of the holder thereof:
(a) Conversion of Saba Common Stock. Each share of Saba Common Stock issued
and outstanding immediately prior to the Effective Time (other than shares of
Saba Common Stock owned by HVI, Merger Sub, Saba, or any subsidiary of Saba, all
of which shall be canceled as provided in Section 2.1(b)) shall be converted
into the right to receive that number of shares of HVI Common Stock equal to the
Exchange Ratio (as defined below) (the "Merger Consideration"). "Exchange Ratio"
means the quotient represented by the ratio of one share of HVI Common Stock for
each six shares of Saba Common Stock. At the Effective Time, all such shares of
Saba Common Stock shall cease to be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each holder of a certificate
which immediately prior to the Effective Time represented any such shares of
Saba Common Stock ("Certificate") (other than HVI, Merger Sub and Saba) shall
thereafter cease to have any rights with respect to such shares of Saba Common
Stock, except the right to receive the applicable Merger Consideration in
accordance with Section 2.2 upon the surrender of such Certificate.
(b) Cancellation of Treasury Stock and HVI Owned Stock. Each share of Saba
Common Stock issued and outstanding immediately prior to the Effective Time that
is owned by Saba or by any subsidiary of Saba and each share of Saba Common
Stock that is owned by HVI, Merger Sub or any other subsidiary of HVI shall
cease to be outstanding and shall automatically be canceled and retired and
shall cease to exist, and no HVI Common Stock or other consideration shall be
delivered in exchange therefor.
(c) Capital Stock of Merger Sub. Each share of common stock, par value
$.001 per share, of Merger Sub issued and outstanding immediately prior to the
Effective Time shall be automatically converted into and become one fully paid
and nonassessable share of common stock, par value $.001 per share, of the
Surviving Corporation.
(d) Treatment of Options and Warrants to Acquire Saba Common Stock. At or
prior to the Effective Time all outstanding warrants to Aberfoyle Capital
Limited and RGC International Investors LDC and those other options and warrants
exercisable at $2.00 or below to acquire Saba Common Stock will be addressed.
Saba shall give written notice to each holder of an option or warrant as soon as
practicable (and in any event within ten business days after the execution of
this Agreement) advising such option or warrant holder how its warrants or
options will be handled, and permitting the exercise of such option or warrant
(to the extent exercisable pursuant to the terms of such option or warrant)
during the remaining period of time preceding the Effective Time.
(e) Treatment of Convertible Debt Securities. HVI shall enter into an
agreement with each holder of a 9% Convertible Senior Subordinated Debenture
issued by Saba under the Amended and Restated Debenture Agreement, dated as of
February 7, 1996 between Saba and the debenture holders (all such securities,
collectively, the "Convertible Debentures") to provide that the Surviving
Corporation shall be entitled to redeem the Convertible Debentures before any
conversion of the then outstanding Convertible Debentures in their original
principal amount and accrued interest without premium or penalty.
(f) Provisions for the Series A Convertible Preferred Stock. Prior to the
Effective Time, HVI shall have notified each Holder of the Series A Convertible
shares of Saba ("Saba Preferred Shares") of the provisions it has made for the
conversion of said Saba Preferred Shares into Common of HVI in accordance with
the Saba Preferred Shares designation.
(g) Notice to Bank One. Upon execution of this Agreement, the parties shall
give notice of the proposed merger to Bank One by providing it with a copy of
this Agreement.
Section 2.2 Exchange of Certificates.
(a) Exchange Fund. Prior to the Effective Time, HVI shall appoint a
commercial bank or trust company, or a subsidiary thereof, to act as exchange
agent hereunder for the purpose of exchanging Certificates for the Merger
Consideration (the "Exchange Agent"). At or prior to the Effective Time, HVI
shall deposit with the Exchange Agent, in trust for the benefit of holders of
shares of Saba Common Stock, certificates representing the HVI Common Stock
issuable pursuant to Section 2.1 in exchange for outstanding shares of Saba
Common Stock. HVI agrees to make available to the Exchange Agent from time to
time as needed, cash sufficient to pay cash in lieu of fractional shares
pursuant to Section 2.2(d). Any cash and certificates of HVI Common Stock
deposited with the Exchange Agent shall hereinafter be referred to as the
"Exchange Fund."
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, the Surviving Corporation shall cause the Exchange Agent to mail
to each holder of record of a Certificate whose shares were converted into the
right to receive the Merger Consideration pursuant to Section 2.1, (i) a letter
of transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and which letter shall be in customary form
and have such other provisions as HVI may reasonably specify) and (ii)
instructions for effecting the surrender of such Certificates in exchange for
the applicable Merger Consideration. Upon surrender of a Certificate for
cancellation to the Exchange Agent, together with such letter of transmittal,
duly executed and completed in accordance with the instructions thereto, and
such other documents as may reasonably be required by the Exchange Agent, the
holder of such Certificate shall be entitled to promptly receive in exchange
therefor (A) one or more shares of HVI Common Stock representing, in the
aggregate, the whole number of shares that such holder has the right to receive
pursuant to Section 2.1 (after taking into account all shares of Saba Common
Stock then held by such holder) and (B) a check in the amount equal to the cash
that such holder has the right to receive pursuant to the provisions of this
Article II, including cash in lieu of any fractional shares of HVI Common Stock
pursuant to Section 2.2(d). No interest will be paid or will accrue on any cash
payable pursuant to Section 2.2(d). The Certificate so surrendered shall
forthwith be canceled. In the event of a transfer of ownership of Saba Common
Stock which is not registered in the transfer records of Saba, one or more
shares of HVI Common Stock evidencing, in the aggregate, the proper number of
shares of HVI Common Stock and a check in the proper amount of cash in lieu of
any fractional shares of HVI Common Stock pursuant to Section 2.2(d) may be
issued promptly with respect to such Saba Common Stock to such a transferee if
the Certificate representing such shares of Saba Common Stock is presented to
the Exchange Agent, accompanied by all documents required to evidence and effect
such transfer and to evidence that any applicable stock transfer taxes have been
paid.
(c) No Further Ownership Rights in Saba Capital Stock. All shares of HVI
Common Stock issued and cash paid upon the surrender of Certificates in
accordance with the terms of this Article II shall be deemed to have been issued
and paid in full satisfaction of all rights pertaining to the shares of Saba
Common Stock theretofore represented by such Certificates.
(d) No Fractional Shares of HVI Common Stock/Provision for Small
Shareholders.
(1) No certificates or scrip or shares of HVI Common Stock representing
fractional shares of HVI Common Stock shall be issued upon the surrender for
exchange of Certificates and such fractional share interests will not entitle
the owner thereof to vote or to have any rights of a shareholder of HVI or a
holder of shares of HVI Common Stock.
(2) Notwithstanding any other provision of this Agreement, each holder
of shares of Saba Common Stock exchanged pursuant to the Merger who would
otherwise have been entitled to receive a fraction of a share of HVI Common
Stock (after taking into account all Certificates delivered by such holder)
shall receive, in lieu thereof, cash (without interest) in an amount equal to
the product of (i) such fractional part of a share of HVI Common Stock
multiplied by (ii) the closing bid price per share of HVI Common Stock reported
on Nasdaq SmallCap Market in The Wall Street Journal, Eastern edition, as of the
Closing Date. As promptly as practicable after the determination of the amount
of cash, if any, to be paid to holders of fractional interests, the Exchange
Agent shall so notify HVI, and HVI shall cause the Surviving Corporation to
promptly deposit such amount with the Exchange Agent and shall cause the
Exchange Agent to forward payments to such holders of fractional interests
subject to and in accordance with the terms hereof.
(3) HVI shall offer to pay cash in lieu of Common Stock to all Saba
shareholders who will be issued two(2) shares or less of HVI Common Stock as a
result of the merger. The cash offer shall be at the closing bid price per share
of HVI on Nasdaq on the Closing Date as determined pursuant to subsection (2)
above.
(e) Termination of Exchange Fund; No Liability. Following the date that is
six months after the Effective Time, the Exchange Agent shall return to the
Surviving Corporation all remaining undistributed Merger Consideration and other
cash, property and instruments in its possession relating to the transactions
described in this Agreement, and the Exchange Agent's duties shall terminate.
Thereafter, each holder of a Certificate may surrender such Certificate directly
to the Surviving Corporation pursuant to the provisions of this Section 2.2 and
(subject to applicable abandoned property, escheat and similar laws) receive in
exchange therefor the Merger Consideration (without interest thereon).
Notwithstanding the foregoing, the Surviving Corporation shall be entitled to
receive from time to time all interest or other amounts earned with respect to
any cash deposited with the Exchange Agent as such amounts accrue or become
available. If any Certificates shall not have been surrendered prior to such
date on which any payment pursuant to this Article II would otherwise escheat to
or become the property of any governmental entity, the cash payment in respect
of such Certificate shall, to the extent permitted by applicable law, become the
property of the Surviving Corporation, free and clear of all claims or interests
of any person previously entitled thereto. None of HVI, Merger Sub, Saba, the
Surviving Corporation or the Exchange Agent shall be liable to any person in
respect of any cash delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(f) Investment of the Exchange Fund. The Exchange Agent shall invest any
cash included in the Exchange Fund as directed by the Surviving Corporation on a
daily basis. Any interest or other income resulting from such investments shall
promptly be paid to the Surviving Corporation.
(g) Withholding Rights. Each of the Surviving Corporation and HVI shall be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of shares of Saba Common Stock such
amounts as it is required to deduct and withhold with respect to the making of
such payment under the Internal Revenue Code of 1986, as amended (the "Code"),
and the rules and regulations promulgated thereunder, or any provision of state,
local or foreign tax law. To the extent that amounts are so withheld by the
Surviving Corporation or HVI, as the case may be, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the holder of
the shares of Saba Common Stock in respect of which such deduction and
withholding was made by the Surviving Corporation or HVI, as the case may be.
(h) Lost, Stolen or Destroyed Certificates. In the event any Certificate
shall have been lost, stolen or destroyed, upon the making of an affidavit of
that fact by the person claiming such Certificate to be lost, stolen or
destroyed and, if required by the Surviving Corporation, the posting of a bond
by such person in such reasonable amount as the Surviving Corporation may direct
as indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will deliver in exchange for such lost, stolen
or destroyed Certificate the applicable Merger Consideration with respect to the
shares of Saba Common Stock formerly represented thereby and any cash in lieu of
fractional shares of HVI Common Stock pursuant to this Agreement.
(i) Further Assurances. If at any time after the Effective Time, any
further assignments or assurances in law or any other things are necessary or
desirable to vest or to perfect or confirm of record in the Surviving
Corporation the title to any property or rights of either Saba or Merger Sub, or
otherwise to carry out the provision of this Agreement, the officers and
directors of the Surviving Corporation are hereby authorized and empowered, in
the name of and on behalf of Saba and Merger Sub, to execute and deliver any and
all things necessary or proper to vest or perfect or confirm title to such
property or rights in the Surviving Corporation, and otherwise to carry out the
purposes and provisions of this Agreement.
(j) Stock Transfer Books. At the close of business, New York City time, on
the day the Effective Time occurs, the stock transfer books of Saba shall be
closed and there shall be no further registration of transfers of shares of Saba
Common Stock thereafter on the records of Saba. From and after the Effective
Time, the holders of Certificates shall cease to have any rights with respect to
such shares of Saba Common Stock formerly represented thereby, except as
otherwise provided herein or by law. On or after the Effective Time, any
Certificates presented to the Exchange Agent or HVI for any reason shall be
converted into the Merger Consideration with respect to the shares of Saba
Common Stock formerly represented thereby and any cash in lieu of fractional
shares of HVI Common Stock to which the holders thereof are entitled pursuant to
Section 2.2(d).
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations and Warranties of Saba. Saba hereby represents and
warrants to HVI that, except as set forth on Schedule 3.1 attached hereto,
Schedules 3.1 and 3.1(2)(a) to the Common Stock Purchase Agreement dated October
8, 1998 and the disclosures contained in Saba's S-1 Registration Statement filed
on December 23, 1998 or as described in filings heretofore made by Saba pursuant
to the informational reporting requirements of the Securities Exchange Act of
1934 (the "Exchange Act"):
(1) Organization and Standing of Saba. Saba 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. Saba 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 Saba. Saba has
no direct or indirect interest, either by way of stock ownership or otherwise,
in any other firm, corporation, association, or business except for
partnerships, operating agreements, farmout agreements, unitization, pooling
agreements and other customary oil and gas industry arrangements.
(2) Capitalization and Indebtedness for Borrowed Moneys. Saba is duly and
lawfully authorized by its Certificate of Incorporation, as amended, to issue
150 million shares of Saba Common Stock and 50 million shares of preferred
stock, $.001 par value per share ("Saba Preferred Stock"), of which as of the
date hereof there are issued and outstanding 11,385,726 shares of Saba Common
Stock and 8,000 shares of Series A Convertible Preferred Stock ("Preferred
Stock"). Saba has no treasury stock and no other authorized series or class of
stock. All the outstanding shares of Saba Common Stock and Saba Preferred Stock
have been duly authorized and validly issued and are fully paid and
nonassessable and free of preemptive rights. Saba 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. Saba is not presently liable on account of any
indebtedness for borrowed moneys, except as reflected in the Saba Financial
Statements (as hereinafter defined).
(3) Saba's Authority. The execution, delivery, and performance of this
Agreement have been duly authorized by all requisite corporate action, subject
to the approval of this Agreement by the shareholders of Saba. This Agreement
has been executed and delivered by Saba and constitutes a valid and binding
obligation of Saba 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 Saba's Certificate of Incorporation or Bylaws, as
amended, or with any contract to which Saba is a party or otherwise bound.
(4) Saba Financial Statements. Saba has furnished to HVI its audited
balance sheets as of December 31, 1997 and 1996, its audited statements of
income and retained earnings and cash flows for each of the three years ended
December 31, 1997, its unaudited balance sheet as of September 30, 1998, and its
unaudited statements of income and cash flows for the nine months ended
September 30, 1998 (collectively, the "Saba Financial Statements"). All of the
Saba Financial Statements present fairly the financial position of Saba as of
the respective balance sheet dates, and the results of its operations and cash
flows for the respective periods therein specified. The Saba 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 provisions of Section 3.3, Saba has not,
since September 30, 1998 and will not prior to the Closing Date without the
prior written consent of HVI, which consent shall not be unreasonably withheld
or delayed, and shall be based on the best interests of Saba'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) Entered into any agreement obligating it to issue any equity securities
except as required by the Common Stock Purchase Agreement dated October 8,
1998 (the "Common Stock Purchase Agreement") as extended between Saba and
HVI;
(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 Saba Financial Statements and current liabilities incurred since the
close of business on the date of the Saba 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 its 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 Saba, or waived any
rights of substantial value; or
(h) Except with respect to this Agreement and the Common Stock Purchase
Agreement, entered into any transaction regarding the sale, lease or
encumbrance of any asset or the settlement of any obligation, or entered
into any other material transaction other than in the ordinary course of
business.
(6) Litigation. Except as disclosed in the Saba Financial Statements, there
are no legal actions, suits, arbitrations, or other legal or administrative
proceedings pending or threatened against Saba which would reasonably be
expected to have a material adverse effect upon it, its properties, assets, or
business; and Saba 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 Saba or
its properties or assets. Saba is not in default of any judgment, order, or
decree of any court or, in any material respect of, any requirements of a
government agency or instrumentality, except as set forth in the Saba Financial
Statements.
(7) Compliance With the Law and Other Instruments. To the best of Saba's
knowledge, the business operations of Saba have been and are being conducted in
substantial compliance with all applicable laws, rules, and regulations of all
authorities. Saba 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 Saba, or which would
prohibit Saba from entering into this Agreement.
(8) Title to Properties and Assets. Saba has good and marketable title to
all of its material properties and assets, including without limitation those
reflected in the Saba Financial Statements and those used or located on property
controlled by Saba 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 Saba Financial Statements as securing specified liabilities; or (b) do not
materially adversely affect the use thereof.
(9) Contracts and Other Obligations. Saba 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 Saba 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 Saba are subjected
to a lien, encumbrance, charge, or other restriction;
(h) Material contract or other material commitment continuing for a
period of more than thirty days and which is not terminable without cost or
other liability to Saba or its successor; or
(i) Any material contract, agreement, lease or other binding
arrangement with which Saba is not in substantial compliance therewith.
(j) Nothing herein shall prohibit or restrict Saba from making
expenditures required under operating agreements, joint venture agreements,
unit, pooling, farmout agreements or expenditures necessitated by emergency
conditions to protect or preserve life or property or expenditures required
by law or administrative authority or to perform its existing commitments.
(10)Records. To the best of Saba's knowledge, the books of account, minute
books, stock certificate books, and stock transfer ledgers of Saba are complete
and correct, and there have been no transactions involving the business of Saba
which properly should have been set forth in said respective books, other than
those set forth therein.
(11)Vote Required. The affirmative vote of the holders of a majority of the
outstanding shares of Saba Common Stock to approve this Agreement (the "Required
Saba Vote") is the only vote of the holders of any class or series of Saba
capital stock necessary to adopt this Agreement and approve the transactions
contemplated hereby.
(12)Brokers or Finders. All negotiations on the part of Saba relative to
this Agreement and the transactions contemplated hereby have been carried on by
Saba without the intervention of any person or as the result of any act of Saba
in such manner as to give rise to any valid claim for a brokerage commission,
finder's fee, or other like payment.
(13)Absence of Certain Changes or Events. Since September 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 Saba, the business or prospects of
Saba, except for conditions generally affecting the segments of the oil and gas
industry in the locales in which Saba conducts its business.
(14)Taxes. Saba 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 Saba up to the date hereof. All of the foregoing returns are true
and correct in all material respects and Saba has paid or provided for all
taxes, interest and penalties shown on such returns or reports as being due.
Saba 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 Saba as of the Closing Date.
(15)Environmental Matters. Saba is aware of no actions, proceedings or
investigations pending or, to the actual knowledge of Saba, threatened before
any federal or state environmental regulatory body, or before any federal or
state court, alleging noncompliance by Saba with CERCLA or any other laws or
regulations regulating the discharge of materials into the environment
("Environmental Laws"). To the actual knowledge of Saba: (i) there is no
reasonable basis for the institution of any action, proceeding or investigation
against Saba under any Environmental Law; (ii) Saba 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) Saba 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) Saba is in substantial compliance with all
applicable Environmental Laws; and (v) no real property used, owned, managed or
controlled by Saba 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.
(16)Full Disclosure. To Saba's knowledge and belief, this Agreement, Saba's
periodic public reports filed with the SEC pursuant to the requirements of the
Exchange Act, and any schedules and certificates delivered by Saba 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 Saba'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 Saba that have not
been set forth in this Agreement, the Schedules hereto, the periodic public
reports of Saba or in other documents delivered by Saba in connection herewith
or disclosed orally by an executive officer of Saba.
(17)State Takeover Statutes. Prior to the time that HVI became an
"interested stockholder" of Saba within the meaning of Section 203 of the DGCL,
the Board of Directors of Saba approved the transactions which resulted in HVI
becoming an interested stockholder and such approval is sufficient to render the
provisions of Section 203 of the DGCL inapplicable to the Merger and the
transactions contemplated by this Agreement. To Saba's knowledge, no other state
takeover statute or similar statute or regulation applies or purports to apply
to this Agreement or the Merger, or any of the transactions contemplated by this
Agreement. The Company is not subject to any provision of the California General
Corporation Law by operation of Section 2115 thereof.
Section 3.2 Representations and Warranties by HVI. HVI hereby represents and
warrants to Saba that, except as set forth on Schedule 3.2 attached hereto or as
described in filings heretofore made by HVI pursuant to the informational
reporting requirements of the Exchange Act:
(1) Organization and Standing of 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. and HVI Cat Canyon, Inc., both of which are wholly owned
subsidiaries of HVI, 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.
(2) Capitalization. HVI is duly and lawfully authorized by its Articles of
Incorporation, as amended, to issue 50 million shares of HVI Common Stock and 50
million shares of preferred stock, no par value per share ("HVI Preferred
Stock"), of which as of the date hereof there are issued and outstanding
2,910,981 shares of HVI Common Stock and no shares of HVI Preferred Stock. HVI
has no treasury stock and no other authorized series or class of stock. All the
outstanding shares of HVI Common Stock have been duly authorized and validly
issued and are fully paid and nonassessable and free of preemptive rights.
Except as may be required to convert the Saba Preferred shares and as listed on
Schedule 3.2(2)(a) attached hereto, HVI 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. HVI is not presently liable on account of any
indebtedness for borrowed moneys, except as reflected in the HVI Financial
Statements (as hereinafter defined).
(3) HVI's Authority. The execution, delivery, and performance of this
Agreement have been duly authorized by all requisite corporate action, subject
to the approval of the HVI Share Issuance (as defined below) by the shareholders
of HVI. This Agreement has been executed and delivered by HVI and 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 HVI's Articles of
Incorporation and any amendments thereto, Bylaws and any amendments thereto, or
of any contract to which HVI is a party or otherwise bound.
(4) HVI Financial Statements. HVI has furnished to Saba its audited balance
sheet as of December 31, 1997, its audited statements of operations and cash
flows for each of the two years ended December 31, 1997, its unaudited balance
sheet as of September 30, 1998, and its unaudited statements of operations and
cash flows for the nine months ended September 30, 1998 (collectively, the "HVI
Financial Statements"). All of the HVI Financial Statements present fairly the
financial position of HVI as of the respective balance sheet dates, and the
results of its operations and cash flows for the respective periods therein
specified. The HVI Financial Statements were prepared in accordance with
generally accepted accounting principles applied upon a basis consistent with
prior accounting periods.
(5) Vote Required. The affirmative vote of the holders of shares of HVI
Common Stock representing a majority of the total votes cast at a duly held
meeting of the holders of outstanding shares of HVI Common Stock (the "Required
HVI Vote"), to approve the issuance by HVI of shares of HVI Common Stock (the
"HVI Share Issuance") pursuant to the terms of this Agreement, is the only vote
of the holders of any class or series of HVI capital stock necessary to approve
the HVI Share Issuance contemplated by this Agreement.
<PAGE>
(6) Present Status. Subject to the provisions of Section 3.3, HVI has
not, since September 30, 1998 and will not prior to the Closing Date without the
prior written consent of Saba, which consent shall not be unreasonably withheld
or delayed, and shall be based on the best interests of HVI'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) Entered into any agreement obligating it to issue any equity securities
except as required by the Common Stock Purchase Agreement dated October 8,
1998 (the "Common Stock Purchase Agreement") as extended between Saba and
HVI;
(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 HVI Financial Statements and current liabilities incurred since the
close of business on the date of the HVI 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 its 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 HVI, or waived any rights
of substantial value; or
(h) Except with respect to this Agreement and the Common Stock Purchase
Agreement, entered into any transaction regarding the sale, lease or
encumbrance of any asset or the settlement of any obligation, or entered
into any other material transaction other than in the ordinary course of
business.
(7) Litigation. Except as disclosed in the HVI Financial Statements, there
are no legal actions, suits, arbitrations, or other legal or administrative
proceedings pending or threatened against HVI which would reasonably be expected
to have a material adverse effect upon it, its properties, assets, or business;
and HVI 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 HVI or its properties or
assets. HVI is not in default of any judgment, order, or decree of any court or,
in any material respect of, any requirements of a government agency or
instrumentality, except as set forth in the HVI Financial Statements.
(8) Compliance With the Law and Other Instruments. To the best of HVI's
knowledge, the business operations of HVI have been and are being conducted in
substantial compliance with all applicable laws, rules, and regulations of all
authorities. HVI 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 HVI, or which would
prohibit HVI from entering into this Agreement.
(9) Title to Properties and Assets. HVI has good and marketable title to
all of its material properties and assets, including without limitation those
reflected in the HVI Financial Statements and those used or located on property
controlled by HVI 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 HVI Financial Statements as securing specified liabilities; or (b) do not
materially adversely affect the use thereof.
(10)Records. To the best of HVI's knowledge, the books of account, minute
books, stock certificate books, and stock transfer ledgers of HVI are complete
and correct, and there have been no transactions involving the business of HVI
which properly should have been set forth in said respective books, other than
those set forth therein.
(11)Taxes. HVI 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 HVI up to the date hereof. All of the foregoing returns are true
and correct in all material respects and HVI has paid or provided for all taxes,
interest and penalties shown on such returns or reports as being due. HVI 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 HVI
as of the Closing Date.
(12)Environmental Matters. HVI is aware of no actions, proceedings or
investigations pending or, to the actual knowledge of HVI, threatened before any
federal or state environmental regulatory body, or before any federal or state
court, alleging noncompliance by HVI with CERCLA or any other laws or
regulations regulating the discharge of materials into the environment
("Environmental Laws"). To the actual knowledge of HVI: (i) there is no
reasonable basis for the institution of any action, proceeding or investigation
against HVI under any Environmental Law; (ii) HVI 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) HVI 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) Saba is in substantial compliance with all
applicable Environmental Laws; and (v) no real property used, owned, managed or
controlled by HVI 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.
(13)Brokers or Finders. All negotiations on the part of HVI relative to
this Agreement and the transactions contemplated hereby have been carried on by
HVI without the intervention of any person or as the result of any act of HVI in
such manner as to give rise to any valid claim for a brokerage commission,
finder's fee, or other like payment.
(14)Absence of Certain Changes or Events. Since September 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 HVI, the business or prospects of
HVI, except for conditions generally affecting the oil and gas industry.
(15)Full Disclosure. To HVI's knowledge and belief, this Agreement, HVI's
periodic public reports filed with the SEC pursuant to the requirements of the
Exchange Act, and any schedules and certificates delivered by HVI 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 HVI'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 HVI that have not been
set forth in this Agreement, the Schedules hereto, the periodic public reports
of HVI or in other documents delivered by HVI in connection herewith.
(16)No Business Activities by Merger Sub. Merger Sub has not conducted any
activities other than in connection with the organization of Merger Sub, the
negotiation and execution of this Agreement and the consummation of the
transactions contemplated hereby. Merger Sub has no subsidiaries.
Section 3.3 Certain Restrictions on Dispositions. Without the prior written
consent of HVI, which consent shall not be unreasonably withheld or delayed,
until the Closing Date Saba 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 HVI, nor sell or otherwise voluntarily
dispose of the Santa Maria Refinery or any interest therein, nor sell or
otherwise voluntarily dispose of any of the material assets of Saba Energy
Company of Texas, Inc.
ARTICLE IV
ADDITIONAL AGREEMENTS
Section 4.1 Preparation of Joint Proxy Statement/Prospectus; Meetings of Saba
and HVI Shareholders.
(a) As promptly as practicable following the date hereof, HVI shall, in
cooperation with Saba, prepare and file with the SEC preliminary proxy materials
which shall constitute the Joint Proxy Statement/Prospectus (such Joint Proxy
Statement/Prospectus, and any amendments or supplements thereto, the "Joint
Proxy Statement/Prospectus") and a registration statement on Form S-4 with
respect to the issuance of HVI Common Stock in the Merger (the "Form S-4"). The
Joint Proxy Statement/Prospectus will be included in the Form S-4 as HVI's
prospectus. The Form S-4 and the Joint Proxy Statement/Prospectus shall comply
as to form in all material respects with the applicable provisions of the
Securities Act of 1933 (the "Securities Act") and the Exchange Act and the rules
and regulations thereunder. Each of HVI and Saba shall use all reasonable
efforts to have the Form S-4 declared effective by the SEC as promptly as
practicable after filing with the SEC and to keep the Form S-4 effective as long
as is necessary to consummate the Merger. HVI shall, as promptly as practicable
after receipt thereof, provide copies to Saba of any written comments received
from the SEC with respect to the Joint Proxy Statement/Prospectus and advise
Saba of any oral comments with respect to the Joint Proxy Statement/Prospectus
received from the SEC. HVI agrees that none of the information supplied or to be
supplied by HVI for inclusion or incorporation by reference in the Joint Proxy
Statement/Prospectus and each amendment or supplement thereto, at the time of
mailing thereof and at the time of the Saba Shareholders Meeting (as defined
below) or the HVI Shareholders Meeting (as defined below), will contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Saba agrees that none
of the information supplied or to be supplied by Saba for inclusion or
incorporation by reference in the Joint Proxy Statement/Prospectus and each
amendment or supplement thereto, at the time of mailing thereof and at the time
of the Saba Shareholders Meeting or the HVI Shareholders Meeting, will contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. For purposes of
the foregoing, it is understood and agreed that information concerning or
related to HVI and the HVI Shareholders Meeting will be deemed to have been
supplied by HVI and information concerning or related to Saba and the Saba
Shareholders Meeting shall be deemed to have been supplied by Saba. HVI will
provide Saba with a reasonable opportunity to review and comment on any
amendment or supplement to the Joint Proxy Statement/Prospectus prior to filing
such with the SEC, and will provide Saba with a copy of all such filings made
with the SEC. No amendment or supplement to the information supplied by Saba for
inclusion in the Joint Proxy Statement/Prospectus shall be made without the
approval of Saba, which approval shall not be unreasonably withheld or delayed.
(b) Saba shall, as promptly as practicable following the execution of this
Agreement, duly call, give notice of, convene and hold a meeting of its
shareholders (the "Saba Shareholders Meeting") for the purpose of obtaining the
Required Saba Vote with respect to this Agreement, shall take all lawful action
to solicit the approval of this Agreement by the Required Saba Vote, and the
Board of Directors of Saba shall recommend approval of this Agreement by the
shareholders of Saba. HVI agrees that at the Saba Shareholders Meeting HVI shall
vote all of its shares of Saba Common Stock in favor of this Agreement, and thus
the Merger Agreement will receive the Required Saba Vote as result of such vote
by HVI.
(c) HVI shall, as promptly as practicable following the execution of this
Agreement, duly call, give notice of, convene and hold a meeting of its
shareholders (the "HVI Shareholders Meeting") for the purpose of obtaining the
Required HVI Vote, shall take all lawful action to solicit the approval of the
HVI Share Issuance by the Required HVI Vote and the Board of Directors of HVI
shall recommend approval of the HVI Share Issuance contemplated by this
Agreement by the shareholders of HVI.
(d) On or prior to the date of the Saba Shareholders Meeting, Saba will
deliver to HVI a letter (the "Saba Affiliate Letter") identifying all persons
who are "affiliates" of Saba for purposes of Rule 145 under the Securities Act
("Rule 145"). On or prior to the Closing Date, Saba will use all reasonable
efforts to cause each person identified as an "affiliate" in the Saba Affiliate
Letter to deliver a written agreement (an "Affiliate Agreement") in connection
with restrictions on affiliates under Rule 145.
Section 4.2 Access to Information. Upon reasonable notice, each party shall (and
shall cause its subsidiaries to) afford to the officers, employees, accountants,
counsel, financial advisors and other representatives of the other party
reasonable access during normal business hours, during the period prior to the
Effective Time, to all its properties, books, contracts, commitments and records
and, during such period, such party shall (and shall cause its subsidiaries to)
furnish promptly to the other party (a) a copy of each report, schedule,
registration statement and other document filed, published, announced or
received by it during such period pursuant to the requirements of federal or
state securities laws, as applicable (other than documents which such party is
not permitted to disclose under applicable law), and (b) consistent with its
legal obligations, all other information concerning its business, properties and
personnel as such other party may reasonably request; provided, however, that
either party may restrict the foregoing access to the extent that (i) a
governmental entity requires such party or any of its subsidiaries to restrict
access to any properties or information reasonably related to any such contract
on the basis of applicable laws and regulations with respect to national
security matters or (ii) any law, treaty, rule or regulation of any governmental
entity applicable to such party requires such party or its subsidiaries to
restrict access to any properties or information. The parties will hold any such
information which is non-public in confidence. Any investigation by HVI or Saba
shall not affect the representations and warranties of Saba or HVI, as the case
may be.
Section 4.3 Best Efforts.
(a) Subject to the terms and conditions of this Agreement, each
party will use its best efforts to take, or cause to be taken, all actions and
to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate the Merger and the other
transactions contemplated by this Agreement as soon as practicable after the
date hereof. Nothing in this Section 4.3(a) shall require any of HVI and its
subsidiaries to sell or otherwise dispose of, or permit the sale or other
disposition of, any assets of HVI, Saba or their respective subsidiaries,
whether as a condition to obtaining any approval from a governmental entity or
any other person or for any other reason, if HVI reasonably determines that such
sale or other disposition would have or is likely to have a Material Adverse
Effect on HVI and its subsidiaries (including the Surviving Corporation and its
Subsidiaries), taken together, after giving effect to the Merger.
(b) In furtherance and not in limitation of the covenants of the parties
contained in Section 4.4(a), if any administrative or judicial action or
proceeding, including any proceeding by a private party, is instituted (or
threatened to be instituted) challenging any transaction contemplated by this
Agreement, each of HVI and Saba shall cooperate in all respects with each other
and use its respective best efforts to contest and resist any such action or
proceeding and to have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other order, whether temporary, preliminary or
permanent, that is in effect and that prohibits, prevents or restricts
consummation of the transactions contemplated by this Agreement.
ARTICLE V
CONDITIONS TO CLOSING
Section 5.1 Conditions to Each Party's Obligation to Effect the Merger. 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:
(a) Shareholder Approval. Saba shall have obtained the Required Saba
Vote in connection with the adoption of this Agreement by the shareholders of
Saba and HVI shall have obtained the Required HVI Vote in connection with the
approval of the HVI Share Issuance by the shareholders of HVI.
(b) No Injunctions, Restraints or Illegality. No laws shall have been
adopted or promulgated, and no temporary restraining order, preliminary or
permanent injunction or other order issued by a court or other governmental
entity of competent jurisdiction shall be in effect, having the effect of making
the Merger illegal or otherwise prohibiting consummation of the Merger, provided
however, that the provisions of this Section 5.1(b) shall not be available to
any party whose failure to fulfill its obligations pursuant to Section 4.3 shall
have been the cause of, or shall have resulted in, such order or injunction.
(c) Effectiveness of the Form S-4. The Form S-4 shall have been
declared effective by the SEC under the Securities Act. No stop order suspending
the effectiveness of the Form S-4 shall have been issued by the SEC and no
proceedings for that purpose shall have been initiated or threatened by the SEC.
(d) Nasdaq Listing. The shares of HVI Common Stock to be issued in the
Merger and such other shares to be reserved for issuance in connection with the
Merger shall have been approved upon official notice of issuance for quotation
on the Nasdaq SmallCap Market.
Section 5.2 Additional Conditions to Obligations of HVI and Merger Sub. The
obligations of HVI and Merger Sub to effect the Merger are subject to the
satisfaction of, or waiver by HVI, on or prior to the Closing Date of the
following conditions:
(a) Representations and Warranties. The representations and warranties
of Saba set forth in Section 3.1 shall be true and correct in all material
respects as of the Closing Date, subject to any changes contemplated by this
Agreement.
(b) Performance of Obligations of Saba. Saba shall have performed or
complied in all material respects with all agreements and covenants required to
be performed by it under this Agreement at or prior to the Closing Date.
(c) No Conversion or Redemption of the Saba Preferred Shares. At or
prior to the Effective Time, none of the Saba Preferred Shares presently issued
and outstanding shall have converted to Saba Common Stock unless said conversion
was completed with the written consent of HVI or otherwise waived in writing by
HVI. Additionally, Saba shall not have received a notice of redemption relative
to the Saba Preferred Shares unless Saba shall have redeemed said Preferred
Shares or provided for their redemption out of its available cash.
(d) No Adverse Change. In accordance with Section 3.1(13) Saba shall
not have suffered any material adverse change, materially adversely affecting
the condition (financial or otherwise) including the inability to meet a
redemption notice, call notice or any other form of obligation outstanding at
the time of entering into this Agreement that cannot be satisfied through
legally available funds of Saba.
(e) Opinion of Saba's Counsel. Saba shall have delivered to HVI the
opinion, dated as of the Closing Date, of Susan M. Whalen, Esq., counsel to
Saba, in the form attached hereto as Schedule 5.2(c).
(f) Certificate of Officers. Saba shall have delivered to HVI a
certificate dated as of the Closing Date, executed in its corporate name by, and
verified by, the oath of the Chairman of its management committee certifying to
the fulfillment of the conditions specified in this Section 5.2.
Section 5.3 Additional Conditions to Obligations of Saba. The obligations of
Saba to effect the Merger are subject to the satisfaction of, or waiver by Saba,
on or prior to the Closing Date of the following conditions:
(a) Representations and Warranties. The representations and warranties
of HVI and Merger Sub set forth in Section 3.2 shall be true and correct in all
material respects as of the Closing Date, subject to any changes contemplated by
this Agreement.
(b) Performance of Obligations of HVI and Merger Sub. HVI and Merger
Sub shall have performed or complied in all material respects with all
agreements and covenants required to be performed by them under this Agreement
at or prior to the Closing Date.
(c) Certificate of Officer. HVI shall have delivered to Saba a
certificate dated as of the Closing Date, executed in its corporate name by, and
verified by, the oath of its chairman and chief executive officer certifying to
the fulfillment of the conditions specified in this Section 5.3.
ARTICLE VI
NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES
All statements of fact contained herein, any certificate or schedule
delivered by or on behalf of Saba, HVI or Merger Sub pursuant to the terms
hereof, shall be deemed representations and warranties made by Saba, HVI and
Merger Sub, 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 VII
TERMINATION AND AMENDMENT
Section 7.1 Termination. This Agreement may be terminated at any time prior to
the Effective Time, by action taken or authorized by the Board of Directors of
the terminating party or parties, whether before or after approval of the
matters presented in connection with the Merger by the shareholders of Saba or
HVI:
(a) By mutual written consent of HVI and Saba, by action of their respective
Boards of Directors;
(b) By either Saba or HVI if the Effective Time shall not have occurred on
or before the elapse of three months from the date of this Agreement (the
"Termination Date"); provided, however, that the right to terminate this
Agreement under this Section 7.1(b) shall not be available to any party whose
failure to fulfill any obligation under this Agreement (including without
limitation Section 4.3) has to any extent been the cause of, or resulted in, the
failure of the Effective Time to occur on or before the Termination Date; or
(c) By either Saba or HVI if (i) the approval by the shareholders of Saba
required for the consummation of the Merger shall not have been obtained by
reason of the failure to obtain the Required Saba Vote or (ii) the approval by
the shareholders of HVI required for the HVI Share Issuance to consummate the
Merger shall not have been obtained by reason of the failure to obtain the
Required HVI Vote, in each case upon the taking of such vote at a duly held
meeting of the shareholders of Saba or HVI, as the case may be, or at any
reconvened meeting after any adjournment or postponement thereof.
(d) By either Saba or HVI if any condition precedent contained in Article V
has not occurred and has not been waived by the other party or cured in time to
comply with Section 7.1(b).
Section 7.2 Effect of Termination.
(a) A termination as a result of Section 7.1(b) resulting from the failure
of any party to fulfill an obligation under this Agreement in a timely manner
(including without limitation Section 4.3) or a termination that results from
Section 7.1(d) with respect only to conditions precedent contained in Sections
5.2 and 5.3 of Article V shall be deemed a "Default" on the part of the party
responsible for the Termination and the party who is in Default shall be deemed
a "Defaulting Party."
(b) In the event of termination of this Agreement by either Saba or HVI as
provided in Section 7. 1, this Agreement shall forthwith become void and there
shall be no liability or obligation on the part of HVI or Saba or their
respective officers, directors or counsel except with respect to this Section
7.2.
(c) HVI and Saba agree that should this Agreement be terminated as a result
of a default by a Defaulting Party, the Defaulting Party shall pay the sum of $1
million plus in the case of Saba being the Defaulting Party, all sums invested
into Saba by HVI or its affiliates and all sums advanced by HVI on behalf of
Saba up to the Termination Date (the "Termination Fee") in the event that either
party shall terminate this Agreement pursuant to Sections 7.1(b) or (d) with
respect only to conditions precedent contained in Sections 5.2 and 5.3 of
Article V as a result of the failure of either party to fulfill its obligations
under this Agreement (including without limitation Section 4.3).
(d) The Termination Fee required to be paid pursuant to Section 7.2(b) shall
be made to non defaulting party upon termination of this Agreement by wire
transfer of immediately available funds to an account designated by non
defaulting party.
Section 7.3 Amendment. This Agreement may be amended by the parties hereto, by
action taken or authorized by their respective Boards of Directors, at any time
before or after approval of the matters presented in connection with the Merger
by the shareholders of Saba and HVI, but, after any such approval, no amendment
shall be made which by law or in accordance with the rules of any relevant stock
exchange or of Nasdaq requires further approval by such shareholders without
such further approval. This Agreement may not be amended except by an instrument
in writing signed on behalf of each of the parties hereto.
Section 7.4 Extension; Waiver. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (iii) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party. The failure of
any party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of those rights.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Announcement. Unless otherwise previously announced, the parties
agree to draft an announcement relating to this Agreement within 24 hours of the
execution hereof, which announcement shall be released as a joint announcement
through the business new wire services.
Section 8.2 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 8.3 Assignment. Neither this Agreement nor any right created hereby
shall be assignable by Saba or HVI 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 8.4 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 schedules hereto. Section 8.5 Knowledge. When used in this
Agreement, the term "knowledge" and words of similar import means knowledge
actually possessed by an officer or director of a party, whether by personal
discovery or communication received from a subordinate, but does not include
imputed or vicarious knowledge.
Section 8.6 Governing Law. This Agreement shall be governed by the laws of the
State of Colorado, except that the DGCL shall govern as to matters of corporate
law pertaining to Saba and Merger Sub. 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 8.7 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 8.8 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 HVI and/or Merger Sub:
Horizontal Ventures, Inc.
Attn: Mr. Randeep S. Grewal
Chairman and Chief Executive Officer
630 Fifth Avenue, Suite 1501
New York, NY 10111
Telefax: (212) 218-4679
With a copy to:
Cohen Brame & Smith Professional Corporation
Attn: Roger V. Davidson, Esq.
1700 Lincoln Street, Suite 1800
Denver, CO 80203
Telefax: (303) 894-0475
(2) If to Saba:
Saba Petroleum Company
Attn: Susan M. Whalen, Esq.
3201 Airpark 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.
Section 8.9 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.
[Remainder of Page Intentionally Left Blank.]
<PAGE>
IN WITNESS WHEREOF, this Agreement is hereby duly executed by each
party hereto as of the date first written above.
HVI:
HORIZONTAL VENTURES, INC.,
a Colorado corporation
By:_________________________________
Randeep S. Grewal, Chairman
and Chief Executive Officer
MERGER SUB:
HVI ACQUISITION CORPORATION,
a Delaware corporation
By:_________________________________
Randeep S. Grewal, Chairman
and Chief Executive Officer
SABA:
SABA PETROLEUM COMPANY,
a Delaware corporation
By: ________________________________
William Hagler, Chairman
of the Executive Committee
