EXHIBIT 10.1 Agreement and Plan of Reorganization
AGREEMENT AND PLAN OF REORGANIZATION
by and among
SABA PETROLEUM COMPANY,
SABA ACQUISITION, INC.
and
OMIMEX RESOURCES, INC.
and
THE STOCKHOLDERS OF
OMIMEX RESOURCES, INC.
and
joined for certain purposes,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
vi
TABLE OF CONTENTS
Page
ARTICLE 1 THE MERGER
1.1 The Merger.................................................................................... 1
1.2 Effective Time................................................................................ 1
1.3 Effect of Merger.............................................................................. 2
1.4 Certificate of Incorporation, Bylaws, Directors and Officers.................................. 2
1.5 Conversion of Shares.......................................................................... 3
1.6 Adjustment.................................................................................... 4
1.7 Loan.......................................................................................... 5
1.8. Warrant....................................................................................... 6
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY
2.1 Existence and Good Standing; Power and Authority.............................................. 6
2.2 Due Authorization; Enforceability............................................................. 7
2.3 Capital Stock................................................................................. 7
2.4 Financial Statements.......................................................................... 7
2.5 Oil and Gas Properties........................................................................ 7
2.6 Other Assets and Properties................................................................... 9
2.7 Contracts..................................................................................... 9
2.8 No Violations................................................................................. 10
2.9 Litigation and Related Matters................................................................ 10
2.10 Taxes......................................................................................... 10
2.11 Patents, Trademarks........................................................................... 11
2.12 Compliance with Laws.......................................................................... 11
2.13 Employee Benefit Plans........................................................................ 11
2.14 Insurance..................................................................................... 12
2.15 Consents...................................................................................... 12
2.16 Environmental Laws and Regulations............................................................ 12
2.17 Affiliate Transactions; Employees............................................................. 13
2.18 Accounts Receivables.......................................................................... 15
2.19 Bank Accounts and Powers of Attorney.......................................................... 15
2.20 Accuracy of Information Furnished............................................................. 15
2.21 Availability of Documents..................................................................... 15
2.22 Brokerage, Financial Advisor or Finder Fees................................................... 16
2.23 Absence of Certain Changes or Events.......................................................... 16
2.24 Subsidiaries.................................................................................. 16
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
3.1 Enforceability................................................................................ 17
3.2 Title to Company Common Stock................................................................. 17
3.3 No Conflicts.................................................................................. 17
3.4 Approvals..................................................................................... 17
3.5 Representations and Warranties of the Company................................................. 18
3.6 Information Furnished......................................................................... 18
3.7 Corporation Status............................................................................ 18
3.8 Taxes......................................................................................... 18
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF SABA
4.1 Existence and Good Standing; Power and Authority.............................................. 18
4.2 Due Authorization; Enforceability............................................................. 19
4.3 Capital Stock................................................................................. 19
4.4 Financial Statements.......................................................................... 19
4.5 Oil and Gas Properties........................................................................ 20
4.6 Other Assets and Properties................................................................... 21
4.7 Contracts..................................................................................... 21
4.8 No Violations................................................................................. 22
4.9 Litigation and Related Matters................................................................ 22
4.10 Taxes......................................................................................... 22
4.11 Patents, Trademarks........................................................................... 23
4.12 Compliance with Laws.......................................................................... 23
4.13 Employee Benefit Plans........................................................................ 23
4.14 Insurance..................................................................................... 24
4.15 Consents...................................................................................... 24
4.16 Environmental Laws and Regulations............................................................ 24
4.17 Affiliate Transactions; Employees............................................................. 25
4.18 Accounts Receivables.......................................................................... 26
4.19 Bank Accounts and Powers of Attorney.......................................................... 26
4.20 Availability of Documents..................................................................... 26
4.21 Brokerage, Financial Advisor or Finder Fees................................................... 26
4.22 Absence of Certain Changes or Events.......................................................... 27
4.23 Subsidiaries.................................................................................. 27
4.24 Commission Filings; Financial Statements...................................................... 28
4.25 Registration Matters.......................................................................... 29
4.26 Matters Relating to Company................................................................... 29
4.27 Tax Basis..................................................................................... 29
ARTICLE 5 COVENANTS OF COMPANY AND THE STOCKHOLDERS
5.1. Affirmative Covenants......................................................................... 29
5.2 Negative Covenants............................................................................ 31
5.3 Conflict Between Affirmative and Negative Covenants........................................... 33
ARTICLE 6 COVENANTS OF SABA
6.1. Affirmative Covenants......................................................................... 33
6.2 Negative Covenants............................................................................ 37
6.3 Conflict Between Affirmative and Negative Covenants........................................... 40
ARTICLE 7 JOINT COVENANTS
7.1 Cooperation................................................................................... 40
7.2 Antitrust Laws Compliance..................................................................... 40
7.3 Tax Matters................................................................................... 41
7.4 Publicity..................................................................................... 42
7.5 Saba Stockholder Approval..................................................................... 42
7.6 Escrow........................................................................................ 42
7.7 Disposition of Assets......................................................................... 42
ARTICLE 8 CONDITIONS TO OBLIGATIONS OF SABA AND ACQUISITION
8.1 Representations and Warranties................................................................ 42
8.2 Covenants of Stockholders and Company......................................................... 43
8.3 Certificate of the Company and Stockholders................................................... 43
8.4 Absence of Litigation......................................................................... 43
8.5 Consents and Approvals........................................................................ 43
8.6 Certificates.................................................................................. 43
8.7 Opinion of Counsel............................................................................ 43
8.8 Fairness Opinion.............................................................................. 44
8.9 No Material Adverse Change.................................................................... 44
8.10 Saba Stockholder Approval..................................................................... 44
8.11 HSR Waiting Period............................................................................ 44
8.12 Disposition of Certain Property............................................................... 44
8.13 Preferred Stock............................................................................... 44
8.14 Subordinated Debt............................................................................. 44
ARTICLE 9 CONDITIONS TO THE COMPANY'S
AND THE STOCKHOLDERS' OBLIGATIONS
9.1 Representations and Warranties................................................................ 45
9.2 Covenants of Saba and Acquisition............................................................. 45
9.3 Certificates of Saba and Acquisition.......................................................... 45
9.4 Absence of Litigation......................................................................... 45
9.5 Consents and Approvals........................................................................ 45
9.6 Certificates.................................................................................. 45
9.7 Opinion of Counsel............................................................................ 45
9.8 Disposition of Certain Property............................................................... 46
9.9 No Material Adverse Change.................................................................... 46
9.10 Saba Stockholder Approval..................................................................... 46
9.11 HSR Waiting Period............................................................................ 46
9.12 Election of Board of Directors................................................................ 46
9.13 Saba Credit Agreement......................................................................... 47
9.14 Preferred Stock............................................................................... 47
9.15 Subordinated Debt............................................................................. 47
9.16 Loan.......................................................................................... 47
9.17 Warrant....................................................................................... 47
ARTICLE 10 CLOSING
10.1 Closing....................................................................................... 47
10.2 Exchange of Certificates...................................................................... 47
10.3 Legends on Saba Common Stock.................................................................. 48
ARTICLE 11 TERMINATION
11.1 Termination................................................................................... 48
11.2 Effect of Termination......................................................................... 49
11.3 Return of Information......................................................................... 49
11.4 Cancellation Payments and Expenses............................................................ 49
ARTICLE 12 INDEMNIFICATION
12.1 Saba's Losses................................................................................. 51
12.2 Stockholders' Losses.......................................................................... 52
12.3 Notice of Loss................................................................................ 52
12.4 Right to Defend............................................................................... 53
12.5 Cooperation................................................................................... 53
ARTICLE 13 OTHER AGREEMENTS: MISCELLANEOUS
13.1 Entire Agreement.............................................................................. 54
13.2 Successors and Assigns........................................................................ 54
13.3 Counterparts.................................................................................. 54
13.4 Headings...................................................................................... 54
13.5 Construction.................................................................................. 54
13.6 Modification and Waiver....................................................................... 54
13.7 Schedules, Etc................................................................................ 55
13.8 Notices....................................................................................... 55
13.9 Survival of Covenants, Agreements, Representations and Warranties............................. 56
13.10 GOVERNING LAW; CHOICE OF FORUM................................................................ 56
13.11 Invalid Provisions............................................................................ 57
13.12 Expenses...................................................................................... 57
13.13 Third Party Beneficiaries..................................................................... 57
13.14 Number and Gender of Words.................................................................... 57
13.15 Further Assurances............................................................................ 57
13.16 Several Obligations........................................................................... 57
13.17 Access to Records and Information............................................................. 57
Disclosure Schedule
Schedule 2.1 - Qualification and Authority
Schedule 2.4 - Financial Statements
Schedule 2.5 - Liens
Schedule 2.6 - Mortgage Notes
Schedule 2.7 - Material Contracts
Schedule 2.9 - Litigation
Schedule 2.13 - Employee Benefits
Schedule 2.14 - Insurance
Schedule 2.15 - Consents
Schedule 2.16 - Environmental Matters
Schedule 2.17(a) - Affiliate Transactions
Schedule 2.17(b) - Labor Issues
Schedule 2.19 - Bank Accounts
Schedule 2.23 - Absence of Certain Changes
Schedule 2.24 - Subsidiaries
Schedule 3.2 - Title to Stock
Schedule 4.1 - Qualification and Authority
Schedule 4.3 - Capital Stock
Schedule 4.4 - Financial Statements
Schedule 4.5 - Liens
Schedule 4.6 - Mortgage Notes
Schedule 4.7 - Material Contracts
Schedule 4.8 - Violations
Schedule 4.9 - Litigation
Schedule 4.10 - Taxes
Schedule 4.13 - Employee Benefits
Schedule 4.14 - Insurance
Schedule 4.15 - Consents
Schedule 4.16 - Environmental Matters
Schedule 4.17(a) - Affiliate Transactions
Schedule 4.17(b) - Labor Issues
Schedule 4.19 - Bank Accounts
Schedule 4.22 - Absence of Certain Changes
Schedule 4.23 - Subsidiaries
Schedule 4.24 - Commission Filings
Schedule 5.2(f) - Collective Bargaining
Schedule 5.2(h) - Amendments
Schedule 6.2(e) - Contracts
Schedule 6.2(g) - Disposition of Assets
Schedule 6.2(h) - Amendments
Schedule 6.2(k) - Dividends
Schedule 6.2(m) - Stock Issuance
Exhibits
Exhibit A - Net Asset Value Model
Exhibit B - Net Liability Schedule
Exhibit C - Adjustment Example
Exhibit D - ▇▇▇▇ ▇▇▇▇ Agreement
Exhibit E - Form of Warrant Agreement
Exhibit F - Personal Property
Exhibit G - Real Property
54
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") dated as of
June 1, 1998 by and among SABA PETROLEUM COMPANY, a Delaware corporation
("Saba"), SABA ACQUISITION, INC., a Delaware corporation and a wholly owned
subsidiary of Saba ("Acquisition"), OMIMEX RESOURCES, INC., a Delaware
corporation ("Company"), the holders of all of the Company's outstanding common
stock identified on the signature pages hereto (such holders being hereinafter
referred to as a "Stockholder" and collectively the "Stockholders"), and joined
for certain purposes by ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (the "Saba Major Stockholder").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Saba, Acquisition and
the Company have each approved the acquisition of the Company by Saba through a
merger (the "Merger") of Acquisition with and into the Company in accordance
with the General Corporation Law of the State of Delaware ("Delaware Law") and
upon the terms and subject to the conditions set forth herein;
WHEREAS, the parties intend that the transaction contemplated hereby
will qualify as a tax-free reorganization under sections 368(a)(1)(A) and
368(a)(2)(E) of the Internal Revenue Code of 1986, as amended (the "Code");
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements, and upon the terms and subject to the
conditions hereinafter set forth, the parties do hereby agree as follows:
ARTICLE 1
THE MERGER
1.1 The Merger. At the Effective Time (as defined below) and subject to
and upon the terms and conditions of this Agreement and Delaware Law,
Acquisition shall be merged with and into the Company, the separate corporate
existence of Acquisition shall cease, and the Company shall continue thereafter
as the surviving corporation under the name "Omimex Corporation." The Company as
the surviving corporation after the Merger is hereafter sometimes referred to as
the "Surviving Corporation".
1.2 Effective Time. As promptly as practicable after the satisfaction
or waiver of the conditions set forth in Articles 8 and 9, the parties hereto
shall cause the Merger to be consummated by filing a Certificate of Merger (the
"Certificate of Merger") with the Secretary of State of the State of Delaware,
in such form as required by, and executed in accordance with the relevant
provisions of, Delaware Law (the time of such filing being the "Effective
Time").
1.3 Effect of Merger. At the Effective Time, the effect of the Merger
shall be as provided by Delaware Law. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time all the property, rights,
privileges, powers and franchises of the Company and Acquisition shall vest in
the Surviving Corporation, and all debts, liabilities and duties of the Company
and Acquisition shall become the debts, liabilities and duties of the Surviving
Corporation.
1.4 Certificate of Incorporation, Bylaws, Directors and Officers.
(a) Company.
(1) The certificate of incorporation of the Company, as in effect
immediately prior to the Effective Time, shall be the certificate of
incorporation of the Surviving Corporation except that at the Effective Time,
the name of the Surviving Corporation shall be changed to "Omimex Corporation,"
and until thereafter amended as provided by law or such certificate of
incorporation.
(2) The bylaws of the Company, as in effect immediately prior to the
Effective Time shall be the bylaws of the Surviving Corporation until thereafter
amended as provided by law, the certificate of incorporation of the Surviving
Corporation or such bylaws.
(3) The following persons shall be the officers and directors of the
Surviving Corporation until their respective successors are duly elected and
qualified or until otherwise provided by law or the Articles of Incorporation or
bylaws of the Surviving Corporation.
Name Offices
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ President, Chief Executive Officer, Director
To be named Chief Financial Officer, Director
▇▇▇▇▇ ▇▇▇▇▇▇ Vice President - Legal, Secretary, Director
(b) Saba. At the Effective Time:
(1) The name of Saba shall be changed to "Omimex Resources, Inc."; and
(2) The following persons shall be the officers and directors of Saba until
their respective successors are duly elected and qualified or until otherwise
provided by law or the Articles of Incorporation or bylaws of Saba.
Name Offices
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ President, Chief Executive Officer, Secretary,
Director
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Director
▇▇▇▇▇▇ ▇▇▇▇ Director
To be named by the Stockholders Director
To be named by the Stockholders Director
1.5 Conversion of Shares. At the Effective Time, by virtue of the
Merger and without any action on the part of Acquisition, the Company or the
holders of any of the following securities:
(a) Each share of common stock, $0.01 par value, of the
Company (the "Company Common Stock") issued and outstanding immediately prior to
the Effective Time shall by virtue of the Merger and without any action on the
part of the holder thereof be converted into and exchanged for the right to
receive 1,886.52 shares (the "Stock Consideration") of common stock, $0.001 par
value, of Saba (the "Saba Common Stock"), subject to adjustment as set forth in
Section 1.6. For reference purposes, the model used to determine the net asset
values of Saba and the Company for purposes of calculating the share conversion
rate hereunder is attached hereto as Exhibit A, which model does not reflect the
disposition of the California properties of the Company or the effect of the
operation of the ▇▇▇▇ ▇▇▇▇ Agreement. For valuation purposes, the parties have
treated Saba's Series A Preferred Stock as constituting 50% equity and 50% debt
convertible at $3.00 on Saba's books. The calculation of the Stock Consideration
is set forth in Exhibit A. Upon such adjustment, Saba shall purchase all
fractional shares of Stock Consideration in cash for the sum of $3.00 per share.
Each share of Company Common Stock held in the treasury of the Company shall be
canceled and extinguished without any conversion thereof and no payment shall be
made with respect thereto.
(b) Each share of common stock, $0.01 par value, of
Acquisition issued and outstanding immediately prior to the Effective Time shall
be converted into and exchanged for one share of common stock, $0.001 par value,
of the Surviving Corporation.
1.6 Adjustment.
(a) The number of shares of Stock Consideration which may be
exchanged for Company Common Stock pursuant to Section 1.5 reflects the agreed
(i) net asset values of Saba and its subsidiaries (except for Santa ▇▇▇▇▇
Refining Company, Saba Petroleum, Inc., Saba Realty, Inc. and the property of
Saba and its subsidiaries in California and Indonesia) (collectively, the "Saba
Group") and the Company and its subsidiaries (except for the property of the
Company and its subsidiaries in California) (collectively, the "Company Group")
as of December 31, 1997 after adjustment for the disposition of assets
contemplated under Sections 7.7, 8.12 and 9.8 and the acquisition of the EAMC
interests in Louisiana), and (ii) net liabilities of the Saba Group and the
Company Group as of December 31, 1997 as set forth on Exhibit B (the "Net
Liability Schedule") after adjustment for the disposition of assets contemplated
under Sections 7.7, 8.12 and 9.8 (but before adjustment for any liabilities
resulting from Saba's acquisition of the EAMC interests in Louisiana, which
adjustment shall be made pursuant to Section 1.6(c) below). In the case of the
Saba Group, these figures are extracted from the audited financial statements of
Saba and its subsidiaries as of December 31, 1997. In the case of the Company
Group, these figures are unaudited estimates of the financial condition of the
Company and its subsidiaries as of December 31, 1997. The parties shall adjust
the number of shares of Stock Consideration issued for Company Common Stock in
accordance with this Section 1.6, and the parties shall make no other adjustment
in the number of shares of Stock Consideration so issued.
(b) To determine any adjustment to the number of shares of
Stock Consideration which may be exchanged for Company Common Stock, within
ninety (90) days after the Closing Date, the parties shall cause ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, L.L.P. to issue to each party an unaudited statement and report (the
"Final Statement") of such party's (i) net liabilities as of December 31, 1997,
determined in accordance with the Net Liability Schedule, and (ii) Net Cash Flow
(as defined below) from January 1, 1998 to the Closing Date. The "Net Cash Flow"
shall be calculated on an accrual basis and shall include (a) all items of
revenue, including, without limitation, (i) oil and gas production sales, (ii)
gas gathering, processing and marketing revenues, and (iii) interest, operator's
fees and other miscellaneous items, minus (b) all items of cash expense,
including, without limitation, (i) lease operating costs and production taxes,
(ii) gas gathering, processing and marketing expenses, (iii) general and
administrative expenses, reasonably allocated, (iv) interest and other
miscellaneous items, and (v) all items of capital which are attributable to
projects which are determined or reasonably believed to be non-commercial (i.e.,
dry hole costs) as of the Closing Date, but excluding, depletion, depreciation
and amortization, abandonment expenses, the first $1,000,000 of transaction
expenses (i.e., legal, accounting, investment banking, etc.) of Saba, and the
first $500,000 of transaction expenses of the Company.
(c) Within ten (10) days of receipt of the Final Statement and
in accordance with the example set forth in Exhibit C hereto, the parties shall
adjust the amount of Stock Consideration that may be exchanged for the Company
Common Stock for (i) the actual net liabilities of the Saba Group and the
Company Group as of December 31, 1997 to the extent that such net liabilities
are other than as shown on their respective December 31, 1997 balance sheets,
and (ii) Net Cash Flow of the Saba Group and the Company Group from January 1,
1998 to the Closing Date.
(i) To adjust the amount of Stock Consideration for the actual net
liabilities of the Saba Group and the Company Group as of December 31, 1997, the
parties shall (i) subtract the difference between the amount of the Saba Group's
net liabilities on the Final Statement and the Net Liabilities Schedule from any
difference between the amount of the Company Group's net liabilities on the Net
Liabilities Schedule and the Final Statement (the "Net Product), (ii) divide the
Net Product (which amount may be positive or negative) by $3.00 (the "Net
Shares"), and (iii) add the Net Shares to 20,348,000, the total amount of Saba
Common Stock to be issued to the Stockholders under Section 1.5. The result of
such addition is referred to herein as the "Base Stock Consideration".
(ii) The parties shall adjust the Base Stock
Consideration for the Net Cash Flow of
the Saba Group and the Company Group from January 1, 1998 to the Closing Date,
by (i) subtracting the amount of the Saba Group's Net Cash Flow during such
period from that of the Company Group during such period on the Final Statement
("Net Cash Product"), (ii) dividing the Net Cash Product (which amount may be
positive or negative) by $3.00 (the "Net Cash Shares"), and (iii) adding the Net
Cash Shares to the Base Stock Consideration. However, no adjustment shall be
made for amounts included in net cash flow where such component has been
reflected on the Net Liabilities Schedule. The result of such addition is
referred to herein as the "Final Stock Consideration".
(d) Any and all adjustments in the number of shares of Stock
Consideration exchanged for Company Common Stock hereunder shall be effected
within fifteen (15) days of receipt of the Final Statement.
1.7 Loan. Provided that Bank One Texas, N.A. has consented in writing
to this Agreement and the transactions contemplated hereunder, including,
without limitation, the loan described in this Section 1.7 (the "Loan"), the use
of the proceeds thereof for the purposes contemplated hereunder, and the
otherwise unencumbered assignment and/or pledge of all right, title and interest
of Saba in the 118 mile ▇▇▇▇▇▇▇▇▇-▇▇▇▇▇ pipeline in Colombia (the "Pipeline") to
and in favor of the Company, on or before June 5, 1998, the Company shall loan
to Saba an amount up to the aggregate sum of $4,190,000, $2,000,000 of which
Saba shall use to pay down the indebtedness of Saba to Bank One Texas, N.A., and
the remaining $2,190,000 of which Saba shall use to redeem shares of Saba's
Series A Preferred Stock pursuant to that certain agreement between Saba and RGC
International Investors, LDC (the "▇▇▇▇ ▇▇▇▇ Agreement"), a copy of which is
attached hereto as Exhibit D. The Loan will bear interest at the rate equal to
the sum of the Prime Rate of interest plus two percent (2%). In the event that
this agreement is terminated hereunder, the entire balance of principal and
accrued and unpaid interest on the Loan shall be due and payable within 90 days
of such termination. Saba shall assign and/or pledge all of its right, title and
interest in the Pipeline to the Company as collateral to secure the Loan (which
assignment, if any, shall be held in escrow or trust for the benefit of the
Company) and shall execute and deliver to the Company, in form and substance
satisfactory to the Company and the Stockholders, such documentation as the
Company reasonably requires to evidence the Loan, assign and/or pledge all of
Saba's right, title and interest in the Pipeline to the Company as collateral to
secure the Loan, and secure and perfect such assignment and/or pledge, which
assignment or pledge shall be otherwise unencumbered by any party or creditor
whatsoever (except by operator and Colombian government liens).
1.8. Warrant. In consideration of the representations, warranties,
covenants and agreements of the Stockholders hereunder, Saba shall grant to the
Stockholders, in proportion to their respective ownership interests in the
post-Merger Saba, a warrant (the "Warrant") to purchase Three Hundred Fifty
Three Thousand (353,000) shares of Saba Common Stock on the same terms and
conditions as that certain Stock Purchase Warrant (Closing Warrant) dated as of
December 31, 1997 from Saba in favor of RGC International Investors, LDC. The
Warrant shall be evidenced by the Warrant Agreements substantially in the form
of Exhibit E attached hereto.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure schedule for this Agreement (the
"Disclosure Schedule"), which includes each of the schedules referenced herein),
the Company represents and warrants to Saba as set forth below. Each of the
following representations and warranties shall be deemed to be repeated in full
as of the Closing Date.
2.1 Existence and Good Standing; Power and Authority.
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware with all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as now being conducted. The Company has four
subsidiaries (the "Subsidiaries"). The Company is duly qualified or licensed as
a foreign corporation and in good standing in each jurisdiction in which the
character or location of the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification necessary,
except where the failure to be so duly qualified or licensed would not have a
material adverse effect on the business, operations, condition, financial or
otherwise, or assets of the Company. Set forth on Schedule 2.1 is a list of the
jurisdictions in which the Company is qualified or licensed to transact business
as a foreign corporation.
(b) The Company has previously delivered to Saba true,
complete and current copies of (i) its certificate of incorporation and bylaws
and (ii) any other agreements or instruments among, or otherwise governing the
relations of, the Stockholders; each of the foregoing instruments or agreements
is identified on Schedule 2.1.
2.2 Due Authorization; Enforceability. The Company has full corporate
power and authority to execute this Agreement and all other agreements and
documents contemplated hereby. The execution and delivery of this Agreement and
such other agreements and documents by the Company and the consummation by the
Company of the Merger and the other transactions contemplated hereby have been
duly authorized by the board of directors and the stockholders of the Company
and no other corporate action on the part of the Company is necessary to
authorize and effect the Merger and the other transactions contemplated hereby.
This Agreement has been duly executed and delivered by the Company and
constitutes the valid and binding obligation of the Company, enforceable in
accordance with its terms, except that (i) enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally, (ii) the remedies of specific performance and
injunctive relief are set to certain equitable defenses and to the discretion of
the court before which any proceedings may be brought, and (iii) rights to
indemnification hereunder may be limited under applicable securities laws.
2.3 Capital Stock. The Company's authorized capital stock consists of
20,000 shares of Company Common Stock, of which 10,786 shares are issued and
outstanding. All issued shares of Company Common Stock have been validly issued
and fully paid and are nonassessable and no holder thereof is entitled to any
preemptive rights. The Stockholders constitute all of the stockholders of the
Company. There are no outstanding conversion or exchange rights, subscriptions,
options, warrants, or other arrangements or commitments obligating the Company
to issue any shares of capital stock or any other securities. None of the shares
of capital stock of the Company are registered or are required to be registered
under the Securities Act of 1933, as amended (the "Securities Act"), the
Securities Exchange Act of 1934, as amended (the "Exchange Act") or state
securities laws and the Company does not have any reporting obligations with the
Securities and Exchange Commission.
2.4 Financial Statements. Set forth as Schedule 2.4 is a true and
complete copy of the unaudited consolidated balance sheet of the Company and its
subsidiaries as of September 30, 1997 and the unaudited balance sheet of the
Company and its subsidiaries (except for Omimex de Colombia, Ltd.) as of
December 31, 1997 (collectively, the "Company Unaudited Balance Sheet") (the
"Company Unaudited Financials"). The Company Unaudited Financials have been
prepared in accordance with generally accepted accounting principles ("GAAP")
consistently applied, and present fairly the financial condition of the Company
and its subsidiaries at and as of such date.
2.5 Oil and Gas Properties.
(a) Properties. The Company has delivered to Saba a true,
correct and complete copy of a reserve report of the Company Properties (as
defined below) prepared by Netherland ▇▇▇▇▇▇ and Associates, Inc. dated March
31, 1998 and ▇▇▇▇▇ ▇▇▇▇▇ Company dated April 16, 1998, effective January 1, 1998
(collectively, the "Company Reserve Report"). Set forth in the Company Reserve
Report are descriptions of all of the interests owned by the Company Group in
oil and gas leases and in oil, gas and other minerals, wherever located. The oil
and gas leases and other oil and gas rights described in the Company Reserve
Report (except properties located in California) are hereinafter referred to as
the "Company Properties".
(b) Title to the Properties. The Company Group has Good and
Defensible Title (as defined below) to the Company Properties. For purposes of
this Section 2.5, "Good and Defensible Title" shall mean that:
(i) Except as disclosed on Schedule 2.5 attached
hereto, the Company Group's interest in the Company Properties
is subject to no outstanding mortgage, deed of trust, Lien (as
defined in Section 2.6), encumbrance or other adverse claim,
right or interest arising by, through or under the Company
Group, but not otherwise; and
(ii) Except as disclosed on Schedule 2.5, the Company
Group (x) is entitled to receive not less than the "Net
Revenue Interests" in oil and gas production from or allocated
to the Company Properties without reduction or diminution by
virtue of any outstanding mortgage, deed of trust, lien,
encumbrance or other adverse claim, right or interest arising
by, through or under the Company Group, but not otherwise, and
is currently receiving from all purchasers of oil and gas
production not less than such Net Revenue Interest without
suspense or indemnity other than is contained in the normal
division orders; and (y) is not obligated to bear costs and
expenses relating to the development of and operations of the
Company Properties, through the plugging, abandonment and
salvage greater than the "Working Interests," and is currently
being billed by and paying the operators of the Company
Properties no more than such Working Interests, and has made
all such payments in a timely manner and in accordance with
current industry practice. As used in this Agreement, "Net
Revenue Interest" shall mean a share of the proceeds of the
sale of production, expressed as a percentage or decimal
fraction, used in the Company Reserve Report as the "net
revenue interest" or "NRI" with respect to the Company
Properties. As used in this Agreement, "Working Interest"
shall mean the ownership of an interest, expressed as a
percentage or decimal fraction, used in the Company Reserve
Report as the "Working Interest" or "WI" with respect to the
Company Properties, and correspondingly expresses a share of
the costs of operations, development or production to be borne
by the Company Group.
(c) Prepayments Regarding Production. The Company Group is not
obligated, by virtue of a "take or pay" or other prepayment arrangement a gas
balancing agreement or arrangement, or any similar provision in any contract to
deliver oil or gas produced from the Company Properties at some future time
without receiving full payment therefor.
(d) No Overcharges. The Company Group has not charged or
received any rate, price or tariff with respect to the sale of oil or gas
produced from the Company Properties in excess of the amounts permitted under
applicable laws, rules and regulations of the United States Government, the
government of any foreign country in which the Company Group operates, or any
state government, including but not limited to the rules and regulations
promulgated by the Federal Energy Regulatory Commission, the Department of
Energy ("DOE"), MMS and all predecessor agencies of the DOE. The Company Group
has no actual or asserted liability, or, to the knowledge of the Company Group,
any potential liability, for the refund of any such amounts or any interest or
penalties thereon.
(e) Properties Acquired. With respect to the acquisitions of
the Company Properties by the Company Group, to Company's knowledge, none of the
representations and warranties given by the respective sellers thereof was or is
untrue or incorrect and the Company Group has not asserted any claims or waived
any rights under the respective purchase and sale agreements or otherwise in
connection with such acquisitions.
2.6 Other Assets and Properties.
(a) Personal Property. Except as set forth on Schedule 2.6,
other than inventory and supplies disposed of or consumed, and accounts
receivable collected or written off, and cash utilized, in the ordinary course
of business consistent with past practice, the Company Group owns all of its
inventory, equipment and other personal property (both tangible and intangible)
(including, without limitation, all fixtures, equipment and associated personal
property used or useful in connection with the ownership or operation of the
Company Properties) free and clear of any lien, mortgage, deed of trust, pledge,
security interest, charge, option or other encumbrance or restriction of any
kind or character (collectively, "Liens", except for statutory liens for current
taxes, assessments or governmental charges or levies on property not yet due and
payable).
(b) Mortgage Notes. Set forth on Schedule 2.6 is a complete list of all
mortgage notes --------------- ------------- owned or held by the Company Group.
2.7 Contracts.
(a) Set forth on Schedule 2.7 is a list of all material
contracts, arrangements and commitments (whether oral or written) (the
"Contracts") to which the Company Group is a party or by which the Company
Group's assets or business are bound including, without limitation, contracts,
arrangements or commitments which relate to (i) the sale, lease or other
disposition by the Company Group of all or any substantial part of any material
property of the Company Group (other than in the ordinary course of business),
(ii) the purchase or lease by the Company Group of property in an amount in
excess of $100,000, (iii) lending or advancing funds by the Company Group, (iv)
borrowing of funds or guarantying the borrowing of funds by any other person or
entity, whether under an indenture, note, loan agreement or otherwise, (v) any
transaction or matter with any affiliate of the Company Group, (vi)
non-competition or employment, or (vii) any other matter which is material to
the business, properties, assets or operations of the Company Group.
(b) Except as described on Schedule 2.7, each Contract is in
full force and effect on the date hereof, the Company Group is not in default in
any material respect under any Contract, the Company Group has not given or
received notice of any default in any material respect under any Contract and,
to the knowledge of the Company, no other party to any Contract is in default in
any material respect thereunder.
2.8 No Violations. The execution and delivery of this Agreement by the
Company and the consummation of the transactions contemplated hereby will not
(a) violate any provision of its certificate of incorporation or bylaws, (b)
violate any statute, rule, regulation, judgment, order or decree of any public
body or authority by which the Company Group or its properties or assets are
bound, or (c) result in a violation or breach of, or constitute a default under,
any Contract or any material license, franchise or permit of the Company Group.
2.9 Litigation and Related Matters. Set forth on Schedule 2.9 is a list
of all actions, suits, proceedings, investigations or grievances (other than
those referred to in Section 2.23) pending against the Company Group or, to the
knowledge of the Company, threatened in writing against the Company Group, the
Company Group's business or any property or rights of the Company Group, at law
or in equity, before or by any court or federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign ("Agencies"). None of the actions, suits, proceedings or
investigations listed on Schedule 2.9, if decided adversely to the Company
Group, either (i) would result in any material adverse change in the business,
operations, assets, condition, financial or otherwise, or properties of the
Company Group or (ii) affects or would, if adversely determined, affect the
right or ability of the Company Group to carry on its business substantially as
now conducted. The Company Group is not subject to any continuing court or
agency order, writ, injunction or decree applicable specifically to the assets,
business, operations or employees of the Company Group, nor in default with
respect to any order, writ, injunction or decree of any court or agency with
respect to its assets, business, operations or employees. Schedule 2.9 lists any
worker's compensation claim outstanding against the Company Group as of the date
hereof.
2.10 Taxes.
(a) The Company and the Stockholders have made a valid
election for the Company to be taxed under subchapter S of the Code, effective
as of the first taxable year of the Company. Such election has been and will
continue to be in effect for the Company for all taxable years of the Company
ending on or before the Closing Date.
(b) The Company Group has filed all income tax returns or tax
information returns required to be filed by it and all returns for other Taxes
(as defined below) required to be filed by it and has paid or provided for all
Taxes due by the Company Group on such returns. No action or proceeding for the
assessment or collection of any Taxes is pending or threatened against the
Company Group, no deficiency, assessment or claim for any Taxes has been
asserted or made against the Company Group that has not been fully paid or
finally settled, and no issue, including the status of the Company as an S
corporation, has been formally raised by any taxing authority in connection with
an audit or examination of any return of Taxes. No federal or state income tax
or tax information returns of the Company Group have been examined, and there
are no outstanding agreements or waivers extending the applicable statutory
periods of limitation for such Taxes for any period. All Taxes which the Company
Group has been required to collect or withhold have been duly withheld or
collected and, to the extent required, have been paid to the proper taxing
authority. Except as reflected on the books and records of the Company Group, to
the knowledge of the Company, no Taxes will be assessed on or after the Closing
Date against the Company Group for any tax period ending on or prior to the
Closing Date, or for any period ending after the Closing Date with respect to
any portion of such tax period that includes or is prior to the Closing Date.
The Company Group has previously made available to Saba all of its books and
records that involve Taxes assessed against the Company Group or any of the
Company Properties. "Taxes" shall mean all taxes, charges, fees, levies or other
assessments including, without limitation, income, excise, property,
withholding, sales and franchise taxes, imposed by the United States, or any
state, county, local or foreign government or subdivision or agency thereof, and
including any interest, penalties or additions attributable thereto.
2.11 Patents, Trademarks. The Company Group does not own or use in the
operation of its business any patents, patent licenses, software licenses, trade
names, trademarks, service marks or copyrights (collectively, "Intellectual
Property"). There are no pending proceedings or adverse claims made or
threatened against the Company Group with respect to any Intellectual Property
and there has been no litigation commenced or, to the knowledge of the Company,
threatened against the Company Group with respect to any Intellectual Property.
2.12 Compliance with Laws. The Company Group (a) is in material
compliance with all applicable laws, regulations (including federal, state and
local procurement regulations), orders, judgments and decrees (other than
Environmental Requirements, which are covered by Section 2.17) except where the
failure to so comply would not have a material adverse effect on the business,
operations, condition, financial or otherwise, or assets of the Company Group,
and (b) possesses all necessary licenses, franchises, permits and governmental
authorizations to conduct its business in the manner in which, and in the
jurisdictions and places where, such business is now conducted, except where the
failure to possess the same would not have a material adverse effect on the
Company Group, its business, operations, condition, financial or otherwise, or
assets.
2.13 Employee Benefit Plans. Except as set forth on Schedule 2.13, the
Company Group does not maintain, nor has it ever maintained, any employee
benefit plan within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA). The Company Group has not
incurred any liability or taken any action, nor does the Company have any
knowledge of any action or event, that could cause the Company Group to incur
any liability (i) under Section 412 of the Code or Title IV of ERISA with
respect to any "single employer plan" (within the meaning of Section 4001(a)(15)
of ERISA), (ii) on account of a partial or complete withdrawal (within the
meaning of Section 4205 and 4203 of ERISA, respectively) with respect to any
"multi-employer plan" (within the meaning of Section 3(37) of ERISA), (ii) on
account of unpaid contributions to any such multi-employer plan, or (iv) to
provide health benefits or other non-pension benefits to retired or former
employees, except as specifically required by Section 4980B(f) of the Code.
Except as set forth in Schedule 2.13, neither the execution and delivery of this
Agreement by the Company nor the consummation of the transactions contemplated
thereby will (i) entitle any current or former employee of the Company Group to
severance pay, unemployment compensation or any similar payment, (ii) accelerate
the time of payment or vesting, or increase the amount of, any compensation due
to any such employee or former employee, or (iii) directly or indirectly result
in any payment made or to be made to or on behalf of any person to constitute a
"parachute payment" (within the meaning of Section 280G of the Code). For
purposes of calculating the Net Asset Value of the Company, any payment
identified on Schedule 2.13 shall be to the Company's account.
2.14 Insurance. Schedule 2.14 contains a list of the policies and
contracts (including insurer, named insured, type of coverage, limits of
insurance, required deductibles or co-payments, annual premiums and expiration
date) for fire, casualty, liability and other forms of insurance maintained by,
or for the benefit of, the Company Group (but excluding any policies maintained
by the operators of ▇▇▇▇▇). All such policies are in full force and effect and
are adequate for the business in which the Company Group engages. The Company
Group has not received any notice of cancellation or non-renewal or of
significant premium increases with respect to any such policy. Except as
disclosed on Schedule 2.14, no pending claims made by or on behalf of the
Company Group under such policies have been denied or are being defended against
third parties under a reservation of rights by an insurer of the Company Group.
All premiums due prior to the date hereof for periods prior to the date hereof
with respect to such policies have been timely paid, and all premiums due before
the Closing Date for periods between the date hereof and the Closing Date will
be timely paid.
2.15 Consents. Except as set forth on Schedule 2.15, no consent,
approval or other authorization of any governmental authority or under any
Contract or other material agreement or commitment to which the Company Group is
a party or by which any of its assets or Company Properties are bound is
required as a result of or in connection with the execution or delivery of this
Agreement by the Company and the Stockholders or the consummation by the Company
and the Stockholders of the transactions contemplated hereby.
2.16 Environmental Laws and Regulations.
(a)(i) Except as set forth on Schedule 2.16, the ownership and
operation of the Company Properties by the Company Group, and to the knowledge
of the Company, the ownership and operation by third parties, and any use,
storage, treatment, disposal, or transportation by the Company Group, and to the
knowledge of the Company, by third parties, of "Hazardous Substances," as
defined below, that has occurred in or on the Company Properties prior to the
date of this Agreement have been in compliance with Environmental Requirements
(as defined below); (ii) during the ownership, occupancy and operation of the
Company Properties by the Company Group, and, to the knowledge of the Company,
prior to the Company Group's ownership, occupancy or operation, no release,
leak, discharge, spill, disposal, or emission of Hazardous Substances has
occurred in, on, or under the Company Properties in a quantity or manner that
violates or requires further investigation or remediation under Environmental
Requirements; (iii) to the knowledge of the Company, the Company Properties are
free of Hazardous Substances (other than petroleum and petroleum byproducts
produced and distributed in the ordinary course of business), except for the
presence of small quantities of Hazardous Substances utilized by the Company
Group or other tenants of the Company Properties in the ordinary course of their
business; and (iv) there is no pending or threatened litigation or
administrative proceeding or, to the knowledge of the Company, investigation
concerning the Company Properties involving Hazardous Substances or
Environmental Requirements.
(b) As used in this Agreement, the following terms shall have
the following meanings:
"Environmental Requirements" means all laws, statutes, rules,
regulations, ordinances, guidance documents, judgments, decrees,
orders, agreements and other restrictions and requirements (whether now
or hereafter in effect) of any governmental authority, including,
without limitation, federal, state, and local authorities, relating to
the regulation or protection of human health and safety, natural
resources, conservation, the environment, or the storage, treatment,
disposal, transportation, handling, or other management of industrial
or solid waste, hazardous waste, hazardous or toxic substances or
chemicals, or pollutants.
"Hazardous Substance" means (i) any "hazardous substance" as defined in
' 101(14) of the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, as amended from time to time (42 U.S.C. "
9601 et seq.) ("CERCLA") or any regulations promulgated thereunder;
(ii) petroleum and petroleum byproducts; or (iii) any additional
substances or materials which are classified or considered to be
pollutants, hazardous or toxic under Environmental Requirements.
2.17 Affiliate Transactions; Employees.
(a) Except for advances for reimbursable expenses not in
excess of $5,000 for any one employee, Schedule 2.17(a) sets forth (i) all
presently outstanding loans and advances made by the Company Group to, or made
to the Company Group by, any stockholder, director, officer or employee and (ii)
all accrued but unpaid vacation (but only in excess of 15 days) pay owing to any
officer or employee which is not disclosed on the Company Audited Balance Sheet
or Company Unaudited Financials.
(b) Except as set forth on Schedule 2.17(b), the Company Group
is not a party to, nor bound by, the terms of any collective bargaining
agreement, and the Company Group has not experienced any material labor
difficulties. There are no labor disputes existing, or to the knowledge of the
Company, threatened involving, by way of example, strikes, work stoppages,
slowdowns, picketing, or any other interference with work or production, or any
other concerted action by employees. No grievance or other legal action arising
out of any collective bargaining agreement or relationship exists, or to the
knowledge of the Company, is threatened. No charges or proceedings before the
National Labor Relations Board, or similar agency, exist, or to the knowledge of
the Company, are threatened.
(c) No legal proceedings, charges, complaints, or similar
actions exist under any federal, state or local laws affecting the employment
relationship including, but not limited to: (i) anti-discrimination statutes
such as Title VII of the Civil Rights Act of 1964, as amended (or similar state
or local laws prohibiting discrimination because of race, sex, religion,
national origin, age and the like); (ii) the Fair Labor Standards Act or other
federal, state or local laws regulating hours of work, wages, overtime and other
working conditions; (iii) requirements imposed by federal, state or local
governmental contracts such as those imposed by Executive Order 11246; (iv)
state laws with respect to tortious employment conduct, such as slander, false
light, invasion of privacy, negligent hiring or retention, intentional
infliction of emotional distress, assault and battery, or loss of consortium; or
(v) the Occupational Safety and Health Act, as amended, as well as any similar
state laws, or other regulations respecting safety in the workplace; and no
proceedings, charges, or complaints are threatened under any such laws or
regulations and no facts or circumstances exist which would give rise to any
such proceedings, charges, complaints, or claims. The Company Group is not
subject to any settlement or consent decree with any present or former employee,
employee representative or any government or agency relating to claims of
discrimination or other claims in respect to employment practices and policies;
no government or agency has issued a judgment, order, decree or finding with
respect to the labor and employment practices (including practices relating to
discrimination) of the Company.
(d) With respect to each person employed by the Company Group
(i) the Company Group hired such person in compliance with the Immigration
Reform and Control Act of 1986 and the rules and regulations thereunder ("IRCA")
and (h) the Company Group has complied with all recordkeeping and other
regulatory requirements under IRCA.
(e) Since the date of its inception, the Company Group has not
incurred any liability or obligation under the Worker Adjustment and Retraining
Notification Act ("WARN") or similar state laws. The Company Group has not laid
off more than ten percent (10%) of its employees at any single site of
employment in any ninety (90) day period during the twelve (12) month period
ending December 31, 1997. It shall be the obligation of the Company Group and
Stockholders to provide any notice required by said Act by reason of the
provisions, execution or operation of this Agreement.
(f) The Company Group is in material compliance with the
provisions of the Americans with Disabilities Act.
2.18 Accounts Receivables. The accounts receivables set forth in the
Company Unaudited Financials and those accounts receivable accruing through the
Closing Date represent valid and bona fide sales to third parties incurred in
the ordinary course of business, collectible in accordance with their terms,
subject to no defenses, set-offs or counterclaims, except to the extent of any
reserves for doubtful accounts not in excess of the amount of the reserves for
doubtful accounts reflected in the Company Unaudited Financials.
2.19 Bank Accounts and Powers of Attorney. Schedule 2.19 sets forth
each bank, savings institution and other financial institution with which the
Company Group has an account or safe deposit box and the names of all persons
authorized to draw thereon or to have access thereto. Each person holding a
power of attorney or similar grant of authority on behalf of the Company Group
is identified on Schedule 2.19. Except as disclosed on such Schedule, the
Company Group has not given any revocable or irrevocable powers of attorney to
any person, firm, corporation or organization relating to its business for any
purpose whatsoever.
2.20 Accuracy of Information Furnished. Any and all books, records and
information furnished to Saba by the Company prior to, at or after the date of
this Agreement, in the Schedules hereto, or otherwise when taken as a whole is,
or when furnished will be, true and correct in all material respects. Such
information when taken as a whole states, or when furnished will state, all
material facts and does not 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 the statements are made, not misleading. There is no
fact actually known to the Company or a Stockholder that materially adversely
affects the business, operations, condition, financial or otherwise, or assets
of the Company Group or the transactions contemplated hereby that has not been
set forth herein or in the other documents, instruments and certificates
delivered to Saba by or on behalf of the Company specifically for use in
connection with the transactions contemplated hereby. Notwithstanding the
foregoing, the Company makes no representation or warranty regarding the
accuracy of any reserve report or other projection furnished to Saba. Any and
all books, records and information furnished to the Engineers by the Company
Group prior to, at or after the date of this Agreement, in the Schedules hereto,
or otherwise when taken as a whole is, or when furnished will be, (i) all such
books, records and information that the Engineers have requested, and (ii) true
and correct in all material respects.
2.21 Availability of Documents. The Company has made available for
inspection by Saba and its representatives true, current, and complete copies of
its certificate of incorporation and bylaws, all written agreements,
arrangements, commitments, and documents referred to in the Schedules attached
hereto, and the corporate minute books of the Company Group. Such corporate
minute books contain the minutes of all of the meetings of stockholders, the
board of directors, and any committees of the Company Group that have been held
preceding the date hereof and all written consents to action executed in lieu
thereof.
2.22 Brokerage, Financial Advisor or Finder Fees. No agent, advisor,
broker, person or firm acting on behalf of the Company Group or any Stockholder
is, or will be, entitled to any commission or fees from any of the parties
hereto, or from any of their respective affiliates in connection with any of the
transactions contemplated hereby.
2.23 Absence of Certain Changes or Events. Except as set forth in
Schedule 2.23 or as otherwise contemplated by this Agreement, since December 31,
1997, there has not been (a) any damage, destruction or casualty loss to the
physical properties of the Company Group (whether or not covered by insurance),
materially and adversely affecting the business, operations or financial
condition of the Company Group, (b) any material adverse change in the business,
operations, condition, financial or otherwise, or assets of the Company Group,
(c) any entry into any transaction, commitment or agreement (including, without
limitation, any borrowing) material to the Company Group, except transactions,
commitments or agreements in the ordinary course of business consistent with
past practice, and which, if occurring after the date hereof, would be in
compliance with Section 5.1, (d) any declaration, setting aside or payment of
any dividend or other distribution in cash, stock or property with respect to
the Company Group's capital stock or other securities, any repurchase,
redemption or other acquisition by the Company Group of any capital stock or
other securities, or any agreement, arrangement or commitment by the Company
Group to do so, (e) any sale, transfer or other disposition of, or the creation
of any Lien upon, any part of the Company Group's assets, tangible or
intangible, except for sales of inventory and use of supplies and collections of
accounts receivables in the ordinary course of business consistent with past
practice, or any cancellation or forgiveness of any debts or claims by the
Company Group, (f) any change in the relations of the Company Group with or loss
of its customers or suppliers, or any loss of business which would materially
and adversely affect the business, operations or financial condition of the
Company Group, or (g) any capital expenditure (including any capital leases) or
commitment therefor by the Company Group in excess of $50,000.
2.24 Subsidiaries. Each subsidiary material to the business of the
Company is a corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation and has the requisite
corporate power to carry on its business as it is now being conducted and to
own, lease and operate the properties and assets used in connection therewith.
Each of such subsidiaries is duly qualified or licensed as a foreign corporation
to do business, and is in good standing, in each jurisdiction where the failure
to be so qualified or licensed would have a material adverse effect on the
Company and its subsidiaries taken as a whole. Except as set forth on Schedule
2.24, the outstanding shares of capital stock of such subsidiaries are validly
issued, fully paid and nonassessable and are owned by the Company or by a
subsidiary of the Company free and clear of all liens, claims or encumbrances,
except for liens, claims or encumbrances which in the aggregate are not material
to the Company and its subsidiaries taken as a whole. Except as set forth in
Schedule 2.24, as of the date of this Agreement, there are no outstanding
options, warrants, preemptive or other rights, contracts, commitments,
undertakings or arrangements by which any of the subsidiaries of the Company is
or may become obligated to issue any additional shares of their capital stock or
securities convertible into any such shares. The Company does not directly or
indirectly own any interest in any other corporation, partnership, joint venture
or other business association or entity, which interest is material to the
Company and its subsidiaries, taken as a whole, except as set forth in Schedule
2.24.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Except as set forth on the Disclosure Schedule, each of the
Stockholders, severally and not jointly, hereby represents and warrants to Saba
as set forth below. Each of the following representations and warranties shall
be deemed to be repeated in full as of the Closing Date.
3.1 Enforceability. This Agreement has been duly executed and delivered
by such Stockholder and constitutes the valid and binding agreement of such
Stockholder, enforceable in accordance with its terms except that (A) such
enforcement may be subject to bankruptcy, insolvency, moratorium or similar laws
affecting creditors' rights generally, (B) the remedy of specific performance
and injunctive relief and other forms of equitable relief are subject to certain
equitable defenses and to the discretion of the court before which any
proceedings therefor may be brought, and (C) rights to indemnification hereunder
may be limited under applicable securities laws.
3.2 Title to Company Common Stock. Such Stockholder (i) owns of record
and beneficially and has good and marketable title to the number of shares of
Company Common Stock set forth opposite the Stockholder's name on Schedule 3.2,
free and clear of any and all Liens, and (ii) has the right to vote such shares
on any matters as to which any shares of Company Common Stock are entitled to
vote under the laws of the State of Delaware and the Company's certificate of
incorporation and bylaws, free of any right in any other person.
3.3 No Conflicts. The execution and delivery of this Agreement by such
Stockholder does not, and the performance of the Stockholder's obligations
hereunder will not, constitute a violation of, conflict with, or result in a
default under, any agreement or instrument to which such Stockholder is a party
or by which such Stockholder is bound, or any judgment, decree or order
applicable to such Stockholder.
3.4 Approvals. Neither the execution and delivery of this Agreement by
such Stockholder nor the performance of such Stockholder's obligations hereunder
will require any consent, authorization or approval of, or waiver or exemption
by, or filing with or notice to, any agency under any provision of law
applicable to such Stockholder or other third party other than notices or
filings, if any, required by federal securities laws.
3.5 Representations and Warranties of the Company. To such Stockholders
knowledge, each representation and warranty of the Company contained in Article
2 is true and correct.
3.6 Information Furnished. Such Stockholder has reviewed or had access
to Saba's Commission Filings (as defined below) and such information relating to
the business and operations of Saba as such Stockholder may have requested of
Saba.
3.7 Corporation Status. Such Stockholder is not a nonresident alien of
the United States and Stockholder is either an individual or a "qualified
subchapter S trust" within the meaning of sections 1361(c)(2) and 1361(d) of the
Code.
3.8 Taxes. Such Stockholder has filed all income tax returns required
to be filed by such Stockholder and all returns of other Taxes required to be
filed by such Stockholder with respect to any item of income, gain, loss or
deduction attributable to such Stockholder's interest in the Company and has
paid or provided for all such Taxes shown to be due by such Stockholder on such
returns. No action or proceeding for the assessment or collection of any Taxes
is pending against Stockholder with respect to any item of income, gain, loss or
deduction attributable to such Stockholder's interest in the Company, no
deficiency, assessment or other formal claim with respect to any item of income,
gain, loss or deduction attributable to such Stockholder's interest in the
Company for any Taxes has been asserted or made against Stockholder that has not
been fully paid or finally settled, and no issue has been formally raised by any
taxing authority in connection with an audit or examination of any return of a
Stockholder with respect to any item of income, gain, loss or deduction
attributable to such Stockholder's interest in the Company.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SABA
Except as set forth on the Disclosure Schedule, Saba hereby represents
and warrants to the Company and the Stockholders as set forth below. Each of the
following representations and warranties shall be deemed to be repeated in full
as of the Closing Date.
4.1 Existence and Good Standing; Power and Authority.
(a) Saba is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware with all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as now being conducted. Saba has thirteen direct or
indirect corporate subsidiaries, of which twelve are wholly owned subsidiaries.
Saba is duly qualified or licensed as a foreign corporation and in good standing
in each jurisdiction in which the character or location of the property owned,
leased or operated by it or the nature of the business conducted by it makes
such qualification necessary, except where the failure to be so duly qualified
or licensed would not have a material adverse effect on the business,
operations, condition, financial or otherwise, or assets of Saba. Set forth on
Schedule 4.1 is a list of the jurisdictions in which Saba is qualified or
licensed to transact business as a foreign corporation.
(b) Saba has previously delivered to the Company true,
complete and current copies of (i) its certificate of incorporation and bylaws
and (ii) any other agreements or instruments among, or otherwise governing the
relations of, Acquisition; each of the foregoing instruments or agreements is
identified on Schedule 4.1.
4.2 Due Authorization; Enforceability. Saba has full corporate power
and authority to execute this Agreement and, subject to stockholder approval,
all other agreements and documents contemplated hereby. The execution and
delivery of this Agreement and such other agreements and documents by Saba and
the consummation by Saba of the Merger and the other transactions contemplated
hereby have been duly authorized by, subject to receipt of a fairness opinion by
CIBC-▇▇▇▇▇▇▇▇▇▇▇ Corp., the board of directors and, subject to stockholder
approval, stockholders of Saba and no other corporate action on the part of Saba
is necessary to authorize and effect the Merger and the other transactions
contemplated hereby. This Agreement has been duly executed and delivered by Saba
and constitutes the valid and binding obligation of Saba, enforceable in
accordance with its terms, except that (i) enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally, (ii) the remedies of specific performance and
injunctive relief are set to certain equitable defenses and to the discretion of
the court before which any proceedings may be brought, (iii) rights to
indemnification hereunder may be limited under applicable securities laws, and
(iv) performance may be subject to approval of the Debenture Holders, Bank One
of Texas, N.A., and RGC International Investors, LDC.
4.3 Capital Stock. Saba's authorized capital stock consists of
150,000,000 shares of Saba Common Stock and 50,000,000 shares of preferred
stock, $.001 par value (the "Saba Preferred Stock"). As of April 13, 1998, there
was issued and outstanding 10,947,393 shares of Saba Common and 10,000 shares of
Preferred Stock. Except as set forth on Schedule 4.3, all issued shares of Saba
Common Stock and Saba Preferred Stock have been validly issued and fully paid
and are nonassessable and no holder thereof is entitled to any preemptive
rights. Except as set forth on Schedule 4.3, there are no outstanding conversion
or exchange rights, subscriptions, options, warrants, or other arrangements or
commitments obligating Saba to issue any shares of capital stock or any other
securities.
4.4 Financial Statements. Set forth as Schedule 4.4 is a true and
complete copy of the audited balance sheet of Saba and its subsidiaries as of
December 31, 1997, together with the report thereon by Coopers & ▇▇▇▇▇▇▇, L.L.P.
and the notes thereto (the "Saba Audited Balance Sheet"), and a pro forma
balance sheet and income statement of Saba and all of its subsidiaries after
giving effect to the proposed distribution of the common stock of Saba
Petroleum, Inc. to the stockholders of Saba at and as of March 31, 1998 (the
"Saba Unaudited Financials"). The Saba Audited Balance Sheet and the Saba
Unaudited Financials have been prepared in accordance with generally accepted
accounting principles ("GAAP") consistently applied, and present fairly the
financial condition of Saba and its respective subsidiaries at and as of the
date thereof.
4.5 Oil and Gas Properties.
(a) Properties. Saba has delivered to the Company a true,
correct and complete copy of a reserve report of the Saba Properties (as defined
below) prepared by Netherland ▇▇▇▇▇▇ and Associates, Inc. and dated March 12,
1998 and ▇▇▇▇▇▇▇ Associates Limited, effective as of January 1, 1998
(collectively, the "Saba Reserve Report"). Set forth in the Saba Reserve Report
are descriptions of all of the interests owned by the Saba Group in oil and gas
leases and in oil, gas and other minerals, wherever located. The oil and gas
leases and other oil and gas rights described in the Saba Reserve Report (except
those located in the State of California, Indonesia and China) are hereinafter
referred to as the "Saba Properties."
(b) Title to the Properties. The Saba Group has Good and
Defensible Title (as defined below) to the Saba Properties. For purposes of this
Section 4.5, "Good and Defensible Title" shall mean that:
(i) Except as disclosed on Schedule 4.5 attached
hereto, the Saba Group's interest in the Saba Properties is
subject to no outstanding mortgage, deed of trust, Lien (as
defined in Section 2.6), encumbrance or other adverse claim,
right or interest arising by, through or under the Saba Group,
but not otherwise; and
(ii) Except as disclosed on Schedule 4.5, the Saba
Group (x) is entitled to receive not less than the "Net
Revenue Interests" in oil and gas production from or allocated
to the Saba Properties without reduction or diminution by
virtue of any outstanding mortgage, deed of trust, lien,
encumbrance or other adverse claim, right or interest arising
by, through or under the Saba Group, but not otherwise, and is
currently receiving from all purchasers of oil and gas
production not less than such Net Revenue Interest without
suspense or indemnity other than is contained in the normal
division orders; and (y) is not obligated to bear costs and
expenses relating to the development of and operations of the
Saba Properties, through the plugging, abandonment and salvage
greater than the "Working Interests," and is currently being
billed by and paying the operators of the Saba Properties no
more than such Working Interests, and has made all such
payments in a timely manner and in accordance with current
industry practice. As used in this Agreement, "Net Revenue
Interest" shall mean a share of the proceeds of the sale of
production, expressed as a percentage or decimal fraction,
used in the Saba Reserve Report as the "net revenue interest"
or "NRI" with respect to the Saba Properties. As used in this
Agreement, "Working Interest" shall mean the ownership of an
interest, expressed as a percentage or decimal fraction, used
in the Saba Reserve Report as the "Working Interest" or "WI"
with respect to the Saba Properties, and correspondingly
expresses a share of the costs of operations, development or
production to be borne by the Saba Group.
(c) Prepayments Regarding Production. The Saba Group is not
obligated, by virtue of a "take or pay" or other prepayment arrangement, a gas
balancing agreement or arrangement, or any similar provision in any contract, to
deliver oil or gas produced from the Saba Properties at some future time without
receiving full payment therefor.
(d) No Overcharges. The Saba Group has not charged or received
any rate, price or tariff with respect to the sale of oil or gas produced from
the Saba Properties in excess of the amounts permitted under applicable laws,
rules and regulations of the United States Government, the government of any
foreign country in which the Saba Group operates, or any state government,
including but not limited to the rules and regulations promulgated by the
Federal Energy Regulatory Commission, the Department of Energy ("DOE"), MMS and
all predecessor agencies of the DOE. The Saba Group has no actual or asserted
liability, or, to the knowledge of Saba, any potential liability, for the refund
of any such amounts or any interest or penalties thereon.
(e) Properties Acquired. With respect to the acquisitions of
the Saba Properties by the Saba Group, to Saba's knowledge, none of the
representations and warranties given by the respective sellers thereof was or is
untrue or incorrect and the Saba Group has not asserted any claims or waived any
rights under the respective purchase and sale agreements or otherwise in
connection with such acquisitions.
4.6 Other Assets and Properties.
(a) Personal Property. Except as set forth on Schedule 4.6,
other than inventory and supplies disposed of or consumed, and accounts
receivable collected or written off, and cash utilized, in the ordinary course
of business consistent with past practice, the Saba Group owns all of its
inventory, equipment and other personal property (both tangible and intangible)
(including, without limitation, all fixtures, equipment and associated personal
property used or useful in connection with the ownership or operation of the
Saba Properties) free and clear of any Lien.
(b) Mortgage Notes. Set forth on Schedule 4.6 is a complete list of all
mortgage notes --------------- ------------- owned or held by the Saba Group.
4.7 Contracts.
(a) Set forth on Schedule 4.7 is a list of all of the
Contracts to which the Saba Group is a party or by which the Saba Group's assets
or business are bound including, without limitation, contracts, arrangements or
commitments which relate to (i) the sale, lease or other disposition by the Saba
Group of all or any substantial part of any material property of the Saba Group
(other than in the ordinary course of business), (ii) the purchase or lease by
the Saba Group of any property in an amount in excess of $100,000, (iii) lending
or advancing funds by the Saba Group, (iv) borrowing of funds or guarantying the
borrowing of funds by any other person or entity, whether under an indenture,
note, loan agreement or otherwise, (v) any transaction or matter with any
affiliate of the Saba Group, (vi) non-competition or employment, or (vii) any
other matter which is material to the business, properties, assets or operations
of the Saba Group.
(b) Except as described on Schedule 4.7, each Contract is in
full force and effect on the date hereof, the Saba Group is not in default in
any material respect under any Contract, the Saba Group has not given or
received notice of any default in any material respect under any Contract and,
to the knowledge of Saba, no other party to any Contract is in default in any
material respect thereunder.
4.8 No Violations. Except as set forth in Schedule 4.8, the execution
and delivery of this Agreement by Saba and the consummation of the transactions
contemplated hereby will not (a) violate any provision of its certificate of
incorporation or bylaws, (b) violate any statute, rule, regulation, judgment,
order or decree of any public body or authority by which the Saba Group or its
properties or assets are bound, or (c) result in a violation or breach of, or
constitute a default under, any Contract or any material license, franchise or
permit of the Saba Group.
4.9 Litigation and Related Matters. Set forth on Schedule 4.9 is a list
of all actions, suits, proceedings, investigations or grievances (other than
those referred to in Section 4.23) pending against the Saba Group or, to the
knowledge of Saba, threatened in writing against the Saba Group, the Saba
Group's business or any property or rights of the Saba Group, at law or in
equity, before or by any court or federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign ("Agencies"). None of the actions, suits, proceedings or
investigations listed on Schedule 4.9, if decided adversely to the Saba Group,
either (i) would result in any material adverse change in the business,
operations, assets, condition, financial or otherwise, or properties of the Saba
Group or (ii) affects or would, if adversely determined, affect the right or
ability of the Saba Group to carry on its business substantially as now
conducted. The Saba Group is not subject to any continuing court or agency
order, writ, injunction or decree applicable specifically to the assets,
business, operations or employees of the Saba Group, nor in default with respect
to any order, writ, injunction or decree of any court or agency with respect to
its assets, business, operations or employees. Schedule 4.9 lists any worker's
compensation claim outstanding against the Saba Group as of the date hereof.
4.10 Taxes. Except as set forth in Schedule 4.10, (i) the Saba Group
has filed all income tax returns or tax information returns required to be filed
by it and all returns for other Taxes (as defined below) required to be filed by
it and has paid or provided for all Taxes due by the Saba Group on such returns,
(ii) no action or proceeding for the assessment or collection of any Taxes is
pending or threatened against the Saba Group, no deficiency, assessment, or
claim for any Taxes has been asserted or made against the Saba Group that has
not been fully paid or finally settled, and no issue, has been formally raised
by any taxing authority in connection with an audit or examination of any return
of Taxes, (iii) no federal or state income tax or tax information returns of the
Saba Group have been examined, and there are no outstanding agreements or
waivers extending the applicable statutory periods of limitation for such Taxes
for any period, (iv) all Taxes which the Saba Group has been required to collect
or withhold have been duly withheld or collected and, to the extent required,
have been paid to the proper taxing authority, (v) except as reflected on the
books and records of the Saba Group, to the knowledge of Saba no Taxes will be
assessed on or after the Closing Date against the Saba Group for any tax period
ending on or prior to the Closing Date, or for any period ending after the
Closing Date with respect to any portion of such tax period that includes or is
prior to the Closing Date, and (vi) the Saba Group has previously made available
to the Company all of its books and records that involve Taxes assessed against
the Saba Group or any of its Saba Properties.
4.11 Patents, Trademarks. The Saba Group does not own or use in the
operation of its business any patents, patent licenses, software licenses, trade
names, trademarks, service marks or copyrights (collectively, "Intellectual
Property"). There are no pending proceedings or adverse claims made or
threatened against the Saba Group with respect to any Intellectual Property and
there has been no litigation commenced or, to the knowledge of Saba, threatened
against the Saba Group with respect to any Intellectual Property.
4.12 Compliance with Laws. The Saba Group (a) is in material compliance
with all applicable laws, regulations (including federal, state and local
procurement regulations), orders, judgments and decrees (other than
Environmental Requirements, which are covered by Section 4.17) except where the
failure to so comply would not have a material adverse effect on the business,
operations, condition, financial or otherwise, or assets of the Saba Group, and
(b) possesses all necessary licenses, franchises, permits and governmental
authorizations to conduct its business in the manner in which, and in the
jurisdictions and places where, such business is now conducted, except where the
failure to possess the same would not have a material adverse effect on the Saba
Group, its business, operations, condition, financial or otherwise, or assets.
4.13 Employee Benefit Plans. Except as set forth on Schedule 4.13, the
Saba Group does not maintain, nor has it ever maintained, any employee benefit
plan within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA). The Saba Group has not incurred any
liability or taken any action, nor does Saba have any knowledge of any action or
event, that could cause the Saba Group to incur any liability (i) under Section
412 of the Code or Title IV of ERISA with respect to any "single employer plan"
(within the meaning of Section 4001(a)(15) of ERISA), (ii) on account of a
partial or complete withdrawal (within the meaning of Section 4205 and 4203 of
ERISA, respectively) with respect to any "multi-employer plan" (within the
meaning of Section 3(37) of ERISA), (ii) on account of unpaid contributions to
any such multi-employer plan, or (iv) to provide health benefits or other
non-pension benefits to retired or former employees, except as specifically
required by Section 4980B(f) of the Code. Except as set forth in Schedule 4.13,
neither the execution and delivery of this Agreement by Saba nor the
consummation of the transactions contemplated thereby will (i) entitle any
current or former employee of the Saba Group to severance pay, unemployment
compensation or any similar payment, (ii) accelerate the time of payment or
vesting, or increase the amount of, any compensation due to any such employee or
former employee, or (iii) directly or indirectly result in any payment made or
to be made to or on behalf of any person to constitute a "parachute payment"
(within the meaning of Section 280G of the Code). For purposes of calculating
the Net Asset Value of the Saba Group, any payment identified on Schedule 4.13
shall be to the Saba's account.
4.14 Insurance. Schedule 4.14 contains a list of the policies and
contracts (including insurer, named insured, type of coverage, limits of
insurance, required deductibles or co-payments, annual premiums and expiration
date) for fire, casualty, liability and other forms of insurance maintained by,
or for the benefit of, the Saba Group (but excluding any policies maintained by
the operators of ▇▇▇▇▇). All such policies are in full force and effect and are
adequate for the business in which the Saba Group engages. The Saba Group has
not received any notice of cancellation or non-renewal or of significant premium
increases with respect to any such policy. Except as disclosed on Schedule 4.14,
no pending claims made by or on behalf of the Saba Group under such policies
have been denied or are being defended against third parties under a reservation
of rights by an insurer of the Saba Group. All premiums due prior to the date
hereof for periods prior to the date hereof with respect to such policies have
been timely paid, and all premiums due before the Closing Date for periods
between the date hereof and the Closing Date will be timely paid.
4.15 Consents. Except as set forth on Schedule 4.15, no consent,
approval or other authorization of any governmental authority or under any
Contract or other material agreement or commitment to which the Saba Group is a
party or by which any of its assets or Saba Properties are bound is required as
a result of or in connection with the execution or delivery of this Agreement by
Saba and Acquisition or the consummation by Saba and Acquisition of the
transactions contemplated hereby.
4.16 Environmental Laws and Regulations.
(a)(i) Except as set forth on Schedule 4.16, the ownership and
operations of the Saba Properties by the Saba Group, and to the knowledge of
Saba, the ownership and operations by third parties, and any use, storage,
treatment, disposal, or transportation by the Saba Group, and to the knowledge
of Saba, by third parties, of "Hazardous Substances," as defined below, that has
occurred in or on the Saba Properties prior to the date of this Agreement have
been in compliance with Environmental Requirements (as defined below); (ii)
during the ownership, occupancy and operation of the Saba Properties by the Saba
Group, and, to the knowledge of Saba, prior to the Saba Group's ownership,
occupancy or operation, no release, leak, discharge, spill, disposal, or
emission of Hazardous Substances has occurred in, on, or under the Saba
Properties in a quantity or manner that violates or requires further
investigation or remediation under Environmental Requirements; (iii) to the
knowledge of Saba, the Saba Properties are free of Hazardous Substances (other
than petroleum and petroleum byproducts produced and distributed in the ordinary
course of business), except for the presence of small quantities of Hazardous
Substances utilized by the Saba Group or other tenants of the Saba Properties in
the ordinary course of their business; and (iv) there is no pending or
threatened litigation or administrative proceeding or, to the knowledge of Saba,
investigation concerning the Saba Properties involving Hazardous Substances or
Environmental Requirements.
4.17 Affiliate Transactions; Employees.
(a) Except for advances for reimbursable expenses not in
excess of $5,000 for any one employee, Schedule 4.17(a) sets forth (i) all
presently outstanding loans and advances made by the Saba Group to, or made to
the Saba Group by, any stockholder, director, officer or employee and (ii) all
accrued but unpaid vacation pay owing to any officer or employee which is not
disclosed on the Saba Audited Balance Sheet or Saba Unaudited Financials.
(b) Except as set forth on Schedule 4.17(b), the Saba Group is
not a party to, nor bound by, the terms of any collective bargaining agreement,
and the Saba Group has not experienced any material labor difficulties. There
are no labor disputes existing, or to the knowledge of Saba, threatened
involving, by way of example, strikes, work stoppages, slowdowns, picketing, or
any other interference with work or production, or any other concerted action by
employees. No grievance or other legal action arising out of any collective
bargaining agreement or relationship exists, or to the knowledge of Saba, is
threatened. No charges or proceedings before the National Labor Relations Board,
or similar agency, exist, or to the knowledge of Saba, are threatened.
(c) No legal proceedings, charges, complaints, or similar
actions exist under any federal, state or local laws affecting the employment
relationship including, but not limited to: (i) anti-discrimination statutes
such as Title VII of the Civil Rights Act of 1964, as amended (or similar state
or local laws prohibiting discrimination because of race, sex, religion,
national origin, age and the like); (ii) the Fair Labor Standards Act or other
federal, state or local laws regulating hours of work, wages, overtime and other
working conditions; (iii) requirements imposed by federal, state or local
governmental contracts such as those imposed by Executive Order 11246; (iv)
state laws with respect to tortious employment conduct, such as slander, false
light, invasion of privacy, negligent hiring or retention, intentional
infliction of emotional distress, assault and battery, or loss of consortium; or
(v) the Occupational Safety and Health Act, as amended, as well as any similar
state laws, or other regulations respecting safety in the workplace; and no
proceedings, charges, or complaints are threatened under any such laws or
regulations and no facts or circumstances exist which would give rise to any
such proceedings, charges, complaints, or claims. The Saba Group is not subject
to any settlement or consent decree with any present or former employee,
employee representative or any government or agency relating to claims of
discrimination or other claims in respect to employment practices and policies;
no government or agency has issued a judgment, order, decree or finding with
respect to the labor and employment practices (including practices relating to
discrimination) of the Saba Group.
(d) With respect to each person employed by the Saba Group (i)
the Saba Group hired such person in compliance with the Immigration Reform and
Control Act of 1986 and the rules and regulations thereunder ("IRCA") and (h)
the Saba Group has complied with all recordkeeping and other regulatory
requirements under IRCA.
(e) Since the date of its inception, the Saba Group has not
incurred any liability or obligation under WARN or similar state laws. The Saba
Group has not laid off more than ten percent (10%) of its employees at any
single site of employment in any ninety (90) day period during the twelve (12)
month period ending December 31, 1997 in violation of WARN.
(f) The Saba Group is in material compliance with the
provisions of the Americans with Disabilities Act.
4.18 Accounts Receivables. The accounts receivables set forth in the
Saba Unaudited Financials and those accounts receivable accruing through the
Closing Date represent valid and bona fide sales to third parties incurred in
the ordinary course of business, collectible in accordance with their terms,
subject to no defenses, set-offs or counterclaims, except to the extent of any
reserves for doubtful accounts not in excess of the amount of the reserves for
doubtful accounts reflected in the Saba Unaudited Financials.
4.19 Bank Accounts and Powers of Attorney. Schedule 4.19 sets forth
each bank, savings institution and other financial institution with which the
Saba Group has an account or safe deposit box and the names of all persons
authorized to draw thereon or to have access thereto. Each person holding a
power of attorney or similar grant of authority on behalf of the Saba Group is
identified on Schedule 4.19. Except as disclosed on such Schedule, the Saba
Group has not given any revocable or irrevocable powers of attorney to any
person, firm, corporation or organization relating to its business for any
purpose whatsoever.
4.20 Availability of Documents. The Saba Group has made available for
inspection by the Company and its representatives true, current, and complete
copies of its certificate of incorporation and bylaws, all written agreements,
arrangements, commitments, and documents referred to in the Schedules attached
hereto, and the corporate minute books of the Saba Group. Such corporate minute
books contain the minutes of all of the meetings of stockholders, the board of
directors, and any committees of the Saba Group that have been held preceding
the date hereof and all written consents to action executed in lieu thereof.
4.21 Brokerage, Financial Advisor or Finder Fees. Except for
CIBC-▇▇▇▇▇▇▇▇▇▇▇ Corp., no agent, advisor, broker, person or firm acting on
behalf of the Saba Group is, or will be, entitled to any commission or fees from
any of the parties hereto, or from any of their respective affiliates in
connection with any of the transactions contemplated hereby.
4.22 Absence of Certain Changes or Events. Except as set forth in
Schedule 4.22 or as otherwise contemplated by this Agreement, since December 31,
1997, there has not been (a) any damage, destruction or casualty loss to the
physical properties of the Saba Group (whether or not covered by insurance),
materially and adversely affecting the business, operations or financial
condition of the Saba Group, (b) any material adverse change in the business,
operations, condition, financial or otherwise, or assets of the Saba Group, (c)
any entry into any transaction, commitment or agreement (including, without
limitation, any borrowing) material to the Saba Group, except transactions,
commitments or agreements in the ordinary course of business consistent with
past practice, and which, if occurring after the date hereof, would be in
compliance with Section 5.1, (d) any declaration, setting aside or payment of
any dividend or other distribution in cash, stock or property with respect to
the Saba Group's capital stock or other securities, any repurchase, redemption
or other acquisition by the Saba Group of any capital stock or other securities,
or any agreement, arrangement or commitment by the Saba Group to do so, (e) any
sale, transfer or other disposition of, or the creation of any Lien upon, any
part of the Saba Group's assets, tangible or intangible, except for sales of
inventory and use of supplies and collections of accounts receivables in the
ordinary course of business consistent with past practice, or any cancellation
or forgiveness of any debts or claims by the Saba Group, (f) any change in the
relations of the Saba Group with or loss of its customers or suppliers, or any
loss of business which would materially and adversely affect the business,
operations or financial condition of the Saba Group, or (g) any capital
expenditure (including any capital leases) or commitment therefor by the Saba
Group in excess of $50,000.
4.23 Subsidiaries. Each subsidiary material to the business of Saba is
a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation and has the requisite corporate power
to carry on its business as it is now being conducted and to own, lease and
operate the properties and assets used in connection therewith. Each of such
subsidiaries is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the failure to be
so qualified or licensed would have a material adverse effect on Saba and its
subsidiaries taken as a whole. Except as set forth on Schedule 4.23, the
outstanding shares of capital stock of such subsidiaries are validly issued,
fully paid and nonassessable and are owned by Saba or by a subsidiary of Saba
free and clear of all liens, claims or encumbrances, except for liens, claims or
encumbrances which in the aggregate are not material to Saba and its
subsidiaries taken as a whole. Except as set forth in Schedule 4.23, as of the
date of this Agreement, there are no outstanding options, warrants, preemptive
or other rights, contracts, commitments, undertakings or arrangements by which
any of the subsidiaries of Saba is or may become obligated to issue any
additional shares of their capital stock or securities convertible into any such
shares. Saba does not directly or indirectly own any interest in any other
corporation, partnership, joint venture or other business association or entity,
which interest is material to Saba and its subsidiaries, taken as a whole,
except as set forth in Schedule 4.23.
4.24 Commission Filings; Financial Statements.
(a) Except as set forth on Schedule 4.24, since December 31,
1997, the Saba Group has timely filed all reports, registration statements and
other filings, together with any amendments required to be made with respect
thereto, that it has been required to file with the Securities and Exchange
Commission (the "Commission") under the Securities Act and the Exchange Act (all
reports, proxy statements, registration statements and other filings (including
all notes, exhibits and schedules thereto and documents incorporated by
reference therein) filed by the Saba Group with the Commission together with any
amendments thereto, insofar as they contain information with respect to the Saba
Group, are sometimes collectively referred to as the, "Commission Filings.") As
of, (i) with respect to all Commission Filings other than registration
statements filed under the Securities Act, the respective dates of their filing
with the Commission or (ii) with respect to all registration statements filed
under the Securities Act, their respective effective dates, the Commission
Filings complied in all material respects with all of the applicable rules and
regulations of the Commission and did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances in
which they were made, not misleading.
(b) The financial statements (including any related notes or
schedules) for the year ended December 31, 1997 included in the Annual Report on
Form 10-K for such year were prepared in accordance with GAAP (except as may be
noted therein or in the notes or schedules thereto) consistently applied and
fairly present the financial position of Saba and all of its subsidiaries as of
December 31, 1997 and 1996 and the consolidated results of operations, cash
flows and stockholders' equity, for each of the years in the three year period
ended December 31, 1997.
(c) Any and all books, records and written information
furnished to the Company by the Saba Group prior to, at or after the date of
this Agreement, in the Schedules hereto, or otherwise when taken as a whole is,
or when furnished will be, true and correct in all material respects. Such
information when taken as a whole states, or when furnished will state, all
material facts and does not 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 the statements are made, not misleading. There is no
fact actually known to the Saba Group or a Stockholder that materially adversely
affects the business, operations, condition, financial or otherwise, or assets
of the Saba Group or the transactions contemplated hereby that has not been set
forth herein or in the other documents, instruments and certificates delivered
to the Company by or on behalf of the Saba Group specifically for use in
connection with the transactions contemplated hereby. Notwithstanding the
foregoing, Saba makes no representation or warranty regarding the accuracy of
any reserve report or other projection furnished to the Company. Any and all
books, records and information furnished to the Engineers by the Saba Group
prior to, at or after the date of this Agreement, in the Schedules hereto, or
otherwise when taken as a whole is, or when furnished will be, (i) all such
books, records and information that the Engineers have requested, and (ii) true
and correct in all material respects.
4.25 Registration Matters. Saba has no reason to believe that the
registration of Saba Common Stock pursuant to Section 6.1(p) would not become
effective within a reasonable period of such registration request.
4.26 Matters Relating to Company. Saba has no plan or intention to
cause the Company to issue additional shares of its stock that would result in
the Saba Group losing control of the Company within the meaning of section
368(c) of the Code.
4.27 Tax Basis. The adjusted tax basis for Federal income tax purposes
of Saba's California Property and the costs attributable to Saba's operations in
Indonesia, China and Pakistan was in excess of $23,000,000 as of December 31,
1997.
ARTICLE 5
COVENANTS OF COMPANY AND THE STOCKHOLDERS
Except with the prior written consent of Saba, on and after the date of
this Agreement and before Closing or as otherwise permitted or contemplated by
this Agreement, Company shall, and the Stockholders shall cause the Company and
the Company Group to, operate in the ordinary course of business substantially
in accordance with its past practices and abide by the following covenants:
5.1. Affirmative Covenants. Company shall, and the Stockholders shall cause
Company Group to:
(a) Access to Information. Allow Saba and its authorized
representatives and agents reasonable access (at Saba's expense, during normal
business hours and upon reasonable advance notice) to the books, records and
assets of the Company and to its officers, directors, employees, authorized
representatives and agents for the purpose of audit and inspection, and furnish
or cause to be furnished to Saba or its authorized representatives and agents
all information with respect to its business and financial operations as Saba
may reasonably request; provided, however, that neither the furnishing of such
information to Saba or its representatives nor any investigation made heretofore
or hereafter by Saba or its representatives shall affect the rights of Saba to
rely on any representation or warranty made by the Stockholders or Company in
this Agreement, each of which representations and warranties shall survive any
furnishing of information or any investigation.
In addition, the Company, at Saba's own cost and expense, shall provide
to Saba access to all records in the Company's possession concerning all
hazardous substances, used, stored, generated, treated, or disposed of by the
Company, all environmental or safety studies conducted by or on behalf of the
Company and all reports, correspondence, or filings to governmental agencies
with jurisdiction over Environmental Requirements concerning the compliance of
the Saba Properties or the operation of the Saba Properties with Environmental
Requirements, all policies and procedures manuals or written guidelines utilized
by the Company to comply with Environmental Requirements, and any other
information reasonably requested by Saba pertaining to environmental, health,
and safety issues (collectively, the "Environmental Information"). The Company
agrees that Saba shall have the right to inspect the Environmental Information
and the Saba Properties, including the performance of an environmental site
assessment and audit; provided, however, Saba shall not perform subsurface or
other invasive investigations, including air monitoring, at or near the Saba
Properties unless the Company, in its sole discretion, agrees to such
investigations.
(b) Maintenance of Assets. Use its best efforts to maintain all of its
assets or replacements thereof and improvements thereon in substantially the
condition they are in on the date of this Agreement (ordinary wear and tear
excepted), and use, operate and maintain all of the above assets in a reasonable
manner, with inventories of spare parts and expendable supplies being maintained
at levels consistent with past practice.
(c) Insurance. Maintain, or have maintained on its behalf, insurance
coverage for the benefit of the Company on the same basis as, or on a
substantially equivalent basis to, the current insurance coverage described in
Schedule 2.14.
(d) Approvals and Consents. Use commercially reasonable efforts (i) to
cause all conditions to the obligations of Saba under this Agreement over which
Company is able to exercise influence or control to be satisfied prior to the
Closing Date and (ii) to obtain promptly and to comply with all requisite
statutory, regulatory or court approvals, third party releases and consents, and
other requirements necessary for the valid and legal consummation of the
transactions contemplated hereby.
(e) Business Organization. Use its best efforts to preserve intact its
business organization and to keep available until the Closing the services of
its present officers and employees.
(f) Preservation of Business. Use its best efforts to preserve its
relationships with suppliers, advertisers, customers, employees and others
having business relations with them or it and shall not change or modify or
commit to change or modify any terms offered to customers or offer or agree to
non-standard or discounted terms to or with any prospective customer or
supplier. The Company promptly shall notify Saba if the Company is informed by
any of its customers or suppliers that such customer or supplier will or may
cease to do business with the Company either prior to or following the Closing.
(g) Books and Records. Maintain its books and records in accordance
with past practices.
(h) Notification. Promptly notify Saba in writing of (i) any unusual or
material developments with respect to the Company or the transactions
contemplated hereby and (ii) of any material change in any of the information
contained in the representations and warranties contained in Article 2 or 3 or
in the Schedules hereto, provided that such notification shall not relieve the
Stockholders or Company of any obligations under this Agreement.
(i) Personnel Recommendations. Promptly notify Saba as material
personnel vacancies occur at Company and discuss with Saba all personnel
recommended for such vacant positions.
(j) Financial Information. Furnish to Saba as soon as available, and in
any event within 25 days after the end of each month ending on and after the
date of this Agreement and prior to the Closing Date, a statement of income and
expense for the month just ended and such other financial information as Saba
may reasonably request, all of which financial information shall be prepared in
accordance with GAAP consistently applied.
(k) Contracts. Prior to the Closing Date, deliver to Saba a list of all
Contracts entered into between the date of this Agreement and the Closing Date
of the type required to be listed on Schedule 2.7, together with copies of such
written Contracts and memoranda of all such Contracts that are oral.
(l) Compliance with Laws. Comply in all material respects with all
material laws, rules, regulations and policies to which Company or the assets of
Company are subject.
5.2 Negative Covenants. Except as contemplated by this Agreement,
without the prior written consent of Saba, Company shall not, and the
Stockholders shall not permit the Company Group to:
(a) Compensation. Increase the compensation, bonuses or other benefits
payable or to be payable to any person employed by it or adopt, amend, modify or
terminate any Company pension or benefit plan, or grant any rights to receive
severance payments or other benefits upon a termination of employment or a
change in control thereof, except in the ordinary course of business consistent
with past practices.
(b) Hiring. [Reserved]
(c) Capital Expenditures. Incur or commit to incur any capital
expenditures, not shown on Schedule 2.23, in an aggregate amount in excess of
$50,000 that will not be paid in full by the Closing Date; provided that Company
may fulfill contractual obligations existing prior to the date hereof which
require expenditures in excess of $50,000.
(d) Indebtedness. Incur, assume or guarantee any material obligation or
liability other than in the ordinary course of business or incur any
indebtedness to the Stockholders.
(e) Contracts. Modify, amend or terminate any of the Contracts except
in the ordinary course of business consistent with past practices and except for
immaterial modifications and amendments; directly or indirectly, enter into or
assume any new contract, agreement, obligation, lease, license or commitment
that in the aggregate commits Company to the expenditure of more than $50,000;
or incur any material nonmonetary obligations.
(f) Collective Bargaining. Except as set forth on Schedule 5.2(f),
enter into any new collective bargaining agreement or modify or extend any
existing collective bargaining agreement with the effect of incurring
obligations after the Closing Date.
(g) Disposition and Acquisition of Assets. Sell, transfer or otherwise
dispose of any asset or property of an aggregate value of more than $10,000
except for inventory sold in the usual and ordinary course of business and
except for cash applied in payment of Company's trade liabilities in the usual
and ordinary course of business; or purchase or otherwise acquire, or agree to
purchase or otherwise acquire, any assets or property other than in the ordinary
course of business consistent with past practices.
(h) Rights. Except as set forth in Schedule 5.2(h), amend, terminate or
give notice of termination with respect to any material existing agreement to
which Company is a party, or waive any material rights thereunder, or waive any
other right relating to the Company's assets except where such waiver of such
other right would not have a material adverse effect on the Company or the
Stockholders.
(i) Encumbrances. Create, assume or permit to exist any Lien, condition
or other charge or encumbrance of any nature upon Company's capital stock or its
assets, except for those Liens in existence on the date of this Agreement and
disclosed in Schedules 2.5 and 2.6.
(j) Licenses. Do any act or fail to do any act that might result in the
expiration, revocation, suspension or modification of any license or permit
material to the operation of the Company, or fail to prosecute with due
diligence any applications for any such license or permit.
(k) Dividends, Merger, Etc. Declare, set aside or pay any dividend or
other distribution (whether in cash, stock or property) in respect of,
purchasing, redeeming or otherwise acquiring, its capital stock, or merge or
consolidate with any other entity.
(l) Certificate of Incorporation; Bylaws. Make any change in its
certificate of incorporation or bylaws.
(m) Stock Issuance; Redemptions; Reorganizations. (i) Issue, grant or
dispose of, or make any agreement, arrangement or commitment obligating it to
issue, grant or dispose of, any of its capital stock or other securities; (ii)
redeem or acquire, or make any agreement, arrangement or commitment obligating
it to redeem or acquire, any of its capital stock or other securities; or, (iii)
authorize or effect any reorganization, recapitalization or split-up of its
capital stock.
(n) Transactions With Affiliates. Enter into any agreement, arrangement
or transaction with, or make any payment, distribution, loan or advance to, the
Stockholders, any affiliate of the Stockholders or any officer, director or
affiliate of the Company or any of its subsidiaries, except as otherwise
contemplated by this Agreement.
(o) Accounting Practices. Make any material changes in its accounting
methods, principles or practices, except as required by GAAP consistently
applied.
(p) Changes in Business Practice. Fail to pay its accounts payable
consistent with past practices, or take any action the purpose or effect of
which is to shift income from post-Closing periods to the pre-Closing period or
to defer expenses from the pre-Closing period to post-Closing periods, which
action is not in the ordinary course of business consistent with past practices.
(q) Tax Elections. Make new elections with respect to Taxes or any
changes in current elections with respect to Taxes affecting Company or any of
its subsidiaries. Neither the Company nor any Stockholder will take any action
or allow any action to be taken that would cause the Company's election to be
taxed under Subchapter S of the Code to be terminated prior to the Closing Date.
(r) WARN. Take any action that would result in an employment loss (as
such term is defined in WARN) for any employee of Company or any of its
subsidiaries.
5.3 Conflict Between Affirmative and Negative Covenants. If there is
any conflict between an affirmative covenant contained in Section 5.1 and a
negative covenant contained in Section 5.2, then Saba shall be entitled to waive
compliance with one or the other, as it deems appropriate.
ARTICLE 6
COVENANTS OF SABA
Except with the prior written consent of Company, on and after the date
of this Agreement and before Closing or as otherwise permitted or contemplated
by this Agreement, Saba shall, and shall cause the Saba Group to, operate in the
ordinary course of business substantially in accordance with its past practices
and abide by the following covenants:
6.1. Affirmative Covenants. Saba shall, and Saba shall cause its
subsidiaries to:
(a) Proxy Statement. Promptly prepare (and Company and the Stockholder
shall cooperate in the preparation of) and file with the SEC as soon as is
reasonably practicable a proxy statement under the Exchange Act, with respect to
the meeting of the stockholders of Saba in connection with the Merger (as
amended or supplemented from time to time, the "Proxy Statement"). Saba will
cause the Proxy Statement to comply as to form in all material respects with the
applicable provisions of the Exchange Act and the rules and regulations
thereunder. Saba shall use commercially reasonable efforts, and Company and the
Stockholders will cooperate with Saba, to have the Proxy Statement filed with
the SEC as promptly as practicable. Saba shall, as promptly as practicable,
provide copies of any written comments received from the SEC with respect to the
Proxy Statement and advise Company and the Stockholders of any material verbal
comments with respect to the Proxy Statement received from the SEC. Each of
Company and Saba shall use all reasonable efforts to obtain all financial
statement information, financial data and reports required by the Exchange Act
for inclusion in the Proxy Statement. Saba agrees that the Proxy Statement and
each amendment or supplement thereto at the time of mailing thereof and at the
time of the meeting of stockholders of Saba, will not include 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; provided, however,
that the foregoing shall not apply to the extent that any such untrue statement
of a material fact or omission to state a material fact was made by Saba in
reliance upon and in conformity with written information concerning Company, its
subsidiaries or any Stockholder furnished to Saba by Company or the Stockholders
specifically for use in the Proxy Statement. Company and the Stockholders agree
the written information concerning Company, its subsidiaries or any Stockholder
provided by them for inclusion in the Proxy Statement and each amendment or
supplement thereto, at the time of mailing thereof and at the time of the
meeting of stockholders of Saba, will not include 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.
(b) Approval of Stockholders and Board Recommendation. Through its
Board of Directors, duly call, give notice of, convene and hold a meeting of its
stockholders for the purpose of voting on the adoption of this Agreement and the
transactions contemplated hereby as soon as reasonably practicable after the
date hereof, subject to obtaining all required consents and the requirements of
applicable laws. Saba shall use its reasonable efforts to solicit from its
stockholders proxies, and shall take all other action necessary and advisable,
to secure the vote of stockholders required by applicable law to obtain the
approval for this Agreement.
(c) SEC Filings. After the date of this Agreement and before the
Closing Date, deliver or make available to the Stockholders copies of all forms,
reports and documents required to be filed by Saba during such period with the
SEC and delivered to Saba's stockholders at the same time Saba delivers such
forms, reports and documents to its stockholders.
(d) Access to Information. Allow Company and its authorized
representatives and agents reasonable access (at Company's expense, during
normal business hours and upon reasonable advance notice) to the books, records
and assets of Saba and its subsidiaries and to their officers, directors,
employees, authorized representatives and agents for the purpose of audit and
inspection, and furnish or cause to be furnished to Company or its authorized
representatives and agents all information with respect to their business and
financial operations as Company may reasonably request; provided, however, that
neither the furnishing of such information to Company nor any investigation made
heretofore or hereafter by Company or its representatives shall affect the
rights of the Company to rely on any representation or warranty made by Saba or
its subsidiaries in this Agreement, each of which representations and warranties
shall survive any furnishing of information or any investigation.
In addition, Saba and its subsidiaries, at the Company's own cost and
expense, shall provide to the Company and its representatives access to the
Environmental Information. Saba and its subsidiaries agree that Company shall
have the right to inspect the Environmental Information and the Saba Properties,
including the performance of an environmental site assessment and audit;
provided, however, Company shall not perform subsurface or other invasive
investigations, including air monitoring, at or near the Saba Properties unless
Saba, in its sole discretion, agrees to such investigations.
(e) Maintenance of Assets. Maintain all of its assets or replacements
thereof and improvements thereon in substantially the condition they are in on
the date of this Agreement (ordinary wear and tear excepted), and use, operate
and maintain all of the above assets in a reasonable manner, with inventories of
spare parts and expendable supplies being maintained at levels consistent with
past practice.
(f) Insurance. Maintain, or have maintained on their behalf, insurance
coverage for the benefit of Saba and Acquisition on the same basis as, or on a
substantially equivalent basis to, their existing insurance coverage.
(g) Approvals and Consents. Use commercially reasonable efforts (i) to
cause all conditions to the obligations of Company under this Agreement over
which Saba and Acquisition are able to exercise influence or control to be
satisfied prior to the Closing Date and (ii) to obtain promptly and to comply
with all requisite statutory, regulatory or court approvals, third party
releases and consents, and other requirements necessary for the valid and legal
consummation of the transactions contemplated hereby.
(h) Business Organization. Use its best efforts to preserve intact its
business organization and to keep available until the Closing the services of
its present officers and employees.
(i) Preservation of Business. Use its best efforts to preserve its
relationships with suppliers, advertisers, customers, employees and others
having business relations with them or it and shall not change or modify or
commit to change or modify any terms offered to customers or offer or agree to
non-standard or discounted terms to or with any prospective customer or
supplier. Saba and Acquisition promptly shall notify Company if Saba or
Acquisition is informed by any of its customers or suppliers that such customer
or supplier will or may cease to do business with Saba or Acquisition either
prior to or following the Closing.
(j) Books and Records. Maintain its books and records in accordance
with past practices.
(k) Notification. Promptly notify Company in writing of (i) any unusual
or material developments with respect to Saba and Acquisition or the
transactions contemplated hereby and (ii) of any material change in any of the
information contained in the representations and warranties contained in Article
4 or in the Schedules hereto, provided that such notification shall not relieve
Saba or Acquisition of any obligations under this Agreement.
(l) Personnel Recommendations. Promptly notify Company as material
personnel vacancies occur at Saba or Acquisition and discuss with Company all
personnel recommended for such vacant positions.
(m) Financial Information. Furnish to Company as soon as available, and
in any event within 25 days after the end of each month ending on and after the
date of this Agreement and prior to the Closing Date, a statement of income and
expense for the month just ended and such other financial information as Company
may reasonably request, all of which financial information shall be prepared in
accordance with GAAP consistently applied.
(n) Contracts. Prior to the Closing Date, deliver to Company a list of
all Contracts entered into between the date of this Agreement and the Closing
Date required to be disclosed in any SEC Filing, together with copies of such
written Contracts and memoranda of all such Contracts that are oral.
(o) Compliance with Laws. Comply in all material respects with all
material laws, rules, regulations and policies to which Saba and Acquisition or
the assets of Saba and Acquisition are subject.
(p) Registration. Use its best efforts to effect the registration of
the Saba Common Stock to be or as issued pursuant to the Merger together with
any securities issued in exchange for, or in replacement of, or otherwise in
respect of, such Saba Common Stock (the "Registrable Securities") as soon as
practicable after written request thereof is made by the Stockholders. In
connection therewith, within ten (10) business days following any such request,
Saba shall prepare and file with the Commission a registration statement on Form
S-3 or other appropriate form for the offer and sale by the Stockholders and
their successors, heirs and affiliates (the "Holders") of the Registrable
Securities so issued and shall use its best efforts to cause such registration
statement to become effective. Saba shall also promptly prepare and file such
documents as may be necessary to register or qualify the Registrable Securities
under the securities laws of the states that any Holder may reasonably request,
and shall do any and all other acts and things reasonably necessary or advisable
to enable such Holder to consummate a sale of the Registrable Securities in
those states. In addition, Saba shall prepare and file all such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective and
in compliance with applicable law for a period of not less than five (5) years
or such shorter period which will terminate when all Registrable Securities have
been sold (but not before the expiration of the 90 day period referred to in
Section 4(3) of the Securities Act and Rule 174 thereunder, if applicable).
Notwithstanding the foregoing, Saba shall not be obligated to effect any such
registration pursuant to this Section 6.1(p) if Saba's counsel delivers an
opinion to the Holders and Saba's registrar and transfer agent reasonably
satisfactory to counsel for the Holders to the effect that the Registrable
Securities may be sold or distributed as planned by the Holders without
registration. All expenses incident to Saba's performance or compliance with
this Section 6.1(p) shall be paid by Saba; provided, however, the Holders shall
be responsible for and shall pay any underwriting, brokerage or selling agent's
fees, discounts or commissions, and shall be responsible for and pay all legal
fees and expenses of counsel to the Holders or counsel to any underwriter or
selling agent. In connection with any underwritten offering to which Saba shall
have consented, Saba shall provide, or cause to be provided, such
representations, warranties, covenants, opinions, "cold comfort" letters,
indemnifications, opportunities for due diligence and other matters, and shall
take all such other reasonable actions, as are customary in underwritten public
offerings of securities.
(q) Security for Loan. Saba shall assign and/or pledge all of its
right, title and interest in the Pipeline to the Company as collateral to secure
the Loan (which assignment, if any, shall be held in escrow or trust for the
benefit of the Company) and shall execute and deliver to the Company, in form
and substance satisfactory to the Company and the Stockholders, such
documentation as the Company reasonably requires to evidence the Loan, assign
and/or pledge all of Saba's right, title and interest in the Pipeline to the
Company as collateral to secure the Loan, and secure and perfect such assignment
and/or pledge, which assignment or pledge shall be otherwise unencumbered by any
party or creditor whatsoever (except by operator and Colombian government
liens).
6.2 Negative Covenants. Except as contemplated by this Agreement,
without the prior written consent of Company, Saba shall not, and Saba shall not
permit the Saba Group to:
(a) Compensation. Except in the ordinary course of business consistent
with past practices, increase the compensation, bonuses or other benefits
payable or to be payable to any person employed by it or adopt, amend, modify or
terminate any Saba or Acquisition pension or benefit plan, or grant, except as
to employees which the Company specifies in writing will not have continuing
employment with Omimex Resources, Inc. immediately after the Effective Time, any
rights to receive severance payments or other benefits upon a termination of
employment or a change in control thereof.
(b) Hiring. Hire any new employee whose aggregate compensation will be in
excess of $35,000 per ------ year.
(c) Capital Expenditures. Incur or commit to incur any capital
expenditures in an aggregate amount in excess of $50,000 that will not be paid
in full by the Closing Date; provided that Saba may fulfill contractual
obligations existing prior to the date hereof which require expenditures in
excess of $50,000.
(d) Indebtedness. Incur, assume or guarantee any material obligation or
liability other than in the ordinary course of business or incur any
indebtedness to Saba, its subsidiaries or the Saba Major Stockholder; provided
that Saba may (i) incur straight debt not in excess of $75 million, either
publicly, institutionally or a combination thereof on such terms as the board of
directors of Saba may approve, and (ii) fulfill commitments outstanding prior to
the date hereof.
(e) Contracts. Except as set forth on Schedule 6.2(e), modify, amend or
terminate any material contracts, arrangements and commitments (whether oral or
written) to which Saba or Acquisition is a party or by which Saba or
Acquisition's assets or business are bound except in the ordinary course of
business consistent with past practices and except for immaterial modifications
and amendments; directly or indirectly, enter into or assume any new contract,
agreement, obligation, lease, license or commitment that in the aggregate
commits Saba or Acquisition to an obligation or expenditure of more than
$50,000; or incur any material nonmonetary obligations.
(f) Collective Bargaining. Enter into any new collective bargaining
agreement or modify or extend any existing collective bargaining agreement with
the effect of incurring obligations after the Closing Date.
(g) Disposition and Acquisition of Assets. Sell, transfer or otherwise
dispose of any asset or property of an aggregate value of more than $10,000
(except for (i) inventory sold in the usual and ordinary course of business and
except for cash applied in payment of Saba's and Acquisition's trade liabilities
in the usual and ordinary course of business, (ii) the common stock of Saba
Petroleum, Inc. and any property located in the State of California, Indonesia
and China, and (iii) Saba's assets or property set forth in Schedule 6.2(g)) or
purchase or otherwise acquire, or agree to purchase or otherwise acquire, any
assets or property other than in the ordinary course of business consistent with
past practices.
(h) Rights. Except as set forth in Schedule 6.2(h), amend, terminate or
give notice of termination with respect to any material existing agreement to
which Saba or Acquisition is a party, or waive any material rights thereunder,
or waive any other right relating to Saba's or Acquisition's assets except where
such waiver of such other right would not have a material adverse effect on Saba
or Acquisition.
(i) Encumbrances. Create, assume or permit to exist any Lien, condition
or other charge or encumbrance of any nature upon Saba's or Acquisition's
capital stock or its assets, except for those Liens in existence on the date of
this Agreement and disclosed in Schedule 4.5.
(j) Licenses. Do any act or fail to do any act that might result in the
expiration, revocation, suspension or modification of any license or permit
material to the operation of Saba or Acquisition, or fail to prosecute with due
diligence any applications for any such license or permit.
(k) Dividends, Merger, Etc. Except as set forth in Schedule 6.2(k),
declare, set aside or pay any dividend or other distribution (whether in cash,
stock or property) in respect of, purchasing, redeeming or otherwise acquiring,
its capital stock, or merge or consolidate with any other entity.
(l) Certificate of Incorporation; Bylaws. Make any change in its
certificate of incorporation or bylaws.
(m) Stock Issuance; Redemptions; Reorganizations. Except as set forth
in Schedule 6.2(m), (i) issue, grant or dispose of, or make any agreement,
arrangement or commitment obligating it to issue, grant or dispose of, any of
its capital stock or other securities at any time; (ii) redeem or acquire, or
make any agreement, arrangement or commitment obligating it to redeem or
acquire, any of its capital stock or other securities; or, (iii) authorize or
effect any reorganization, recapitalization or split-up of its capital stock.
(n) Transactions With Affiliates. Enter into any agreement, arrangement
or transaction with, or make any payment, distribution, loan or advance to, any
of the stockholders of Saba, any affiliate of the stockholders of Saba or any
officer, director or affiliate of Saba or its subsidiaries, except as otherwise
contemplated by this Agreement.
(o) Accounting Practices. Make any material changes in its accounting
methods, principles or practices, except as required by GAAP consistently
applied.
(p) Changes in Business Practice. Fail to pay its accounts payable
consistent with past practices, or take any action the purpose or effect of
which is to shift income from post-Closing periods to the pre-Closing period or
to defer expenses from the pre-Closing period to post-Closing periods, which
action is not in the ordinary course of business consistent with past practices.
(q) Tax Elections. Make new elections with respect to Taxes or any
changes in current elections with respect to Taxes affecting Saba or its
subsidiaries.
(r) WARN. Take any action that would result in an employment loss (as
such term is defined in WARN) for any employee of Saba or Acquisition.
(s) Solicitation. Together with the Saba Major Stockholder and the
directors of Saba (subject to applicable law, including, without limitation,
fiduciary duty requirements, to which such directors are subject), during the
period commencing on the date of this Agreement and ending with the earlier to
occur of the Closing or for a period of ten (10) days after the termination of
this Agreement in accordance with its terms, directly or indirectly, solicit or
initiate the submission of proposals or offers from any person for any
acquisition or purchase of all or a material amount of the assets of, or any
equity interest in, Saba or a merger, consolidation or business combination of
or involving Saba.
6.3 Conflict Between Affirmative and Negative Covenants. If there is
any conflict between an affirmative covenant contained in Section 6.1 and a
negative covenant contained in Section 6.2, then Company shall be entitled to
waive compliance with one or the other, as it deems appropriate.
ARTICLE 7
JOINT COVENANTS
7.1 Cooperation. The parties to this Agreement shall cooperate fully
with each other and their counsel and accountants in connection with any actions
required to be taken as part of their respective obligations under this
Agreement, including, without limitation, all actions required to be taken to
comply with '368, '355 and related provisions of the Code, shall execute such
other documents as may be reasonably necessary and desirable to the
implementation and consummation of this Agreement, and shall otherwise use their
respective best efforts to consummate the transactions contemplated hereby and
to fulfill their respective obligations under this Agreement.
Without limiting the foregoing paragraph, the parties shall use all
reasonable efforts to obtain all authorizations, consents, orders and approvals
of federal, state and local regulatory bodies and officials and nongovernmental
third parties that may be or become necessary for performance of their
obligations pursuant to this Agreement, and shall cooperate fully with each
other in promptly seeking to obtain all such authorizations, consents, orders
and approvals.
7.2 Antitrust Laws Compliance. As soon as practicable after the
execution of this Agreement, each of the parties will make all filings required
of it under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended. Each party and/or its affiliates shall pay all of the filing fees
required of such party in connection therewith. Each party will cooperate with
the other parties in accomplishing such filings and will keep the other parties
apprised of the status of any inquiries made of such party by the Federal Trade
Commission, the Antitrust Division of the United States Department of Justice,
or any other governmental agency with respect to this Agreement or the
transactions contemplated hereby or thereby.
7.3 Tax Matters.
(a) The Stockholders agree to timely prepare and file all tax
returns relating to the operation of Company and its Subsidiaries prior to the
Closing Date. Stockholders will make such tax returns available to Saba at least
30 days prior to the date that such returns are required to be filed and Saba
and the Stockholders will use their best efforts to cooperate in good faith with
respect to any issues that may arise in connection with the preparation of such
tax returns.
(b) Saba intends to prepare all of its tax returns on the
basis of owing no U.S. federal income tax resulting from the disposition of
property subject to Section 6.2(g)(ii). In the event that any U.S. federal
income tax becomes due and owing as a result of the disposition of the property
subject to Section 6.2(g)(ii), (i) the Company shall be liable for payment of
the Company Percentage (as defined below) of the first $2,000,000 principal
amount of such tax and penalties and interest thereon, and (ii) Saba Petroleum,
Inc. shall be liable for the payment of (a) the Saba Percentage of the first
$2,000,000 principal amount of such tax, (b) one hundred percent (100%) of the
principal amount of such tax in excess of $2,000,000, and (c) all interest and
penalties other than those specified in (i) above that accrue on the entire
principal amount of such tax, if any. The "Company Percentage" shall mean the
percentage ownership that the Stockholders have of shares of Saba Common Stock
immediately after giving effect to Section 1.6(c). The "Saba Percentage" shall
mean the percentage ownership that the Stockholders do not have of shares of
Saba Common Stock immediately after giving effect to Section 1.6(c).
(c) The parties hereby agree that if any dispute or
controversy relating to a post closing adjustment under Section 1.6(c) or this
Section 7.3 arises between them, they shall exert all possible efforts to
resolve and settle the dispute. If the parties cannot reach a mutually agreeable
settlement through conciliation, they agree that any controversy or claim
arising out of or relating to this Section 7.3 will be settled by arbitration in
accordance with the then existing Commercial Arbitration Rules of the American
Arbitration Association ("AAA"), and judgment upon the reward rendered by the
arbitrator may be entered in any court having jurisdiction thereof or having
jurisdiction over one or more of the parties or their assets. The arbitral
tribunal shall be composed of one (1) arbitrator. The parties will attempt to
agree upon the appointment of the arbitrator. If the parties fail to agree upon
the appointment of the arbitrator within thirty (30) days after the date the
claimant's demand for arbitration is communicated to the other party, the AAA
will make the appointment. The place of arbitration will be Los Angeles,
California. The parties hereby exclude any right of application or appeal to any
court to the extent that they may validly so agree, provided that the foregoing
arbitration provision will not prevent a party from applying to a court of
competent jurisdiction for injunctive and other forms of interim or equitable
relief. The parties hereto agree that the arbitrator shall decide which party or
parties shall pay for the costs and expenses of all arbitration proceedings. The
arbitrator shall (i) be limited to awarding compensatory relief and related
interest and precluded from modifying the terms of this Agreement, and (ii) have
no authority to resolve a dispute arising under or with respect to any other
provisions of this Agreement and his/her jurisdiction shall be limited to the
two sections specified in this Section 7.3(c).
7.4 Publicity. Prior to the Closing Date, all general notices,
releases, statements and communications to advertisers, customers, suppliers,
employees and independent contractors of the parties hereto and to the press and
the general public relating to this Agreement (including the existence of this
Agreement and the transactions contemplated hereby), shall be made only at such
times and in such manner as may be mutually agreed upon by Saba and the
Stockholders; provided, however, that (i) a party shall be entitled, following
reasonable prior written notice to the other parties, to issue such press
releases and to make such public statements and filings as are, in the opinion
of its legal counsel, required by applicable law (including, without limitation,
federal securities laws and regulations), and (ii) the board of directors has
given and has not withdrawn its recommendation to the stockholders to approve
the Merger.
7.5 Saba Stockholder Approval. At the shareholders meeting called
pursuant to Section 6.1(b), the Saba Major Stockholder shall vote all of his
shares in favor of the approval of this Agreement, including, without
limitation, the Merger and the election of the directors designated in Section
1.4(b).
7.6 Escrow. On the Closing Date, post-Merger Saba shall escrow
$3,600,000 or an amount sufficient to redeem all of the 9% subordinated
debentures in accordance with the terms and conditions thereof, and shall
promptly effect such redemption thereafter.
7.7 Disposition of Assets. As a consequence of the determination of the
Company Group that the best of interests of Saba after the Merger will be served
by not conducting business or owning assets within the State of California, the
parties shall have done such things as may be reasonably necessary to cause the
post-Merger Saba to not conduct business or own assets in the State of
California.
ARTICLE 8
CONDITIONS TO OBLIGATIONS OF SABA AND ACQUISITION
The obligation of Saba and Acquisition to consummate the transactions
contemplated hereby to occur on the Closing Date shall be conditioned upon the
satisfaction or waiver by Saba and Acquisition, at or prior to the Closing, of
the following conditions:
8.1 Representations and Warranties. Each representation and warranty of
the Company and Stockholders contained in this Agreement and in any Schedule or
other disclosure in writing from the Company or Stockholders shall be true and
correct when made, and shall be true and correct in all material respects on and
as of the Closing Date with the same effect as though such representation and
warranty had been made on and as of the Closing Date.
8.2 Covenants of Stockholders and Company. All of the covenants and
agreements herein on the part of Stockholders and the Company to be complied
with or performed on or before the Closing Date shall have been complied with
and performed in all material respects.
8.3 Certificate of the Company and Stockholders. There shall be
delivered to Saba and Acquisition a certificate dated the Closing Date and
signed by the President of the Company and each Stockholder to the effect set
forth in Sections 8.1 and 8.2, which certificate shall have the effect of a
representation and warranty made by the Company and each Stockholder on and as
of the Closing Date.
8.4 Absence of Litigation. No inquiry, action, suit, or proceeding
shall have been asserted, threatened, or instituted (i) in which it is sought to
restrain or prohibit the carrying out of the transactions contemplated by this
Agreement or to challenge the validity of such transactions or any part thereof,
(ii) which would, if adversely determined, result in any material adverse change
in the business, operations or assets or the condition, financial or otherwise,
or results of operations or prospects of the Company, or (iii) which would, if
adversely determined, have a material adverse effect on the right or ability of
the Company to carry on its business as now conducted.
8.5 Consents and Approvals. All material authorizations, consents,
approvals, waivers and releases, if any, necessary for the Company to consummate
the transactions contemplated hereby shall have been obtained (including,
without limitation, those consents and approvals set forth on Schedule 2.15
hereto and the consent of Bank One Texas, N.A., as lender to Saba, the Debenture
holders, and the Preferred Stockholders) and copies thereof shall be delivered
to Saba.
8.6 Certificates. The Company shall have delivered to Saba and
Acquisition (i) certificates of the appropriate governmental authorities, dated
as of a date not more than five (5) business days prior to the Closing Date,
attesting to the existence and good standing of the Company in the states of
Delaware and in each jurisdiction where the Company is qualified to do business;
(ii) a copy, certified by the Secretary of State of Delaware as of a date not
more than five (5) business days prior to the Closing Date, of the certificate
of incorporation and all amendments thereto of the Company; (iii) a copy
certified by the Secretary of the Company, dated the Closing Date, of the bylaws
of the Company; and (iv) certificates, dated the Closing Date, of the Secretary
of the Company relating to the incumbency and corporate proceedings in
connection with the consummation of the transactions contemplated hereby.
8.7 Opinion of Counsel. Saba and Acquisition shall have received
opinions from counsel or an accounting firm of Saba and Acquisition, dated as of
the Closing Date and in form and substance satisfactory to Saba and Acquisition,
that (i) the Merger will constitute a tax-free reorganization under Section 368
of the Code, and (ii) the spin-off of stock in Saba Petroleum, Inc. from Saba
will not constitute a taxable dividend to the Saba stockholders.
8.8 Fairness Opinion. Saba shall have received a written opinion from
CIBC-▇▇▇▇▇▇▇▇▇▇▇ Corp. that the transactions contemplated herein are fair from a
financial point of view to the shareholders of Saba, which is in effect and has
not been withdrawn as of Effective Time.
8.9 No Material Adverse Change. Except as disclosed on a Schedule
hereto, no material adverse change in the results of operations, financial
condition or business of the Company shall have occurred, and the Company shall
not have suffered any material loss or damage to any of its properties or
assets, whether or not covered by insurance, since December 31, 1997, which
change, loss or damage is reasonably likely to materially adversely affect the
business or financial condition of the Company; and Saba shall have received a
certificate signed by the Chief Financial Officer of the Company dated the
Closing Date to such effect.
8.10 Saba Stockholder Approval. The Merger shall have been approved by
the requisite vote or consent of the stockholders of Saba in accordance with
Saba's Articles of Incorporation and applicable law.
8.11 HSR Waiting Period. Any waiting period (and any extension thereof)
applicable to the consummation of the Merger under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976, as amended, shall have expired or been
terminated.
8.12 Disposition of Certain Property. As a consequence of the
determination of the Company Group that the best of interests of Saba after the
Merger will be served by not conducting business or owning assets within the
State of California, the Company Group shall have done such things as may be
reasonably necessary to ensure that the post-Merger Saba does not conduct
business or own assets in the State of California
Prior to the consummation of the Merger, the Company Group shall have
divested itself of all of its assets which are located in the State of
California.
8.13 Preferred Stock. Saba, in its sole discretion, shall be satisfied
with the treatment of the Preferred Stock in accordance with the ▇▇▇▇ ▇▇▇▇
Agreement.
8.14 Subordinated Debt. Bank One Texas, N.A. shall have approved payment of
Saba's 9% subordinated Debentures.
ARTICLE 9
CONDITIONS TO THE COMPANY'S
AND THE STOCKHOLDERS' OBLIGATIONS
The obligation of the Company and the Stockholders to consummate, the
transactions contemplated hereby to occur on the Closing Date shall be
conditioned upon the satisfaction or waiver by the Company and the Stockholders,
at or prior to the Closing, of the following conditions:
9.1 Representations and Warranties. Each representation and warranty of
Saba and Acquisition contained in this Agreement and in any Schedule or other
disclosure in writing from Saba or Acquisition shall be true and correct when
made, and shall be true and correct in all material respects on and as of the
Closing Date with the same effect as though such representation and warranty had
been made on and as of the Closing Date.
9.2 Covenants of Saba and Acquisition. All of the covenants and
agreements herein on the part of Saba and Acquisition to be complied with or
performed on or before the Closing Date shall have been fully complied with and
performed in all material respects.
9.3 Certificates of Saba and Acquisition. Each of Saba and Acquisition
shall have delivered to the Company a certificate dated the Closing Date and
signed by the President or a Vice President of Saba and Acquisition to the
effect set forth in Sections 9.1 and 9.2, which certificates shall have the
effect of a representation and warranty made by each of Saba and Acquisition on
and as of the Closing Date.
9.4 Absence of Litigation. No inquiry, action, suit or proceeding shall
have been asserted, threatened, or instituted in which it is sought to restrain
or prohibit the carrying out of the transactions contemplated by this Agreement
or to challenge the validity of such transactions or any part thereof.
9.5 Consents and Approvals. All material authorizations, consents,
approvals, waivers and releases, if any, necessary for Saba and Acquisition to
consummate the transactions contemplated hereby shall have been obtained
(including, without limitation, those consents and approvals set forth on
Schedule 4.15 hereto) and delivered to the Company.
9.6 Certificates. Each of Saba and Acquisition shall have delivered to
the Company (i) a certificate of the appropriate governmental authority, dated
as of a date not more than five (5) business days prior to the Closing Date,
attesting to the existence and good standing of Saba and Acquisition in the
State of Delaware; (ii) copies, certified by the Secretary of State of Delaware
as of a date not more than five (5) business days prior to the Closing Date, of
the certificate of incorporation and all amendments thereto of Saba and
Acquisition, respectively, (iii) copies, certified by the Secretary of each of
Saba and Acquisition, dated the Closing Date, of the bylaws of Saba and
Acquisition; and (iv) a certificate, dated the Closing Date, of the Secretary of
each of Saba and Acquisition relating to the incumbency and corporate
proceedings in connection with the consummation of the transactions contemplated
hereby.
9.7 Opinion of Counsel. The Company and the Stockholders shall have
received an opinion of ▇▇▇▇▇ ▇▇▇▇▇▇▇ Rain ▇▇▇▇▇▇▇ (A Professional Corporation),
counsel to the Company and the Stockholders, dated as of the Closing Date and in
form and substance satisfactory to the Company and the Stockholders that the
Merger will constitute a tax-free reorganization under Section 368 of the Code.
9.8 Disposition of Certain Property. As a consequence of the
determination of the Company Group that the best of interests of Saba after the
Merger will be served by not conducting business or owning assets within the
State of California, the Saba Group shall have taken such actions to ensure that
the post-Merger Saba does not conduct business or own assets in the State of
California.
Prior to the consummation of the Merger, the Saba Group shall have
caused all of its assets located in the State of California ("Saba's California
Property") to be conveyed to Saba Petroleum, Inc. ("SPI"). Saba's California
Property shall include all of the stock of Santa ▇▇▇▇▇ Refining Company and Saba
Realty, Inc., the personal property located in the State of California and
described on Exhibit F hereto and the realty and oil and gas properties located
in the State of California and described on Exhibit G hereto. Concurrently with
the consummation of the Merger, Saba shall distribute to the shareholders of
Saba as of the record date established by the Board of Directors of Saba for
such purpose the common stock of SPI on such basis as such Board shall have
determined. For purposes of effecting the foregoing, to the extent that the then
existing indebtedness of the Saba Group shall not have been retired, SPI shall
be deemed to owe, and have secured financing for payment of, $6.0 million of
such indebtedness as adjusted to the date of the Merger.
9.9 No Material Adverse Change. Except as disclosed on a Schedule
hereto, no material adverse change in the results of operations, financial
condition or business of Saba shall have occurred, and Saba shall not have
suffered any material loss or damage to any of its properties or assets, whether
or not covered by insurance, since December 31, 1997, which change, loss or
damage is reasonably likely to materially adversely affect the business or
financial condition of Saba; and the Company shall have received a certificate
signed by the Chief Financial Officer of Saba dated the Closing Date to such
effect.
9.10 Saba Stockholder Approval. The Merger shall have been approved by
the requisite vote or consent of the stockholders of Saba in accordance with
Saba's Articles of Incorporation and applicable law.
9.11 HSR Waiting Period. Any waiting period (and any extension thereof)
applicable to the consummation of the Merger under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976, as amended, shall have expired or been
terminated.
9.12 Election of Board of Directors. As of the Closing Date, the Board
of Directors of Saba shall consist of the five (5) directors set forth in
Section 1.4(b) hereof until their successors are duly elected and qualified.
9.13 Saba Credit Agreement. Bank One Texas, N.A. shall have executed and
delivered, in form and substance satisfactory to the Company and the
Stockholders, a commitment to extend credit to (i) post-merger Saba and its
subsidiaries in the amount of at least $50,000,000, and (ii) Saba Petroleum,
Inc. in the amount of at least 6,000,000.
9.14 Preferred Stock. The Company and the Stockholders, in their
respective sole discretion, shall be satisfied with the treatment of the
Preferred Stock in accordance with the ▇▇▇▇ ▇▇▇▇ Agreement.
9.15 Subordinated Debt. Bank One Texas, N.A. shall have approved payment of
Saba's 9% subordinated Debentures.
9.16 Loan. Saba shall have assigned and/or pledged all of its right,
title and interest in the Pipeline to the Company as collateral to secure the
Loan and shall have executed and delivered to the Company, in form and substance
satisfactory to the Company and the Stockholders, such documentation as the
Company reasonably requires to evidence the Loan, assign and/or pledge all of
Saba's right, title and interest in the Pipeline to the Company as collateral to
secure the Loan, and secure and perfect such assignment and/or pledge, which
assignment or pledge shall be otherwise unencumbered by any party or creditor
whatsoever (except by operator and Colombian government liens).
9.17 Warrant. Saba shall have executed and delivered to the
Stockholders, in form and substance satisfactory to the Company and the
Stockholders, such documents as the Company requires to evidence the Warrant,
including, without limitation, the Warrant Agreement.
ARTICLE 10
CLOSING
10.1 Closing. Unless this Agreement is first terminated as provided in
Section 11.1, and subject to the satisfaction or waiver of all the conditions
set forth in Articles 8 and 9, the closing of the transactions contemplated
hereby (the "Closing") shall take place (i) on September 30, 1998, at the
offices of Saba in Santa Maria, California, or (ii) on such other date and at
such other place as the parties may agree upon in writing (the "Closing Date").
10.2 Exchange of Certificates. At the Closing and immediately following
the Effective Time, upon surrender of each certificate representing shares of
Company Common Stock, Saba shall, in exchange therefor, deliver certificates
representing the appropriate number of shares of Saba Common Stock, as
contemplated in Section 1.5 above. Until so surrendered or exchanged, each such
certificate representing Company Common Stock shall represent solely the right
to receive the applicable number of shares of Saba Common Stock.
10.3 Legends on Saba Common Stock. The certificates evidencing the
shares of Saba Common Stock to be delivered at Closing shall contain
substantially the following restrictive legend:
"THESE, SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR ANY APPLICABLE STATE LAW. THEY MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR PLEDGED WITHOUT (1) REGISTRATION UNDER THE
SECURITIES ACT OF 1933 AND ANY APPLICABLE STATE LAW OR (2) AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT
REQUIRED."
Saba shall cause such legend to be removed from the certificates upon the
effectiveness of the registration of such shares of Saba Common Stock.
ARTICLE 11
TERMINATION
11.1 Termination. This Agreement may be terminated at any time prior to
the Effective Time:
(a) by mutual written consent of Saba and the Company; or
(b) by either Saba or the Company if (i) the Merger shall have
not been consummated by October 31, 1998 (the "Termination Date") or (ii) a
court of competent jurisdiction or governmental, regulatory or administrative
agency or commission shall have issued an order, decree or ruling or taken any
other action (which order, decree or ruling or other action the parties hereto
shall use their best efforts to vacate), in each case permanently restraining,
enjoining or otherwise prohibiting the transactions contemplated by this
Agreement; or
(c) By Saba (with the approval of the Directors), by giving
written notice of such termination to the Company, if (i) any representation or
warranty of the Company herein is untrue or incorrect in any material respect
and, in the reasonable opinion of Saba, the condition to closing in Section 8.1
could not be expected to be satisfied by the termination date contemplated by
11.1(b) hereof, (ii) there has been a material breach of any material covenant
or agreement of the Company herein such that, in the reasonable opinion of Saba,
the condition to closing in Section 8.2 could not be expected to be satisfied by
the termination date contemplated by 11.1(b) hereof, (iii) a material adverse
change in the results of operations or financial condition or business of the
Company has occurred, or the Company has suffered any material loss or damage to
any of its properties or assets, whether or not covered by insurance, since
December 31, 1997, which change, loss or damage is reasonably likely to
materially adversely affect the business or financial condition of the Company,
or (iv) the stockholders of Saba or the Company do not approve and adopt this
Agreement.
(d) By the Company (with the approval of the Directors), by
giving written notice of such termination to Saba, if (i) any representation or
warranty of Saba herein is untrue or incorrect in any material respect and, in
the reasonable opinion of the Company, the condition to closing in Section 9.1
could not be expected to be satisfied by the termination date contemplated by
11.1(b) hereof, (ii) there has been a material breach of any material covenant
or agreement of Saba herein such that, in the reasonable opinion of the Company,
the condition to closing in Section 9.2 could not be expected to be satisfied by
the termination date contemplated by 11.1(b) hereof, (iii) a material adverse
change in the results of operations or financial condition or business of Saba
has occurred, or Saba has suffered any material loss or damage to any of its
properties or assets, whether or not covered by insurance, since December 31,
1997, which change, loss or damage is reasonably likely to materially adversely
affect the business or financial condition of Saba, or (iv) the stockholders of
Saba or the Company do not approve and adopt this Agreement.
(e) by Saba, if prior to the Effective Time, a person or
entity makes a bona fide offer to purchase or otherwise acquire some or all of
the stock or assets of Saba.
11.2 Effect of Termination. In the event that this Agreement shall be
terminated pursuant to Section 11.1 hereof, all further obligations of the
parties hereto under this Agreement (other than pursuant to Article 12 and
Sections 11.3, 11.4 and 13.13) shall terminate without further liability or
obligation of each party to the other parties hereunder. Except in the case of
gross negligence, willful misconduct or fraud, termination of this Agreement
shall be the sole and exclusive remedy for breach of any representation or
warranty which pursuant to Section 13.9 does not survive the Closing and for
breach of any obligation to be performed under this Agreement prior to the
Closing.
11.3 Return of Information. If this Agreement is terminated in
accordance with the terms hereof, each of the parties shall return to the other
party all information and material provided to it in connection with the
transactions contemplated hereby, and each such party shall exercise all
reasonable diligence in maintaining the confidentiality of such information.
11.4 Cancellation Payments and Expenses.
(a) Expenses and Cancellation Fee. Saba shall, upon demand,
pay immediately to the Company a cancellation fee (the "Cancellation Fee") of
$1,000,000 payable in immediately available funds if (i) the Merger is not
consummated or this Agreement is terminated pursuant to Section 11.1(e), and
(ii) thereafter a Change in Control (as defined below) during the Measuring
Period (as defined below) shall occur (collectively, the "Payment Event").
A "Change in Control" shall be deemed to have occurred on the earliest
date on or by which (i) the beneficial ownership of the equity securities of
Saba on the part of any person or entity (other than the Company or its
affiliates or associates), together with the beneficial ownership thereof on the
part of the affiliates and/or associates of such person or entity, first equals
or exceeds 50 percent of the equity securities of Saba then outstanding, or (ii)
any person or entity (other than the Company or its affiliates or associates)
acquires assets of Saba which, together with any assets acquired from Saba by
any affiliates and/or associates of such person or entity, constitute at least
50 percent of the assets owned by Saba on the Termination Date; provided,
however, that if during the Measuring Period (as defined below), Saba enters
into an agreement providing for a transaction or series of transactions that
would result in Change in Control, the Cancellation Fee shall become payable on
the date such agreement is entered into, provided further, however, that no
payment shall become due in respect of such Change in Control until the earliest
date upon which such transaction or series of transactions is consummated
(whether or not such date occurs during the Measuring Period).
The "Measuring Period" shall be the period of time beginning on the
Termination Date and ending nine months after such date.
(b) Remedies. Saba acknowledges that the agreements contained
in this Section 11.4 are an integral part of the transactions contemplated by
this Agreement and that, without these agreements, the Company and the
Stockholders would not enter into this Agreement. Accordingly, if Saba fails to
pay any amounts due pursuant to this Section 11.4, and, in order to obtain such
payment, suit is commenced which results in a judgment against Saba therefor,
Saba shall pay the plaintiff's reasonable costs (including reasonable attorney
fees and expenses) in connection with such suit, together with interest computed
on any amounts determined to be due pursuant to this Section 11.4 (computed from
the date upon which such amounts were due and payable pursuant to this Section
11.4) and such costs (computed from the date(s) incurred) at the rate of ten
percent (10%) per annum. Saba's obligations under this Section 11.4 shall
survive any termination of this Agreement.
(c) This section shall not be applicable to a Change in
Control resulting solely from the conversion of the Preferred Stock.
ARTICLE 12
INDEMNIFICATION
12.1 Saba's Losses.
(a) Stockholders jointly and severally agree to indemnify and
hold harmless Saba and the Surviving Corporation and their respective directors,
officers, employees, representatives, agents, and attorneys (collectively, "Saba
Indemnitees") from, against and in respect of any and all Saba Losses (as
defined below) suffered, sustained, incurred or required to be paid by any of
them by reason of (i) any representation or warranty made by the Company or any
Stockholder in or pursuant to this Agreement that is to survive pursuant to
Section 13.9 being untrue or incorrect in any material respect; or (ii) any
failure by the Company (prior to the Effective Time) or any Stockholder to
observe or perform their covenants and agreements set forth in this Agreement or
any other agreement or document executed by them in connection with the
transactions contemplated hereby, except in any instance to the extent Saba
Losses result from a Saba Indemnitee's own gross negligence or willful
misconduct.
(b) "Saba's Losses" shall mean all damages (including, without
limitation, amounts paid in settlement with Stockholders' consent, which consent
may not be unreasonably withheld), losses, obligations, liabilities, claims,
deficiencies, costs (including, without limitation, reasonable attorneys' fees),
Taxes, penalties, fines, interest, monetary sanctions and expenses, including,
without limitation, reasonable attorneys' fees and costs incurred to comply with
injunctions and other court and agency orders, and other costs and expenses
incident to any suit, action, investigation, claim or proceeding or to establish
or enforce a Saba Indemnitee's right to indemnification hereunder. Saba Losses
shall not include lost profits or consequential damages.
(c) The Saba Indemnitees shall not be entitled to assert or
recover hereunder, including the indemnification claims under Article 12, for
(i) any claim that does not exceed $50,000, and (ii) the first $100,000, in the
aggregate of such claims; it being the intention of the parties that such amount
shall be for the sole account of the Saba Indemnitees.
(d) The maximum aggregate liability of the Company and the
Stockholders under this Agreement or arising out of the transactions
contemplated hereby, including any obligation to the Saba Indemnitees under
Article 12, shall not exceed $10,000,000.
(e) Any right to bring any arbitration, suit, action or other
proceeding to enforce any of the obligations of any party hereunder or arising
out of the transactions contemplated hereby shall terminate on the earlier of
the first day of the eighteenth (18th) calendar month after the Closing, or
October 31, 2000.
12.2 Stockholders' Losses.
(a) Saba (before the Effective Time) and the Saba Major
Stockholder jointly and severally agree to indemnify and hold harmless the
Stockholders and their respective employees, representatives, agents, and
attorneys (collectively, the "Stockholder Indemnitees") from, against, for and
in respect of any all Stockholder Losses (as defined below) suffered, sustained,
incurred or required to be paid by a Stockholder Indemnitee by reason of (i) any
representation or warranty made by Saba or Acquisition in or pursuant to this
Agreement that is to survive pursuant to Section 13.9 being untrue or incorrect
in any material respect; or (ii) any failure by Saba, Acquisition or the
Surviving Corporation (following the Effective Time) to observe or perform its
covenants and agreements set forth in this Agreement or any other agreement or
document executed by it in connection with the transactions contemplated hereby,
except in any instance to the extent Stockholder Losses result from a
Stockholder Indemnitee's own gross negligence or willful misconduct.
(b) "Stockholder Losses" shall mean all damages (including,
without limitation, amounts paid in settlement with Saba's consent, which
consent may not be reasonably withheld), losses, obligations, liabilities,
claims, deficiencies, costs (including, without limitation, reasonable
attorneys' fees) and expenses, including, without limitation, reasonable
attorneys' fees and costs incurred to comply with injunctions and other court
and agency orders, and other costs and expenses incident to any suit, action,
investigation, claim or proceeding or to establish or enforce a Stockholder
Indemnitee's right to indemnification hereunder.
Stockholder Losses shall not include lost profits or consequential damages.
(c) The Stockholder Indemnitees shall not be entitled to
assert or recover hereunder, including the indemnification claims under Article
12, for (i) any claim that does not exceed $50,000, and (ii) the first $100,000,
in the aggregate of such claims; it being the intention of the parties that such
amount shall be for the sole account of the Stockholder Indemnitees.
(d) The maximum aggregate liability of Saba and the
Stockholder Indemnitees under this Agreement or arising out of the transactions
contemplated hereby, including any obligation to the Stockholder Indemnitees
under Article 12, shall not exceed $10,000,000.
(e) Any right to bring any arbitration, suit, action or other
proceeding to enforce any of the obligations of any party hereunder or arising
out of the transactions contemplated hereby shall terminate on the earlier of
the first day of the eighteenth (18th) calendar month after the Closing, or
October 31, 2000.
12.3 Notice of Loss. Except to the extent set forth in the next
sentence, no party shall have any liability under the indemnity provisions of
this Agreement with respect to a particular matter unless a notice setting forth
in reasonable detail the breach or other matter which is asserted has been given
to the Indemnifying Party (as defined below) and, in addition, if such matter
arises out of a suit, action, investigation, proceeding or claim, such notice is
given promptly, but in any event within thirty (30) days after the Indemnified
Party (as defined below) is given notice of the claim or the commencement of the
suit, action, investigation or proceeding. Notwithstanding the preceding
sentence, failure of the Indemnified Party to give notice hereunder shall not
release the Indemnifying Party from its obligations under this Article 12,
except to the extent the Indemnifying Party is actually prejudiced by such
failure to give notice. With respect to Saba Losses, Stockholders severally and
not jointly, shall be the Indemnifying Party and Saba Indemnitees shall be the
Indemnified Parties. With respect to Stockholder Losses, Saba and the Surviving
Corporation shall be the Indemnifying Party and Stockholder Indemnitees shall be
the Indemnified Party.
12.4 Right to Defend. Upon receipt of notice of any suit, action,
investigation, claim or proceeding for which indemnification might be claimed by
an Indemnified Party, the Indemnifying Party shall be entitled to defend,
contest or otherwise protect against any such suit, action, investigation, claim
or proceeding at its own cost and expense, and the Indemnified Party must
cooperate in any such defense or other action. The Indemnified Party shall have
the right, but not the obligation, to participate at its own expense in defense
thereof by counsel of its own choosing, but the Indemnifying Party shall be
entitled to control the defense unless the Indemnified Party has relieved the
Indemnifying Party from liability with respect to the particular matter or the
Indemnifying Party fails to assume defense of the matter. In the event the
Indemnifying Party shall fail to defend, contest or otherwise protect in a
timely manner against any such suit, action, investigation, claim or proceeding,
the Indemnified Party shall have the right, but not the obligation, thereafter
to defend, contest or otherwise protect against the same and make any compromise
or settlement thereof and recover the entire cost thereof from the Indemnifying
Party including, without limitation, reasonable attorneys' fees, disbursements
and all amounts paid as a result of such suit, action, investigation, claim or
proceeding or the compromise or settlement thereof; provided, however, that the
Indemnified Party must send a written notice to the Indemnifying Party of any
such proposed settlement or compromise, which settlement or compromise the
Indemnifying Party may reject, in its reasonable judgment, within thirty (30)
days of receipt of such notice. Failure to reject such notice within such thirty
(30) day period shall be deemed an acceptance of such settlement or compromise.
The Indemnified Party shall have the right to effect a settlement or compromise
over the objection of the Indemnifying Party; provided, that if (i) the
Indemnifying Party is contesting such claim in good faith or (ii) the
Indemnifying Party has assumed the defense from the Indemnified Party, the
Indemnified Party waives any right to indemnity therefor. If the Indemnifying
Party undertakes the defense of such matters, the Indemnified Party shall not,
so long as the Indemnifying Party does not abandon the defense thereof, be
entitled to recover from the Indemnifying Party any legal or other expenses
subsequently incurred by the Indemnified Party in connection with the defense
thereof other than the reasonable costs of investigation undertaken by the
Indemnified Party with the prior written consent of the Indemnifying Party.
12.5 Cooperation. Each party and its respective affiliates, successors
and assigns shall cooperate with each other in the defense of any suit, action,
investigation, tax audit, proceeding or claim by a third party and, during
normal business hours, shall afford each other access to their books and records
and employees relating to such suit, action, investigation, proceeding or claim
and shall furnish each other all such further information that they have the
right and power to furnish as may reasonably be necessary to defend such suit,
action, investigation, proceeding or claim, including, without limitation,
reports, studies, correspondence and other documentation relating to
Environmental Protection Agency, Occupational Safety. and Health Administration,
and Equal Employment Opportunity Commission matters.
ARTICLE 13
OTHER AGREEMENTS: MISCELLANEOUS
13.1 Entire Agreement. This Agreement (including the exhibits and
schedules hereto) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, between the parties hereto
with respect to the subject matter hereof, and no party shall be liable or bound
to the other in any manner by any representations or warranties not set forth
herein.
13.2 Successors and Assigns. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. Neither this Agreement nor any
rights, interests, or obligations hereunder may be assigned by any party hereto
without the prior written consent of all other parties hereto, and any purported
assignment in violation of this Section 13.2 shall be null and void.
13.3 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument.
13.4 Headings. The headings of the articles and sections of this
Agreement are inserted for convenience only and shall not be deemed to
constitute part of this Agreement or to affect the construction hereof.
13.5 Construction. As used in this Agreement, the words "herein,"
"hereof" and "hereunder" and other words of similar import refer to this
Agreement as a whole and not to any particular article, section, paragraph, or
other subdivision.
13.6 Modification and Waiver. Any of the terms or conditions of this
Agreement may be waived in writing at any time by the party which is entitled to
the benefits thereof, and this Agreement may be modified or amended by a written
instrument executed by Saba, Acquisition, the Company and Stockholders. No
supplement, modification, or amendment of this Agreement shall be binding unless
executed in writing by all of the parties hereto. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of any
other provision hereof (whether or not similar) nor shall such waiver constitute
a continuing waiver.
13.7 Schedules, Etc. All exhibits and schedules annexed hereto are
expressly made a part of this Agreement as though fully set forth herein, and
all references to this Agreement herein or in any such exhibits or schedules
shall refer. to and include all such exhibits and schedules.
13.8 Notices. Any notice, request, instruction, document or other
communication to be given hereunder by any party hereto to any other party
hereto shall be in writing and validly given if (i) delivered personally, (ii)
sent by telecopy, (iii) delivered by overnight express, or (iv) sent by
registered or certified mail, postage prepaid, as follows:
If to Saba or Acquisition, to:
Saba Petroleum Company
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇; and
▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇, LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Company:
Omimex Resources, Inc.
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
with a copy to:
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇▇▇▇▇▇▇ Rain ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇▇▇▇▇▇▇ Rain ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address for a party as shall be specified by like notice. Any
notice which is delivered personally, or sent by telecopy or overnight express
in the manner provided herein shall be deemed to have been duly given to the
party to whom it is directed upon actual receipt by such party. Any notice which
is addressed and mailed in the manner herein provided shall be conclusively
presumed to have been given to the party to whom it is addressed at the close of
business, local time of the recipient, on the third day after the day it is so
placed in the mail.
13.9 Survival of Covenants, Agreements, Representations and Warranties.
None of the representations and warranties contained herein or made pursuant
hereto shall survive the Closing, except that the representations and warranties
contained in Sections 2.10, 2.22, 4.3 and 4.21 shall survive until the
expiration of the applicable statute of limitations.
13.10 GOVERNING LAW; CHOICE OF FORUM. THIS AGREEMENT SHALL BE
CONSTRUED, ENFORCED, AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA (WITHOUT REGARD TO ITS CHOICE OF LAW PRINCIPLES), EXCEPT THAT THE
LAWS OF THE STATE OF DELAWARE SHALL APPLY AS TO MATTERS OF ORGANIC CORPORATE
LAW.
AS PART OF THE CONSIDERATION FOR VALUE RECEIVED PURSUANT TO THIS
AGREEMENT, AND REGARDLESS OF THE LOCATION OF ANY PRESENT OR FUTURE DOMICILE OR
PRINCIPAL PLACE OF BUSINESS OF THE PARTIES, EACH PARTY HEREBY IRREVOCABLY
CONSENTS AND AGREES TO THE JURISDICTION OF ANY FEDERAL OR STATE COURT SITTING IN
THE SOUTHERN DISTRICT OF CALIFORNIA OR THE COUNTY OF SANTA ▇▇▇▇▇▇▇ IN ANY SUIT,
ACTION OR PROCEEDING BROUGHT AGAINST SUCH PARTY BY THE OTHER PARTY AND
PERTAINING TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS
AGREEMENT AND AGREES THAT EITHER OF THE AFORESAID COURTS SHALL BE AN APPROPRIATE
FORUM FOR SUCH ACTION.
13.11 Invalid Provisions. If any provision of this Agreement is held to
be illegal, invalid, or unenforceable under present or future laws, such
provision shall be fully severable, this Agreement shall be construed and
enforced as if such illegal, invalid, or unenforceable provision had never
comprised a part of this Agreement, and the remaining provisions of this
Agreement shall remain in full force and effect and shaH not be affected by the
illegal, invalid, or unenforceable provision or by its severance from this
Agreement.
13.12 Expenses. Each party shall bear its own fees and expenses
incurred in connection with the transactions contemplated hereby.
13.13 Third Party Beneficiaries. Except as otherwise specifically
provided in Article 11, no individual or firm, corporation, partnership, or
other entity shall be a third party beneficiary of the representations,
warranties, covenants, and agreements made by any party hereto.
13.14 Number and Gender of Words. Whenever the singular number is used,
the same shall include the plural where appropriate, and words of any gender
shall include each other gender where appropriate.
13.15 Further Assurances. From time to time after the Closing, at the
request of any other party but at the expense of the requesting party, Saba,
Acquisition, the Company, the Stockholders, the Saba Major Stockholder and the
Directors, as the case may be, will execute and deliver any such other
instruments of conveyance, assignment and transfer, and take such other action
as the other party may reasonably request in order to consummate the
transactions contemplated hereby.
13.16 Several Obligations. Any several obligations or liabilities of
the Stockholders hereunder shall be performed by them in proportion to their
interests in the Company Common Stock as of the date hereof.
13.17 Access to Records and Information. For a period of five years
from the Closing, each of the parties will cooperate with the other in
furnishing information necessary for the other party to comply with requirements
of the Securities and Exchange Commission, the Internal Revenue Service, the
Franchise Tax Board of the State of California, any other governmental agency or
in defending or prosecuting suits by or against third parties, concerning the
prior operation of the properties held by each pursuant to this agreement. In
particular and without limiting the generality of the foregoing, each party will
provide access to the other to information possessed by or available to such
other party without undue effort or expense, requisite or helpful in preparing
tax returns or historical financial statements. SPI is intended to be a direct
beneficiary of this covenant and has executed this agreement solely for the
purposes of binding it to perform this obligations of this section 13.17.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written.
SABA PETROLEUM COMPANY
By:/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
President
SABA ACQUISITION, INC.
By:/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
President
SABA PETROLEUM, INC.
By:/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
President
OMIMEX RESOURCES, INC.
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
President
June 16, 1998
79
STOCKHOLDERS OF OMIMEX RESOURCES, INC.
/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/s/▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
/s/▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/▇▇▇▇ ▇▇▇▇▇▇▇▇ Trust
▇▇▇▇ ▇▇▇▇▇▇▇▇ Trust
By:
Trustee
/s/▇▇▇▇ ▇▇▇▇▇▇▇▇ Trust
▇▇▇▇ ▇▇▇▇▇▇▇▇ Trust
By:
Trustee
SABA MAJOR STOCKHOLDER
/s/▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
EXHIBIT A
to the
Agreement and Plan of Reorganization
NET ASSET VALUE MODEL
Calif Colombia Louisiana Canada Other Total W/o ColombiaCanada Other Total W/Calif W/o
Calif Calif
Reserve reports
PDP 15.0 27.7 6.3 5.4 9.6 64.0 49.0 41.5 3.7 24.3 69.5 133.5 118.5
PDNP 2.5 4.4 8.3 0.0 2.6 17.8 15.3 11.5 0.0 3.4 14.9 32.7 30.2
PUD 2.6 25.0 8.1 6.1 1.1 42.9 40.3 28.7 0.1 0.2 29.0 71.9 69.3
Proved 20.1 57.1 22.7 11.5 13.3 124.7 104.6 81.7 3.8 27.9 113.4 138.1 218.0
Probable 33.6 52.0 2.2 0.2 2.8 90.8 57.2 57.1 0.9 1.6 59.6 150.4 116.8
Possible 148.0 21.6 0.7 0.0 1.1 171.4 23.4 24.6 0.0 0.1 24.7 196.1 48.1
Total 201.7 130.7 25.6 11.7 17.2 386.9 185.2 163.4 4.7 29.6 197.7 584.6 382.9
Reserve Factors
General 0 0.75 0.815 1 1 0.75 1 1
PDP 0% 75% 82% 100% 100% 75% 100% 100%
PDNP 0% 60% 61% 80% 80% 60% 80% 80%
PUD 0% 53% 41% 70% 70% 53% 70% 70%
Probable 0% 19% 20% 25% 25% 19% 25% 25%
Possible 0% 8% 8% 10% 10% 8% 10% 10%
Reserve Value 0.0 47.9 14.0 9.7 13.2 84.9 84.9 65.6 4.0 27.6 97.2 182.1 182.1
Pipeline 0.0 4.2 0.0 0.0 0.0 4.2 4.2 5.4 0.0 0.0 5.4 9.6 9.6
Refinery 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Real Estate 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.0 2.0 2.0 2.0
Exploration 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.0 0.0 0.0 2.0 2.0 2.0
Enterprise 0.0 0.0 0.0 0.0 1.0 1.0 1.0 0.0 0.0 3.0 3.0 4.0 4.0
Wk cap, other 0.0 0.0 0.0 0.9 1.0 1.9 1.9 0.0 0.0 0.0 0.0 1.9 1.9
Total assets 0.0 52.1 14.0 10.6 15.3 92.0 92.0 73.0 4.0 32.5 109.5 201.6 201.6
Long Term Debt 0.0 0.0 0.0 0.0 23.0 23.0 23.0 0.0 0.0 17.0 17.0 40.0 40.0
Debentures 0.0 0.0 0.0 0.0 3.6 3.6 3.6 0.0 0.0 0.0 0.0 3.6 3.6
Costs/ other 0.0 0.0 0.0 0.0 1.0 1.0 1.0 0.0 0.0 0.0 0.5 1.5 3.5
Preferred stock 0.0 0.0 0.0 0.0 11.5 11.5 11.5 0.0 0.0 0.0 0.0 11.5 11.5
Total liabilities 0.0 0.0 0.0 0.0 39.1 39.1 39.1 0.0 0.0 17.0 17.5 56.6 58.6
Net Value 0.0 52.1 14.0 10.6 (23.8)52.9 52.9 73.0 4.0 15.5 92.0 145.0 145.0
% 37% 37% 63%
Shares - primary 11.147 11.147 19.387
NAV / Share $4.75 $4.75 $4.75
Net 58.8 58.8 92.0 150.9 150.9
value-adjusted
% 39% 39% 61%
Shares fully 13.345 13.345 20.873
diluted
NAV / share $4.41 $4.41 $4.41
fully diluted
SHARES OUTSTANDING (000'S)
Shares NAV,
chg.
Issued at 12/31/97 10.947 $0.000
EAMC acquisition 0.200 0.000
-------------------- ---------
Currently outstanding 11.147 0.000
Options in money 0.548 0.815
Preferred Stock ($5.1 MM @ $3.50) 1.450 5.100
Warrants to Preferred 0.200 0.000
==================== =========
Fully diluted 13.345 $5.915
==================== =========
CONTINGENT:
Debentures ($3,599@ $4.38/sh) 0.822
Warrants to pfd./placement (@ $10.68/sh) 0.270
Options out of money (@ $15.50/sh) 0.625
---------
Subtotal 1.716
=========
Exhibit B To the Agreement and Plan of Reorganization
NET LIABILITY SCHEDULE
Saba Omimex
Current liabilities 24,279,948 12,000,000
Long-term debt 19,609,855 17,000,000
Other liabilities (net)1 78,069 0
---------- ------
Total liabilities 43,967,872 29,000,000
Current assets 13,941,308 12,000,000
---------- ----------
Net liabilities (w/ California 30,026,564 17,000,000
properties)
Less: California debt 6,000,000 0
---------- ------
Net liabilities 24,026,5642 17,000,000
Exhibit C to the Agreement and Plan of Reorganization
ADJUSTMENT EXAMPLES
1. Net Liabilities (12/31/97)
a. Example 1
Saba Omimex
Estimated net liabilities 24,026,564 17,000,000
Final net liabilities per Final
Statement 26,000,000 16,000,000
---------- ----------
Net Product (588,344) 1,000,000
-(588,344)
1,588,344
/ 3.00
Net Shares 529,448 shares
Aggregate Stock Consider. +20,348,000 shares
Base Stock Consideration 20,877,448 shares
b. Example 2
Saba Omimex
Estimated net liabilities 24,026,564 17,000,000
Final net liabilities per Final
Statement 26,000,000 17,500,000
---------- ----------
Net Product (588,344) (500,000)
-(588,344)
88,344
/ 3.00
Net Shares 29,448 shares
Aggregate Stock Consider. +20,348,000 shares
Base Stock Consideration 20,377,448 shares
c. Example 3
Saba Omimex
Estimated net liabilities 24,026,564 17,000,000
Final net liabilities per Final
Statement 26,000,000 18,000,000
---------- ----------
Net Product (588,344) (1,000,000)
-(588,344)
(411,656)
/ 3.00
Net Shares (137,219) shares
Aggregate Stock Consider. +20,348,000 shares
Base Stock Consideration 20,210,782 shares
2. Net Cash Flow (1/1/98 - Closing)
a. Example 1
Saba Omimex
Oil & gas revenues 11,000,000 13,000,000
Other revenues 1,000,000 2,000,000
--------- ---------
Total revenues 12,000,000 15,000,000
Lease operating expenses 6,000,000 7,000,000
Gas and administrative 1,000,000 2,000,000
expenses
Interest and other expenses 2,000,000 2,000,000
Capital / dry hole expenses 1,000,000 0
--------- ---------
Net Cash Flow 2,000,000 4,000,000
- 2,000,000
Net Cash Product 2,000,000
/ 3.00
Net Cash Shares 666,667 shares
Base Stock Consideration +20,877,448 shares3
Final Stock Consideration 21,544,115 shares
b. Example 2
Saba Omimex
Oil & gas revenues 11,000,000 11,000,000
Other revenues 3,000,000 2,000,000
--------- ---------
Total revenues 14,000,000 13,000,000
Lease operating expenses 6,000,000 7,000,000
Gas and administrative 1,000,000 2,000,000
expenses
Interest and other expenses 2,000,000 2,000,000
Capital / dry hole expenses 1,000,000 0
--------- ---------
Net Cash Flow 4,000,000 2,000,000
- 4,000,000
Net Cash Product (2,000,000)
/ 3.00
Net Cash Shares (666,667) shares
Base Stock Consideration +20,877,448 shares4
Final Stock Consideration 20,210,781 shares
EXHIBIT D to the Agreement and Plan of Reorganization
RGC International Investors, LDC
▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: Saba Petroleum Company, Series A Convertible Preferred Stock and
"Redemption Warrants"
Gentlemen:
When accepted by you ("Holder"), this letter will constitute an
agreement among Saba Petroleum Company ("Saba"), Omimex Resources, Inc.
("Omimex") and Holder, as follows:
1. Holder warrants and represents that it is now the sole beneficial and
record holder and owner of the "Securities " issued by Saba pursuant to the
Securities Purchase Agreement dated December 31, 1997 between Saba and
Holder and that Holder has the right and power to execute and perform this
agreement and that all subsequent owners and holders of the Securities, as
such, will be bound by this agreement;
2. Holder hereby consents to the execution and performance of the Agreement
and Plan of Reorganization between Saba and Omimex on substantially the
same term as those contained in the copy of such Agreement attached hereto
("Agreement"), provided, however, that the consent to the performance of
such agreement shall terminate on November 1, 1998, if such performance has
not theretofore occurred and Holder hereby waives and relinquishes any
right or privilege it may have under the Securities Purchase Agreement and
any agreement executed pursuant thereto to require any whole or partial
redemption of the Stock as a result of the consummation of the transactions
contemplated by the Agreement.
3. Holder hereby gives and grants to Omimex the exclusive right and option to
purchase for cash, all or any portion, but not less than $2 million, or
greater than $3 million, principal amount of the Series A Convertible
Preferred Stock (the "Stock") owned by Holder at 105% of Stated Value, plus
accrued interest to the date of purchase by giving written notice
specifying the amount of Stock for which the option is exercised together
with a wire transfer of immediately available funds in the amount of the
purchase price therefor, such option to expire on the earlier to occur of
a) three days after the execution of the Agreement, or b) on June 5, 1998
at 6 P.M. Philadelphia time; Omimex hereby agrees that the stock acquired
by it pursuant to paragraphs 3 and 4, shall be retired upon consummation of
the merger contemplated by the Agreement and, in any event, (before it is
retired or if not retired) may not be converted until such time as the
Holder has fully converted any Stock held by it.
4. Provided that Omimex shall have exercised the option contained in paragraph
3, in whole or in part, Holder hereby gives and grants to Omimex the
exclusive right and option to purchase an additional amount of the Stock,
such amount to be all or any portion of two times the Stated Value of the
amount of Stock purchased pursuant to paragraph 3, at 108.5% of the Stated
Value plus accrued interest to the date of purchase by giving written
notice and immediately available funds for the purchase price in the manner
specified in paragraph 3, such option to expire on the earlier of September
30, 1998, at 6 P.M. Philadelphia time or the closing or termination of the
transaction(s) contemplated by the Agreement; the right to purchase Stock
pursuant to this paragraph 4 is subject to the Holders right to convert
such Stock in accordance with the terms of the Certificate of Designation ,
as modified by paragraph 5 below. To the extent the Holder submits a
conversion notice in respect of Stock subject hereto prior to the exercise
by Omimex of its option hereunder, Saba shall be bound to honor such
conversion in accordance with terms of the Certificate of Designation as
modified hereby.
5. The ability of the Holder to convert the Stock is changed from that
specified in section VI.A.(b) of the Certificate of Designation, so that
fifty percent of the Stock not then actually purchased by Omimex pursuant
to paragraphs 3 and 4 hereof, shall be convertible in accordance with said
section VI.A.(b) and the remaining fifty percent shall be convertible, on a
cumulative basis, 20% on September 1, 1998, and an additional 20% on the
first calendar day of each succeeding month, unless a) such Stock is
converted at a price of $4 or more (after the closing of the transaction(s)
contemplated by the Agreement)(subject to adjustments for stock splits,
stock dividends, extraordinary distributions (including the spin-off) and
similar transactions), or b) the Agreement has been terminated or the
transaction contemplated thereby abandoned, in which cases all of such
Stock may be converted without regard to the foregoing limitations; For the
avoidance of doubt (i)Omimex shall be deemed to have actually purchased
Stock only to the extent it has exercised its options to purchase and has
paid for such Stock in accordance the terms hereof and (ii) the Holder
shall be entitled to convert any Stock not then actually purchased by
Omimex in accordance with the terms of the Certificate of Designation as
modified hereby.
6. As part of the consummation of the Agreement and in partial consideration
of the execution of this agreement by Holder, Holder shall receive a like
distribution as will shareholders of record of Saba, such distribution to
be equal to sixty percent of the amount Holder would have received had
Holder converted at the closing date all of the Stock, less the amounts
actually purchased by Omimex pursuant to paragraphs 3 , 4 and 11 hereof and
less any amounts which may be redeemed by Saba in accordance with the
Certificate of Designation prior to the closing date but not prior to
August 30, 1998.
7. Any of the Stock not acquired by Omimex pursuant to paragraphs 3 or 4
hereof, may be redeemed or purchased by Saba, at its option, in accordance
with the existing agreements relating to the Stock at a purchase or
redemption price specified in the Certificate of Designation, plus the
Redemption Warrants specified therein proportionately reduced to the amount
of Stock redeemed or purchased;
8. If the Stock is redeemed, it shall be redeemed in the manner specified in
the Certificate of Designation and if it is purchased, it shall be
purchased in like manner as specified in paragraph 3 hereof;
9. The Stock Purchase Warrant (Closing Warrant) is hereby amended by revising
the Exercise Price specified therein to be "115% of the average daily
closing price on the American (or such other exchange or market as then
shall be the principal market) for the Common Stock during the ten trading
days succeeding the date on which the transactions contemplated by the
Agreement occur", or if the Agreement is terminated or the transactions
contemplated thereby abandoned, 115% of the closing price on the American
Stock Exchange of the Common Stock on the date that this agreement is
executed by Holder;
10. The modifications to the conversion schedule made by paragraph 5 hereof,
shall terminate and the existing conversion schedule shall be reinstated if
any of the following events shall occur, a) ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ or any company
or entity controlled by him or a member of his immediate family shall
voluntarily sell any of the Common Stock prior to the date on which the
Agreement is consummated, it being understood that margin sales shall not
be considered a voluntary sale and that a sale to Omimex or its
shareholders off the exchange shall not be within this condition, or b) the
registration statement covering the Common Stock underlying the Stock shall
not be declared effective by the close of business on June 30, 1998, or c)
a proposal to approve the issuance of more than 19.9% of the Common Stock
in exchange for the conversion of the Stock and the warrants held by Holder
in a manner to permit the conversion and exercise thereof, as the case may
be, without violation of Rule 713 of the American Stock Exchange, shall not
be approved by the shareholders by November 1, 1998; by his execution of
this agreement on behalf of Saba, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ agrees to vote all shares
owned by him in favor of such proposal; and
11. Subject to the prior right of Omimex, Holder hereby grants to Saba the
exclusive right and option to purchase such amounts of Stock as Omimex may
be permitted to purchase pursuant to paragraphs 3 and 4 hereof on the terms
and in the manner specified in such paragraphs. Omimex, Saba and any other
holder of the Stock (other than Holder) shall be bound by the restrictions
on conversion described in paragraph 3 above.
If the foregoing constitutes our agreement, kindly execute and return a copy of
this letter by facsimile, which will constitute an original counterpart,
followed by return of an executed original copy by overnight courier. This
agreement is for the direct and express benefit of Omimex, as well as the
parties hereto.
Very truly yours,
SABA PETROLEUM COMPANY
By /s/Ilyas Chaudhary__________
ACCEPTED AND AGREED TO
On this 1st day of June 1998
RGC INTERNATIONAL INVESTORS, LDC
By: ▇▇▇▇ ▇▇▇▇ Capital Management, L.P., Investment Manager
By RGC General Partner Corp., as general partner
By: /s/ ▇▇▇▇▇ ▇. Bloch____________
▇▇▇▇▇ ▇. ▇▇▇▇▇, Managing Director
THE FOREGOING IS APPROVED on
This 1st day of June 1998
OMIMEX RESOURCES, INC.
By: /s/ Naresh Vashisht__________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Chairman and Chief Executive Officer
Exhibit E
to the
Agreement and Plan of Reorganization
FORM OF WARRANTY AGREEMENT
THIS WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
EXCEPT AS OTHERWISE SET FORTH HEREIN, NEITHER THIS WARRANT NOR ANY OF
SUCH SHARES MAY BE SOLD, OFFERED FOR SALE, ASSIGNED, TRANSFERRED, OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION UNDER SUCH ACT OR
AN OPINION OF COUNSEL THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT
OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT. ANY SUCH SALE,
ASSIGNMENT OR TRANSFER MUST ALSO COMPLY WITH APPLICABLE STATE
SECURITIES LAWS.
Right to Purchase 353,000
Shares of Common Stock,
par value $.001 per share
STOCK PURCHASE WARRANT
THIS CERTIFIES THAT, for value received, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, THE ▇▇▇▇ ▇▇▇▇▇▇▇▇ TRUST and the ▇▇▇▇ ▇▇▇▇▇▇▇▇ TRUST
(collectively, the "Holder") or its registered assigns, is entitled to purchase
from OMIMEX RESOURCES, INC. (formerly Saba Petroleum Company), a Delaware
corporation (the "Company"), at any time or from time to time during the period
specified in Paragraph 2 hereof, Three Hundred Fifty Three Thousand (353,000)
fully paid and nonassessable shares of the Company's Common Stock, par value
$.001 per share (the "Common Stock"), at the exercise price specified in that
certain Agreement (the "▇▇▇▇ ▇▇▇▇ Agreement") dated June 1, 1998 between Saba
Petroleum Company, RGC International Investors, LDC and Omimex Resources, Inc.
(the "Exercise Price"). The term "Warrant Shares," as used herein, refers to the
shares of Common Stock purchasable hereunder.
This Warrant is subject to the following terms, provisions, and
conditions:
1. Manner of Exercise; Issuance of Certificates; Payment for Shares.
Subject to the provisions hereof, this Warrant may be exercised by the holder
hereof, in whole or in part, by the surrender of this Warrant, together with a
completed exercise agreement in the form attached hereto (the "Exercise
Agreement"), to the Company during normal business hours on any business day at
the Company's principal executive offices (or such other office or agency of the
Company as it may designate by notice to the holder hereof), and upon (i)
payment to the Company in cash, by certified or official bank check or by wire
transfer for the account of the Company of the Exercise Price for the Warrant
Shares specified in the Exercise Agreement or (h) if the resale of the Warrant
Shares by the holder is not then registered pursuant to an effective
registration statement under the Securities Act of 1933, as amended (the
"Securities Act"), delivery to the Company of a written notice of an election to
effect a "Cashless Exercise" (as defined in Section 11(c) below) for the Warrant
Shares specified in the Exercise Agreement. The Warrant Shares so purchased
shall be deemed to be issued to the holder hereof or such holder's designee, as
the record owner of such shares, as of the close of business on the date on
which this Warrant shall have been surrendered, the completed Exercise Agreement
shall have been delivered, and payment shall have been made for such shares as
set forth above. Certificates for the Warrant Shares so purchased, representing
the aggregate number of shares specified in the Exercise Agreement, shall be
delivered to the holder hereof within a reasonable time, not exceeding three (3)
business days, after this Warrant shall have been so exercised. The certificates
so delivered shall be in such denominations as may be requested by the holder
hereof and shall be registered in the name of such holder or such other name as
shall be designated by such holder. If this Warrant shall have been exercised
only in part, then, unless this Warrant has expired, the Company shall, at its
expense, at the time of delivery of such certificates, deliver to the holder a
new Warrant representing the number of shares with respect to which this Warrant
shall not then have been exercised.
2. Period of Exercise. This Warrant is exercisable at any time or from
time to time on or after the Effective Time (as defined in that certain
Agreement and Plan of Reorganization by and among Saba Petroleum Company, Saba
Acquisition, Inc., Omimex Resources, Inc., the Stockholders of Omimex Resources,
Inc. and, for certain purposes, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇) and before 5:00 p.m., Fort
Worth, Texas time on the fifth (5th) anniversary of the Effective Date (the
"Exercise Period").
3. Certain Agreements of the Company. The Company hereby covenants and
agrees as follows:
(a) Shares to be Fully Paid. All Warrant Shares will, upon
issuance in accordance with the terms of this Warrant, be validly issued, fully
paid, and nonassessable and free from all taxes, liens, and charges with respect
to the issue thereof.
(b) Reservation of Shares. During the Exercise Period, the
Company shall at all times have authorized, and reserved for the purpose of
issuance upon exercise of this Warrant, a sufficient number of shares of Common
Stock to provide for the exercise of this Warrant.
(c) Listing. The Company shall promptly secure the listing of
the shares of Common Stock issuable upon exercise of the Warrant upon each
national securities exchange or automated quotation system, if any, upon which
shares of Common Stock are then listed (subject to official notice of issuance
upon exercise of this Warrant) and shall maintain, so long as any other shares
of Common Stock shall be so listed, such listing of all shares of Common Stock
from time to time issuable upon the exercise of this Warrant; and the Company
shall so list on each national securities exchange or automated quotation
system, as the case may be, and shall maintain such listing of, any other shares
of capital stock of the Company issuable upon the exercise of this Warrant if
and so long as any shares of the same class shall be listed on such national
securities exchange or automated quotation system.
(d) Certain Actions Prohibited. The Company will not, by
amendment of its charter or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities, or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed by it hereunder, but will at all times in
good faith assist in the carrying out of all the provisions of this Warrant and
in the taking of all such action as may reasonably be requested by the holder of
this Warrant in order to protect the exercise privilege of the holder of this
Warrant against dilution or other impairment, consistent with the tenor and
purpose of this Warrant. Without limiting the generality of the foregoing, the
Company (i) will not increase the par value of any shares of Common Stock
receivable upon the exercise of this Warrant above the Exercise Price then in
effect, and (ii) will take all such actions as may be necessary or appropriate
in order that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock upon the exercise of this Warrant.
(e) Successors and Assigns. This Warrant will be binding upon
any entity succeeding to the Company by merger, consolidation, or acquisition of
all or substantially all the Company's assets.
4. Antidilution Provisions. During the Exercise Period, the Exercise
Price and the number of Warrant Shares shall be subject to adjustment from time
to time as provided in this Paragraph 4.
In the event that any adjustment of the Exercise Price as required
herein results in a fraction of a cent, such Exercise Price shall be rounded up
to the nearest cent.
(a) Adjustment of Exercise Price and Number of Shares upon
Issuance of Common Stock. Except as otherwise provided in Paragraphs 4(c) and
4(e) hereof, if and whenever on or after the date of issuance of this Warrant,
the Company issues or sells, or in accordance with Paragraph 4(b) hereof is
deemed to have issued or sold, any shares of Common Stock for no consideration
or for a consideration per share (before deduction of reasonable expenses or
commissions or underwriting discounts or allowances in connection therewith)
less than the Market Price (as hereinafter defined) on the date of issuance (a
"Dilutive Issuance"), then immediately upon the Dilutive Issuance, the Exercise
Price will be reduced to a price determined by multiplying the Exercise Price in
effect immediately prior to the Dilutive Issuance by a fraction, (i) the
numerator of which is an amount equal to the sum of (x) the number of shares of
Common Stock actually outstanding immediately prior to the Dilutive Issuance,
plus (y) the quotient of the aggregate consideration, calculated as set forth in
Paragraph 4(b) hereof, received by the Company upon such Dilutive Issuance
divided by the Market Price in effect immediately prior to the Dilutive
Issuance, and (ii) the denominator of which is the total number of shares of
Common Stock Deemed Outstanding (as defined below) immediately after the
Dilutive Issuance.
(b) Effect on Exercise Price of Certain Events. For purposes
of determining the adjusted Exercise Price under Paragraph 4(a) hereof, the
following will be applicable:
(i) Issuance of Rights or Options. If the Company in any manner issues or
grants any warrants, rights or options, whether or not immediately exercisable,
to subscribe for or to purchase Common Stock or other securities convertible
into or exchangeable for Common Stock ("Convertible Securities") (such warrants,
rights and options to purchase Common Stock or Convertible Securities are
hereinafter referred to as "Options") and the price per share for which Common
Stock is issuable upon the exercise of such Options is less than the Market
Price on the date of issuance or grant of such Options, then the maximum total
number of shares of Common Stock issuable upon the exercise of all such Options
will, as of the date of the issuance or grant of such Options, be deemed to be
outstanding and to have been issued and sold by the Company for such price per
share. For purposes of the preceding sentence, the price per share for which
Common Stock is issuable upon the exercise of such Options" is determined by
dividing (i) the total amount, if any, received or receivable by the Company as
consideration for the issuance or granting of all such Options, plus the minimum
aggregate amount of additional consideration, if any, payable to the Company
upon the exercise of all such Options, plus, in the case of Convertible
Securities issuable upon the exercise of such Options, the minimum aggregate
amount of additional consideration payable upon the conversion or exchange
thereof at the time such Convertible Securities first become convertible or
exchangeable, by (ii) the maximum total number of shares of Common Stock
issuable upon the exercise of all such Options (assuming full conversion of
Convertible Securities, if applicable). No further adjustment to the Exercise
Price will be made upon the actual issuance of such Common Stock upon the
exercise of such Options or upon the conversion or exchange of Convertible
Securities issuable upon exercise of such Options.
(ii) Issuance of Convertible Securities. If the Company in any manner
issues or sells any Convertible Securities, whether or not immediately
convertible (other than where the same are issuable upon the exercise of
Options) and the price per share for which Common Stock is issuable upon such
conversion or exchange is less than the Market Price on the date of issuance,
then the maximum total number of shares of Common Stock issuable upon the
conversion or exchange of all such Convertible Securities will, as of the date
of the issuance of such Convertible Securities, be deemed to be outstanding and
to have been issued and sold by the Company for such price per share. For the
purposes of the preceding sentence, the price per share for which Common Stock
is issuable upon such conversion or exchange" is determined by dividing (i) the
total amount, if any, received or receivable by the Company as consideration for
the issuance or sale of all such Convertible Securities, plus the minimum
aggregate amount of additional consideration, if any, payable to the Company
upon the conversion or exchange thereof at the time such Convertible Securities
first become convertible or exchangeable, by (ii) the maximum total number of
shares of Common Stock issuable upon the conversion or exchange of all such
Convertible Securities. No further adjustment to the Exercise Price will be made
upon the actual issuance of such Common Stock upon conversion or exchange of
such Convertible Securities.
(iii) Change in Option Price or Conversion Rate. If there is a change at
any time in (i) the amount of additional consideration payable to the Company
upon the exercise of any Options; (ii) the amount of additional consideration,
if any, payable to the Company upon the conversion or exchange of any
Convertible Securities; or (iii) the rate at which any Convertible Securities
are convertible into or exchangeable for Common Stock (other than under or by
reason of provisions designed to protect against dilution), the Exercise Price
in effect at the time of such change will be readjusted to the Exercise Price
which would have been in effect at such time had such Options or Convertible
Securities still outstanding provided for such changed additional consideration
or changed conversion rate, as the case may be, at the time initially granted,
issued or sold.
(iv) Treatment of Expired Options and Unexercised Convertible Securities.
If, in any case, the total number of shares of Common Stock issuable upon
exercise of any Option or upon conversion or exchange of any Convertible
Securities is not, in fact, issued and the rights to exercise such Option or to
convert or exchange such Convertible Securities shall have expired or
terminated, the Exercise Price then in effect will be readjusted to the Exercise
Price which would have been in effect at the time of such expiration or
termination had such Option or Convertible Securities, to the extent outstanding
immediately prior to such expiration or termination (other than in respect of
the actual number of shares of Common Stock issued upon exercise or conversion
thereof), never been issued.
(v) Calculation of Consideration Received. If any Common Stock, Options or
Convertible Securities are issued, granted or sold for cash, the consideration
received therefor for purposes of this Warrant will be the amount received by
the Company therefor, before deduction of reasonable commissions, underwriting
discounts or allowances or other reasonable expenses paid or incurred by the
Company in connection with such issuance, grant or sale. In case any Common
Stock, Options or Convertible Securities are issued or sold for a consideration
part or all of which shall be other than cash, the amount of the consideration
other than cash received by the Company will be the fair value of such
consideration, except where such consideration consists of securities, in which
case the amount of consideration received by the Company will be the Market
Price thereof as of the date of receipt. In case any Common Stock, Options or
Convertible Securities are issued in connection with any acquisition, merger or
consolidation in which the Company is the surviving corporation, the amount of
consideration therefor will be deemed to be the fair value of such portion of
the net assets and business of the non-surviving corporation as is attributable
to such Common Stock, Options or Convertible Securities, as the case may be. The
fair value of any consideration other than cash or securities will be determined
in good faith by the Board of Directors of the Company.
(vi) Exceptions to Adjustment of Exercise Price. No adjustment to the
Exercise Price will be made (i) upon the exercise of any warrants, options or
convertible securities granted, issued and outstanding on the date of issuance
of this Warrant or issued pursuant to the ▇▇▇▇ ▇▇▇▇ Agreement; (ii) upon the
grant or exercise of any stock or options which may hereafter be granted or
exercised under any employee benefit plan of the Company now existing or to be
implemented in the future, so long as the issuance of such stock or options is
approved by a majority of the independent members of the Board of Directors of
the Company or a majority of the members of a committee of independent directors
established for such purpose; or (iii) upon the exercise of the Warrants.
(c) Subdivision or Combination of Common Stock. If the Company
at any time subdivides (by any stock split, stock dividend, recapitalization,
reorganization, reclassification or otherwise) the shares of Common Stock
acquirable hereunder into a greater number of shares, then, after the date of
record for effecting such subdivision, the Exercise Price in effect immediately
prior to such subdivision will be proportionately reduced. If the Company at any
time combines (by reverse stock split, recapitalization, reorganization,
reclassification or otherwise) the shares of Common Stock acquirable hereunder
into a smaller number of shares, then, after the date of record for effecting
such combination, the Exercise Price in effect immediately prior to such
combination will be proportionately increased.
(d) Adjustment in Number of Shares. Upon each adjustment of
the Exercise Price pursuant to the provisions of this Paragraph 4, the number of
shares of Common Stock issuable upon exercise of this Warrant shall be adjusted
by multiplying a number equal to the Exercise Price in effect immediately prior
to such adjustment by the number of shares of Common Stock issuable upon
exercise of this Warrant immediately prior to such adjustment and dividing the
product so obtained by the adjusted Exercise Price.
(e) Consolidation, Merger or Sale. In case of any
consolidation of the Company with, or merger of the Company into any other
corporation, or in case of any sale or conveyance of all or substantially all of
the assets of the Company other than in connection with a plan of complete
liquidation of the Company, then as a condition of such consolidation, merger or
sale or conveyance, adequate provision will be made whereby the holder of this
Warrant will have the right to acquire and receive upon exercise of this Warrant
in lieu of the shares of Common Stock immediately theretofore acquirable upon
the exercise of this Warrant, such shares of stock, securities or assets as may
be issued or payable with respect to or in exchange for the number of shares of
Common Stock immediately theretofore acquirable and receivable upon exercise of
this Warrant had such consolidation, merger or sale or conveyance not taken
place. In any such case, the Company will make appropriate provision to insure
that the provisions of this Paragraph 4 hereof will thereafter be applicable as
nearly as may be in relation to any shares of stock or securities thereafter
deliverable upon the exercise of this Warrant. The Company will not effect any
consolidation, merger or sale or conveyance unless prior to the consummation
thereof, the successor corporation (if other than the Company) assumes by
written instrument the obligations under this Paragraph 4 and the obligations to
deliver to the holder of this Warrant such shares of stock, securities or assets
as, in accordance with the foregoing provisions, the holder may be entitled to
acquire.
(f) Distribution of Assets. In case the Company shall declare
or make any distribution of its assets (including cash) to holders of Common
Stock as a partial liquidating dividend, by way of return of capital or
otherwise, then, after the date of record for determining stockholders entitled
to such distribution, but prior to the date of distribution, the holder of this
Warrant shall be entitled upon exercise of this Warrant for the purchase of any
or all of the shares of Common Stock subject hereto, to receive the amount of
such assets which would have been payable to the holder had such holder been the
holder of such shares of Common Stock on the record date for the determination
of stockholders entitled to such distribution.
(g) Notice of Adjustment. Upon the occurrence of any event
which requires any adjustment of the Exercise Price, then, and in each such
case, the Company shall give notice thereof to the holder of this Warrant, which
notice shall state the Exercise Price resulting from such adjustment and the
increase or decrease in the number of Warrant Shares purchasable at such price
upon exercise, setting forth in reasonable detail the method of calculation and
the facts upon which such calculation is based. Such calculation shall be
certified by the chief financial officer of the Company.
(h) Minimum Adjustment of Exercise Price. No adjustment of the
Exercise Price shall be made in an amount of less than 1% of the Exercise Price
in effect at the time such adjustment is otherwise required to be made, but any
such lesser adjustment shall be carried forward and shall be made at the time
and together with the next subsequent adjustment which, together with any
adjustments so carried forward, shall amount to not less than 1% of such
Exercise Price.
(i) No Fractional Shares. No fractional shares of Common Stock
are to be issued upon the exercise of this Warrant, but the Company shall pay a
cash adjustment in respect of any fractional share which would otherwise be
issuable in an amount equal to the same fraction of the Market Price of a share
of Common Stock on the date of such exercise.
(j) Other Notices. In case at any time:
(i) the Company shall declare any dividend upon the Common Stock payable in
shares of stock of any class or make any other distribution (including dividends
or distributions payable in cash out of retained earnings) to the holders of the
Common Stock;
(ii) the Company shall offer for subscription pro rata to the holders of
the Common Stock any additional shares of stock of any class or other rights;
(iii) there shall be any capital reorganization of the Company, or
reclassification of the Common Stock, or consolidation or merger of the Company
with or into, or sale of all or substantially all its assets to, another
corporation or entity; or
(iv) there shall be a voluntary or involuntary dissolution, liquidation or
winding-up of the Company;
then, in each such case, the Company shall give to the holder of this Warrant
(a) notice of the date on which the books of the Company shall close or a record
shall be taken for determining the holders of Common Stock entitled to receive
any such dividend, distribution, or subscription rights or for determining the
holders of Common Stock entitled to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up and (b) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding-up, notice of
the date (or, if not then known, a reasonable approximation thereof by the
Company) when the same shall take place. Such notice shall also specify the date
on which the holders of Common Stock shall be entitled to receive such dividend,
distribution, or subscription rights or to exchange their Common Stock for stock
or other securities or property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation, or
winding-up, as the case may be. Such notice shall be given at least 30 days
prior to the record date or the date on which the Company's books are closed in
respect thereto. Failure to give any such notice or any defect therein shall not
affect the validity of the proceedings referred to in clauses (i), (ii), (iii)
and (iv) above.
(k) Certain Events. If any event occurs of the type
contemplated by the adjustment provisions of this Paragraph 4 but not expressly
provided for by such provisions, the Company will give notice of such event as
provided in Paragraph 4(g) hereof, and the Company's Board of Directors will
make an appropriate adjustment in the Exercise Price and the number of shares of
Common Stock acquirable upon exercise of this Warrant so that the rights of the
Holder shall be neither enhanced nor diminished by such event.
(l) Certain Definitions.
(i) "Common Stock Deemed Outstanding" shall mean the number of shares of
Common Stock actually outstanding (not including shares of Common Stock held in
the treasury of the Company), plus (x) pursuant to Paragraph 4(b)(i) hereof, the
maximum total number of shares of Common Stock issuable upon the exercise of
Options, as of the date of such issuance or grant of such Options, if any, and
(y) pursuant to Paragraph 4(b)(ii) hereof, the maximum total number of shares of
Common Stock issuable upon conversion or exchange of Convertible Securities, as
of the date of issuance of such Convertible Securities, if any.
(ii) "Market Price," as of any date, (i) means the average of the last
reported sale prices for the shares of Common Stock on the American Stock
Exchange (the "AMEX") for the five (5) trading days immediately preceding such
date as reported by Bloomberg, L.P. ("Bloomberg"), or (ii) if the AMEX is not
the principal trading market for the shares of Common Stock, the average of the
last reported sale prices on the principal trading market for the Common Stock
during the same period as reported by Bloomberg, or (iii) if market value cannot
be calculated as of such date on any of the foregoing bases, the Market Price
shall be the fair market value as reasonably determined in good faith by (a) the
Board of Directors of the Corporation or, at the option of a
majority-in-interest of the holders of the outstanding Warrants by (b) an
independent investment bank of nationally recognized standing in the valuation
of businesses similar to the business of the corporation. The manner of
determining the Market Price of the Common Stock set forth in the foregoing
definition shall apply with respect to any other security in respect of which a
determination as to market value must be made hereunder.
(iii) "Common Stock," for purposes of this Paragraph
4, includes the Common Stock,
par value $.001 per share, and any additional class of stock of the Company
having no preference as to dividends or distributions on liquidation, provided
that the shares purchasable pursuant to this Warrant shall include only shares
of Common Stock, par value $.001 per share, in respect of which this Warrant is
exercisable, or shares resulting from any subdivision or combination of such
Common Stock, or in the case of any reorganization, reclassification,
consolidation, merger, or sale of the character referred to in Paragraph 4(e)
hereof, the stock or other securities or property provided for in such
Paragraph.
5. Issue Tax. The issuance of certificates for Warrant Shares upon the
exercise of this Warrant shall be made without charge to the holder of this
Warrant or such shares for any issuance tax or other costs in respect thereof,
provided that the Company shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issuance and delivery of any
certificate in a name other than the holder of this Warrant.
6. No Rights or Liabilities as a Shareholder. This Warrant shall not
entitle the holder hereof to any voting rights or other rights as a shareholder
of the Company. No provision of this Warrant, in the absence of affirmative
action by the holder hereof to purchase Warrant Shares, and no mere enumeration
herein of the rights or privileges of the holder hereof, shall give rise to any
liability of such holder for the Exercise Price or as a shareholder of the
Company, whether such liability is asserted by the Company or by creditors of
the Company.
7. Transfer, Exchange, and Replacement of Warrant.
(a) Restriction on Transfer. This Warrant and the rights
granted to the holder hereof are transferable, in whole or in part, upon
surrender of this Warrant, together with a properly executed assignment in the
form attached hereto, at the office or agency of the Company referred to in
Paragraph 7(e) below, provided, however, that any transfer or assignment shall
be subject to the conditions set forth in Paragraph 7(f) hereof. Until due
presentment for registration of transfer on the books of the Company, the
Company may treat the registered holder hereof as the owner and holder hereof
for all purposes, and the Company shall not be affected by any notice to the
contrary.
(b) Warrant Exchangeable for Different Denominations. This
Warrant is exchangeable, upon the surrender hereof by the holder hereof at the
office or agency of the Company referred to in Paragraph 7(e) below, for new
Warrants of like tenor representing in the aggregate the right to purchase the
number of shares of Common Stock which may be purchased hereunder, each of such
new Warrants to represent the right to purchase such number of shares as shall
be designated by the holder hereof at the time of such surrender.
(c) Replacement of Warrant. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction, or
mutilation of this Warrant and, in the case of any such loss, theft, or
destruction, upon delivery of an indemnity agreement reasonably satisfactory in
form and amount to the Company (including the posting of a bond, if reasonably
requested by the Company), or, in the case of any such mutilation, upon
surrender and cancellation of this Warrant, the Company, at its expense, will
execute and deliver, in lieu thereof, a new Warrant of like tenor.
(d) Cancellation; Payment of Expenses. Upon the surrender of
this Warrant in connection with any transfer, exchange, or replacement as
provided in this Paragraph 7, this Warrant shall be promptly canceled by the
Company. The Company shall pay all taxes (other than securities transfer taxes)
and all other expenses (other than legal expenses, if any, incurred by the
Holder or transferees or any expenses incurred in connection with the posting of
a bond pursuant to Paragraph 7(c) above) and charges payable in connection with
the preparation, execution, and delivery of Warrants pursuant to this Paragraph
7.
(e) Register. The Company shall maintain, at its principal
executive offices (or such other office or agency of the Company as it may
designate by notice to the holder hereof), a register for this Warrant, in which
the Company shall record the name and address of the person in whose name this
Warrant has been issued, as well as the name and address of each transferee and
each prior owner of this Warrant.
(f) Exercise or Transfer Without Registration. If, at the time
of the surrender of this Warrant in connection with any exercise, transfer, or
exchange of this Warrant, this Warrant (or, in the case of any exercise, the
Warrant Shares issuable hereunder), shall not be registered under the Securities
Act of 1933, as amended (the "Securities Act") and under applicable state
securities or blue sky laws, the Company may require, as a condition of allowing
such exercise, transfer, or exchange, (i) that the holder or transferee of this
Warrant, as the case may be, furnish to the Company a written opinion of
counsel, which opinion and counsel are acceptable to the Company, to the effect
that such exercise, transfer, or exchange may be made without registration under
said Act and under applicable state securities or blue sky laws, (ii) that the
holder or transferee execute and deliver to the Company an investment letter in
form and substance acceptable to the Company and (iii) that the transferee be an
"accredited investor" as defined in Rule 501(a) promulgated under the Securities
Act; provided that no such opinion, letter or status as an "accredited investor"
shall be required in connection with a transfer pursuant to Rule 144 under the
Securities Act. The first holder of this Warrant, by taking and holding the
same, represents to the Company that such holder is acquiring this Warrant for
investment and not with a view to the distribution thereof.
8. Registration Rights. [Reserved]
9. Notices. All notices, requests, and other communications required or
permitted to be given or delivered hereunder to the holder of this Warrant shall
be in writing, and shall be personally delivered, or shall be sent by certified
or registered mail or by recognized overnight mail courier, postage prepaid and
addressed, to such holder at the address shown for such holder on the books of
the Company, or at such other address as shall have been furnished to the
Company by notice from such holder. All notices, requests, and other
communications required or permitted to be given or delivered hereunder to the
Company shall be in writing, and shall be personally delivered, or shall be sent
by certified or registered mail or by recognized overnight mail courier, postage
prepaid and addressed, to the office of the Company at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Chief Executive Officer, or at
such other address as shall have been furnished to the holder of this Warrant by
notice from the Company. Any such notice, request, or other communication may be
sent by facsimile, but shall in such case be subsequently confirmed by a writing
personally delivered or sent by certified or registered mail or by recognized
overnight mail courier as provided above. All notices, requests, and other
communications shall be deemed to have been given either at the time of the
receipt thereof by the person entitled to receive such notice at the address of
such person for purposes of this Paragraph 9, or, if mailed by registered or
certified mail or with a recognized overnight mail courier upon deposit with the
United States Post Office or such overnight mail courier, if postage is prepaid
and the mailing is properly addressed, as the case may be.
10. Governing Law. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF DELAWARE WITHOUT
REGARD TO THE BODY OF LAW CONTROLLING CONFLICTS OF LAW.
11. Miscellaneous.
(a) Amendments. This Warrant and any provision hereof may only
be amended by an instrument in writing signed by the Company and the holder
hereof.
(b) Descriptive Headings. The descriptive headings of the
several paragraphs of this Warrant are inserted for purposes of reference only,
and shall not affect the meaning or construction of any of the provisions
hereof.
(c) Cashless Exercise. Notwithstanding anything to the
contrary contained in this Warrant, if the resale of the Warrant Shares by the
holder is not then registered pursuant to an effective registration statement
under the Securities Act, this Warrant may be exercised by presentation and
surrender of this Warrant to the Company at its principal executive offices with
a written notice of the holder's intention to effect a cashless exercise,
including a calculation of the number of shares of Common Stock to be issued
upon such exercise in accordance with the terms hereof (a "Cashless Exercise").
In the event of a Cashless Exercise, in lieu of paying the Exercise Price in
cash, the holder shall surrender this Warrant for that number of shares of
Common Stock determined by multiplying the number of Warrant Shares to which it
would otherwise be entitled by a fraction, the numerator of which shall be the
difference between the then current Market Price per share of the Common Stock
and the Exercise Price, and the denominator of which shall be the then current
Market Price per share of Common Stock.
[The balance of this page is intentionally left blank.]
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer.
OMIMEX RESOURCES, INC.
(formerly Saba Petroleum Company)
By:
Name:
Title:
Dated as of
FORM OF EXERCISE AGREEMENT
Dated:
To:
Theundersigned, pursuant to the provisions set forth in the within
Warrant, hereby agrees to purchase shares of Common Stock covered by
such Warrant, and makes payment herewith in full therefor at the
price per share provided by such Warrant in cash or by certified or official
bank check in the amount of, or, if the resale of such Common Stock by the
undersigned is not currently registered pursuant to an effective registration
statement under the Securities Act of 1933, as amended, by surrender of
securities issued by the Company (including a portion of the Warrant) having a
market value (in the case of a portion of this Warrant, determined in accordance
with Section 11(c) of the Warrant) equal to $ . Please issue a certificate or
certificates for such shares of Common Stock in the name of and pay any cash for
any fractional share to:
Name:
Signature:
Address:
Note: The above signature should correspond exactly with the name on the face of
the within Warrant.
and, if said number of shares of Common Stock shall not be all the shares
purchasable under the within Warrant, a new Warrant is to be issued in the name
of said undersigned covering the balance of the shares purchasable thereunder
less any fraction of a share paid in cash.
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and
transfers all the rights of the undersigned under the within Warrant, with
respect to the number of shares of Common Stock covered thereby set forth
hereinbelow, to:
Name of Assignee Address No of Shares
, and hereby irrevocably constitutes and appoints as agent and attorney-in-fact
to transfer said Warrant on the books of the within-named corporation, with full
power of substitution in the premises.
Dated:
In the presence of
Name:
Signature:
Title of Signing
Officer or Agent (if any):
Address:
Note: The above signature should correspond exactly with the name on the face of
the within Warrant.
Exhibit F
to the
AGREEMENT AND PLAN OF REORGANIZATION
Personal Property
1. All vehicles, office equipment, computer hardware and software, furniture,
artwork, appliances, and supplies situated in California and leased and/or
owned by Saba or any of its subsidiaries.
2. The gamma survey equipment owned by Saba Exploration Company.
3. All of the stock of Saba Cayman Limited, a Cayman Islands Corporation.
4. All of the stock of Saba Jatiluhur Limited, a Cayman Islands Corporation.
Exhibit G
to the
AGREEMENT AND PLAN OF REORGANIZATION
Real Property
1. Oil and gas and surface fee interests and any other rights in that certain
real property situated in North Orcutt, California, purchased by Saba from
Gitte-Ten, Inc., and all liabilities, including that certain pending
litigation identified as Case No. CV 980202 in San ▇▇▇▇ Obispo County
Superior Court in which Saba is a named defendant, with respect thereto.
2. A fee interest and any other rights in approximately 6 acres of real
property situated in Yorba Linda, California, purchased by Saba from
Republic Bank, and all liabilities with respect thereto.
3. Oil and gas interests and any other rights in that certain oil/gas prospect
known as Beldridge Road/Railroad Grade in ▇▇▇▇ County, California,
purchased by Saba Exploration Company with Nahama Natural Gas from Chevron,
and all liabilities with respect thereto.