EXHIBIT 10.3
OPTION AGREEMENT
THIS AGREEMENT entered into this 22nd day of July, 1998, by and between
International Publishing Holding s.a. ("IPH"), a Luxembourg corporation whose
offices are located at 0 Xxxxx Xxxxxxx, 0000 Xxxxxxxxxx, Xxxxx-Xxxxx of
Luxembourg, and Horizontal Ventures, Inc. ("HVI"), a Colorado corporation,
whose offices are at 000 Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, XX 00000, XXX;
WITNESSETH:
WHEREAS, HVI has given consideration to acquiring a substantial interest in
Saba Petroleum Company ("Saba"); having its headquarters in Santa Barbara,
California, and quoted on the American Exchange ("AMEX") under the symbol SAB;
and
WHEREAS, IPH is the largest shareholder of HVI and is desirous of assisting
HVI in its efforts in purchasing shares of Saba in the open market or directly
from holders of Saba securities, and to make securities so purchased available
to HVI under the conditions of this Agreement;
NOW THEREFORE, in consideration of the mutual covenants contained herein, the
parties hereto agree as follows:
1) Issues regarding Section 13 of the Securities Exchange Act of 1934: The
parties acknowledge that as a result of this Agreement they are acting
in concert with respect to the acquisition of the securities of Saba
and that as such they are mutually liable for any violation of Section
13 and therefore must work in close and constant communication with
regard thereto.
2) Call Option: HVI shall have the right to call for purchase from IPH all
of the Saba securities in possession of IPH at the moment of such upon
the following terms and conditions:
(2.1) Exercise: This call may be exercised at any time but no later
than June 30, 1999.
(2.2) Purchase price: HVI will pay to IPH its purchase price including
all costs of the Saba securities plus 20% (twenty percent), upon
exercise of this call at no later than December 31, 1998; or plus
30% (thirty percent) if the call is exercised after that date.
(2.3) Payment: HVI will pay IPH the purchase price in cash or at the
option of HVI, partly or in whole in newly to be issued common
shares of HVI calculated at a price per share equivalent to the
average of the closing price of HVI shares on the Nasdaq Small
Cap Market during the thirty trading days preceding the date of
exercise by HVI of this Call Option, but in any case at no more
than USD 15 (fifteen United States dollars) per share of HVI.
(2.4) Additional condition: HVI may only exercise this call if in so
acquiring the Saba securities purchased by IPH, it will realize
the purpose of this Agreement, i.e. to obtain a substantial
interest in Saba.
3) Put Option: As of April 1, 1999, and no later than June 30, 1999, IPH
has the right to sell the Saba securities purchased by it under this
Agreement to HVI for the same purchase price and for the same form of
payment to be elected by HVI, as agreed to in Article 2 above.
4) Procedures for Executing Options: Exercise of the Call Option can only
be done for the total number of Saba securities that IPH will have in
its possession at the time of exercise. If HVI wishes to exercise its
rights under this Call Option, it shall give IPH both a verbal and a
faxed written notice at the place for notices set forth hereinafter.
Subsequent to the receipt of the faxed notice, IPH will instruct its
custodian(s) holding the Saba securities bought by IPH under this
Agreement to deliver these securities to HVI, at an account so directed
by HVI against simultaneous payment by HVI, in cash or in common shares
of HVI, to that custodian or at any other account directed by IPH. IPH
shall give HVI both a verbal and a faxed written notice of its wish to
sell the Saba securities held by it to HVI at the place for notices set
forth hereinafter. Subsequent to the receipt of the faxed notice, HVI
shall arrange that it can receive such shares in an account directed by
it in such a way that against delivery by IPH of the Saba securities
simultaneously payment in the way elected by HVI under this Agreement
will be executed. Upon exercise of the Call Option by HVI or the Put
Option by IPH, HVI should give immediately notice to IPH which form of
payment it has elected, i.e. shares or cash or a combination and, if in
shares, the number thereof and the computation of the value thereof.
5) Registration Rights: Subject to the provisions of this article 5, IPH
agrees to take and hold any shares of HVI received from HVI under
Articles 2 and 3 for investment and not with a view to distribution
within the meaning of the Securities Act of 1933, as amended. HVI
hereby commits to amend its S-3 Registration Statement on file with the
Securities and Exchange Commission within thirty days of executing one
of the above referenced options, if payment in shares of HVI is
elected, to provide for the registration of the shares issued to IPH in
exchange for the Saba shares and to have said amendment declared
effective at the earliest practicable date subsequent to the amendment.
If such registration through amendment appears impossible, HVI is
obliged to obtain the same effect in favor of IPH by any other manner
of registration permitted by applicable law.
6) Relief from Delivery Requirements under Certain Circumstances: HVI
shall be relieved from delivery of its shares to IPH under this Option
Agreement only if such delivery would violate the Nasdaq rules without
shareholder approval. Under such circumstances HVI shall deliver that
number of shares that it is able to deliver immediately and register
all shares including those that it may not deliver without shareholder
approval in accordance with the above mentioned registration rights
clause. If shareholder approval is required for any of the certificates
to be issued to IPH, HVI shall conscientiously prepare a proxy
statement therefor, file same with the Securities and Exchange
Commission and obtain necessary clearance for holding the shareholders'
meeting at the earliest practicable date. Additionally, HVI shall
authorize the transfer agent to issue the shares in IPH's name for
deliver immediately upon receipt of shareholder approval and HVI shall
use diligence in obtaining the required shareholder approval therefor.
To the extent that HVI elects to pay any portion of the purchase price
for the Saba securities in shares of HVI (the "Non-Cash Portion"), at
the closing, HVI will deliver a full recourse promissory note to IPH,
dated the closing date and payable within 180 days thereafter, in an
amount equal to the Non-Cash Portion. The amount outstanding under the
promissory note will bear interest (payable in monthly installments on
the first date of each month) at an annual interest rate equal to 2%
over Libor, in effect on the date of closing. Such note will be
surrendered to HVI against the delivery to IPH of the HVI shares in
payment of the Non-Cash Portion, which at that moment must be
registered and such registration been declared effective, as agreed in
Section 5 above.
7) Notices: All notices under this Option Agreement will be issued to (a)
IPH: Attn: Reink X. Xxxxx, X.X. Xxx 00000, 0000 XX Xxx Xxxxx, Xxx
Xxxxxxxxxxx, telephone (00) 00 0000000, facsimile (00) 00 0000000, and
(b) HVI: Attn: Xxxxxxx X. Xxxxxx, Chairman and CEO, 000 Xxxxx Xxxxxx,
Xxxxx 0000, Xxx Xxxx, XX 00000, telephone (0) 000-0000000, facsimile
(0) 000-0000000.
8) This Agreement: (i) constitutes the entire agreement of the parties
relating to the subject matter hereto and supersedes all prior
agreements, understandings and arrangements; (ii) shall be governed by
New York law; (iii) may not be amended or discharged except in writing;
and (iv) may be executed in counterparts.
Dated this 22nd day of July, 1998.
International Publishing Holding s.a.
/s/ Reink X. Xxxxx
_____________________________________
By: Reink X. Xxxxx, Head of Investments
Horizontal Ventures Inc.
/s/ Xxxxxxx Xxxxxx
_____________________________________
By: Xxxxxxx X. Xxxxxx, Chairman & CEO
