EXHIBIT 10.1
Execution Copy
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made to be effective as
of the 23rd day of August, 2002 (the "Effective Date"), by and between VAALCO
International, Inc., a Delaware corporation (the "Company"), VAALCO Energy,
Inc., a Delaware corporation ("VEI") and Nissho Iwai Corporation, a Japanese
corporation (the "Purchaser").
Preliminary Statements
WHEREAS, The Company and VEI entered into the Subscription Agreement dated
as of August 23, 2002 (the "Subscription Agreement") pursuant to which the
Company issued and sold 10,000 shares of the Company's common stock, par value
$0.001 per share (the "Common Stock"), to VEI; and
WHEREAS, VEI desires to sell to the Purchaser, and the Purchaser desires to
purchase and accept 999 shares of the Common Stock from VEI and the Warrants
(defined below) all in accordance with the terms and subject to the conditions
set forth in this Agreement.
Agreement
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and for good and valuable consideration, the receipt and adequacy
of which is hereby acknowledged, the Company, VEI and the Purchaser hereby agree
as follows:
1. Purchase and Sale.
(a) Common Stock.
(i) Subject to the terms and conditions of this Agreement, at the
Closing VEI will sell to the Purchaser, and the Purchaser will purchase
from VEI Nine Hundred Ninety-Nine (999) shares of its Common Stock
representing 9.99% of the shares of the issued and outstanding Common Stock
as of the date hereof (the "Purchased Shares") for aggregate consideration
of Three Million Two Ninety One Thousand Three Hundred and Fifteen United
States Dollars (US $3,291,315) (the "Aggregate Consideration") which amount
shall consist of the Purchase Price and the Additional Consideration. For
the purposes of this Agreement, the "Purchase Price" shall be $3,000,000
and the "Additional Consideration" shall be $291,315, which is an amount
equaling 9.99% of the cash calls since April 1, 2002 for VAALCO Gabon
(Etame) Inc., a Delaware corporation and wholly-owned subsidiary of the
Company ("VGEI").
(ii) Subject to the terms and conditions of this Agreement, at the
Closing VEI shall sell and issue to NIC warrants to purchase shares of
VEI's common stock (the "Warrants") in the forms attached hereto as
Exhibits B-1 and B-2.
(iii) Subject to the terms and conditions of this Agreement, at the
Closing, VEI agrees to satisfy its payment obligations under Section 1 of
the Subscription Agreement.
(b) Closing. The purchase and sale of Purchased Shares and Warrants to the
Purchaser shall take place at the offices of the Company, located at 0000 Xxxx
Xxx Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000, contemporaneously with the execution
of this Agreement (which time and place are designated as the "Closing"). At the
Closing, the Company shall deliver to the Purchaser stock certificate(s) No. 2
representing the Purchased Shares and the Warrants in exchange for the Aggregate
Consideration by wire transfer of immediately available funds as directed by the
Company in writing to Purchaser at least 2 business days prior to the Closing.
2. Representations and Warranties of the Company and VEI. The Company and VEI
hereby represent and warrant to the Purchaser that as of the date hereof, except
as set forth on the Schedule of Exceptions (the "Schedule of Exceptions")
furnished to the Purchaser and attached hereto as Exhibit A specifically
identifying the relevant subparagraphs hereof, which exceptions shall be deemed
to be representations and warranties as if made hereunder:
(a) Organization and Good Standing. Each of the Company and VEI is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
carry on its business as now conducted. Each of the Company and VEI is duly
qualified to transact business and is in good standing in each jurisdiction in
which the failure to so qualify would have a material adverse effect on its
business or properties.
(b) Capitalization and Voting Rights. The authorized capital stock of the
Company consists, or will consist immediately prior to the Closing, of Ten
Thousand (10,000) shares of Common Stock, all of which are issued and
outstanding and owned by VEI prior to the Closing.
(c) Authorization. All corporate action on the part of the Company and VEI,
its officers, directors and stockholders necessary for the authorization,
execution and delivery of this Agreement and all other agreements and
instruments contemplated hereunder, the performance of all obligations of each
of the Company and VEI hereunder and thereunder, and the authorization,
issuance, sale and delivery of the Purchased Shares and the Warrants has been
taken or will be taken prior to the Closing, and this Agreement and all other
agreements and instruments contemplated hereunder constitute valid and legally
binding obligations of each of the Company and VEI, enforceable in accordance
with their respective terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, and other laws of general application
affecting enforcement of creditors' rights generally, and (ii) as limited by
laws relating to the availability of specific performance, injunctive relief, or
other equitable remedies.
(d) Valid Issuance of Purchased Shares and the Warrants. The Purchased
Shares and the Warrants that are being purchased hereunder, when issued, sold
and delivered in accordance with the terms of this Agreement for the
consideration expressed herein, will be duly and validly issued, fully paid, and
nonassessable, and will be free and clear of encumbrances other than any
encumbrances in favor of 1818 Fund II, L.P. ("1818 Fund") or International
2
Finance Corporation ("IFC") or created under this Agreement, other agreements
and instruments contemplated hereunder as listed in the Schedule of Exceptions,
and applicable securities laws.
(e) Governmental Consents. No consent, approval, order or authorization of,
or registration, qualification, designation, declaration or filing with, any
federal, state or local governmental authority of any country on the part of the
Company is required in connection with the consummation of the transactions
contemplated by this Agreement.
(f) Lender Consents. No consent, approval, or filing with, any lender is
required in connection with the consummation of the transactions by VEI or the
Company contemplated by this Agreement other than 1818 Fund and IFC.
(g) Offering. Subject in part to the truth and accuracy of the Purchaser's
representations set forth in Section 3 of this Agreement, the offer, sale and
issuance of the Warrants and the Common Stock as contemplated by this Agreement
are exempt from the registration requirements of the Securities Act of 1933, as
amended (the "Act").
(h) Capital Contribution. VEI agrees that it will contribute at Closing
100% of its right title and interest in and to the shares of VGEI to the Company
(the "Capital Contribution"). Following the Capital Contribution the Company
will own 100% of the capital stock of VGEI, free of restrictions on transfer,
other than such restrictions on transfers under this Agreement, other agreements
and instruments contemplated hereunder as listed in the Schedule of Exceptions,
and applicable securities laws.
(i) Gabon Production Sharing Contract. VGEI is the owner of an undivided
30.35% of the interest in that certain Exploration and Production Sharing
Contract with the Republic of Gabon dated July 7, 1995 (the "Contract") and such
interest is owned free and clear of any lien or encumbrance except as set forth
in the Schedule of Exceptions.
(j) Financial Condition. The financial statements for the year ended
December 31, 2001 as set forth in the Independent Auditor's Report of VGEI dated
April 26, 2002 ("Financial Statement") and the related unaudited interim
financial statements, including Statement of Operations, Statement of Cash Flow,
Statement of Stock Holders' Equity and Balance Sheet dated as of May 31, 2002
("Interim Financial Statement") fairly present in all material respects the
financial condition and the results of operations, changes in equity and cash
flows of VGEI as of the respective dates and for the period referred to in such
Financial Statements, all in accordance with GAAP (provided that the Interim
Financial Statement will not include auditor's notes). These Financial
Statements reflect the consistent application of such accounting principles
throughout the periods involved and have been or will be prepared from and are
in accordance with the accounting records of VGEI.
(k) Absence of Material Changes and Undisclosed Liabilities. Neither the
Company nor VEI are aware of any material adverse changes in the assets of VGEI,
the operations in the Gabon Contract Area or in the relationship between the
parties to the Production Sharing Contract and the Government of the Republic of
Gabon. Neither the
3
Company nor VGEI have any known liabilities except for: liabilities reflected or
reserved against in the Interim Financial Statement or Financial Statement,
liabilities that are listed in the Schedule of Exceptions, current liabilities
incurred in the ordinary course of business of VGEI since the date of the
Interim Balance Sheet, and liabilities that would not have a material adverse
effect on the business, operations or assets of VGEI.
(l) Books and Records. The books of account and other financial records of
the Company and of VGEI, all of which have been made available to NIC, are
complete and correct in all material respects and represent actual, bona fide
transactions and have been maintained in accordance with customary business
practices, including the maintenance of adequate system of internal controls.
3. Representations and Warranties of the Purchaser. The Purchaser hereby
represents and warrants that:
(a) Authorization. The Purchaser has full power and authority to enter into
this Agreement and the other agreements and instruments contemplated hereunder,
and each such Agreement constitutes its valid and legally binding obligation,
enforceable in accordance with its terms.
(b) Purchase Entirely for Own Account. The Purchased Shares to be received
by the Purchaser pursuant to this Agreement will be acquired for investment for
the Purchaser's own account, not as a nominee or agent, and not with a view to
the resale or distribution of any part thereof, and the Purchaser has no present
intention of selling, granting any participation in, or otherwise distributing
the same.
(c) Accredited Investor. The Purchaser is an "accredited investor" within
the meaning of SEC Rule 501 of Regulation D, as presently in effect.
(d) Knowledge, Experience and Resources. The Purchaser has such knowledge
and experience in financial and business matters that it is capable of
evaluating the merits and risks of an investment in the Company and is able to
bear the economic risks of an investment in the Purchased Shares for an
indefinite period of time and to withstand a complete loss of such investment.
(e) Receipt of Information. The Purchaser has met with officers of the
Company and its subsidiary, has had an opportunity to ask questions and receive
answers concerning the business, properties, prospects and financial condition
of the Company and the terms and conditions of an investment in the Company, and
has received all information that it believes is necessary or desirable in
connection with an investment in the Company. The Purchaser is solely
responsible for its own due diligence investigation of the Company and its
proposed business, for its analysis of the merits and risks of its investment
made pursuant to this Agreement and for its analysis of the terms of its
investment.
(f) Restricted Securities. The Purchaser understands that the Purchased
Shares and the Warrants it is purchasing are characterized as "restricted
securities" under the federal
4
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Act, as amended, only in certain limited circumstances. In this connection,
the Purchaser represents that it is familiar with Securities and Exchange
Commission Rule 144, as presently in effect, and understands the resale
limitations imposed thereby and by the Act
(g) Brokers and Finders. Neither the Purchaser nor any of its officers,
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fee, commission or finders fee in connection with
the transactions contemplated by this Agreement.
(h) Legends. It is understood that the certificates evidencing the
Purchased Shares may bear one or all of the following legends:
(i) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH
RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR
UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT."
(ii) The legend required by the Stockholders' Agreement, as defined in
Section 4(d), below.
(iii) Any legend required by the blue sky laws of any state to the
extent such laws are applicable to the shares represented by the
certificate so legended.
(j) Foreign Investors. If Purchaser is not a United States person,
Purchaser hereby represents that it has satisfied itself as to the full
observance of the laws of its jurisdiction in connection with any invitation to
subscribe for the Purchased Shares or any use of this Agreement, including (i)
the legal requirements within its jurisdiction for the purchase of the Purchased
Shares and the Warrants, (ii) any foreign exchange restrictions applicable to
such purchase, (iii) any governmental or other consents that may need to be
obtained, and (iv) the income tax and other tax consequences, if any, that may
be relevant to the purchase, holding, redemption, sale or transfer of the
Purchased Shares and the Warrants. Such Purchaser's payment for, and its
continued beneficial ownership of the Purchased Shares and the Warrants, will
not violate any applicable securities or other laws of its jurisdiction.
4. Conditions of Purchaser's Obligations at Closing. The obligation of the
Purchaser to purchase the Purchased Shares and the Warrants at the Closing under
this Agreement is subject to the fulfillment on or before the Closing of each of
the following conditions, any of which may be waived pursuant to Section 6(e) of
this Agreement:
5
(a) Performance. The Company and VEI shall have performed and complied, in
all material respects, with all agreements, obligations and conditions contained
in this Agreement that are required to be performed or complied with by it on or
before the Closing.
(b) Compliance Certificate. The President or Chief Executive Officer of the
Company and the President or Chief Executive Officer of VEI shall deliver to the
Purchaser at the Closing a certificate stating that the conditions specified in
Section 4(a) together with a customary certification of the Secretaries of the
Company and of VEI as to the incumbency of the relevant officers of the Company
and of VEI.
(c) Authorizations. All authorizations, approvals, or permits, if any, of
any governmental authority or regulatory body that are required in connection
with the lawful issuance and sale of the Purchased Shares at the Closing
pursuant to this Agreement shall be duly obtained and effective as of the
Closing.
(d) Stockholders' Agreement. Contemporaneously with the execution of this
Agreement, the Company, the Purchaser, and VEI shall have executed and delivered
the Stockholders' Agreement in the form attached hereto as Exhibit B (the
"Stockholders' Agreement").
(e) Tax Summary. VEI shall have furnished to Purchaser a summary of the tax
implications of the transactions contemplated by this Agreement as they relate
to the Purchaser, the Company, VEI and VGEI.
(f) Legal Opinions. VEI and VGEI shall have delivered to the Purchaser a
legal opinion in the form attached as Exhibit C.
(g) Required Consents. VEI and VGEI shall have received the consent of IFC
and 1818 Fund to the transactions contemplated by this Agreement.
5. Conditions of VEI's and the Company's Obligations at Closing. The obligation
of VEI to sell the Purchased Shares and the Warrants at the Closing to the
Purchaser under this Agreement is subject to the fulfillment on or before the
Closing of each of the following conditions, any of which may be waived pursuant
to Section 6(e) of this Agreement:
(a) Payment of Consideration. The Purchaser shall have delivered the
Aggregate Consideration as specified in Section 1(a) hereof to VEI.
(b) Performance. The Purchaser shall have performed and complied, in all
material respects, with all agreements, obligations and conditions contained in
this Agreement that are required to be performed or complied with by it on or
before the Closing.
(c) Compliance Certificate. The Representative Director of the Purchaser
shall deliver to the Company at the Closing a certificate stating that the
conditions specified in Section 5(b) have been fulfilled together with
certifications as to the incumbency of relevant officers of the Purchaser.
6
(d) Authorizations. All authorizations, approvals, or permits, if any, of
any governmental authority or regulatory body that are required in connection
with the lawful issuance and sale of the Purchased Shares at the Closing
pursuant to this Agreement shall be duly obtained and effective as of the
Closing.
(e) Stockholders' Agreement. Contemporaneously with the execution of this
Agreement, the Company, the Purchaser, and VEI shall have executed and delivered
the Stockholders' Agreement.
(f) Required Consents. The Company, VEI and VGEI shall have received the
consent of IFC and 1818 Fund to the transactions contemplated by this Agreement.
(g) Amended and Restated Subordinated Credit Agreement. Purchaser shall
have entered into the Amended and Restated Subordinated Credit Agreement with
VEI and 1818 Fund to loan $3,000,000 of a $13,000,000 loan described in such
Agreement dated as of , 2002, in form and substance reasonably
------------
satisfactory to VEI and shall fund $3,000,000 at Closing into the "Sponsor
Escrow Account" as defined in said Amended and Restated Subordinated Credit
Agreement.
6. Miscellaneous.
(a) Indemnity; Survival of Warranties. The warranties, representations and
covenants of the Company, VEI and the Purchaser contained in or made pursuant to
this Agreement shall survive the execution and delivery of this Agreement and
the Closing for a period of one year and shall in no way be affected by any
investigation of the subject matter thereof made by or on behalf of the
Purchaser, VEI or the Company. Each party shall indemnify and hold harmless the
other parties from and against any actual damage, loss, liability, cost or
expense (including reasonable attorneys fees) incurred by the other resulting
from any breach of the party's representations, warranties or covenants in this
Agreement.
(b) No Assignment. No party may assign or otherwise transfer any rights,
interests or obligations under this Agreement without the prior written consent
of the other parties, which consent may be withheld in the sole and absolute
discretion of such parties for any reason whatsoever or for no reason, and any
attempted assignment in violation of this provision shall be void and of no
effect.
(c) Severability. If any provision of this Agreement, or the application
thereof, shall for any reason and to any extent be invalid or unenforceable, the
remainder of this Agreement and application of such provision to other persons
or circumstances shall be interpreted so as best to reasonably effect the intent
of the parties hereto. The parties further agree to replace such void or
unenforceable provision of this Agreement with a valid and enforceable provision
which will achieve, to the extent possible, the economic, business and other
purposes of the void or unenforceable provision.
(d) Entire Agreement. This Agreement, the exhibits hereto, the documents
and agreements referred to herein and the exhibits thereto, constitute the
entire understanding and
7
agreement of the parties hereto with respect to the subject matter hereof and
thereof and supersede all prior and contemporaneous agreements or
understandings, inducements or conditions, express or implied, written or oral,
between the parties with respect hereto and thereto. To the extent that the
terms of this Agreement conflict with the terms of any document or agreement
referred to herein, the terms of the Loan Agreement dated as of April 19, 2002
between VGEI and IFC shall control.
(e) Amendments and Waivers. Any term of this Agreement may be amended and
the observance of any term of this Agreement may be waived (either generally or
in a particular instance and either retroactively or prospectively), only with
the written consent of the Company and the Purchaser.
(f) Expenses. Except as provided to the contrary herein, each party shall
pay all of its own costs and expenses with respect to the negotiation, execution
and delivery of this Agreement and exhibits hereto. The Company's costs and
expenses with respect to the negotiation, execution and delivery of this
Agreement and exhibits hereto shall be paid by VEI.
(g) Governing Law. This Agreement shall be governed by, and construed in
all respects in accordance with, the laws of the State of New York, without
regard to the principles of conflict of laws thereof.
(h) Notices. All notices and other communications required or permitted
hereunder shall be in writing and shall be delivered by personal delivery, an
internationally recognized courier such as DHL or Federal Express, facsimile or
first class registered or certified mail, postage prepaid, addressed as follows:
If to the Purchaser to:
Nissho Iwai Corporation
0-0, Xxxxx 0-xxxxx, Xxxxxx-xx, Xxxxx 000-0000 XXXXX
Attention: Xxxxxxxx Xxxxxxxxx, General Manager,
Energy Project Department,
Facsimile No.: 00-0-0000-0000
If to the Company to:
VAALCO International, Inc.
0000 Xxxx Xxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: President
Facsimile No.: 000-000-0000
8
If to VEI to:
VAALCO Energy, Inc.
0000 Xxxx Xxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: President
Facsimile No.: 000-000-0000
or at such other address as the intended recipient previously shall have
designated by written notice to the other party. Notice by registered or
certified mail shall be effective on the date it is officially recorded as
delivered to the intended recipient by return receipt or equivalent, and in the
absence of such record of delivery, the effective date shall by presumed to have
been the eighth business day after it was deposited in the mail. All notices and
other communications required or contemplated by this Agreement delivered in
person or sent by an internationally recognized courier shall be deemed to have
been delivered to and received by the addressee and shall be effective on the
date of personal delivery. Notices delivered by confirmed facsimile shall be
deemed delivered to and received by the addressee and effective on the date
sent. Notice not given in writing shall be effective only if acknowledged in
writing by a duly authorized representative of the party to whom it was given.
(i) Headings. The titles of the sections of this Agreement are for
convenience of reference only and are not to be considered in construing this
Agreement.
(j) Jurisdiction. Any legal action or proceeding relating to this Agreement
shall be instituted in a state or federal court in New York, NY. The parties
agree to submit to the jurisdiction of, and agree that venue is proper in, these
courts in any such legal action or proceeding.
(k) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument. Execution and delivery of this Agreement by
exchange of facsimile copies bearing the facsimile signature of a party hereto
shall constitute a valid and binding execution and delivery of this Agreement by
such party. Such facsimile copies shall constitute enforceable original
documents.
(l) Construction. This Agreement has been negotiated by the respective
parties hereto and their attorneys and the language hereof shall not be
construed for or against any party.
[signature pages to follow]
9
IN WITNESS WHEREOF, the parties have executed this Stock Purchase
Agreement as of the date first above written.
COMPANY:
VAALCO International, Inc.
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
PURCHASER:
Nissho Iwai Corporation
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
VEI:
VAALCO Energy, Inc.
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
Signature Page
Stock Purchase Agreement
EXHIBIT A
Schedule of Exceptions
Section 2(h)
1. Amended and Restated Subordinated Credit Agreement, dated as of June 10,
2002 among 1818 Fund II, L.P, Nissho Iwai Corporation and VALCO Energy,
Inc., as amended.
2. Loan Agreement, dated as of April 19, 2002 between VAALCO Gabon (Etame)
Inc. and International Finance Corporation, as amended.
Section 2(i)
1. Amended and Restated Pledge of Shares Agreement dated May 31, 2002, among
VAALCO Energy, Inc., VAALCO International Inc. and International Finance
Corporation as amended.
EXHIBIT B
Stockholders' Agreement
