EXHIBIT 2.4
STOCK PURCHASE AGREEMENT
BETWEEN
VAALCO ENERGY, INC.
AS SELLER,
AND
PANAFRICAN ENERGY CORPORATION LTD
AS PURCHASER,
Dated as of January 15, 2001.
TABLE OF CONTENTS
Page
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ARTICLE 1 PURCHASE AND SALE.................................................... 1
Section 1.1 Purchase and Sale.......................................... 1
Section 1.2 Certain Definitions........................................ 1
ARTICLE 2 CONSIDERATION....................................................... 3
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLER............................ 3
Section 3.1 Disclaimers................................................ 3
Section 3.2 Seller..................................................... 4
Section 3.3 The Company................................................ 5
Section 3.4 Hydrocarbon Interest....................................... 7
Section 3.5 Litigation................................................. 7
Section 3.6 Taxes and Assessments...................................... 7
Section 3.7 Outstanding Capital Commitments............................ 7
Section 3.8 Compliance with Laws....................................... 8
Section 3.9 Contracts.................................................. 8
Section 3.10 Advance Sale of Production................................. 8
Section 3.11 Consents and Preferential Purchase Rights.................. 8
Section 3.12 Liability for Brokers' Fees................................ 8
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF PURCHASER......................... 9
Section 4.1 Existence and Qualification................................ 9
Section 4.2 Power...................................................... 9
Section 4.3 Authorization and Enforceability........................... 9
Section 4.4 No Conflicts............................................... 9
Section 4.5 Consents, Approvals or Waivers............................. 9
Section 4.6 Litigation................................................. 10
Section 4.7 Financing.................................................. 10
Section 4.8 Liability for Brokers' Fees................................ 10
ARTICLE 5 COVENANTS OF THE PARTIES............................................ 10
Section 5.1 Access..................................................... 10
Section 5.2 Notification of Breaches................................... 11
Section 5.3 Public Announcements....................................... 11
Section 5.4 Operation of Business...................................... 12
Section 5.5 Conduct of the Company..................................... 12
Section 5.6 Indemnity Regarding Access................................. 13
Section 5.7 Consents and Preferential Rights........................... 13
Section 5.8 Governmental Reviews....................................... 13
Section 5.9 Further Assurances......................................... 13
ARTICLE 6 CONDITIONS TO CLOSING............................................... 14
Section 6.1 Conditions of Seller to Closing............................ 14
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Section 6.2 Conditions of Purchaser to Closing......................... 14
ARTICLE 7 CLOSING............................................................. 15
Section 7.1 Time and Place of Closing.................................. 15
Section 7.2 Obligations of Seller at Closing........................... 16
Section 7.3 Obligations of Purchaser at Closing........................ 16
Section 7.4 Casualty or Condemnation Loss.............................. 17
ARTICLE 8 TAX MATTERS......................................................... 17
Section 8.1 Liability for Taxes........................................ 17
Section 8.2 Preparation and Filing of Tax Returns...................... 18
Section 8.3 Allocation Arrangements.................................... 18
Section 8.4 Access to Information...................................... 18
Section 8.5 Tax Proceedings............................................ 19
Section 8.6 Conflict................................................... 19
ARTICLE 9 TERMINATION......................................................... 19
Section 9.1 Termination................................................ 19
Section 9.2 Effect of Termination...................................... 19
ARTICLE 10 INDEMNIFICATION; LIMITATIONS....................................... 20
Section 10.1 Indemnification............................................ 20
Section 10.2 Indemnification Actions.................................... 22
Section 10.3 Limitation on Actions...................................... 24
ARTICLE 11 MISCELLANEOUS...................................................... 25
Section 11.1 Counterparts............................................... 25
Section 11.2 Notices.................................................... 25
Section 11.3 Sales or Use Tax, Recording Fees and Similar Taxes and Fees 25
Section 11.4 Expenses................................................... 26
Section 11.5 Change of Name............................................. 26
Section 11.6 Replacement of Bonds, Letters of Credit and Guarantees..... 26
Section 11.7 Records.................................................... 26
Section 11.8 Governing Law.............................................. 27
Section 11.9 Arbitration................................................ 27
Section 11.10 Captions................................................... 28
Section 11.11 Waivers.................................................... 28
Section 11.12 Assignment................................................. 28
Section 11.13 Amendment.................................................. 28
Section 11.14 No Third-Person Beneficiaries.............................. 28
Section 11.15 References................................................. 28
Section 11.16 Construction............................................... 29
Section 11.17 Limitation on Damages...................................... 29
Section 11.18 Severability............................................... 29
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EXHIBITS:
Exhibit A - Hydrocarbon Interest
Exhibit B - Supplemental and Correction Deed of Assignment from Western Atlas
Afrique, Ltd. to Vaalco Energy (Gabon), Inc.
Exhibit C - The Amendment One to the Joint Operating Agreement
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Index of Defined Terms
Defined Term Section
------------ -------
AAA........................... 11.9
Accounting Principles......... 3.3(g)
Affiliate..................... 1.2(b)
Agreement..................... Preamble
Allocated Value............... 5.7
Assets........................ 1.2(a)
Balance Sheet................. 3.3(g)
Xxxx of Sale and Agreement.... 1.2(a)(i)
Business Day.................. 1.2(c)
Claim......................... 10.2(b)
Claim Notice.................. 10.2(b)
Closing....................... 7.1
Closing Date.................. 7.1
Company....................... Recitals
Contract Area................. 1.2(a)(iii)
Contracts..................... 1.2(a)(iv)
Damages....................... 10.1(d)
Deed of Assignment............ 1.2(a)(i)
Effective Time................ 3.7
Equipment..................... 1.2(a)(vi)
Governmental Authority........ 1.2(d)
Headquarters Employees........ 5.8(b)
Hydrocarbon Interest.......... 1.2(a)(i)
Hydrocarbons.................. 1.2(a)(iv)
Indemnified Person............ 10.2(a)
Indemnifying Person........... 10.2(a)
Joint Operating Agreement..... 6.2(f)
JOA Amendment................. 6.2(f)
Laws.......................... 1.2(e)
Material Adverse Effect....... 3.1(d)
National Employees............ 5.8(a)
Party; Parties................ Preamble
Person........................ 1.2(f)
Post-Effective Time Period.... 8.1(b)
Pre-Effective Time Period..... 8.1(a)
Purchaser..................... Preamble
Records....................... 1.2(a)(vi)
Seller........................ Preamble
Shares........................ Recitals
Tax........................... 1.2(g)
Tax Indemnified Person........ 8.6(a)
Tax Indemnifying Person....... 8.6(a)
Tax Items..................... 8.2(a)
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement"), is dated as of January
15, 2001, by and between VAALCO Energy, Inc., a company organized under the laws
of Delaware ("Seller"), and PanAfrican Energy Corporation Ltd., a company
organized under the laws of the States of Jersey ("Purchaser"). Seller and
Purchaser are sometimes referred to collectively as the "Parties" and
individually as a "Party."
RECITALS:
Seller desires to sell and Purchaser desires to purchase all of the issued
and outstanding shares (the "Shares") of VAALCO Energy (Gabon), Inc., a company
organized under the laws of Delaware (the "Company").
NOW, THEREFORE, in consideration of the premises and of the mutual
promises, representations, warranties, covenants, conditions and agreements
contained herein, and for other valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows:
ARTICLE 1 PURCHASE AND SALE
SECTION 1.1 PURCHASE AND SALE. On the terms and conditions contained in
this Agreement, Seller agrees to sell to Purchaser and Purchaser agrees to
purchase, accept and pay for the Shares.
SECTION 1.2 CERTAIN DEFINITIONS. As used herein:
(a) "Assets" means all of the Company's right, title, and interest in
and to the following:
(i) The Exploration and Production Sharing Contract described in
Exhibit A (the "Hydrocarbon Interest"), and the assets described
under that certain Supplemental and Correction Deed of Assignment
by and between Western Atlas Afrique, Ltd., as Assignor, to the
Company, as Assignee (the "Deed of Assignment") attached as
Exhibit B.
(ii) All units that include all or a part of the area subject to
the Hydrocarbon Interest (the "Contract Area");
(iii) All presently existing contracts, agreements and
instruments to which the Company's interest in the Hydrocarbon
Interest is subject, including operating agreements, unitization,
pooling and communitization agreements, joint venture agreements,
farmin and farmout agreements, exchange agreements, transportation
agreements, processing agreements, agreements for the sale and
purchase of oil, gas and/or other liquid or gaseous hydrocarbons or
any combination thereof ("Hydrocarbons"), all of which are
hereinafter collectively
referred to as "Contracts", provided that "Contracts" shall not include
the Hydrocarbon Interest;
(iv) All easements, permits, licenses, servitudes, rights-of-
way, surface leases and other rights appurtenant to, and used or held
for use solely in connection with, the Hydrocarbon Interest;
(v) Equipment, machinery, fixtures and other tangible personal
property and improvements located on the Contract Area or used or held
for use solely in connection with the operation of the Hydrocarbon
Interest (the "Equipment");
(vi) All books, records, data, files, maps and accounting
records related solely to the Hydrocarbon Interests, or used or held for
use solely in connection with the maintenance or operation thereof, but
excluding (i) any books, records, data, files, maps and accounting
records licensed from a third Person which are not transferable or
cannot be disclosed under the terms of the license in the event of a
sale of the Company or for which the license will terminate or a
transfer fee or similar payment will be incurred upon a sale of the
Company, (ii) any computer software that is proprietary to any Affiliate
of the Company, (iii) attorney-client communications with, and work
product of, legal counsel for the Company or any Affiliate of the
Company other than Contracts and correspondence of such legal counsel
with third Persons, including Governmental Authorities, who are not
employed by or acting for such Affiliates or counsel for such Affiliates
(the "Records").
(vii) 32.50% of the Cost Oil pool under said Exploration and
Production Sharing Contract.
(b) "Affiliate" means, with respect to any Person, a Person that
directly or indirectly controls, is controlled by or is under common control
with such Person, with control in such context meaning the ability to direct the
management or policies of a Person through ownership of voting shares or other
securities, pursuant to a written agreement, or otherwise.
(c) "Business Day" means any day other than a Saturday, a Sunday, or a
day on which banks are closed for business in Houston, Texas, United States of
America.
(d) "Governmental Authority" means any government, including without
limitation the governments of the United States of America, States of Jersey,
Mauritius and Gabon, and/or any political subdivision thereof, including
departments, courts, commissions, boards, bureaus, ministries, agencies or other
instrumentalities.
(e) "Laws" means all laws, statutes, rules, regulations, ordinances,
orders, decrees, requirements, judgments and codes of Governmental Authorities.
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(f) "Person" means any individual, corporation, partnership, limited
liability company, trust, estate, Governmental Authority or any other entity.
(g) "Tax" means all federal, state, local and foreign taxes, including
income tax, surtax, remittance tax, presumptive tax, net worth tax, special
contribution, production tax, pipeline transportation tax, value added tax,
withholding tax, gross receipts tax, windfall profits tax, profits tax,
severance tax, personal property tax, real property tax, sales tax, service tax,
transfer tax, use tax, excise tax, premium tax, customs duties, stamp tax, motor
vehicle tax, entertainment tax, insurance tax, capital stock tax, franchise tax,
occupation tax, payroll tax, employment tax, social security, unemployment tax,
disability tax, alternative or add-on minimum tax, estimated tax, and any other
assessments, duties, fees, levies or other charges imposed by a Governmental
Authority together with any interest, fine or penalty thereon, or addition
thereto.
ARTICLE 2 CONSIDERATION
The Parties have entered into this Agreement in consideration of the mutual
promises contained herein, and other good and valuable consideration.
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLER
SECTION 3.1 DISCLAIMERS.
(a) Except as and to the extent expressly set forth in this Article 3 or
in the certificate of Seller to be delivered pursuant to Section 7.2(c), (i)
Seller makes no representations or warranties, express or implied, and (ii)
Seller expressly disclaims all liability and responsibility for any
representation, warranty, statement or information made or communicated (orally
or in writing) to Purchaser or any of its Affiliates, employees, agents,
consultants or representatives (including, without limitation, any opinion,
information, projection or advice that may have been provided to Purchaser by
any officer, director, employee, agent, consultant, representative or advisor of
Seller or any of its Affiliates).
(b) EXCEPT AS EXPRESSLY REPRESENTED OTHERWISE IN THIS ARTICLE 3 OR IN
THE CERTIFICATE OF SELLER TO BE DELIVERED AT CLOSING PURSUANT TO SECTION 7.2(c),
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, SELLER EXPRESSLY DISCLAIMS ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO (I) TITLE TO ANY OF THE
ASSETS, (II) THE CONTENTS, CHARACTER OR NATURE OF ANY DESCRIPTIVE MEMORANDUM, OR
ANY REPORT OF ANY PETROLEUM ENGINEERING CONSULTANT, OR ANY GEOLOGICAL OR SEISMIC
DATA OR INTERPRETATION, RELATING TO THE ASSETS, (III) THE QUANTITY, QUALITY OR
RECOVERABILITY OF PETROLEUM SUBSTANCES IN OR FROM THE ASSETS, (IV) ANY ESTIMATES
OF THE VALUE OF THE ASSETS OR FUTURE REVENUES GENERATED BY THE ASSETS, (V) THE
PRODUCTION OF PETROLEUM SUBSTANCES FROM THE ASSETS, OR WHETHER PRODUCTION HAS
BEEN CONTINUOUS, OR IN PAYING QUANTITIES, (VI) THE
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MAINTENANCE, REPAIR, CONDITION, QUALITY, SUITABILITY, DESIGN OR MARKETABILITY OF
THE ASSETS, OR (VII) ANY OTHER MATERIALS OR INFORMATION THAT MAY HAVE BEEN MADE
AVAILABLE OR COMMUNICATED TO PURCHASER OR ITS AFFILIATES, OR ITS OR THEIR
EMPLOYEES, AGENTS, CONSULTANTS, REPRESENTATIVES OR ADVISORS IN CONNECTION WITH
THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY DISCUSSION OR
PRESENTATION RELATING THERETO, AND FURTHER DISCLAIMS ANY REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE OR CONFORMITY TO MODELS OR SAMPLES OF MATERIALS OF ANY EQUIPMENT, IT
BEING EXPRESSLY UNDERSTOOD AND AGREED BY THE PARTIES HERETO THAT PURCHASER HAS
MADE OR CAUSED TO BE MADE SUCH INSPECTIONS AS PURCHASER DEEMS APPROPRIATE.
(c) Any representation "to the knowledge of Seller" or "to Seller's
knowledge" is limited to matters within the actual conscious awareness of
Seller's and its Affiliates' officers and directors.
(d) Inclusion of a matter on a schedule attached hereto with respect to
a representation or warranty that addresses matters having a Material Adverse
Effect shall not be deemed an indication that such matter does, or may, have a
Material Adverse Effect. Matters may be disclosed on a schedule for purposes of
information only. As used herein, "Material Adverse Effect" means a material
adverse effect on the ownership, operation or value of the Company or the
Assets, taken as a whole; provided, however, that "Material Adverse Effect"
shall not include material adverse effects resulting from general changes in
Hydrocarbon prices; general changes in industry, economic or political
conditions; civil unrest, insurrection or similar disorders; or changes in Laws.
(e) Subject to the foregoing provisions of this Section 3.1, and the
other terms and conditions of this Agreement, Seller represents and warrants to
Purchaser the matters set out in Sections 3.2 through 3.12.
SECTION 3.2 SELLER.
(a) Existence and Qualification. Seller is a company duly organized and
validly existing under the laws of Delaware and is duly qualified to do business
as a foreign company in each jurisdiction in which it is required to qualify in
order to conduct its business, except where the failure to so qualify would not,
individually or in the aggregate, have a Material Adverse Effect.
(b) Power. Seller has the corporate power to enter into and perform this
Agreement (and all documents required to be executed and delivered by Seller at
Closing) and to consummate the transactions contemplated by this Agreement (and
such documents).
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(c) Authorization and Enforceability. The execution, delivery and
performance of this Agreement (and all documents required to be executed and
delivered by Seller at Closing), and the consummation of the transactions
contemplated hereby and thereby, have been duly and validly authorized by all
necessary corporate action on the part of Seller. This Agreement has been duly
executed and delivered by Seller (and all documents required to be executed and
delivered by Seller at Closing shall be duly executed and delivered by Seller)
and this Agreement constitutes, and at the Closing such documents shall
constitute, the valid and binding obligations of Seller, enforceable in
accordance with their terms except as such enforceability may be limited by
applicable bankruptcy or other similar Laws affecting the rights and remedies of
creditors generally as well as to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
(d) No Conflicts. The execution, delivery and performance of this
Agreement by Seller, and the consummation of the transactions contemplated by
this Agreement shall not (i) violate any provision of the certificate of
incorporation or bylaws of Seller, (ii) result in default (with due notice or
lapse of time or both) or the creation of any lien or encumbrance or give rise
to any right of termination, cancellation or acceleration under any material
note, bond, mortgage, indenture, license or agreement to which Seller is a party
or by which it is bound, (iii) violate any judgment, order, ruling, or decree
applicable to Seller as a party in interest or (iv) violate any Laws applicable
to Seller, or any of the Assets, except any matters described in clauses (ii),
(iii), or (iv) above which would not have a Material Adverse Effect.
SECTION 3.3 THE COMPANY.
(a) Title to Shares. Seller has good and valid title to the Shares, free
and clear of any liens, claims, encumbrances, security interests, options,
charges and restrictions of any kind. Assuming Purchaser has the requisite power
and authority to be the lawful owner of the Shares, upon delivery to Purchaser
at the Closing of certificates representing the Shares, duly endorsed by Seller
for transfer to Purchaser, and upon Seller's receipt of the consideration
described in Article II, good and valid title to the Shares shall pass to
Purchaser, free and clear of any liens, claims, encumbrances, security
interests, options, charges and restrictions of any kind, other than those
arising from acts of Purchaser or its Affiliates. Other than this Agreement, the
Shares are not subject to any voting agreement or other contract, agreement,
arrangement, commitment or understanding, including any such agreement,
arrangement, commitment or understanding restricting or otherwise relating to
the voting, dividend rights or disposition of the Shares.
(b) Existence and Qualification. The Company is a company duly organized
and validly existing under the Laws of Delaware and is duly qualified to do
business as a foreign company in each jurisdiction where it does business,
except where the failure to so qualify would not, individually or in the
aggregate, have a Material Adverse Effect.
(c) Power. The Company has the corporate power and authority to own,
lease or otherwise hold the Assets and conduct its business in the manner
presently conducted.
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(d) No Conflicts. The consummation of transactions contemplated by this
Agreement shall not (i) violate any provision of the certificate of
incorporation or bylaws of the Company, (ii) result in default (with due notice
or lapse of time or both) or the creation of any lien or encumbrance or give
rise to any right of termination, cancellation or acceleration under any note,
bond, mortgage, indenture, license or agreement to which the Company is a party
or by which it is bound, (iii) violate any judgment, order, ruling, or decree
applicable to the Company as a party in interest, or (iv) violate any Laws
applicable to the Company, or any of the Assets.
(e) Charter and Bylaws. Seller has delivered to Purchaser true and
complete copies of the charter and by-laws (or equivalent governing
instruments), each as amended to the Closing Date, of the Company. The stock
certificates and transfer books, and the minute books of the Company (which have
been made available for inspection by Purchaser prior to the date hereof) are
true, complete and current.
(f) The Shares. The entire authorized capital stock of the Company is
the Shares, consisting of 1,000 shares of common stock, par value $10.00, and
all the Shares are duly authorized and validly issued and outstanding, fully
paid, non-assessable and not issued in violation of any preemptive rights.
Except for the Shares, there are no outstanding shares of capital stock or other
equity securities of the Company, or any contractual arrangements giving any
person a right to receive any benefits or rights similar to the rights enjoyed
by or accruing to the holders of any capital stock of the Company. Other than
this Agreement, there are no outstanding warrants, options, rights, convertible
or exchangeable securities or other commitments pursuant to which Seller or the
Company is or may become obligated to issue or sell any shares of capital stock
or other equity securities of the Company.
(g) Balance Sheet. The consolidated, audited balance sheet (the "Balance
Sheet") of the Company as of the Effective Time attached hereto as Schedule
3.3(g) has been prepared from the books and records of the Company in conformity
with United States generally accepted accounting principles as published by the
Financial Accounting Standards Board (the "Accounting Principles") and fairly
presents the financial position of the Company as of the date thereof.
(h) Subsidiaries. The Company does not directly or indirectly own any
capital stock or other equity interest in any Person.
(i) Employees. The Company has no past or current employees and no past
or current employee benefit plans. The Company's directors and officers are not
directly compensated by the Company.
(j) Company History. The Company was formed by Seller in 1995, and since
the date of its formation the sole activity of the Company has been to own the
Assets, participate under the Hydrocarbon Interest and undertake activities
related thereto. The Company does not own any material property (real, personal
or mixed) other than the Assets. The Company is not engaged in and is not
otherwise a party to any joint venture, partnership or enterprise other than as
directly regards and concerns the Assets.
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SECTION 3.4 HYDROCARBON INTEREST. The Hydrocarbon Interest is in full
force and effect, and neither the Company nor, to the knowledge of Seller, any
other Person is in default thereunder except such defaults as would not,
individually or in the aggregate, have a Material Adverse Effect. The Company
owns a 32.50% undivided interest in the Assets and the "Contractor's" rights to
the Hydrocarbon Interest free and clear of any liens, mortgages, security
interests, charges, pledges or other encumbrances or ownership rights of third
Persons of any kind or character except (a) rights of Governmental Authorities
in the Republic of Gabon and their assignees under the terms of the Hydrocarbon
Interest or the Contracts or applicable Law, (b) preferential rights, similar
rights and rights to consent, if any, held by third Persons under the operating
agreement or other agreements applicable to the Hydrocarbon Interest as
described on Schedule 3.11 and (c) those encumbrances or ownership rights
described on Exhibit A.
SECTION 3.5 LITIGATION. There are no actions, suits or proceedings
pending, or to Seller's knowledge threatened in writing, before any Governmental
Authority or arbitrator with respect to the Company or the Assets.
SECTION 3.6 TAXES AND ASSESSMENTS. The Company has filed all Tax returns
required to be filed by the Company. The Company has withheld and paid all Taxes
that were required to be withheld or due and payable by the Company. The Company
has not received written notice of any threatened or pending claim against the
Company from any applicable taxing authority for assessment of Taxes. The
Company is not the beneficiary of any extension of time to file any Tax return.
The Company has not expressly waived any statute of limitations in respect of
Taxes or agreed to an extension of time with respect to a Tax assessment or
deficiency. The Company has not received any written notice of a claim made by a
tax authority in a jurisdiction where the Company has not filed Tax returns that
the Company is or may be subject to taxation in that jurisdiction. The Company
has no obligation to pay the Taxes of any other Person as a transferee or
successor, by contract or otherwise.
SECTION 3.7 OUTSTANDING CAPITAL COMMITMENTS. Except as provided in the
current approved work program and budget under the joint operating agreement for
the Contract Area, or as otherwise disclosed on Schedule 3.7, there are no
outstanding AFEs or other commitments to make capital expenditures which are
binding on the Company and which Seller reasonably anticipates will individually
require expenditures at or after 12:01 a.m. local time on October 1, 2000 (the
"Effective Time") in excess of fifty thousand U.S. dollars (U.S.$50,000).
SECTION 3.8 COMPLIANCE WITH LAWS. The Company has complied with all
applicable Laws, except such failures to comply as would not, individually or in
the aggregate, have a Material Adverse Effect. Neither the Company, nor the
officers or directors of the Company, in any unlawful manner, have offered,
paid, promised to pay, or authorized the payment of any money, or offered,
given, promised to give, or authorized the paying of anything of value to
foreign governmental officials, political parties, political officials or
candidates for political office, or to any person while knowing that all or a
portion of such money or thing of value would be offered, given or promised,
directly or indirectly, to any foreign officials, for the purpose of influencing
such foreign officials acting in their official capacity, inducing such foreign
officials to do or omit to do any acts in violation of the lawful duty of such
foreign officials or securing any improper advantage, in order to assist the
Company in obtaining or retaining business for or with, or directing business
to, any Person. The Company has complied
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with all applicable import/export laws and regulations, including obtaining, to
the extent required, applicable export license and permits and refraining from
participating in illegal boycotts, except such failures to comply as would not,
individually or in the aggregate, have a Material Adverse Effect.
SECTION 3.9 CONTRACTS. Neither the Company, nor to the knowledge of
Seller, any other Person is in default under any Contract except such defaults
as would not, individually or in the aggregate, have a Material Adverse Effect.
Except as disclosed on Schedule 3.9, there are no Contracts that will be binding
on the Company or the Assets after Closing.
SECTION 3.10 ADVANCE SALE OF PRODUCTION. The Company is not obligated by
virtue of a take or pay payment, advance payment or other similar payment (other
than arrangements established in the Hydrocarbon Interest), to deliver
Hydrocarbons, or proceeds from the sale thereof, attributable to the Company's
interest in the Hydrocarbon Interest at some future time without receiving
payment therefor at or after the time of delivery .
SECTION 3.11 CONSENTS AND PREFERENTIAL PURCHASE RIGHTS. The Hydrocarbon
Interest is not subject to any preferential rights to purchase or similar rights
or required third Person consents to assignment, which may be applicable to the
transactions contemplated by this Agreement, except as set forth on Schedule
3.11.
SECTION 3.12 LIABILITY FOR BROKERS' FEES. Purchaser shall not directly
or indirectly have any responsibility, liability or expense, as a result of
undertakings or agreements of Seller or the Company, for brokerage fees,
finder's fees, agent's commissions or other similar forms of compensation to an
intermediary in connection with the negotiation, execution or delivery of this
Agreement or any agreement or transaction contemplated hereby.
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller the following:
SECTION 4.1 EXISTENCE AND QUALIFICATION. Purchaser is a corporation
organized, validly existing and in good standing under the laws of the States of
Jersey; and Purchaser is duly qualified to do business as a foreign corporation
in every jurisdiction in which it is required to qualify in order to conduct its
business except where the failure to so qualify would not have a material
adverse effect on Purchaser or its properties.
SECTION 4.2 POWER. Purchaser has the corporate power to enter into and
perform this Agreement (and all documents required to be executed and delivered
by Purchaser at Closing) and to consummate the transactions contemplated by this
Agreement (and such documents).
SECTION 4.3 AUTHORIZATION AND ENFORCEABILITY. The execution, delivery
and performance of this Agreement (and all documents required to be executed and
delivered by Purchaser at Closing), and the consummation of the transactions
contemplated hereby and thereby, have been duly and validly authorized by all
necessary corporate action on the part of Purchaser. This Agreement has been
duly executed and delivered by Purchaser (and all documents required to be
executed and delivered by Purchaser at Closing will be duly executed and
delivered by Purchaser) and this Agreement constitutes, and at the Closing such
documents
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will constitute, the valid and binding obligations of Purchaser, enforceable in
accordance with their terms except a s such enforceability may be limited by
applicable bankruptcy or other similar laws affecting the rights and remedies of
creditors generally as well as to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
SECTION 4.4 NO CONFLICTS. The execution, delivery and performance of
this Agreement by Purchaser, and the consummation of the transactions
contemplated by this Agreement, will not (i) violate any provision of the
certificate of incorporation or bylaws (or other governing instruments) of
Purchaser, (ii) result in a material default (with due notice or lapse of time
or both) or the creation of any lien or encumbrance or give rise to any right of
termination, cancellation or acceleration under any material note, bond,
mortgage, indenture, license or agreement to which Purchaser is a party or by
which it is bound, (iii) violate any judgment, order, ruling, or regulation
applicable to Purchaser as a party in interest or (iv) violate any Law
applicable to Purchaser or any of its assets, except any matters described in
clauses (ii), (iii) or (iv) above which would not have a material adverse effect
on Purchaser or its properties.
SECTION 4.5 CONSENTS, APPROVALS OR WAIVERS. The execution, delivery and
performance of this Agreement by Purchaser will not be subject to any consent,
approval or waiver from any Governmental Authority or other third Person.
SECTION 4.6 LITIGATION. There are no actions, suits or proceedings
pending, or to Purchaser's knowledge, threatened in writing before any
Governmental Authority or arbitrator against Purchaser or any subsidiary of
Purchaser which are reasonably likely to impair materially Purchaser's ability
to perform its obligations under this Agreement.
SECTION 4.7 FINANCING. Purchaser has sufficient cash, available lines of
credit or other sources of immediately available funds (in United States
dollars) to enable it to pay the consideration described in Article II to Seller
at the Closing.
SECTION 4.8 LIABILITY FOR BROKERS' FEES. Seller shall not directly or
indirectly have any responsibility, liability or expense, as a result of
undertakings or agreements of Purchaser, for brokerage fees, finder's fees,
agent's commissions or other similar forms of compensation to an intermediary in
connection with the negotiation, execution or delivery of this Agreement or any
agreement or transaction contemplated hereby.
ARTICLE 5 COVENANTS OF THE PARTIES
SECTION 5.1 ACCESS. Seller will give Purchaser and its representatives
access to the Assets and access to and the right to copy, at Purchaser's
expense, the Records in Seller's and its Affiliates' possession, for the purpose
of conducting an investigation of the Assets, but only to the extent that Seller
may do so without violating any obligations to any third Person and to the
extent that Seller has authority to grant such access without breaching any
restriction binding on Seller. Such access by Purchaser shall be limited to
Seller's normal business hours, and Purchaser's investigation shall be conducted
in a manner that minimizes interference with the operation of the Assets. Unless
and until the Closing occurs, Purchaser shall keep all information obtained by
Purchaser and its representatives from Seller and its representatives with
9
respect to the Company or the Assets, except information that was already in
Purchaser's possession (and not subject to any confidentiality restrictions in
favor of Seller), confidential and not disclose the same except that Purchaser
may disclose such information:
(a) to its Affiliates;
(b) to employees, officers and directors of Purchaser and its
Affiliates;
(c) to professional consultants, agents or advisors retained by
Purchaser for purposes of evaluating such information;
(d) to Governmental Authorities and third Persons holding
preferential rights to purchase or similar rights or rights
of consent that may be applicable to the transactions
contemplated by this Agreement, as reasonably necessary to
obtain waivers of such rights, or such consents;
(e) to the extent disclosure is required by applicable Law or
the applicable rules of any stock exchange having
jurisdiction over Purchaser or its Affiliates; and
(f) which is acquired independently from a third Person who is
not under any obligation of confidentiality to Seller or
its Affiliates.
Purchaser shall require any Person to whom information is disclosed under
Section 5.1(c) to agree in writing to keep such information confidential for the
benefit of Seller. Purchaser shall be responsible for insuring that all Persons
to whom it discloses such information under Sections 5.1(a), (b) or (c) keep
such information confidential and shall be liable for any breach of that
confidentiality obligation by any such disclosee.
SECTION 5.2 NOTIFICATION OF BREACHES. Until the Closing,
(a) Purchaser shall notify Seller promptly after Purchaser
obtains actual knowledge that any representation or
warranty of Seller contained in this Agreement is untrue in
any material respect or will be untrue in any material
respect as of the Closing Date or that any covenant or
agreement to be performed or observed by Seller prior to or
on the Closing Date has not been so performed or observed
in any material respect.
(b) Seller shall notify Purchaser promptly after Seller obtains
actual knowledge that any representation or warranty of
Purchaser contained in this Agreement is untrue in any
material respect or will be untrue in any material respect
as of the Closing Date or that any covenant or agreement to
be performed or observed by Purchaser prior to or on the
Closing Date has not been so performed or observed in any
material respect.
If any of Purchaser's or Seller's representations or warranties is untrue or
shall become untrue in any material respect between the date of execution of
this Agreement and the Closing Date, or if any of Purchaser's or Seller's
covenants or agreements to be performed or observed prior to or on the Closing
Date shall not have been so performed or observed in any material respect, but
if such breach of representation, warranty, covenant or agreement shall (if
curable) be cured by the
10
Closing (or, if the Closing does not occur, by the date set forth in Section
9.1), then such breach shall be considered not to have occurred for all purposes
of this Agreement.
SECTION 5.3 PUBLIC ANNOUNCEMENTS. Until the Closing, neither Party shall
make any press release or other public announcement regarding the existence of
this Agreement, the contents hereof or the transactions contemplated hereby
without the prior written consent of the other Party; provided, however, the
foregoing shall not restrict disclosures by Purchaser or Seller (i) that are
required by applicable securities or other Laws or the applicable rules of any
stock exchange having jurisdiction over the disclosing Party or its Affiliates
or (ii) to Governmental Authorities and third Persons holding preferential
rights to purchase or rights of consent that may be applicable to the
transactions contemplated by this Agreement, as reasonably necessary to obtain
waivers of such rights, or such consents.
SECTION 5.4 OPERATION OF BUSINESS. Except as provided in the current
approved work program and budget under the joint operating agreement for the
Contract Area, or as otherwise set forth on Schedule 3.7, until the Closing,
Seller will cause the Company to (i) operate its business in the ordinary
course, (ii) not, without the prior written consent of Purchaser, which consent
shall not be unreasonably conditioned or withheld, commit to any operation
reasonably anticipated to require future capital expenditures by the Company in
excess of U.S.$20,000, or terminate, amend, execute or extend any Contracts
affecting the Assets, (iii) maintain insurance coverage on the Assets in the
amounts and of the types presently in force, (iv) use reasonable efforts to
maintain in full force and effect the Hydrocarbon Interest, (v) maintain all
material governmental permits and approvals affecting the Assets, and (vi) not
transfer, sell, hypothecate, encumber or otherwise dispose of any Assets except
for (A) transfers of Assets pursuant to valid third Person exercises of
preferential purchase rights or similar rights and (B) sales and dispositions of
Equipment made in the ordinary course of business consistent with past
practices. In the event of an emergency, Seller may take such action as a
prudent operator would take and shall notify Purchaser of such action promptly
thereafter.
SECTION 5.5 CONDUCT OF THE COMPANY. The Seller shall not permit the
Company to do any of the following without the prior written consent of the
Purchaser: (i) amend its charter, by-laws or equivalent governing instruments;
(ii) issue, redeem or otherwise acquire any shares of its capital stock or issue
any option, warrant or right relating to its capital stock or any securities
convertible into or exchangeable for any shares of capital stock or declare or
pay any dividend (whether in cash, stock, property, or any combination thereof),
or declare or pay any stock-split; (iii) incur or assume any liabilities,
obligations or indebtedness for borrowed money or guarantee any such
liabilities, obligations or indebtedness, other than accounts payable incurred
in the ordinary course of business; (iv) lend to any Person (except as set forth
in Section 5.5 (ix)) or make an equity investment in any other Person; (v) make
any change in any method of accounting or accounting practice or policy other
than those required by the Accounting Principles; (vi) acquire by merging or
consolidating with, or by purchasing a substantial portion of the assets of, or
by any other manner, any business or any corporation, partnership, association
or other business organization or division thereof; (vii) enter into any lease
of real property, except any renewals of existing leases in the ordinary course
of business; (viii) enter into any settlement of any issue with respect to any
assessment or audit or other administrative or judicial proceeding with respect
to Taxes; (ix) make any loan (other than (A) accounts receivable in the ordinary
course of business, (B) advances or cash call payments to the operator as
required under
11
applicable operating agreements, or (C) advances on behalf of co-owners for
costs under applicable operating agreements) to any Person; (x) terminate or
voluntarily relinquish any permit, license or other authorization from any
Governmental Authority necessary for the conduct of the Company's business or
operations or which relates in any way to any Asset or (xi) agree to do any of
the foregoing. Purchaser's approval of any action restricted by this Section 5.5
shall not be unreasonably withheld.
SECTION 5.6 INDEMNITY REGARDING ACCESS. Purchaser agrees to indemnify,
defend and hold harmless Seller, its Affiliates, and all such Persons'
directors, officers, employees, agents and representatives from and against any
and all claims, liabilities, losses, costs and expenses (including court costs
and reasonable attorneys' fees), including claims (including without limitation
contribution or indemnity claims by other owners of the Hydrocarbon Interest),
liabilities, losses, costs and expenses attributable to personal injury, death,
or property damage, arising out of or relating to access to the Assets prior to
the Closing by Purchaser, its Affiliates, or its or their directors, officers,
employees, agents or representatives under Section 5.1 hereof (to which
Purchaser was not otherwise entitled as a co-owner of the Hydrocarbon Interest),
even if caused in whole or in part by the negligence (whether sole, joint or
concurrent), strict liability or other legal fault of any indemnified Person.
SECTION 5.7 CONSENTS AND PREFERENTIAL RIGHTS.
(a) Promptly after the date hereof, Seller shall prepare and
send (i) notices to the holders of any required consents to
assignment that are set forth on Schedule 3.11 requesting
consents to the transactions contemplated by this Agreement
and (ii) notices to the holders of any applicable
preferential rights to purchase or similar rights that are
set forth on Schedule 3.11 in compliance with the terms of
such rights and requesting waivers of such rights. Any
preferential purchase right must be exercised subject to
all terms and conditions set forth in this Agreement.
Seller shall use commercially reasonable efforts to cause
such consents to assignment and waivers of preferential
rights to purchase or similar rights (or the exercise
thereof) to be obtained and delivered prior to Closing,
provided that Seller shall not be required to make payments
or undertake obligations to or for the benefit of the
holders of such rights in order to obtain the required
consents and waivers. Purchaser shall cooperate with Seller
in seeking to obtain such consents to assignment and
waivers of preferential rights and similar rights.
(b) Should any preferential right to purchase any portion of
the Assets be exercised prior to Closing, or should any
Person holding a right of first opportunity deliver a
binding offer on terms more favorable to Seller than the
terms of this Agreement, this Agreement shall terminate in
accordance with Article 9.
SECTION 5.8 GOVERNMENTAL REVIEWS. Seller and Purchaser shall each in a
timely manner make (a) all required filings, if any, and prepare applications to
and conduct negotiations, with each Governmental Authority as to which such
filings, applications or negotiations are necessary or appropriate in the
consummation of the transactions contemplated hereby and (b) provide such
information as the other may reasonably request in order to make such filings,
prepare such applications and conduct such negotiations. Each Party shall
cooperate with and use all reasonable efforts to assist the other with respect
to such filings, applications and negotiations.
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SECTION 5.9 FURTHER ASSURANCES. After Closing, Seller and Purchaser each
agrees to take such further actions and to execute, acknowledge and deliver all
such further documents as are reasonably requested by the other Party for
carrying out the purposes of this Agreement or of any document delivered
pursuant to this Agreement.
ARTICLE 6 CONDITIONS TO CLOSING
SECTION 6.1 CONDITIONS OF SELLER TO CLOSING. The obligations of Seller
to consummate the transactions contemplated by this Agreement are subject, at
the option of Seller, to the satisfaction on or prior to Closing of each of the
following conditions:
(a) Representations. The representations and warranties of
Purchaser set forth in Article 4 shall be true and correct
in all material respects as of the date of this Agreement
and as of the Closing Date as though made on and as of the
Closing Date (other than representations and warranties
that refer to a specific date, which need only be true and
correct on and as of such specified date);
(b) Performance. Purchaser shall have performed and observed,
in all material respects, all covenants and agreements to
be performed or observed by it under this Agreement prior
to or on the Closing Date;
(c) No Action. On the Closing Date, no suit, action, or other
proceeding (excluding any such matter initiated by Seller
or any of its Affiliates) shall be pending or threatened
before any Governmental Authority or body of competent
jurisdiction seeking to enjoin or restrain the consummation
of the transactions contemplated by this Agreement or
recover substantial damages from Seller or any Affiliate of
Seller resulting therefrom; and
(d) Consents and Waivers. All necessary consents and approvals
required from Governmental Authorities and all material
consents and approvals required from other third Persons
for the consummation of the transactions contemplated by
this Agreement shall have been granted, and all
preferential purchase rights, rights of first opportunity
and similar rights with respect to such transactions shall
have been waived, expired without exercise, or, in the case
of rights of first opportunity, resulted in an offer which
was properly rejected by Seller or the Company, as
applicable.
(e) Closing of Western Atlas Afrique Transaction. Seller or its
Affiliates shall have consummated the acquisition of all of
the stock of Western Atlas Afrique, Ltd. from Western Atlas
International, Inc. and Western Atlas Afrique, Ltd. shall
have duly executed and delivered to the Company the Deed of
Assignment.
SECTION 6.2 CONDITIONS OF PURCHASER TO CLOSING. The obligations of
Purchaser to consummate the transactions contemplated by this Agreement are
subject, at the option of Purchaser, to the satisfaction on or prior to Closing
of each of the following conditions:
(a) Representations. The representations and warranties of
Seller set forth in Article 3 shall be true and correct as
of the date of this Agreement and as of the Closing Date as
though made on and as of the Closing Date (other than
representations and
13
warranties that refer to a specified date, which need only
be true and correct on and as of such specified date),
except for such breaches, if any, as would not have a
Material Adverse Effect;
(b) Performance. Seller shall have performed and observed, in
all material respects, all covenants and agreements to be
performed or observed by it under this Agreement prior to
or on the Closing Date;
(c) No Action. On the Closing Date, no suit, action, or other
proceeding (excluding any such matter initiated by
Purchaser or any of its Affiliates) shall be pending or
threatened before any Governmental Authority or body of
competent jurisdiction seeking to enjoin or restrain the
consummation of the transactions contemplated by this
Agreement or recover substantial damages from Purchaser or
any Affiliate of Purchaser resulting therefrom;
(d) Consents and Waivers. All necessary consents and approvals
required from Governmental Authorities and all material
consents and approvals required from other third Persons
for the consummation of the transactions contemplated by
this Agreement shall have been granted, and all
preferential purchase rights, rights of first opportunity
and similar rights with respect to such transactions shall
have been waived, expired without exercise, or, in the case
of rights of first opportunity, resulted in an offer which
was properly rejected by Seller or the Company, as
applicable; and
(e) Material Adverse Change. There shall have been no material
adverse changes since the Effective Time in the business,
operations, assets or condition of the Company, taken as a
whole, except as may have resulted from general changes in
Hydrocarbon prices; general changes in industry, economic
or political conditions; civil unrest, insurrection or
similar disorders; or changes in Laws.
(f) The Amendment One to the Joint Operating Agreement. The
Amendment One to the Joint Operating Agreement (the "JOA
Amendment") substantially in the form of Exhibit C attached
hereto, amending that certain Joint Operating Agreement
among Vaalco Gabon (Etame), Inc., Operator, Vaalco Energy
(Gabon), Inc. and other Non-operators dated as of April 4,
1997 covering the Hydrocarbon Interest (the "Joint
Operating Agreement") shall be duly executed by the parties
thereto.
ARTICLE 7 CLOSING
SECTION 7.1 TIME AND PLACE OF CLOSING. The consummation of the purchase
and sale of the Shares contemplated by this Agreement (the "Closing") shall,
unless otherwise agreed to in writing by Purchaser and Seller, take place at the
offices of Seller located at 0000 Xxxx Xxx Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxx
00000, at 10:00 a.m., local time, on January, ___ 2001 or if all conditions in
Article 6 to be satisfied prior to Closing have not yet been satisfied or
waived, as soon thereafter as such conditions have been satisfied or waived,
subject to the provisions of Article 9. The date on which the Closing occurs is
referred to herein as the "Closing Date."
SECTION 7.2 OBLIGATIONS OF SELLER AT CLOSING. At the Closing, upon the
terms and subject to the conditions of this Agreement, and subject to the
simultaneous performance by
14
Purchaser of its obligations pursuant to Section 7.3, Seller shall deliver or
cause to be delivered to Purchaser, among other things, the following:
(a) A duly executed share transfer form for transfer of the
Shares to Purchaser;
(b) Resignations of the directors and officers of the Company,
including a confirmation by each of them that he(she) has
no claim against the Company for compensation for loss of
office or termination of employment;
(c) A certificate duly executed by an authorized corporate
officer of Seller, dated as of the Closing, certifying on
behalf of Seller that the conditions set forth in Sections
6.2(a) and 6.2(b) have been fulfilled; and
(d) A certificate duly executed by the secretary or any
assistant secretary of Seller, dated as of the Closing, (i)
attaching and certifying on behalf of Seller complete and
correct copies of (A) the certificate of incorporation and
the bylaws of Seller, each as in effect as of the Closing,
(B) the resolutions of the Board of Directors of Seller
authorizing the execution, delivery, and performance by
Seller of this Agreement and the consummation of the
transactions contemplated hereby, and (C) any required
approval by the stockholders of Seller of this Agreement
and the transactions contemplated hereby and (ii)
certifying on behalf of Seller the incumbency of each
officer of Seller executing this Agreement or any document
delivered in connection with the Closing.
SECTION 7.3 OBLIGATIONS OF PURCHASER AT CLOSING. At the Closing, upon
the terms and subject to the conditions of this Agreement, and subject to the
simultaneous performance by Seller of its obligations pursuant to Section 7.2,
Purchaser shall deliver or cause to be delivered to Seller, among other things,
the following:
(a) Transfer of any agreed cash consideration;
(b) A certificate by an authorized corporate officer of
Purchaser, dated as of the Closing, certifying on behalf of
Purchaser that the conditions set forth in Sections 6.1(a)
and 6.1(b) have been fulfilled; and
(c) A certificate duly executed by the secretary or any
assistant secretary of Purchaser, dated as of the Closing,
(i) attaching and certifying on behalf of Purchaser
complete and correct copies of (A) the certificate of
incorporation and the bylaws (or other governing
instruments) of Purchaser, each as in effect as of the
Closing, (B) the resolutions of the Board of Directors of
Purchaser authorizing the execution, delivery, and
performance by Purchaser of this Agreement and the
consummation of the transactions contemplated hereby, and
(C) any required approval by the stockholders of Purchaser
of this Agreement and the transactions contemplated hereby
and (ii) certifying on behalf of Purchaser the incumbency
of each officer of Purchaser executing this Agreement or
any document delivered in connection with the Closing.
SECTION 7.4 CASUALTY OR CONDEMNATION LOSS. If, after the date of this
Agreement but prior to Closing Date, any portion of the Assets is destroyed by
fire or other casualty or is expropriated or taken in condemnation or under
right of eminent domain, Purchaser shall
15
nevertheless be required to close and Seller shall elect by written notice to
Purchaser prior to Closing either (i) to cause the Assets affected by any
casualty to be repaired or restored, at Seller's sole cost, as promptly as
reasonably practicable (which work may extend after the Closing Date), or (ii)
to indemnify Purchaser through a document reasonably acceptable to Seller and
Purchaser against any costs or expenses that Purchaser reasonably incurs to
repair the Assets subject to any casualty. In each case, Seller shall retain all
rights to insurance and other claims against third parties with respect to the
casualty or taking except to the extent the Parties otherwise agree in writing.
Notwithstanding the preceding, if the loss caused by such casualty or taking
exceeds U.S. $500,000, either Party may, by notice to the other at least one (1)
Business Day prior to Closing, elect to terminate this Agreement under Section
9.1.
ARTICLE 8 TAX MATTERS
SECTION 8.1 LIABILITY FOR TAXES. (a) Seller shall be liable for, and
shall indemnify and hold harmless Purchaser and the Company from and against,
any Taxes imposed on or incurred by the Company and attributable to any taxable
period ending prior to the Effective Time, and the portion, determined as
described in Section 8.1(c), of any such Taxes for any taxable period beginning
prior to the Effective Time and ending after the Effective Time which is
allocable to the portion of such period occurring prior to the Effective Time
(the "Pre-Effective Time Period").
(b) Purchaser shall be liable for, and shall indemnify and hold harmless
Seller and its Affiliates from and against, any Taxes imposed on or incurred by
the Company and attributable to any taxable period beginning on or after the
Effective Time, and the portion, determined as described in Section 8.1(c), of
any such Taxes for any taxable period beginning prior to the Effective Time and
ending after the Effective Time which is allocable to the portion of such period
occurring on or after the Effective Time (the "Post-Effective Time Period").
(c) Whenever it is necessary for purposes of this Agreement to determine
the portion of any Taxes of or with respect to the Company for a taxable period
beginning prior to and ending after the Effective Time which is allocable to the
Pre-Effective Time Period or the Post-Effective Time Period, the determination
shall be made (i) in the case of property, ad valorem or similar Taxes (which
are not based on or measured by production), by allocating all such Taxes on a
per diem basis, (ii) in the case of franchise, capital or similar Taxes (which
are not based on or measured by income or profit), by allocating all such Taxes
on a period diem basis, and (iii) in the case of other Taxes, by assuming that
each of the Pre-Effective Time Period and the Post-Effective Time Period
constitutes a separate taxable period and by taking into account the actual
taxable events occurring during each such period.
(d) Any claim for indemnification under this Section 8.1, except to the
extent otherwise provided in this Article 8, shall be resolved in accordance
with the procedures described in Section 10.2.
SECTION 8.2 PREPARATION AND FILING OF TAX RETURNS. (a) With respect to
each Tax return for, by or with respect to the Company that is required to be
filed on or before the
16
Closing Date, Seller shall cause such Tax return to be prepared, shall cause to
be included in such Tax ret urn all items of income, gain, loss, deduction and
credit or other items (collectively "Tax Items") required to be included therein
and shall timely file or cause to be filed (assuming it has authority to do so)
such Tax return with the appropriate taxing authority and shall (subject to any
right of indemnification under Section 8.1) pay the amount of Taxes shown to be
due on such Tax return.
(b) With respect to each Tax return for, by or with respect to the
Company that is required to be filed after the Closing Date, Purchaser shall
cause such Tax return to be prepared, shall cause to be included in such Tax
return all Tax Items required to be included therein, and shall cause the
Company to file timely such Tax return with the appropriate taxing authority and
shall (subject to any right of indemnification under Section 8.1) pay timely the
amount of Taxes shown to be due on such Tax return.
(c) Any Tax return to be prepared pursuant to the provision of this
Article shall be prepared in an appropriate manner consistent with good
accounting practices followed in prior years with respect to similar Tax
returns, except for changes required by changes in law.
SECTION 8.3 ALLOCATION ARRANGEMENTS. Effective as of the Closing Date,
any tax indemnity, sharing, allocation or similar agreement or arrangement that
may be in effect prior to the Closing Date between or among the Seller and the
Company, shall be extinguished in full, and any liabilities or rights existing
under any such agreement or arrangement shall cease to exist and shall no longer
be enforceable.
SECTION 8.4 ACCESS TO INFORMATION. (a) Seller shall grant to Purchaser
(or its designees) access at all reasonable times to all of the information,
books and records relating to the Company within the possession of Seller
(including without limitation work papers and correspondence with taxing
authorities), and shall afford Purchaser (or its designees) the right (at
Purchaser's expense) to take extracts therefrom and to make copies thereof, to
the extent reasonably necessary to permit Purchaser (or its designees) to
prepare Tax returns, to conduct negotiations with Tax authorities, and to
implement the provisions of, or to investigate or defend any claims between the
Parties arising under, this Agreement.
(b) Purchaser shall grant to Seller (or its designees) access at all
reasonable times to all of the information, books and records relating to the
Company within the possession of Purchaser or the Company (including without
limitation work papers and correspondence with taxing authorities), and shall
afford Seller (or its designees) the right (at Seller's expense) to take
extracts therefrom and to make copies thereof, to the extent reasonably
necessary to permit Seller (or its designees) to prepare Tax returns, to conduct
negotiations with Tax authorities, and to implement the provisions of, or to
investigate or defend any claims between the Parties arising under, this
Agreement.
(c) Each of the Parties hereto will preserve and retain all schedules,
work papers and other documents relating to any Tax returns of or with respect
to the Company or to any claims, audits or other proceedings affecting the
Company until the expiration of the
17
statute of limitations (including extensions) applicable to the taxable period
to which such documents relate or until the final determination of any
controversy with respect to such taxable period, and until the final
determination of any payments that may be required with respect to such taxable
period under this Agreement.
SECTION 8.5 TAX PROCEEDINGS. In the event Purchaser, the Company, or any
of their Affiliates receives notice of any examination, claim, adjustment or
other proceeding with respect to the liability of the Company for Taxes for any
taxable period for which Seller is or may be liable under Section 8.1, Purchaser
shall, within ten (10) days, notify Seller in writing. Seller and Purchaser
shall cooperate with each other, and with their respective Affiliates, and will
consult with each other in the settlement of any proceeding described in this
Section 8.5 that could affect the other.
SECTION 8.6 CONFLICT. In the event of a conflict between the provisions
of this Article 8 and any other provision of this Agreement, this Article 8
shall control.
ARTICLE 9 TERMINATION
SECTION 9.1 TERMINATION. This Agreement may be terminated at any time
prior to Closing: (i) by the mutual prior written consent of Seller and
Purchaser; (ii) by either Seller or Purchaser pursuant to the provisions of
Section 7.4; or (iii) by either Seller or Purchaser, if Closing has not occurred
on or before March 31, 2001, provided, however, that no Party shall be entitled
to terminate this Agreement under this Section 9.1(iii) if the Closing has
failed to occur because such Party negligently or willfully failed to perform or
observe in any material respect its covenants and agreements hereunder. This
Agreement shall also terminate in the circumstances described in Section 5.7(b).
SECTION 9.2 EFFECT OF TERMINATION. If this Agreement is terminated
pursuant to Section 9.1, this Agreement shall become void and of no further
force or effect (except for the provisions of Sections 3.12, 4.8, 5.3, 5.6,
11.4, 11.8, 11.9, 11.16 and 11.17 and the confidentiality obligation in Section
5.1, all of which shall continue in full force and effect). Notwithstanding
anything to the contrary in this Agreement, the termination of this Agreement
under Section 9.1(iii) shall not relieve any Party from liability (including
liability for consequential damages) for any willful or negligent failure to
perform or observe in any material respect any of its agreements or covenants
contained herein that are to be performed or observed at or prior to Closing. In
the event this Agreement terminates under Section 9.1(iii) and any Party has
willfully or negligently failed to perform or observe in any material respect
any of its agreements or covenants contained herein which are to be performed at
or prior to Closing, then the other Party shall be entitled to all remedies
available at law or in equity and shall be entitled to recover court costs and
attorneys' fees in addition to any other relief to which such Party maybe
entitled.
ARTICLE 10 INDEMNIFICATION; LIMITATIONS
SECTION 10.1 INDEMNIFICATION.
(a) From and after Closing, Purchaser shall indemnify, defend and hold
harmless Seller from and against all Damages incurred or suffered by Seller
18
(i) caused by or arising out of or resulting from the
ownership, use or operation of the Assets, whether before
or after the Effective Time or the Closing Date,
(ii) caused by or arising out of or resulting from Purchaser's
breach of any of Purchaser's covenants or agreements
contained in Article 5, or
(iii) caused by or arising out of or resulting from any breach
of any representation or warranty made by Purchaser contained in
Article 4 of this Agreement or in the certificate delivered by
Purchaser at Closing pursuant to Section 7.3(b),
EVEN IF SUCH DAMAGES ARE CAUSED IN WHOLE OR IN PART BY THE NEGLIGENCE
(WHETHER SOLE, JOINT OR CONCURRENT), STRICT LIABILITY OR OTHER LEGAL FAULT
OF ANY INDEMNIFIED PERSON, but excepting Damages to the extent caused by
the gross negligence or willful misconduct of such Indemnified Person and
further excepting in each case Damages against which Seller would be
required to indemnify Purchaser under Section 10.1(b) at the time the claim
notice is presented by Purchaser.
(b) From and after Closing, Seller shall indemnify, defend and hold
harmless Purchaser against and from all Damages incurred or suffered by
Purchaser
(i) attributable to or arising out of the Company's obligations
and liabilities with respect to the actions, suits or
proceedings, if any, set forth on Schedule 3.5;
(ii) caused by or arising out of or resulting from Seller's
breach of any of Seller's covenants or agreements contained
in Article 5, or
(iii) caused by or arising out of or resulting from any breach
of any representation or warranty made by Seller contained in
Article 3 of this Agreement, or in the certificate delivered by
Seller at Closing pursuant to Section 7.2(c),
EVEN IF SUCH DAMAGES ARE CAUSED IN WHOLE OR IN PART BY THE NEGLIGENCE
(WHETHER SOLE, JOINT OR CONCURRENT), STRICT LIABILITY OR OTHER LEGAL FAULT
OF ANY INDEMNIFIED PERSON, but excepting Damages to the extent caused by
the gross negligence or willful misconduct of such Indemnified Person.
(c) Notwithstanding anything to the contrary contained in this
Agreement, this Section 10.1 contains the Parties' exclusive remedy against each
other with respect to breaches of the representations, warranties, covenants and
agreements of the Parties contained in Articles 3, 4 and 5 (excluding Section
5.6, which shall be separately enforceable by Seller pursuant to whatever rights
and remedies are available to it outside of this Article 10) and the
affirmations of such representations, warranties, covenants and agreements
contained in the certificate delivered by each Party at Closing pursuant to
Sections 7.2(c) or 7.3(b), as applicable. From and after Closing, except for the
remedies contained in this Section 10.1, and any other remedies available to the
Parties at law or in
19
equity for breaches of provisions of this Agreement other than Articles 3, 4 and
5 (excluding Section 5.6), Seller and Purchaser each releases, remises and
forever discharges the other and its Affiliates and all such Persons'
stockholders, officers, directors, employees, agents, advisors and
representatives from any and all suits, legal or administrative proceedings,
claims, demands, damages, losses, costs, liabilities, interest, or causes of
action whatsoever, in law or in equity, known or unknown, which such Parties
might now or subsequently may have, based on, relating to or arising out of this
Agreement or the Company's ownership, use or operation of the Assets, including
without limitation any rights under insurance policies issued or underwritten by
the other Party or any of its Affiliates and any rights under agreements between
the Company and the Seller or any other Affiliate of the Company, EVEN IF CAUSED
IN WHOLE OR IN PART BY THE NEGLIGENCE (WHETHER SOLE, JOINT OR CONCURRENT),
STRICT LIABILITY OR OTHER LEGAL FAULT OF ANY RELEASED PERSON, but excepting
suits, legal or administrative proceedings, claims, demands, damages, losses,
costs, liabilities, interest or causes of action caused by the gross negligence
or willful misconduct of such released Person and further excepting any existing
contractual rights under service contracts entered into in the ordinary course
of business between the Company and Affiliates of the Company relating to the
provision of geological, geophysical, engineering or well services.
(d) "Damages", for purposes of this Article 10, shall mean the amount of
any actual liability, loss, cost, expense, claim, award or judgment incurred or
suffered by any Indemnified Person arising out of or resulting from the
indemnified matter, whether attributable to personal injury or death, property
damage, contract claims, torts or otherwise including reasonable fees and
expenses of attorneys, consultants, accountants or other agents and experts
reasonably incident to matters indemnified against, and the costs of
investigation and/or monitoring of such matters, and the costs of enforcement of
the indemnity; provided, however, that Purchaser and Seller shall not be
entitled to indemnification under this Section 10.1 for, and "Damages" shall not
include, (i) loss of profits or other consequential damages suffered by the
Party claiming indemnification, or any punitive damages, or (ii) any liability,
loss, cost, expense, claim, award or judgment to the extent resulting from or
increased by the actions or omissions of any Indemnified Person after the
Closing Date.
(e) The indemnity to which each Party is entitled under this Section
10.1 shall be for the benefit of and extend to such Party's present and former
Affiliates, and its and their respective directors, officers, employees, and
agents. Any claim for indemnity under this Section 10.1 by any such Affiliate,
director, officer, employee or agent must be brought and administered by the
applicable Party to this Agreement. No Indemnified Person other than Seller and
Purchaser shall have any rights against either Seller or Purchaser under the
terms of this Section 10.1 except as may be exercised on its behalf by Purchaser
or Seller, as applicable, pursuant to this Section 10.1(e). Each of Seller and
Purchaser may elect to exercise or not exercise indemnification rights under
this Section on behalf of the other Indemnified Persons affiliated with it in
its sole discretion and shall have no liability to any such other Indemnified
Person for any action or inaction under this Section.
20
(f) Purchaser and Seller agree that any remediation activities
undertaken with respect to any claimed Damages relating to a breach of Seller's
representation and warranty pursuant to section 3.8 or any Claim related to
environmental matters covered by such representation and warranty, whether
conducted by Purchaser or Seller, shall be reasonable in extent and cost
effective and shall not be designed or implemented in such a manner as to exceed
what is required to cause a condition to be brought into compliance with
applicable Laws.
SECTION 10.2 INDEMNIFICATION ACTIONS.
(a) All claims for indemnification under Section 10.1 shall be asserted
and resolved as follows: For purposes of this Article 10, the term "Indemnifying
Person" when used in connection with particular Damages shall mean the Person
having an obligation to indemnify another Person or Persons with respect to such
Damages pursuant to this Article 10, and the term "Indemnified Person" when used
in connection with particular Damages shall mean a Person having the right to be
indemnified with respect to such Damages pursuant to this Article 10.
(b) To make claim for indemnification under Section 10.1, subject to
Section 10.1(e), an Indemnified Person shall notify the Indemnifying Person of
its claim, including the specific details of and specific basis under this
Agreement for its claim (the "Claim Notice"). In the event that the claim for
indemnification is based upon a claim by a third Person against the Indemnified
Person (a "Claim"), the Indemnified Person shall provide its Claim Notice
promptly after the Indemnified Person has actual knowledge of the Claim and
shall enclose a copy of all papers (if any) served with respect to the Claim;
provided that the failure of any Indemnified Person to give notice of a Claim as
provided in this Section 10.2 shall not relieve the Indemnifying Person of its
obligations under Section 10.1 except to the extent such failure results in
insufficient time being available to permit the Indemnifying Person to
effectively defend against the Claim or otherwise prejudices the Indemnifying
Person's ability to defend against the Claim. In the event that the claim for
indemnification is based upon an inaccuracy or breach of a representation,
warranty, covenant or agreement, the Claim Notice shall specify the
representation, warranty, covenant or agreement that was inaccurate or breached.
(c) In the case of a claim for indemnification based upon a Claim, the
Indemnifying Person shall have thirty (30) days from its receipt of the Claim
Notice to notify the Indemnified Person whether it admits or denies its
liability to defend the Indemnified Person against such Claim under this Article
10. If the Indemnifying Person does not notify the Indemnified Person within
such thirty (30) day period regarding whether the Indemnifying Person admits or
denies its liability to defend the Indemnified Person, the Damages for which the
Indemnified Person is seeking indemnity shall be conclusively deemed a liability
of the Indemnifying Person hereunder. The Indemnified Person is authorized,
prior to and during such thirty (30) day period, to file any motion, answer or
other pleading that it shall deem necessary or appropriate to protect its
interests or those of the Indemnifying Person and that is not prejudicial to the
Indemnifying Person.
21
(d) If the Indemnifying Person admits its liability to indemnify the
Indemnified Person, it shall have the right and obligation to diligently defend,
at its sole cost and expense, the Claim. The Parties agree to cooperate in
contesting any Claim which the Indemnifying Person elects to contest (provided,
however, that the Indemnified Person shall not be required to bring any
counterclaim or cross-complaint against any Person). The Parties shall jointly
participate in any defense or settlement of any Claim pursuant to this Section
10.2(d). An Indemnifying Person shall not, without the written consent of the
Indemnified Person, settle any Claim or consent to the entry of any judgment
with respect thereto that (i) does not result in a final resolution of the
Indemnified Person's liability with respect to the Claim (including, in the case
of a settlement, an unconditional written release of the Indemnified Person from
all liability in respect of such Claim) or (ii) may materially and adversely
affect the Indemnified Person (other than as a result of money damages covered
by the indemnity).
(e) If the Indemnifying Person does not admit its liability to indemnify
the Indemnified Person or admits its liability but fails to diligently defend or
settle the Claim, then the Indemnified Person shall have the right to defend
against the Claim (at the sole cost and expense of the Indemnifying Person, if
the Indemnified Person is entitled to indemnification hereunder), with counsel
of the Indemnified Person's choosing, subject to the right of the Indemnifying
Person to admit its liability to indemnify the Indemnified Person and assume the
defense of the Claim at any time prior to settlement or final determination
thereof. If the Indemnifying Person has not yet admitted its liability to
indemnify the Indemnified Person, the Indemnified Person shall send written
notice to the Indemnifying Person of any proposed settlement and the
Indemnifying Person shall have the option for ten (10) days following receipt of
such notice to (i) admit in writing its liability for indemnification with
respect to such Claim and (ii) if liability is so admitted, assume the defense
of the Claim, including the power to reject the proposed settlement. If the
Indemnified Person settles any Claim over the objection of the Indemnifying
Person after the Indemnifying Person has timely admitted its liability for
indemnification in writing and assumed the defense of the Claim, the Indemnified
Person shall be deemed to have waived any right to indemnity therefor.
(f) In the case of a claim for indemnification not based upon a Claim,
the Indemnifying Person shall have thirty (30) days from its receipt of the
Claim Notice to (i) cure the Damages complained of, (ii) admit its liability for
such Damages or (iii) dispute the claim for such Damages. If the Indemnifying
Person does not notify the Indemnified Person within such thirty (30) day period
that it has cured the Damages or that it disputes the claim for such Damages,
the amount of such Damages shall conclusively be deemed a liability of the
Indemnifying Person hereunder.
SECTION 10.3 LIMITATION ON ACTIONS.
(a) The representations and warranties of the Parties in Articles 3 and
4 and the covenants and agreements of the Parties in Article 5, and the
corresponding representations and warranties given in the certificates delivered
at Closing pursuant to Sections 7.2(c) and 7.3(b), as applicable, shall survive
the Closing for a period of one year, except the representations and warranties
of Seller set forth in Sections 3.3(a) and
22
3.3(j), and the corresponding representations and warranties given in the
certificate delivered by Seller at Closing, which shall survive the Closing for
a period of two years. The remainder of this Agreement shall survive the Closing
without time limit except as may otherwise be expressly provided herein.
Representations, warranties, covenants and agreements shall be of no further
force and effect after the date of their expiration, provided that there shall
be no termination of any bona fide claim asserted pursuant to this Agreement
with respect to such a representation, warranty, covenant or agreement prior to
its expiration date.
(b) The indemnities in Sections 10.1(a)(ii), 10.1(a)(iii), 10.1(b)(ii)
and 10.1(b)(iii) shall terminate as of the termination date of each respective
representation, warranty, covenant or agreement that is subject to
indemnification, except in each case as to matters for which a specific written
claim for indemnity has been delivered to the Indemnifying Person on or before
such termination date. The indemnities in Sections 10.1(a)(i) and 10.1(b)(i)
shall continue without time limit.
(c) Seller shall not have any liability for any indemnification under
Section 10.1 until and unless the aggregate amount of the liability for all
Damages for which Claim Notices are delivered by Purchaser exceeds twenty
thousand dollars ($20,000) U.S. and then only to the extent such Damages exceed
twenty thousand dollars ($20,000), provided, however, that this Section 10.3(c)
shall not limit Seller's liability under Section 10.1(b)(i).
(d) The amount of any Damages for which an Indemnified Person is
entitled to indemnity under this Article 10 shall be reduced by the amount of
insurance proceeds realized by the Indemnified Person or its Affiliates with
respect to such Damages (net of any collection costs, and excluding the proceeds
of any insurance policy issued or underwritten by the Indemnified Person or its
Affiliates).
ARTICLE 11 MISCELLANEOUS
SECTION 11.1 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original instrument, but all such
counterparts together shall constitute but one agreement.
SECTION 11.2 NOTICES. All notices that are required or may be given
pursuant to this Agreement shall be sufficient in all respects if given in
writing, in English and delivered personally, by telecopy or by recognized
courier service, as follows:
If to Seller: VAALCO Energy, Inc.
0000 Xxxx Xxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Telephone: 000-000-0000
Telecopy: 000-000-0000
Attn: President
23
If to Purchaser: PanAfrican Energy Corporation Ltd.
XX Xxx 000
Xxx Xxxxxx Xxxxxxx House
00-00 Xxxxxxxxx, Xx. Xxxxxxx, Xxxxxx, Xxxxxxx
Xxxxxxx XX0 0XX
Telephone: 00-0000-000000
Telecopy: 00-0000-000000
Attn: X. Xxxxxxxx or other Vice President
Either Party may change its address for notice by notice to the other in the
manner set forth above. All notices shall be deemed to have been duly given at
the time of receipt by the Party to which such notice is addressed.
SECTION 11.3 SALES OR USE TAX, RECORDING FEES AND SIMILAR TAXES AND FEES
Purchaser shall bear any sales, use, excise, gross receipts, registration,
capital, documentary, stamp or transfer Taxes, recording fees and similar Taxes
and fees incurred and imposed upon, or with respect to, the transfer of the
Shares or other transactions contemplated hereby. If such transfer or
transactions are exempt from any such taxes or fees upon the filing of an
appropriate certificate or other evidence of exemption, Purchaser shall timely
furnish to Seller such certificate or evidence.
SECTION 11.4 EXPENSES. Except as provided in Section 11.3, all expenses
incurred by Seller in connection with or related to the authorization,
preparation or execution of this Agreement, and the Exhibits and Schedules
hereto and thereto, and all other matters related to the Closing, including
without limitation, all fees and expenses of counsel, accountants and financial
advisers employed by Seller, shall be borne solely and entirely by Seller, and
all such expenses incurred by Purchaser shall be borne solely and entirely by
Purchaser.
SECTION 11.5 CHANGE OF NAME. Purchaser shall, as promptly as
practicable, but in any case within thirty (30) days after the Closing Date,
amend the charter and bylaws (or equivalent governing documents) of the Company
to change the Company's name to a name not containing "VAALCO" or any
abbreviations or variants thereof and make any filings necessary to change the
name of all local branches through which the Company does business accordingly.
As promptly as practicable, but in any case within one hundred eighty (180) days
after the Closing Date, Purchaser shall eliminate the name "VAALCO," and any
abbreviations or variants thereof from the Assets and, except with respect to
such grace period for eliminating existing usage, shall have no right to use any
logos, trademarks or trade names belonging to Seller or any of its Affiliates.
SECTION 11.6 REPLACEMENT OF BONDS, LETTERS OF CREDIT AND GUARANTEES. The
Parties understand that none of the bonds, letters of credit and guarantees, if
any, posted by Seller or any other Affiliate of the Company with any
Governmental Authority or third Person and relating to the Company or the Assets
are to be transferred to Purchaser. On or before Closing, Purchaser shall
obtain, or cause to be obtained in the name of Purchaser, replacements for such
bonds, letters of credit and guarantees, to the extent such replacements are
necessary to permit the cancellation of the bonds, letters of credit and
guarantees posted by Seller and such Affiliates or to consummate the
transactions contemplated by this Agreement.
24
SECTION 11.7 RECORDS.
(a) Within ten (10) days after the Closing Date, Seller shall deliver or
cause to be delivered to Purchaser any Records that are in the possession of
Seller or its Affiliates, and not already in the possession of Purchaser or its
Affiliates, subject to Section 11.7(b).
(b) Seller may retain the originals of those Records relating to tax,
and accounting matters or ongoing litigation, if any, for which Seller is
retaining responsibility and provide Purchaser with copies thereof. Seller may
retain copies of any other Records.
(c) Purchaser, for a period of seven (7) years following the Closing,
shall (i) retain the Records, (ii) provide Seller, its Affiliates, and its and
their respective officers, employees and representatives with access to the
Records during normal business hours for review and copying at Seller's expense
and (iii) provide Seller, its Affiliates, and its and their respective officers,
employees and representatives with access, during normal business hours, to
materials received or produced after Closing relating to any claim for
indemnification made under Section 10.2 of this Agreement (excluding, however,
attorney work product and attorney-client communications with respect to any
such claim being brought by Purchaser under this Agreement) for review and
copying at Seller's expense and to Seller's and its Affiliates' respective
officers, employees and representatives for the purpose of discussing any such
claim, provided that Purchaser shall have the right to have its own
representatives present during any such meeting.
SECTION 11.8 GOVERNING LAW. This Agreement and the legal relations
between the Parties shall be governed by and construed in accordance with the
laws of the State of Texas, United States of America without regard to
principles of conflicts of laws that would direct the application of the laws of
another jurisdiction.
SECTION 11.9 ARBITRATION. It is agreed, as a severable and independent
arbitration agreement separately enforceable from the remainder of this
Agreement, that any dispute, controversy or claim arising out of or in relation
to or in connection with this Agreement, including, without limitation, any
dispute as to the construction, validity, interpretation, enforceability, or
breach of this Agreement, shall be exclusively and finally settled by
arbitration in accordance with this Section 11.9. Either Party may submit such a
dispute, controversy, or claim to arbitration by notice to the other Party and
the administrator for the American Arbitration Association ("AAA"). The
arbitration proceedings shall be conducted in Houston, Texas, United States of
America in accordance with the International Arbitration Rules of the American
Arbitration Association as in effect on the date hereof. The arbitration shall
be heard and determined by three (3) arbitrators. Each Party shall appoint an
arbitrator of its choice within twenty (20) days of the submission of the notice
of arbitration. The Party appointed arbitrators shall in turn appoint a
presiding arbitrator for the tribunal within twenty (20) days following the
appointment of the second Party appointed arbitrator. If the Party appointed
arbitrators cannot reach agreement on a presiding arbitrator for the tribunal
and/or one Party fails to appoint its Party appointed arbitrator within the
applicable period, the AAA shall act as appointing authority to appoint an
independent arbitrator with at least ten (10) years experience in the legal
and/or commercial aspects of the petroleum industry. None of the arbitrators
shall have been an employee of or consultant to either Party to this Agreement
or any of its Affiliates
25
within the five (5) year period preceding the arbitration, or have any financial
interest in the dispute, controversy, or claim. All decisions of the arbitral
tribunal shall be by majority vote. The arbitration shall be conducted in the
English language. The arbitrators may not award special punitive damages except
those claimed by Persons other than Indemnified Persons under this Agreement for
which responsibility is being allocated between the Parties. Each Party shall
pay its own expenses in connection with the arbitration, but the compensation
and expenses of the arbitrators shall be borne in such manner as may be
specified in the arbitral award. Privileges protecting attorney-client
communications and attorney work product from compelled disclosure or use in
evidence, as recognized by the courts of the State of Texas, United States of
America, shall apply to and be binding in any arbitration proceeding conducted
under this Section 11.9.
SECTION 11.10 CAPTIONS. The captions in this Agreement are for
convenience only and shall not be considered a part of or affect the
construction or interpretation of any provision of this Agreement.
SECTION 11.11 WAIVERS. Any failure by any Party to comply with any of
its obligations, agreements or conditions herein contained may be waived by the
Party to whom such compliance is owed by an instrument signed by the Party to
whom compliance is owed and expressly identified as a waiver, but not in any
other manner. No waiver of, or consent to a change in, any of the provisions of
this Agreement shall be deemed or shall constitute a waiver of, or consent to a
change in, other provisions hereof (whether or not similar), nor shall such
waiver constitute a continuing waiver unless otherwise expressly provided.
SECTION 11.12 ASSIGNMENT. No Party shall assign or otherwise transfer
all or any part of this Agreement, nor any of its rights or duties hereunder,
without the prior written consent of the other Party, such consent no to be
unreasonably withheld, and any transfer made without such consent shall be void.
Subject to the foregoing, this Agreement shall be binding upon and inure to the
benefit of the Parties hereto and their respective successors and assigns.
SECTION 11.13 AMENDMENT. This Agreement may be amended or modified only
by an agreement in writing signed by both Parties and expressly identified as an
amendment or modification.
SECTION 11.14 NO THIRD-PERSON BENEFICIARIES. Nothing in this Agreement
shall entitle any Person other than Purchaser and Seller and their permitted
assignees and successors in interest to any claim, cause of action, remedy or
right of any kind, except the rights expressly provided to the Persons described
in Section 10.1(e).
SECTION 11.15 REFERENCES.
In this Agreement:
(a) References to any gender includes a reference to all other
genders;
(b) References to the singular includes the plural, and vice
versa;
(c) Reference to any Article or Section means an Article or
Section of this Agreement;
26
(d) Reference to any Exhibit or Schedule means an Exhibit or
Schedule to this Agreement, all of which are incorporated
into and made a part of this Agreement;
(e) Unless expressly provided to the contrary, "hereunder",
"hereof", "herein" and words of similar import are
references to this Agreement as a whole and not any
particular Section or other provision of this Agreement;
and
(f) "Include" and "including" shall mean include or including
without limiting the generality of the description
preceding such term.
SECTION 11.16 CONSTRUCTION. Purchaser is a party capable of making such
investigation, inspection, review and evaluation of the Assets as a prudent
purchaser would deem appropriate under the circumstances, including with respect
to all matters relating to the Assets, their value, operation and suitability.
Each of Seller and Purchaser has had the opportunity to exercise business
discretion in relation to the negotiation of the details of the transaction
contemplated hereby. This Agreement is the result of arm's-length negotiations
from equal bargaining positions.
SECTION 11.17 LIMITATION ON DAMAGES. Notwithstanding anything to the
contrary contained herein, none of Purchaser, Seller or any of their respective
Affiliates shall be entitled to special or punitive damages in connection with
this Agreement and the transactions contemplated hereby (other than special or
punitive damages suffered by third Persons for which responsibility is allocated
between the Parties) and each of Purchaser and Seller, for itself and on behalf
of its Affiliates, hereby expressly waives any right to special or punitive
damages in connection with this Agreement and the transactions contemplated
hereby. After Closing, none of Purchaser, Seller or any of their respective
Affiliates shall be entitled to consequential damages in connection with this
Agreement and the transactions contemplated hereby (other than consequential
damages suffered by third Persons for which responsibility is allocated between
the Parties) and each of Purchaser and Seller, for itself and on behalf of its
Affiliates, hereby waives any right to consequential damages after Closing in
connection with this Agreement and the transactions contemplated hereby.
SECTION 11.18 SEVERABILITY. If any provision of this Agreement (or any
part of such provision) is unenforceable, all other provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any
provision (or any part of such provision) is unenforceable, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that the transactions contemplated hereby are fulfilled.
27
IN WITNESS WHEREOF, this Agreement has been signed by each of the
Parties as of the date first above written.
SELLER: VAALCO ENERGY, INC.
-----------------------------------
Name:
Title:
PURCHASER: PANAFRICAN ENERGY CORPORATION LTD.
-----------------------------------
Name:
Title:
28
ATTACHED TO AND MADE A PART OF THE STOCK PURCHASE AGREEMENT DATED JANUARY __,
2001 BETWEEN VAALCO ENERGY, INC. AND PAN AFRICAN ENERGY CORPORATION LTD.
EXHIBIT A
HYDROCARBON INTEREST
1. That certain Exploration and Production Sharing Contract among the Republic
of Gabon, VAALCO Gabon (Etame), Inc. and VAALCO Energy (Gabon), Inc. executed
on July 7, 1995 and covering part of the Etame Marin block, offshore Gabon.
ATTACHED TO AND MADE A PART OF THE STOCK PURCHASE AGREEMENT DATED JANUARY __,
2001 BETWEEN VAALCO ENERGY, INC. AND PAN AFRICAN ENERGY CORPORATION LTD.
EXHIBIT B
1. That certain Supplemental and Correction Deed of Assignment between Western
Atlas Afrique, Ltd., as Assignor, and Vaalco Energy (Gabon), Inc., as Assignee
to be dated effective as of the Effective Date.
ATTACHED TO AND MADE A PART OF THE STOCK PURCHASE AGREEMENT DATED JANUARY __,
2001 BETWEEN VAALCO ENERGY, INC. AND PAN AFRICAN ENERGY CORPORATION LTD.
EXHIBIT C
1. Attach copy of JOA Amendment amending Section 3.2 of the Joint Operating
Agreement
ATTACHED TO AND MADE A PART OF THE STOCK PURCHASE AGREEMENT DATED JANUARY __,
2001 BETWEEN VAALCO ENERGY, INC. AND PAN AFRICAN ENERGY CORPORATION LTD.
SCHEDULE 3.3(G)
BALANCE SHEET
Attached.
ATTACHED TO AND MADE A PART OF THE STOCK PURCHASE AGREEMENT DATED JANUARY __,
2001 BETWEEN VAALCO ENERGY, INC. AND PAN AFRICAN ENERGY CORPORATION LTD.
SCHEDULE 3.7
OUTSTANDING CAPITAL COMMITMENTS
AFE # 005, dated December 5, 2000, is awaiting approval for drilling of Etame
Well 3V ("ET-3V") in the Etame Main Block and the cash call for operating costs
for the period October 2000 through March 2001 has not been met pending Closing
of this Agreement.
ATTACHED TO AND MADE A PART OF THE STOCK PURCHASE AGREEMENT DATED JANUARY __,
2001 BETWEEN VAALCO ENERGY, INC. AND PAN AFRICAN ENERGY CORPORATION LTD.
SCHEDULE 3.9
CONTRACTS
Defaults under Contracts
None. (Note that the cash call for operating costs for the period from October
2000 through March 2001 has not been met pending closing of this Agreement.)
Contracts
Joint Operating Agreement among Vaalco Gabon (Etame), Inc., Operator, Vaalco
Energy (Gabon), Inc. and others, as Non-Operators, dated effective as of April
4, 1997 covering the Hydrocarbon Interests.
ATTACHED TO AND MADE A PART OF THE STOCK PURCHASE AGREEMENT DATED JANUARY __,
2001 BETWEEN VAALCO ENERGY, INC. AND PAN AFRICAN ENERGY CORPORATION LTD.
SCHEDULE 3.11
CONSENTS AND PREFERENTIAL PURCHASE RIGHTS
AGREEMENT DATE TYPE OF RIGHT ELECTION PERIOD STATUS PARTY
--------------------------------------------------------------------------------------------------------------
Joint Operating 4-11-97 Right of 30 Days From Obtained Vaalco Gabon
Agreement Negotiation Notice to Make (Etame), Inc.
See Article 12.1(G) Offer
--------------------------------------------------------------------------------------------------------------
Joint Operating 4-11-97 Right of 30 Days From Obtained Petrofields
Agreement Negotiation Notice to Make Exploration &
See Article 12.1(G) Offer Development Co.,
Inc.
--------------------------------------------------------------------------------------------------------------
Joint Operating 4-11-97 Right of 30 Days From Obtained Xxxxxx Petroleum
Agreement Negotiation Notice to Make and Minerals
See Article 12.1(G) Offer Corporation
--------------------------------------------------------------------------------------------------------------
Joint Operating 4-11-97 Right of 30 Days From Obtained Sasol Petroleum
Agreement Negotiation Notice to Make International,
See Article 12.1(G) Offer Ltd. (Assignee of
Petrofields).
--------------------------------------------------------------------------------------------------------------
