EXHIBIT 3
to SCHEDULE 13D
THIS WARRANT AND ANY SECURITIES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR FOREIGN JURISDICTION.
NEITHER THIS WARRANT, SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
ACT AND APPLICABLE STATE AND FOREIGN SECURITIES LAWS OR PURSUANT TO AN
APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH
LAWS.
---------------------------------------------
VAALCO ENERGY, INC.
COMMON STOCK PURCHASE WARRANT
---------------------------------------------
This certifies that, for good and valuable consideration, VAALCO
Energy, Inc., a Delaware corporation (the "Company"), grants to 1818 Fund II,
L.P., a Delaware limited partnership (the "Warrantholder"), the right to
subscribe for and purchase from the Company, during the Exercise Period (as
hereinafter defined), seven million five hundred thousand (7,500,000) validly
issued, fully paid and nonassessable shares, par value $.10, of Common Stock of
the Company (the "Warrant Shares"), at the exercise price per share of $.50 (the
"Exercise Price"), all subject to the terms, conditions and adjustments herein
set forth. Capitalized terms used herein shall have the meanings ascribed to
such terms in Section 11 below.
1. WARRANT. This Warrant is issued pursuant to, and in accordance
with, Section 1.02(b) of the Subordinated Credit Agreement, dated the date
hereof, between the Company and the Warrantholder (the "Credit Agreement") and
is subject to the terms thereof and hereof.
2. EXERCISE OF WARRANT; PAYMENT OF TAXES.
2.1 EXERCISE OF WARRANT. Subject to the terms and
conditions set forth herein, this Warrant may be exercised at any time, in whole
or in part, by the Warrantholder during the Exercise Period by:
(a) the surrender of this Warrant to the
Company, with a duly executed Exercise Form, and
(b) subject to Section 2.2 below, the delivery
of payment to the Company, for the account of the Company, by cash, wire
transfer, certified or official bank check or any other means approved by the
Company, of the aggregate Exercise Price in lawful money of the United States of
America.
2
The Company agrees that the Warrant Shares shall be deemed to be issued to the
Warrantholder as the record holder of such Warrant Shares as of the close of
business on the date on which this Warrant shall have been surrendered and
payment made of the Exercise Price as aforesaid.
2.2 CONVERSION RIGHT.
(a) In lieu of the payment of the aggregate
Exercise Price, the Warrantholder shall have the right (but not the obligation),
to require the Company to convert this Warrant, in whole or in part, into shares
of Common Stock (the "Conversion Right") as provided for in this Section 2.2.
Upon exercise of the Conversion Right, the Company shall deliver to the
Warrantholder (without payment by the Warrantholder of any of the Exercise
Price) in accordance with Section 2.2(b) that number of shares of Common Stock
equal to the quotient obtained by dividing (i) the value of the Warrant or
portion thereof at the time the Conversion Right is exercised (determined by
subtracting the aggregate Exercise Price at the time of the exercise of the
Conversion Right for the number of shares of Common Stock for which the Warrant
is being exercised from the aggregate Current Market Price for the shares of
Common Stock issuable upon exercise of the Warrant at the time of the exercise
of the Conversion Right for the number of shares of Common Stock for which the
Warrant is being exercised) by (ii) the Current Market Price of one share of
Common Stock at the time of the exercise of the Conversion Right.
(b) The Conversion Right may be exercised by the
Warrantholder on any Business Day prior to the end of the Exercise Period by
surrender of this Warrant to the Company, with a duly executed Exercise Form
with the conversion section completed, exercising the Conversion Right and
specifying the total number of shares of Common Stock that the Warrantholder
will be issued pursuant to such conversion.
2.3 WARRANT SHARES CERTIFICATE. A stock certificate or
certificates for the Warrant Shares specified in the Exercise Form shall be
delivered to the Warrantholder within five (5) Business Days after receipt of
the Exercise Form by the Company and, if the Conversion Right is not exercised,
the payment by the Warrantholder of the aggregate Exercise Price. If this
Warrant shall have been exercised only in part, the Company shall, at the time
of delivery of the stock certificate or certificates, deliver to the
Warrantholder a new Warrant evidencing the right to purchase the remaining
Warrant Shares, which new Warrant shall in all other respects be identical with
this Warrant.
2.4 PAYMENT OF TAXES. The Company will pay all
documentary stamp or other issuance taxes, if any, attributable to the issuance
of Warrant Shares upon the exercise of this Warrant; PROVIDED, HOWEVER, that the
Company shall not be required to pay any tax or taxes which may be payable in
respect of any transfer involved in the issue or delivery of any Warrants or
Warrant certificates or Warrant Shares in a name other than that of the then
Warrantholder as reflected upon the books of the Company.
3
3. RESTRICTIONS ON TRANSFER; RESTRICTIVE LEGENDS.
3.1 TRANSFER. At no time may this Warrant or the Warrant
Shares be offered, sold, transferred, pledged or otherwise disposed of, in whole
or in part, except in accordance with applicable federal and state securities
laws.
3.2 LEGENDS.
(a) Except as otherwise permitted by this
Section 3, each Warrant (including each Warrant issued upon the transfer of any
Warrant) shall be stamped or otherwise imprinted with a legend in substantially
the following form:
"This Warrant and any shares acquired upon the
exercise of this Warrant have not been registered under the Securities Act of
1933, as amended (the "Act"), or the securities laws of any state of the United
States or foreign jurisdiction. Neither this Warrant, such securities nor any
interest therein may be transferred except pursuant to an effective registration
statement under such Act and applicable state and foreign securities laws or
pursuant to an applicable exemption from the registration requirements of such
Act and such laws."
(b) Except as otherwise permitted by this
Section 3, each certificate for Common Stock (or Other Securities) issued upon
the exercise of any Warrant, and each certificate issued upon the transfer of
any such Common Stock (or Other Securities), shall be stamped or otherwise
imprinted with a legend in substantially the following form:
"The shares represented by this certificate have not
been registered under the Securities Act of 1933 and may not be transferred in
the absence of such registration or an exemption therefrom under such Act."
4. RESERVATION AND REGISTRATION OF SHARES. The Company covenants
and agrees as follows:
(a) All Warrant Shares that are issued upon the
exercise of this Warrant shall, upon issuance, be validly issued, not subject to
any preemptive rights, and, be free from all taxes, liens, security interests,
charges, and other encumbrances with respect to the issuance thereof, other than
taxes in respect of any transfer occurring contemporaneously with such issue.
(b) The Company shall at all times have
authorized and reserved, and shall keep available and free from preemptive
rights, a sufficient number of shares of Common Stock to provide for the
exercise of the rights represented by this Warrant.
(c) The Company shall not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
spin-off, consolidation, merger, dissolution, issue or sale of securities or any
other action or
4
inaction, seek to avoid the observance or performance of any of the terms of
this Warrant, and shall at all times in good faith assist in performing and
giving effect to the terms hereof and in the taking of all such actions as may
be necessary or appropriate in order to protect the rights of the Warrantholder
against dilution or other impairment.
5. ANTI-DILUTION AND OTHER ADJUSTMENTS. The Exercise Price and
the number of Warrant Shares to be received upon exercise of this Warrant shall
be subject to adjustment as follows:
5.1 DIVIDEND, SUBDIVISION, COMBINATION OR
RECLASSIFICATION OF COMMON STOCK. In the event that the Company shall at any
time or from time to time, after the issuance of this Warrant but prior to the
exercise hereof, (w) make a dividend or distribution on the outstanding shares
of Common Stock payable in Capital Stock, (x) subdivide the outstanding shares
of Common Stock into a larger number of shares, (y) combine the outstanding
shares of Common Stock into a smaller number of shares or (z) issue any shares
of its Capital Stock in a reclassification of the Common Stock (other than any
such event for which an adjustment is made pursuant to another clause of this
Section 5), THEN, and in each such case, (A) the aggregate number of Warrant
Shares for which this Warrant is exercisable (the "Warrant Share Number")
immediately prior to such event shall be adjusted (and any other appropriate
actions shall be taken by the Company) so that the Warrantholder shall be
entitled to receive upon exercise of this Warrant the number of shares of Common
Stock or other securities of the Company that it would have owned or would have
been entitled to receive upon or by reason of any of the events described above,
had this Warrant been exercised immediately prior to the occurrence of such
event and (B) the Exercise Price payable upon the exercise of this Warrant shall
be adjusted by multiplying such Exercise Price immediately prior to such
adjustment by a fraction, the numerator of which shall be the number of Warrant
Shares issuable upon the exercise of this Warrant immediately prior to such
adjustment, and the denominator of which shall be the number of Warrant Shares
issuable immediately thereafter. An adjustment made pursuant to this Section 5.1
shall become effective retroactively (x) in the case of any such dividend or
distribution, to a date immediately following the close of business on the
record date for the determination of holders of shares of Common Stock entitled
to receive such dividend or distribution or (y) in the case of any such
subdivision, combination or reclassification, to the close of business on the
day upon which such corporate action becomes effective.
5.2 ISSUANCE OF COMMON STOCK OR COMMON STOCK EQUIVALENTS
BELOW EXERCISE PRICE.
(a) If the Company shall at any time or from
time to time, after the issuance of this Warrant but prior to the exercise
hereof, issue or sell (such issuance or sale, a "New Issuance") any shares of
Common Stock or Common Stock Equivalents at a price per share of Common Stock
(the "New Issue Price") that is less than the Exercise Price then in effect as
of the record date or Issue Date (as defined below), as the case may be (the
"Relevant Date') (treating the price per share of Common Stock, in the case of
the issuance of any Common Stock Equivalent, as equal to (x) the
5
sum of the price for such Common Stock Equivalent plus any additional
consideration payable (without regard to any anti-dilution adjustments) upon the
conversion, exchange or exercise of such Common Stock Equivalent divided by (y)
the number of shares of Common Stock initially underlying such Common Stock
Equivalent), other than (i) issuances or sales for which an adjustment is made
pursuant to another subsection of this Section 5 and (ii) issuances in
connection with an Excluded Transaction, THEN, and in each such case, (A) the
Exercise Price then in effect shall be adjusted to equal the New Issue Price and
(B) the Warrant Share Number immediately prior to such adjustment shall be
increased to equal the product of (i) the aggregate number of Warrant Shares for
which this Warrant is exercisable immediately prior to the New Issuance
multiplied by (ii) a fraction, the numerator of which shall be the Exercise
Price in effect on the day immediately prior to the Relevant Date and the
denominator of which shall be the Exercise Price in effect immediately after
such adjustment.
Such adjustment shall be made whenever such shares of Common Stock or Common
Stock Equivalents are issued, and shall become effective retroactively (x) in
the case of an issuance to the stockholders of the Company, as such, to a date
immediately following the close of business on the record date for the
determination of shareholders entitled to receive such shares of Common Stock or
Common Stock Equivalents and (y) in all other cases, on the date (the "Issue
Date") of such issuance; PROVIDED, HOWEVER, that the determination as to whether
an adjustment is required to be made pursuant to this Section 5.2 shall be made
only upon the issuance of such shares of Common Stock or Common Stock
Equivalents, and not upon the issuance of any security into which the Common
Stock Equivalents convert, exchange or may be exercised.
(b) In case at any time any shares of Common
Stock or Common Stock Equivalents or any rights or options to purchase any
shares of Common Stock or Common Stock Equivalents shall be issued or sold for
consideration other than cash, the consideration received therefor shall be
deemed to be the amount received by the Company therefor, without deduction
therefrom of any expenses incurred or any underwriting commissions or
concessions or discounts paid or allowed by the Company in connection therewith,
as determined mutually by the Board of Directors and the Majority Warrantholders
or, if the Board of Directors and the Majority Warrantholders shall fail to
agree, at the Company's expense by an appraiser chosen by the Board of Directors
and reasonably acceptable to the Majority Warrantholders.
5.3 CERTAIN DISTRIBUTIONS. In case the Company shall at
any time or from time to time, after the issuance of this Warrant but prior to
the exercise hereof, distribute to all holders of shares of Common Stock
(including any such distribution made in connection with a merger or
consolidation in which the Company is the resulting or surviving Person and
shares of Common Stock are not changed or exchanged) cash, evidences of
indebtedness of the Company or another issuer, securities of the Company or
another issuer or other assets (excluding dividends or distributions payable in
shares of Common Stock for which adjustment is made under Section 5.1 and any
distribution in connection with an Excluded Transaction) or rights or warrants
to subscribe for or purchase any of the foregoing, THEN, and in each such case,
(A) the
6
Exercise Price in effect immediately prior to the date of distribution shall be
adjusted (and any other appropriate actions shall be taken by the Company) by
being multiplied by a fraction (i) the numerator of which shall be such Current
Market Price of Common Stock immediately prior to the date of distribution less
the then fair market value (as determined by the Board of Directors in the
exercise of their fiduciary duties) of the portion of the cash, evidences of
indebtedness, securities or other assets so distributed or of such rights or
warrants applicable to one share of Common Stock and (ii) the denominator of
which shall be the Current Market Price of the Common Stock immediately prior to
the date of distribution (but such fraction shall not be greater than one) and
(B) the Warrant Share Number shall be increased by being multiplied by a
fraction (i) the numerator of which shall be the Current Market Price of one
share of Common Stock immediately prior to the record date for the distribution
of such cash, evidences of indebtedness, securities, other assets or rights or
warrants and (ii) the denominator of which shall be the Current Market Price of
one share of Common Stock immediately prior to such record date less the fair
market value (as determined by the Board of Directors in the exercise of their
fiduciary duties) of the portion of such cash, evidences of indebtedness,
securities, other assets or rights or warrants so distributed applicable to one
share of Common Stock. Such adjustment shall be made whenever any such
distribution is made and shall become effective retroactively to a date
immediately following the close of business on the record date for the
determination of stockholders entitled to receive such distribution.
5.4 CREDIT AGREEMENT ADJUSTMENTS.
(a) In the event that the Obligations of the
Company to the Warrantholder have not been satisfied in full on or before the
earlier of (i) nine (9) months from the First Sale of Production and (ii)
eighteen (18) months from the date hereof, then on the last day of such ninth
(9th) month or eighteenth (18th) month, as the case may be, and on the last day
of each succeeding month until the Obligations of the Company to the
Warrantholder have been satisfied in full, the Exercise Price in effect on each
such date shall be reduced (and any other appropriate actions shall be taken by
the Company) by subtracting from the Exercise Price in effect immediately prior
to such adjustment an amount equal to the Exercise Price in effect immediately
prior to such adjustment multiplied by a fraction (i) the numerator of which
shall be ten percent (10%) of the average daily principal balance outstanding
under the Note during such month and (ii) the denominator of which shall be ten
million dollars ($10,000,000). In the event that the Exercise Price is required
to be adjusted pursuant to this Section 5.4(a) and at the same time an
adjustment is required to be made pursuant to Section 5.4(b), then the
adjustment required to be made under this Section 5.4(a) shall be made after
giving effect to the adjustment required under Section 5.4(b).
(b) If, on the date that is eighteen (18) months
from the date hereof, (i) the Obligations of the Company to the Warrantholder
have not been satisfied in full and the Market Price on such date (or if such
date is not a Business Day, on the immediately preceding Business Day) is less
than the Exercise Price then in effect (determined without regard to any
adjustments made pursuant to Section 5.4(a)), then on
7
such date, the Exercise Price then in effect shall be reduced (and any other
appropriate actions shall be taken by the Company) to an amount that is equal to
eighty percent (80%) of the Current Market Price; PROVIDED, HOWEVER, that in no
event, shall any adjustment be made pursuant to this Section 5.4(b) if such
adjustment would result in an increase to the Exercise Price in effect
immediately prior to such adjustment. In the event that the Exercise Price is
required to be adjusted pursuant to this Section 5.4(b) and at the same time an
adjustment is required to be made pursuant to Section 5.4(a), then the
adjustment required to be made under this Section 5.4(b) shall be made before
giving effect to the adjustment required under Section 5.4(a).
5.5 OTHER CHANGES. In case the Company at any time or
from time to time, after the issuance of this Warrant but prior to the exercise
hereof, shall take any action affecting its Common Stock similar to or having an
effect similar to any of the actions described in any of Sections 5.1 or 5.4
(but not including any action described in any such Section) and the Board of
Directors in good faith determines that it would be equitable in the
circumstances to adjust the Exercise Price and Warrant Share Number as a result
of such action, THEN, and in each such case, the Exercise Price and Warrant
Share Number shall be adjusted in such manner and at such time as the Board of
Directors in good faith determines would be equitable in the circumstances (such
determination to be evidenced in a resolution, a certified copy of which shall
be mailed to the Warrantholder).
5.6 NO ADJUSTMENT; PAR VALUE MINIMUM. Notwithstanding
anything herein to the contrary, no adjustment under this Section 5 need be made
to the Exercise Price or Warrant Share Number if the company receives written
notice from the Warrantholder that no such adjustment is required.
Notwithstanding any other provision of this Warrant, the Exercise Price shall
not be adjusted below the par value of a share of Common Stock.; PROVIDED,
HOWEVER, that the written consent of the Majority Warrantholders shall be
required prior to any increase in the par value of the shares of Common Stock.
5.7 ABANDONMENT. If the Company shall take a record of
the holders of shares of its Common Stock for the purpose of entitling them to
receive a dividend or other distribution, and shall thereafter and before the
distribution to stockholders thereof legally abandon its plan to pay or deliver
such dividend or distribution, then no adjustment in the Exercise Price or
Warrant Share Number shall be required by reason of the taking of such record.
5.8 CERTIFICATE AS TO ADJUSTMENTS. Upon any adjustment in
the Exercise Price or Warrant Share Number, the Company shall within a
reasonable period (not to exceed ten (10) days) following any of the foregoing
transactions deliver to the Warrantholder a certificate, signed by (i) the Chief
Executive Officer of the Company and (ii) the Chief Financial Officer of the
Company, setting forth in reasonable detail the event requiring the adjustment
and the method by which such adjustment was calculated and specifying the
adjusted Exercise Price and Warrant Share Number then in effect following such
adjustment.
8
5.9 REORGANIZATION, RECLASSIFICATION, MERGER OR SALE
TRANSACTION. In case of any capital reorganization, reclassification, Sale
Transaction, merger or consolidation (other than a Sale Transaction or a merger
or consolidation of the Company in which the Company is the surviving
corporation) of the Company or other change of outstanding shares of Common
Stock (other than a change in par value, or from par value to no par value, or
from no par value to par value) (each, a "Transaction") at any time after the
issuance of this Warrant but prior to the exercise hereof, the Company shall
execute and deliver to the Warrantholder at least twenty (20) Business Days
prior to effecting such Transaction a certificate stating that the Warrantholder
shall have the right thereafter to exercise this Warrant for the kind and amount
of shares of stock or other securities, property or cash receivable upon such
Transaction by a holder of the number of shares of Common Stock into which this
Warrant could have been exercised immediately prior to such Transaction, and
provision shall be made therefor in the agreement, if any, relating to such
Transaction. Such certificate shall provide for adjustments which shall be as
nearly equivalent as may be practicable to the adjustments provided for in this
Section 5 and shall contain other terms substantially identical to the terms
hereof. If, in the case of any such Transaction, the stock, other securities,
cash or property receivable thereupon by a holder of Common Stock includes
shares of stock or other securities of a Person other than the successor or
purchasing Persons and other than the Company, which controls or is controlled
by the successor or purchasing Person or which, in connection with such
Transaction, issues stock, securities, other property or cash to holders of
Common Stock, then such certificate also shall be executed by such Person, and
such Person shall, in such certificate, specifically assume the obligations of
such successor or purchasing Person and acknowledge its obligations to issue
such stock, securities, other property or cash to holders of the Warrants upon
exercise thereof as provided above. The provisions of this Section 5.9 and any
equivalent thereof in any such certificate similarly shall apply to successive
transactions.
5.10 NOTICES. In case at any time or from time to time:
(a) the Company shall declare a divided (or any
other distribution) on its shares of Common Stock;
(b) the Company shall authorize the granting to
the holders of shares of its Common Stock rights or warrants to subscribe for or
purchase any shares of Capital Stock or any other rights or warrants;
(c) there shall occur a Transaction; or
(d) the Company shall take any other action that
would require a vote of the Company's stockholders;
then the Company shall mail to the Warrantholder, as promptly as possible but in
any event at least ten (10) days prior to the applicable date hereinafter
specified, a notice stating (A) the date on which a record is to be taken for
the purpose of such dividend, distribution or granting of rights or warrants or,
if a record is not to be taken, the date as of which the holders of Common Stock
of record to be entitled to such dividend,
9
distribution or granting of rights or warrants are to be determined, or (B) the
date on which such Transaction is expected to become effective and the date as
of which it is expected that holders of Common Stock of record shall be entitled
to exchange their Common Stock for shares of stock or other securities or
property or cash deliverable upon such Transaction. Notwithstanding the
foregoing, in the case of any event to which Section 5.9 is applicable, the
Company shall also deliver the certificate described in such Section 5.9 to the
Warrantholder at least ten (10) Business Days prior to effecting such
reorganization or reclassification as aforesaid.
6. REGISTRATION RIGHTS. The Warrant Shares are subject to the
terms and conditions of the Registration Rights Agreement, dated April 21, 1998,
between the Company and the Warrantholder.
7. LOSS OR DESTRUCTION OF WARRANT. Subject to the terms and
conditions hereof, upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant
and, in the case of loss, theft or destruction, of such bond or indemnification
as the Company may reasonably require, and, in the case of such mutilation, upon
surrender and cancellation of this Warrant, the Company will execute and deliver
a new Warrant of like tenor.
8. OWNERSHIP OF WARRANT. The Company may deem and treat the
person in whose name this Warrant is registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by anyone
other than the Company) for all purposes and shall not be affected by any notice
to the contrary, until presentation of this Warrant for registration of
transfer.
9. AMENDMENTS. Any provision of this Warrant may be amended and
the observance thereof waived only with the written consent of the Company and
the Warrantholder.
10. NO IMPAIRMENT. The Company (i) will not permit the par value
of any shares of stock receivable upon the exercise of this Warrant to exceed
the amount payable therefor upon such exercise, (ii) will take all such action
as may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable shares of Common Stock on the
exercise of the Warrant from time to time outstanding, and (iii) will not take
any action which results in any adjustment of the Exercise Price if the total
number of shares of Common Stock (or Other Securities) issuable after the action
upon the exercise of the Warrant would exceed the total number of shares of
Common Stock (or Other Securities) then authorized by the Company's Certificate
of Incorporation and available for the purpose of issuance upon such exercise.
11. DEFINITIONS. As used herein, unless the context otherwise
requires, the following terms have the following respective meanings:
"AFFILIATE" shall mean any Person who is an "affiliate" as defined in
Rule 12b-2 of the General Rules and Regulations under the Exchange Act.
10
"BOARD OF DIRECTORS" means the Board of Directors of the Company.
"BUSINESS DAY" means any day other than a Saturday, Sunday or other day
on which commercial banks in the State of New York are authorized or required by
law or executive order to close.
"CAPITAL STOCK" means, with respect to any Person, any and all shares,
interests, participations, rights in, or other equivalents (however designated
and whether voting or non-voting) of such Person's capital stock and any and all
rights, warrants or options exchangeable for or convertible into such capital
stock (but excluding any debt security whether or not it is exchangeable for or
convertible into such capital stock).
"COMMISSION" means the Securities and Exchange Commission or any
similar agency then having jurisdiction to enforce the Securities Act.
"COMMON STOCK" means the Common Stock, par value $.10 per share, of the
Company.
"COMMON STOCK EQUIVALENT" means any security or obligation which is by
its terms convertible into or exercisable into shares of Common Stock,
including, without limitation, any option, warrant or other subscription or
purchase right with respect to Common Stock.
"COMPANY" has the meaning set forth in the first paragraph of this
Warrant.
"CONVERSION RIGHT" has the meaning set forth in Section 2.2(a) of this
Warrant.
"CREDIT AGREEMENT" has the meaning set forth in Section 1 of this
Warrant.
"CURRENT MARKET PRICE" means, as of the date of determination, (a) the
average of the daily Market Price under clause (a), (b) or (c) of the definition
thereof of the Common Stock during the immediately preceding thirty (30) trading
days ending on such date, and (b) if the Common Stock is not then listed or
admitted to trading on any national securities exchange or quoted in the
over-the-counter market, then the Market Price under clause (d) of the
definition thereof on such date.
"EXCLUDED TRANSACTION" means (a) any issuance of up to an aggregate of
two million (2,000,000) shares of restricted stock or options to purchase shares
of Common Stock (subject to adjustment in the event of stock splits,
combinations or similar occurrences) to employees, officers or directors of the
Company pursuant to a stock option plan or other employee benefit arrangement
approved by the Board of Directors and (b) any issuance of Common Stock upon
conversion or exercise of any Common Stock Equivalents and/or (c) any issuance
of Warrant Shares.
11
"EXERCISE FORM" means an Exercise Form in the form annexed hereto as
EXHIBIT A.
"EXERCISE PERIOD" means the period beginning on the date hereof and
ending on the fifth (5th) anniversary of the date hereof.
"EXERCISE PRICE" has the meaning set forth in the first paragraph of
this Warrant.
"FIRST SALE OF PRODUCTION" has the meaning set forth in the Loan
Agreement between VAALCO Gabon (Etame), Inc. and the International Finance
Corporation dated April 19, 2002.
"ISSUE DATE" has the meaning set forth in Section 5.2 of this Warrant.
"MARKET PRICE" means, as of the date of determination, (a) if the
Common Stock is listed on a national securities exchange, the closing price per
share of Common Stock on such date published in THE WALL STREET JOURNAL
(NATIONAL EDITION) or, if no such closing price on such date is published in THE
WALL STREET JOURNAL (NATIONAL EDITION), the average of the closing bid and asked
prices on such date, as officially reported on the principal national securities
exchange on which the Common Stock is then listed or admitted to trading; or (b)
if the Common Stock is not then listed or admitted to trading on any national
securities exchange but is designated as a national market system security by
the National Association of Securities Dealers, Inc., the last trading price of
the Common Stock on such date; or (c) if there shall have been no trading on
such date or if the Common Stock is not designated as a national market system
security by the National Association or Securities Dealers, Inc., the average of
the reported closing bid and asked prices of the Common Stock on such date as
shown by the National Market System of the National Association of Securities
Dealers, Inc. Automated Quotations System and reported by any member firm of the
New York Stock Exchange selected by the Company; or (d) if none of (a), (b) or
(c) is applicable, a market price per share determined mutually by the Board of
Directors and the Majority Warrantholders or, if the Board of Directors and the
Majority Warrantholders shall fail to agree, at the Company's expense by an
appraiser chosen by the Board of Directors and reasonably acceptable to the
Majority Warrantholders. Any determination of the Market Price by an appraiser
shall be based on a valuation of the Company as an entirety without regard to
any discount for minority interests or disparate voting rights among classes of
capital stock.
"MAJORITY WARRANTHOLDERS" means the holders of a majority of Warrant
Shares issuable upon exercise of all of the warrants issued pursuant to Section
1.02(b) of the Credit Agreement assuming the exercise of all such warrants.
"NEW ISSUANCE" has the meaning set forth in Section 5.2 of this
Warrant.
"NEW ISSUE PRICE" has the meaning set forth in Section 5.2 of this
Warrant.
12
"NOTE" has the meaning set forth in the Credit Agreement.
"OBLIGATIONS" means the obligations of the Company to the Warrantholder
for the prompt payment when due (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise) and performance of the Note and
the Credit Agreement and any premium and all interest and other sums in respect
thereof, whether now or hereafter owing or incurred.
"OTHER SECURITIES" means any stock (other than Common Stock) and other
securities of the Company or any other Person (corporate or otherwise) which the
holder of the Warrant at any time shall be entitled to receive, or shall have
received upon the exercise of the Warrant, in lieu of or in addition to Common
Stock.
"PERSON" means any individual, firm, corporation, partnership, limited
liability company, trust, incorporated or unincorporated association, joint
venture, joint stock company, governmental body or other entity of any kind.
"RELEVANT DATE" has the meaning set forth in Section 5.2 of this
Warrant.
"SALE TRANSACTION" shall mean (a) (i) the merger or consolidation of
the Company into or with one or more Persons, (ii) the merger or consolidation
of one or more Persons into or with the Company or (iii) a tender offer or other
business combination if, in the case of (i), (ii) or (iii), the stockholders of
the Company prior to such merger or consolidation do not retain at least a
majority of the voting power of the surviving Person or (b) the voluntary sale,
conveyance, exchange or transfer to another Person of (i) the voting Capital
Stock of the Company if, after such sale, conveyance, exchange or transfer, the
stockholders of the Company prior to such sale, conveyance, exchange or transfer
do not retain at least a majority of the voting power of the Company or (ii) all
or substantially all of the assets of the Company.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder.
"TRANSACTION" has the meaning set forth in Section 5.9 of this Warrant.
"WARRANT SHARE NUMBER" has the meaning set forth in Section 5.1 of this
Warrant.
"WARRANT SHARES" has the meaning set forth in the first paragraph of
this Warrant.
"WARRANTHOLDER" has the meaning set forth in the first paragraph of
this Warrant.
12. MISCELLANEOUS.
12.1 ENTIRE AGREEMENT. This Warrant and the Credit
Agreement constitutes the entire agreement between the Company and the
Warrantholder with
13
respect to the Warrant and supersedes all prior agreements and understanding
with respects to the subject matter of this Warrant.
12.2 BINDING EFFECT; BENEFITS. This Warrant shall inure to
the benefit of and shall be binding upon the Company and the Warrantholder and
their respective permitted successors and assigns. Nothing in this Warrant,
expressed or implied, is intended to or shall confer on any person other than
the Company and the Warrantholder, or their respective permitted successors or
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Warrant.
12.3 HEADINGS. The headings in this Warrant are for
convenience of reference only and shall not limit or otherwise affect the
meaning of this Warrant.
12.4 NOTICES. All notices, demands and other
communications provided for or permitted hereunder shall be made in writing and
shall be by registered or certified first-class mail, return receipt requested,
telecopier, courier service or personal delivery:
(a) if to the Company:
VAALCO Energy, Inc.
0000 Xxxx Xxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000-0130
Attention: Xxxxxxx Xxxxxxxxx
with a copy to:
Xxxxxx and Xxxxx, LLP
0000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxx Xxxxx
(b) if to the Warrantholder:
The 1818 Fund II, L.P.
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxxx Xxxxx
with a copy to:
14
Xxxx, Xxxxx, Rifkind, Xxxxxxx & Xxxxxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxxx Xxxxx
All such notices, demands and other communications shall be deemed to
have been duly given when delivered by hand, if personally delivered; when
delivered by courier, if delivered by commercial courier service; five (5)
Business Days after being deposited in the mail, postage prepaid, if mailed; and
when receipt is mechanically acknowledged, if telecopied. Any party may by
notice given in accordance with this Section 12.4 designate another address or
Person for receipt of notices hereunder.
12.5 SEVERABILITY. Any term or provision of this Warrant
which is invalid or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the terms and
provisions of this Warrant or affecting the validity or enforceability of any of
the terms or provisions of this Warrant in any other jurisdiction.
12.6 GOVERNING LAW. THIS WARRANT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO
THE CONFLICTS OF LAW PRINCIPLES THEREOF.
12.7 NO RIGHTS OR LIABILITIES AS STOCKHOLDERS. Nothing
contained in this Warrant shall be determined as conferring upon the
Warrantholder any rights as a stockholder of the Company or as imposing any
liabilities on the Warrantholder to purchase any securities whether such
liabilities are asserted by the Company or by creditors or stockholders of the
Company or otherwise.
12.8 AMENDMENTS AND WAIVERS. Except as otherwise provided
herein, the provisions of this Warrant may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless consented to in writing by the Company and the
Warrantholder.
[Remainder of this page intentionally left blank]
15
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer.
VAALCO ENERGY, INC.
By: /s/ X. Xxxxxxx Xxxxxxxxx
---------------------------------------
Name: X. Xxxxxxx Xxxxxxxxx
Title: President
Dated: June 10, 2002
EXHIBIT A
---------
EXERCISE FORM
-------------
(To be executed upon exercise of this Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant, to purchase [insert number] shares of Common Stock
and [herewith tenders payment for such shares to the order of the Company in the
amount of $[insert number] [hereby exercises its Conversion Right] in accordance
with the terms of this Warrant. The undersigned requests that a certificate for
such [Warrant Shares] [that number of Warrant Shares to which the undersigned is
entitled as calculated pursuant to Section 2.2] be registered in the name of the
undersigned and that such certificates be delivered to the undersigned's address
below.
The undersigned represents that it is acquiring such shares for its own
account for investment and not with a view to or for sale in connection with any
distribution thereof (subject, however, to any requirement of law that the
disposition thereof shall at all times be within its control).
Dated: _______________
Signature ________________________________
________________________________
(Print Name)
________________________________
(Street Address)
________________________________
(City) (State) (Zip Code)
