As filed with the Securities and Exchange Commission on July 14, 1998.
Registration No. 333-__________
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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VAALCO ENERGY, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 76-0274813
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4600 POST OAK PLACE, SUITE 309, HOUSTON, TEXAS 77027
TELEPHONE: (713) 623-0801
(Address, including zip code, and telephone number including
area code, of registrant's principal executive offices)
W. RUSSELL SCHEIRMAN
4600 POST OAK PLACE, SUITE 309, HOUSTON, TEXAS 77027
TELEPHONE: (713) 623-0801
(Name, address, including zip code, and telephone number
including area code, of agent for service)
-----------------
COPIES TO:
BUTLER & BINION, L.L.P.
1000 LOUISIANA, SUITE 1600
HOUSTON, TEXAS 77002
ATTN: GEORGE G. YOUNG III, ESQ.
TELEPHONE: (713) 237-3111
TELECOPY: (713) 237-3202
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: From time to
time after the Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: |_|
If any securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
CALCULATION OF REGISTRATION FEE
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PROPOSED
MAXIMUM PROPOSED MAXI-
TITLE OF CLASS OF OFFERING MUM AGGREGATE AMOUNT OF
SECURITIES TO BE AMOUNT TO BE PRICE PER OFFERING REGISTRATION
REGISTERED REGISTERED UNIT(1) PRICE(1) FEE
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Common Stock,
$.10 par value 5,745,325 $2.53 $14,535,672 $4,288.02
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933, as amended, on
the basis of the average of the closing bid and asked price per share on
the OTC Bulletin Board on July 10, 1998.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
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<PAGE>
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* *
* INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A *
* REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED *
* WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT *
* BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE *
* REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT *
* CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR *
* SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH *
* OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR *
* QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. *
* *
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PROSPECTUS
SUBJECT TO COMPLETION, DATED JULY 13, 1998
5,745,325 Shares
VAALCO ENERGY, INC.
COMMON STOCK
The shares of common stock offered hereby (the "Offered Securities") are
shares of common stock, par value $.10 per share ("Common Stock"), of VAALCO
Energy, Inc., a Delaware corporation (the "Company"), owned by certain
stockholders of the Company. See "Selling Stockholders". The Company will not
receive any of the proceeds from the sale of the Offered Securities hereby.
The Company's Common Stock trades on the OTC Bulletin Board under the
symbol "VEIX." On July 10, 1998, the average of the closing bid and asking price
of a share of the Common Stock on the OTC Bulletin Board was $2.53 per share.
The Offered Securities may be offered and sold from time to time by
Selling Stockholders through brokers or to dealers or directly to one or more
purchasers in negotiated transactions, at market prices prevailing at the time
of sale or at prices related to such market prices. The Offered Securities may
be sold from time to time in transactions on the OTC Bulletin Board at the
market price then prevailing although sales may also be made in negotiated
transactions or otherwise. The Selling Stockholders and brokers executing
selling orders on behalf of the Selling Stockholders and dealers to whom the
Selling Stockholders may sell may be deemed to be "underwriters" within the
meaning of the Securities Act of 1933, as amended ("Securities Act"), in which
event commissions received by such brokers may be deemed to be underwriting
commissions under the Securities Act. Although each Selling Stockholder may sell
all or a portion of the shares of Common Stock offered hereby, no Selling
Stockholder is required to make any such sale. See "Plan of Distribution" for
further information concerning the plan of distribution of the Offered
Securities.
The expenses of registration incurred in connection with this offering,
estimated at $50,000, will be paid by the Company, but all selling and other
expenses incurred by Selling Stockholders will be borne by such Selling
Stockholders. See "Plan of Distribution."
PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED HEREBY SHOULD CAREFULLY
CONSIDER THE MATTERS SET FORTH UNDER THE CAPTION "RISK FACTORS," BEGINNING ON
PAGE 3.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS JULY , 1998.
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") in Washington, D.C., a Registration Statement on Form S-3
("Registration Statement") under the Securities Act with respect to the Common
Stock offered by this Prospectus. Certain portions of the Registration Statement
have not been included in this Prospectus. For further information, reference is
made to the Registration Statement and the Exhibits thereto. The Company is
subject to the information requirements of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and in accordance therewith files reports,
proxy statements and other information with the Commission. The Registration
Statement (with exhibits), as well as such reports, proxy statements and other
information can be inspected and copied at the public reference facilities
maintained by the Commission at its principal offices at Judiciary Plaza, 450
Fifth Street, Room 1024, N.W., Washington, D.C. 20549, and its regional offices
at Citicorp Center, 500 Madison Street, Suite 1400, Chicago, Illinois 60661 and
7 World Trade Center, Suite 1300, New York, New York 10048. Copies of such
material can be obtained at prescribed rates from the Public Reference Section
of the Commission at its principal office at Judiciary Plaza, 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549. The Commission maintains a Web site
that contains reports, proxy and information statements and other information
regarding issuers that file electronically with the Commission at
http://www.sec.gov.
The Company provides its security holders an annual report containing
audited financial statements for the fiscal year covered thereby. Such report
usually is provided within 120-days after the end of the Company's most recent
fiscal year.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's (i) annual report on Form 10-KSB for the fiscal year ended
December 31, 1997, filed on March 30, 1998, as supplemented by Form 10-KSB/A,
filed May 15, 1998, (ii) the Company's quarterly report on Form 10-QSB for the
fiscal quarter ended March 31, 1998, (iii) the description of the Company's
Common Stock contained in the Company's Registration Statement on Form 10 (Reg.
No. 0-20928) as amended by a Form 8 filed by the Company with the Commission on
January 7, 1993 and a Form 8 filed by the Company with the Commission on January
25, 1993, (iv) the Company's Definitive Proxy Statement filed on June 4, 1998
relating to the Annual Meeting of Stockholders on June 24, 1998, (v) the
Company's current report on Form 8-K dated March 4, 1998, and (vi) the Company's
current report on Form 8-K filed on May 6, 1998, as supplemented by Form 8-K/A
filed on May 29, 1998, are hereby incorporated herein by reference.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act after the date of this Prospectus and before the
termination of the offering covered hereby shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of filing of
such documents. Any statement contained in this Prospectus, in any supplement to
this Prospectus or in a document incorporated or deemed to be incorporated by
reference in this Prospectus shall be deemed to be modified or superseded for
purposes of this Prospectus to the extent that a statement contained in this
Prospectus or in any other subsequently filed document which also is or is
deemed to be incorporated by reference modifies or replaces such statement. Any
such statement shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of such person, a copy
of any or all of the documents incorporated by reference in this Prospectus,
other than exhibits to such documents, unless such exhibits are specifically
incorporated by reference into the information that this Prospectus
incorporates. All such requests should
<PAGE>
be directed to VAALCO Energy, Inc., 4600 Post Oak Place, Suite 309, Houston,
Texas 77027, Attention: Investor Relations Department, telephone number (713)
623-0801.
THE COMPANY
VAALCO Energy, Inc., a Delaware corporation (the "Company" or "VAALCO"),
is engaged in the acquisition, exploration, development and production of oil
and gas properties. VAALCO owns producing properties and conducts exploration
activities internationally in the Philippines and domestically in the Texas Gulf
Coast area, and has recently begun international exploration activities in
Gabon, West Africa. VAALCO recently acquired a 7.5% interest in Hunt Overseas
Exploration Company, L.P., which has exploration prospects in a number of
international areas. The Company has also recently entered into a joint venture
agreement to engage in the exploration of oil and gas properties in the United
States, primarily in the onshore Gulf Coast area, including Alabama, Mississippi
and Louisiana.
The Company's executive offices are located at 4600 Post Oak Place, Suite
309, Houston, Texas 77027, telephone number (713) 623-0801.
RECENT DEVELOPMENTS
GABON DISCOVERY. In June 1998, the Company successfully drilled its first
exploration well offshore southern Gabon, West Africa. The well, located in the
block covered by the Etame Marin Permit ("Permit"), tested at 3.5 MBbls/day (0.6
net to the Company), and is temporariliy shut-in pending evaluation of the well
results. The well is located just north of hydrocarbon accumulations in Tehibala
North and Tehibala South which were identified in the 1970s but deemed
non-commercial at that time. The Company has identified several other prospects
in the block, and believes that this block has the potential to add
significantly to the Company's reserves if initial interpretations prove
correct.
The Company is the operator of the Permit and owns a 17.85% working
interest. Western Atlas Afrique Ltd. has a 65% working interest and three
additional partners collectively own the remaining 17.15% working interest.
Under the terms of the Permit, the Gabonese government has the option to
participate with up to a 7.5% working interest in the development of any
commercial discoveries on the block which, if exercised, would reduce
proportionately the interest of the other participants.
HUNT TRANSACTION/ PRIVATE PLACEMENT. On April 21, 1998, the Company
completed the acquisition of 1818 Oil Corp. from The 1818 Fund II, L.P. ("Fund")
in exchange for 10,000 shares of the Company's preferred stock ("Preferred
Stock") convertible into 27.5 million shares of Common Stock. The general
partner of the Fund is Brown Brothers Harriman & Co. The principal assets of
1818 Oil Corp. are a limited partner interest in Hunt Overseas Exploration
Company, L.P. ("Hunt"), a partnership engaged in the exploration for oil
internationally, and $12.6 million in cash. The cash held by 1818 Oil Corp. will
be used to fund its obligations to make capital contributions to Hunt.
Simultaneously with the acquisition of 1818 Oil Corp., VAALCO completed a
private placement of 5.2 million shares of Common Stock for estimated net
proceeds of $9.5 million. Of such shares, 3,763,441 were acquired by the Fund as
part of the acquisition of the 1818 Oil Corp. and the balance was acquired by
institutional investors. Proceeds of the offering were allocated to fund
VAALCO's capital budget for 1998.
As a result of the acquisition of 1818 Oil Corp. and the private
placement, the Fund beneficially owns approximately 64% of the outstanding
shares of VAALCO, assuming conversion of the Preferred Stock. Pursuant to rights
granted in the Preferred Stock, the Fund has appointed T. Michael Long, Lawrence
Tucker and Walter Grist to VAALCO's Board of Directors. See "Risk
Factors--Control by Major Stockholder."
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<PAGE>
FORMATION OF JOINT VENTURE. In April 1998, VAALCO also completed the
formation of a joint venture with Paramount Petroleum Company ("Paramount") and
Robert Schneeflock, the owner of Paramount, to explore for oil and gas primarily
in the onshore Gulf Coast area.
RISK FACTORS
PROSPECTIVE PURCHASERS OF THE OFFERED SECURITIES SHOULD CAREFULLY
CONSIDER, TOGETHER WITH OTHER INFORMATION IN THIS PROSPECTUS, THE FOLLOWING
FACTORS THAT MAY AFFECT THE COMPANY.
CONTROL BY MAJOR STOCKHOLDER
Currently, the Fund owns Common Stock and Preferred Stock which votes as a
class with the Common Stock on an as converted basis, and which, in the
aggregate, represents approximately 64% of the outstanding voting power of the
Company on an as converted basis (excluding options and warrants). In addition,
the terms of the Preferred Stock held by the Fund provide that while the
Preferred Stock is outstanding, the holders of Preferred Stock voting together
as a class will be entitled to elect three directors of the Company.
Accordingly, the Fund is able to control all matters submitted to a vote of the
stockholders of the Company, including the election of directors.
The Company's Bylaws contain provisions which require that at least a
majority of the directors constituting the entire Board of Directors, which
majority must include at least one of the directors elected by the holders of
Preferred Stock, approve each of the following transactions effected by either
the Company or, as applicable, any subsidiary of the Company: any issuance of or
agreement to issue any equity securities, including securities convertible into
or exchangeable for such equity securities (other than issuances pursuant to an
employee benefit plan); the declaration of any dividend; the incurrence,
assumption of or refinancing of indebtedness; the adoption of any employee stock
option or similar plan; entering into employment or consulting agreements with
annual compensation exceeding $100,000; any merger or consolidation; the sale,
conveyance, exchange or transfer of the voting stock or all or substantially all
of the assets; the sale or other disposition to another person, or purchase,
lease or other acquisition from another person, of any material assets, rights
or properties; certain expenditures in excess of $300,000; the formation of any
entity that is not wholly-owned by the Company; material changes in accounting
methods or policies; any amendment, modification or restatement of the
certificate of incorporation or bylaws; the settlement of any claim or other
action against the Company or subsidiary in an amount in excess of $50,000;
approval or amendment of the annual operating budget; any other action which is
not in the ordinary course of business; and the agreement to take any of the
foregoing actions. Accordingly, none of the foregoing actions can be taken by
the Company without the approval of at least one director designated by the
holders of the Preferred Stock.
VOLATILITY OF OIL AND GAS PRICES AND MARKETS
The Company's revenues, cash flow, profitability and future rate of growth
are substantially dependent upon prevailing prices for oil and gas. The
Company's ability to borrow funds and to obtain additional capital on attractive
terms is also substantially dependent on oil and gas prices. The Company's
production in the Philippines (representing substantially all of the Company's
oil production since 1994) is from mature offshore fields with high production
costs. The Company's margin on sales from these fields (the price received for
oil less the production costs for the oil) is lower than the margin on oil
production from many other areas. As a result, the profitability of the
Company's production in the Philippines is affected more by changes in prices
than production located in other areas. Historically, oil and gas prices and
markets have been volatile and are likely to continue to be volatile in the
future. Prices for oil and gas are subject to wide fluctuations in response to
relatively minor changes in supply of and demand for oil and gas, market
uncertainty and a variety of additional factors that are beyond the control of
the Company.
- 3 -
<PAGE>
These factors include international political conditions, the
domestic and foreign supply of oil and gas, the level of consumer demand,
weather conditions, domestic and foreign governmental regulations, the price and
availability of alternative fuels and overall economic conditions. In addition,
various factors, including the availability and capacity of gas gathering
systems and pipelines, the effect of federal, state and foreign regulation of
production and transportation, general economic conditions, changes in supply
due to drilling by other producers and changes in demand may adversely affect
the Company's ability to market its oil and gas production. Any significant
decline in the price of oil or gas would adversely affect the Company's
revenues, operating income, cash flows and borrowing capacity and may require a
reduction in the carrying value of the Company's oil and gas properties and its
planned level of capital expenditures.
The recent downturn in certain of the economies in Asia has resulted in a
substantial oversupply of crude oil products in the area. The Company's
Philippine production competes as an energy source with crude oil products, so
the price received for the Company's production is being adversely affected by
market instability and the current oversupply of crude oil products in the area.
For example, average prices during the first quarter of 1998 were $7.50 per Bbl,
compared with $9.00 per Bbl in the first quarter of 1997. Although the Company
believes the oversupply of crude oil products will not be permanent, no
assurances can be given as to the amount of time that will be required to return
the supplies of crude oil products to normal.
REPLACEMENT OF RESERVES
The Company's future success depends upon its ability to find, develop or
acquire additional oil and gas reserves that are economically recoverable.
Except to the extent that the Company conducts successful exploration or
development activities or acquires properties containing proved reserves, the
estimated net proved reserves of the Company will generally decline as reserves
are produced. there can be no assurance that the Company's planned development
and exploration projects and acquisition activities will result in significant
additional reserves or that the Company will have continuing success drilling
productive wells at economic finding costs. The drilling of oil and gas wells
involves a high degree of risk, especially the risk of dry holes or of wells
that are not sufficiently productive to provide an economic return on the
capital expended to drill the wells. In addition, the Company's drilling
operations may be curtailed, delayed or canceled as a result of numerous
factors, including title problems, weather conditions, political instability,
economic/currency imbalances, compliance with governmental requirements and
shortages or delays in the delivery of equipment and availability of drilling
rigs. Certain of the Company's oil and gas properties are operated by third
parties or may be subject to operating committees controlled by national oil
companies and, as a result, the Company has limited control over the nature and
timing of exploration and development of such properties or the manner in which
operations are conducted on such properties.
SUBSTANTIAL CAPITAL REQUIREMENTS
The Company makes, and will continue to make, substantial capital
expenditures for the acquisition, exploitation, development, exploration and
production of oil and gas reserves. Historically, the Company has financed these
expenditures primarily with cash flow from operations, asset sales, private
sales of equity, bank borrowings and purchase money debt. The Company believes
that it will have sufficient capital to finance planned capital expenditures
through June 1999. If revenues decrease as a result of lower oil and gas prices,
operating difficulties or declines in reserves, the Company may have limited
ability to finance planned capital expenditures in the future. There can be no
assurances that additional equity financing or cash generated by operations or
borrowings will be available to meet these requirements.
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<PAGE>
The Company has committed to invest $3.0 million in the Paramount joint
venture, of which $0.7 million has already been funded. There can be no
assurance that the Company will realize a return on this investment or that the
Company's investment in the Paramount joint venture will be successful.
HISTORY OF LOSSES
Without giving effect to the acquisition of 1818 Oil Corp., the Company
incurred net losses (after preferred dividends requirement) of $12.3 million,
$8.2 million, $7.2 million and $0.6 million for each of the years ended December
31, 1993, 1994, 1995 and 1996, respectively. In addition, 1818 Oil Corp. had net
losses of $0.2 million, $1.0 million and $16.0 million for each of the years
ended December 31, 1995, 1996 and 1997, respectively and $0.4 million for the
three month ended March 31, 1998. No assurance can be made that the Company
will operate profitably in the future. The likelihood of the Company's future
profitability must be considered in light of the financial, business and
operating risks, expenses, difficulties, and delays frequently encountered in
connection with the oil and gas acquisition, exploration, development and
production business in which the Company is engaged. The financial statements
incorporated by reference herein do not include any adjustments that may result
from these uncertainties.
DRILLING RISKS
Drilling activities are subject to many risks, including the risk that no
commercially productive reservoirs will be encountered. There can be no
assurance that new wells drilled by the Company will be productive or that the
Company will recover all or any portion of its investment. Drilling for oil and
natural gas may involve unprofitable efforts, not only from dry wells, but from
wells that are productive but do not produce sufficient net revenues to return a
profit after drilling, operating and other costs. The cost of drilling,
completing and operating wells is often uncertain and cost overruns are common.
The Company's drilling operations may be curtailed, delayed or canceled as a
result of numerous factors, many of which are beyond the Company's control,
including title problems, weather conditions, compliance with governmental
requirements and shortages or delays in the delivery of equipment and services.
OPERATING HAZARDS AND UNINSURED RISKS
The oil and gas business involves a variety of operating risks, including
fire, explosions, blow-outs, pipe failure, casing collapse, abnormally pressured
formations and environmental hazards such as oil spills, gas leaks, ruptures and
discharges of toxic gases, the occurrence of any of which could result in
substantial losses to the Company due to injury and loss of life, severe damage
to and destruction of property, natural resources and equipment, pollution and
other environmental damage, clean-up responsibilities, regulatory investigation
and penalties and suspension of operations. The Company's production facilities
are also subject to hazards inherent in marine operations, such as capsizing,
sinking, grounding, collision and damage from severe weather conditions. The
relatively deep offshore drilling conducted by the Company overseas involves
increased drilling risks of high pressures and mechanical difficulties,
including stuck pipe, collapsed casing and separated cable. The impact that any
of these risks may have upon the Company is increased due to the low number of
producing properties owned by the Company. The Company and operators of
properties in which it has an interest maintain insurance against some, but not
all, potential risks; however, there can be no assurance that such insurance
will be adequate to cover any losses or exposure for liability. The occurrence
of a significant unfavorable event not fully covered by insurance could have a
material adverse effect on the Company's financial condition and results of
operations. Furthermore, the Company cannot predict whether insurance will
continue to be available at a reasonable cost or at all.
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<PAGE>
UNCERTAINTIES IN ESTIMATING RESERVES AND FUTURE NET CASH FLOWS
There are numerous uncertainties inherent in estimating quantities of
proved oil and gas reserves, including many factors beyond the control of the
Company. Reserve engineering is a subjective process of estimating the
underground accumulations of oil and gas that cannot be measured in an exact
manner. The estimates incorporated by reference in this Prospectus are based on
various assumptions required by the Commission, including unescalated prices and
costs and capital expenditures, and, therefore, are inherently imprecise
indications of future net revenues. Actual future production, revenues, taxes,
operating expenses, development expenditures and quantities of recoverable oil
and gas reserves may vary substantially from those assumed in the estimates. Any
significant variance in these assumptions could materially affect the estimated
quantity and value of reserves, In addition, the Company's reserves may be
subject to downward or upward revision based upon production history, results of
future development, availability of funds to acquire additional reserves,
prevailing oil and gas prices and other factors. Moreover, the calculation of
the estimated present value of the future net revenue using a 10% discount rate
as required by the Commission is not necessarily the most appropriate discount
factor based on interest rates in effect from time to time and risks associated
with the Company's reserves or the oil and gas industry in general.
It is also possible that reserve engineers may make different estimates of
reserves and future net revenues based on the same available data. In
calculating reserves on a BOE basis, gas was converted to oil at the ratio of
six Mcf of gas to one Bbl of oil. While this conversion ratio approximates the
energy equivalent of oil and gas on a Btu basis, it may not represent the
relative prices received by the Company on the sale of its oil and gas
production.
The estimated future net revenues attributable to the Company's net proved
reserves are prepared in accordance with Commission guidelines, and are not
intended to reflect the fair market value of the Company's reserves. In
accordance with the rules of the Commission, the Company's reserve estimates are
prepared using period end prices received for oil and gas. The estimated
quantities and present values of the Company's reserves at December 31, 1996
would have been lower if prices in effect on December 31, 1997 were used to
calculate such quantities and present values. Future reductions in prices below
those prevailing at year end 1997 would result in the estimated quantities and
present values of the Company's reserves being further reduced.
A substantial portion of the Company's proved reserves are or will be
subject to service contracts, production sharing contracts and other
arrangements. See "--Foreign Operations." The quantity of oil and gas the
Company will ultimately receive under these arrangements will differ based on
numerous factors, including the price of oil and gas, production rates,
production costs, cost recovery provisions and local tax and royalty regimes.
Changes in many of these factors do not affect estimates of U.S. reserves in the
same way they affect estimates of proved reserves in foreign jurisdictions, or
will have a different effect on reserves in foreign countries than in the United
States. As a result, proved reserves in foreign jurisdictions may not be
comparable to proved reserve estimates in the United States.
FOREIGN OPERATIONS
The Company's international assets and operations are subject to various
political, economic and other uncertainties, including, among other things, the
risks of war, expropriation, nationalization, renegotiation or nullification of
existing contracts, taxation policies, foreign exchange restrictions, changing
political conditions, international monetary fluctuations, currency controls and
foreign governmental regulations that favor or require the awarding of drilling
contracts to local contractors or require foreign contractors to employ citizens
of, or purchase supplies from, a particular jurisdiction. In addition, if a
dispute arises with foreign operations, the Company may be subject to the
exclusive
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<PAGE>
jurisdiction of foreign courts or may not be successful in subjecting foreign
persons, especially foreign oil ministries and national oil companies, to the
jurisdiction of the United States.
The Company's private ownership of oil and gas reserves under oil and gas
leases in the United States differs distinctly from its ownership of foreign oil
and gas properties. In the foreign countries in which the Company does business,
the state generally retains ownership of the minerals and consequently retains
control of (and in many cases, participates in) the exploration and production
of hydrocarbon reserves. Accordingly, operations outside the United States may
be materially affected by host governments through royalty payments, export
taxes and regulations, surcharges, value added taxes, production bonuses,
participation options and other charges.
Certain of the Company's producing properties are located offshore Palawan
Island in the Philippines, and, consequently, a portion of the Company's assets
is subject to regulation by the government of the Philippines. Although there
has been unrest and uncertainty in the Philippines, to date, the country's
Office of Energy Affairs has been largely unaffected by political changes. The
Company has operated in the Philippines since 1985 and believes that it has good
relations with the current Philippine government. However, there can be no
assurance that present or future governmental regulation in the Philippines will
not materially adversely affect the operations or cash flows of the Company.
All of the Company's current Philippine producing properties are located
in fields covered under Service Contract 14. To obtain favorable tax treatment,
at least 15% of Service Contract 14 must be owned by Philippine nationals.
Residents of the Philippines currently own in excess of 15% of Blocks A, B, C
and D of Service Contract 14, including 71% of Block C. The Company's ability to
export oil produced in the Philippines is restricted by the terms of Service
Contract 14. The Company currently sells its oil production within the
Philippines and therefore may be exposed to foreign currency risk.
INVESTMENT IN HUNT
The Company is a limited partner in Hunt. Generally, all decisions
concerning the operations of Hunt are made by the general partner without the
consent or input of the limited partners. Accordingly, the Company is not able
to influence decisions with respect to operations of Hunt, including decisions
regarding the purchase of concessions and other interests, exploration and
development operations (including the location, testing, completing or plugging
and abandoning of wells, as well as the gathering of seismic and other
geophysical data), farm out and other participation agreements, the acquisition
or sale of real and personal property, insurance coverage, bank and other
financings and other matters significant to the operations of Hunt.
The exploration activity of Hunt is ongoing. To date, Hunt's exploration
activities have not resulted in the discovery of any commercial oil or gas
reserves. No assurance can be given that Hunt's activities will ever result in
any commercial production or that the Company will realize a return on its
investment in Hunt. Hunt's operations are subject to risks applicable to the oil
and gas industry in general as well as to risks inherent in foreign operations,
and are subject to many of the risks disclosed herein under "Risk Factors"
including, without limitation, "--Foreign Operations," "--Volatility of Oil and
Gas Prices and Markets," "--Replacement of Reserves," "--Drilling Risks,"
"--Operating Hazards and Uninsured Risks," "--Uncertainties in Estimating
Reserves and Future Net Cash Flows," "--Environmental and Other Regulations" and
"--Acquisition Risks."
ENVIRONMENTAL AND OTHER REGULATIONS
The Company's business is regulated by the laws and regulations of the
United States, Philippines and Gabon. In addition, Hunt does business in and is
subject to the laws and regulations of other foreign
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<PAGE>
countries. These laws and governmental regulations, which cover matters
including drilling operations, taxation and environmental protection, may be
changed from time to time in response to economic or political conditions. See
"--Foreign Operations."
The Company's domestic operations are subject to numerous laws and
regulations governing the discharge of materials into the environment or
otherwise relating to environmental protection. The Company's domestic
operations could result in liability for personal injuries, property damage, oil
spills, discharge of hazardous materials, remediation and clean-up costs and
other environmental damages. In addition, the Company could be liable for
environmental damages caused by previous property owners. As a result,
substantial liabilities to third parties or governmental entities may be
incurred, the payment of which could have a material adverse effect on the
Company's financial condition, results of operations and liquidity. The Company
maintains insurance coverage for its operations, including limited coverage for
sudden environmental damages, but does not believe that insurance coverage for
environmental damages that occur over time is available at a reasonable cost.
Moreover, the Company does not believe that insurance coverage for the full
potential liability that could be caused by sudden environmental damages is
available at a reasonable cost. Accordingly, the Company may be subject to
liability or may lose substantial portions of its properties in the event of
certain environmental damages. The Company could incur substantial costs to
comply with environmental laws and regulations.
A substantial portion of the Company's producing properties are located
offshore. The costs to abandon offshore wells may be substantial. For financial
accounting purposes the Company accrues a per BOE charge over the life of a
field to cover such abandonment costs. No assurances can be given that such
reserves will be sufficient to pay such costs in the future as they are
incurred.
The Oil Pollution Act of 1990 imposes a variety of regulations on
"responsible parties" related to the prevention of oil spills. The
implementation of new, or the modification of existing, environmental laws or
regulations, including regulations promulgated pursuant to the Oil Pollution Act
of 1990, could have a material adverse impact on the Company.
The recent trend toward stricter standards in environmental legislation
and regulation in the U.S. is likely to continue. For instance, legislation has
been introduced in Congress that would reclassify certain exploration and
production wastes as "hazardous wastes" which would make the reclassified wastes
subject to much more stringent handling, disposal and clean-up requirements. If
such legislation were enacted, it could have a significant impact on the
operating costs of the Company, as well as the oil and gas industry in general.
Initiatives to further regulate the disposal of oil and gas wastes are also
pending in certain states, and these various initiatives could have a similar
impact on the Company.
In addition, while the Company believes that it is currently in compliance
with environmental laws and regulations applicable to the Company's operations
in the Philippines and Gabon, no assurances can be given that the Company will
be able to continue to comply with such environmental laws and regulations
without incurring substantial costs.
ACQUISITION RISKS
The Company intends to continue acquiring oil and gas properties. Although the
Company performs a review of the acquired properties that it believes is
consistent with industry practices, such reviews are inherently incomplete. It
generally is not feasible to review in depth every individual property involved
in each acquisition. Ordinarily, the Company will focus its due diligence
efforts on the higher valued properties and will sample the remainder. however,
even an in-depth review of all properties and records may not necessarily reveal
existing or potential problems nor will it permit a buyer to become sufficiently
familiar with the properties to assess fully their deficiencies and
capabilities. Inspections may
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<PAGE>
not be performed on every well, and structural or environmental problems, such
as ground water contamination, are not necessarily observable even when an
inspection is undertaken. The Company may be required to assume preclosing
liabilities, including environmental liabilities, and may acquire interests in
properties on an "as is" basis. There can be no assurance that the Company's
acquisitions will be successful.
LIMITED TRADING MARKET
At the present time, the Common Stock is not quoted on the Nasdaq Stock
Market, Inc. ("NNM") or listed on any national stock exchange. Although the
Common Stock currently trades on the OTC Bulletin Board, the trading volume has
not been substantial and there can be no assurance as to the liquidity or
sustainability of the market for the Common Stock or the ability of stockholders
to sell Common Stock at any price. Future trading prices of the Common Stock
will depend on many factors including, among others, prevailing market
conditions and the Company's operating results. The Company does not currently
meet the requirements of the NNM. There can be no assurance that the Common
Stock will meet these listing requirements and that it will be accepted for
trading on the NNM or on any national stock exchange.
As of June 15, 1998, 27,500,000 shares of Common Stock were issuable to the
Fund upon conversion of the Preferred Stock, 1,445,325 shares of Common Stock
were issuable upon the exercise of certain outstanding warrants and 2,075,000
shares of Common Stock were issuable upon the exercise of certain employee stock
options. All of such shares may be exercised or converted within sixty days of
the date of this Prospectus. In addition, the Fund has certain registration
rights with respect to the shares of Common Stock issuable upon conversion of
the Preferred Stock. The Common Stock being offered pursuant to this Prospectus
represents approximately 27% of the Company's total outstanding securities
(excluding options, warrants held by persons other than Jefferies and Company,
Inc. and outstanding Preferred Stock conversion rights). All of these common
shares, to the extent that they are eligible or appear to be eligible for sale
in the public market, could have a materially adverse effect on the market price
of the Common Stock and therefore make it more difficult to sell equity
securities. The Company may issue additional equity securities in order to fund
working capital requirements and for other purposes. To the extent the Company
does so, existing stockholders may experience substantial dilution, particularly
if the terms of such issuance include discounts to market prices or the issuance
of convertible securities.
RELIANCE ON KEY PERSONNEL
The Company is highly dependent upon its executive officers and key
employees, particularly Messrs. Gerry, Walston and Scheirman. Moreover, the
Company's investment in the Paramount joint venture is highly dependent upon
Robert Schneeflock. The unexpected loss of the services of any of these
individuals could have a detrimental effect on the Company. The Company has
entered into employment agreements with Messrs. Gerry and Scheirman which will
terminate in August 1998. The Company does not maintain key man life insurance
on any of its employees.
QUALIFICATION OF NET OPERATING LOSS CARRY FORWARD
As of December 31, 1996, the Company had a net operating loss carry
forward of $13.2 million for federal income tax purposes, and 1818 Oil Corp. had
a net operating loss carry forward of from $10 million to $12 million. As a
result of the acquisition of the capital stock of 1818 Oil Corp., the net
operating loss of the Company which may be used to offset future taxable income
will be limited to $1.6 million during any year. The net operating losses of
1818 Oil Corp. were not affected by the acquisition.
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<PAGE>
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus, including the documents incorporated by reference herein
and the exhibits hereto and thereto, includes "forward-looking statements"
within the meaning of Section 27A of the Securities Act and Section 21E of the
Securities Exchange Act of 1934 ("Exchange Act"). All statements other than
statements of historical facts included or incorporated by reference in this
Prospectus, including without limitation, statements regarding the Company's
financial position, reserve quantities and net present values, business
strategy, plans and objectives of management of the Company for future
operations are forward-looking statements. Although the Company believes that
the assumptions upon which such forward-looking statements are based are
reasonable, it can give no assurance that such assumptions will prove to have
been correct. Important factors that could cause actual results to differ
materially from the Company's expectations ("Cautionary Statements") are
disclosed above and elsewhere in this Prospectus as well as in periodic reports
filed by the Company under the Exchange Act. All subsequent written and oral
forward-looking statements attributable to the Company or persons acting on its
behalf are expressly qualified in their entirety by the Cautionary Statements.
SELLING STOCKHOLDERS
The following table sets forth as to each Selling Stockholder: (i) such
Stockholder's name and relationship to the Company, (ii) the number of shares of
Common Stock beneficially owned as of June 30, 1998, (iii) the number of shares
of Common Stock to be sold pursuant to this Prospectus, and (iv) the number and
percent of shares of Common Stock beneficially owned after the offering,
assuming all of the Offered Shares are sold. The Selling Stockholders reserve
the right to reduce the number of shares of Common Stock offered for sale or to
otherwise decline to sell any or all of the Offered Securities registered
hereunder.
SHARES
BENEFICIALLY SHARES TO SHARES PERCENT OF
OWNED BE SOLD OWNED CLASS
PRIOR TO IN THE AFTER AFTER
NAME OFFERING OFFERING OFFERING OFFERING
- ---- --------- -------- -------- --------
Jacob D. Landry (1) ............ 100,000 100,000 0 *
Emmett M. Murphy (1) ........... 200,000 200,000 0 *
Centennial Energy Partners,
L.P. (2) ..................... 387,500 387,500 0 *
Tercentennial Energy Partners,
L.P. (3) ..................... 262,500 262,500 0 *
Quadrennial Partners, L.P. (4) . 75,000 75,000 0 *
Investment II L.C. (1) ......... 25,000 25,000 0 *
L. Zachary Landry (1) .......... 30,000 30,000 0 *
Avocet Capital Management (1)... 300,000 300,000 0 *
Sands Partnership No. 1 (5) .... 1,020,000 920,000 0 *
Sandpiper & Co. (1) ............ 1,500,000 1,500,000 0 *
David D. May (1) ............... 50,000 50,000 0 *
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<PAGE>
SHARES
BENEFICIALLY SHARES TO SHARES PERCENT OF
OWNED BE SOLD OWNED CLASS
PRIOR TO IN THE AFTER AFTER
NAME OFFERING OFFERING OFFERING OFFERING
- ---- --------- -------- -------- --------
Sanford B. Prater (1) .......... 100,000 100,000 0 *
Philip J. Hempleman (1) ........ 250,000 250,000 0 *
Boyd L. Jefferies
Sharon K. Jefferies JTWOS (1) 50,000 50,000 0 *
W.S. Farish & Company (6) ...... 100,000 100,000 0 *
C. Daniel Walker (6) ........... 50,000 50,000 0 *
James M. Harrison (6) .......... 50,000 50,000 0 *
Ashok N. Vasvani and
Bansie Vasvani JTWROS (6) .... 50,000 50,000 0 *
Richard B. Coons (6) ........... 50,000 50,000 0 *
Magowan Family Foundation (6) .. 75,000 75,000 0 *
Magowan Profit Sharing Plan (6). 25,000 25,000 0 *
Saroc Oil Company (6) .......... 150,000 150,000 0 *
Meridian Fund, Ltd. (6) ........ 200,000 200,000 0 *
Lee Global Energy Fund (6) ..... 50,000 50,000 0 *
W.I. Lee (6) ................... 50,000 50,000 0 *
George T. Graves III IRA (6) ... 20,000 20,000 0 *
Global Undervalued Securities
Fund L.P. (6) ................ 100,000 100,000 0 *
Jefferies & Company, Inc. (7) .. 445,325 445,325 0 *
--------- --------- ----- -----
Total: ............. 5,765,325 5,765,325 0 *
- ---------------------
* The percentage of shares of Common Stock owned by each Selling Stockholder
before and after the offering is less than 1%.
(1) The shares of Common Stock beneficially owned prior to the offering were
purchased in a private placement which was consummated in July 1997 ("1997
Placement"). The shares are included in the Registration Statement of which
this Prospectus is a part pursuant to a Registration Rights Agreement dated
July 28, 1997 by and among the Company, Jefferies & Company, Inc.
("Jefferies") and certain purchasers listed therein ("1997 Agreement").
(2) Of the 387,500 shares of Common Stock beneficially owned by Centennial
Energy Partners, L.P. prior to the offering, 250,000 were purchased in the
1997 Placement and are included herein pursuant to the 1997 Agreement and
137,500 were purchased in a private placement which was consummated in
April 1998 ("1998 Placement") and are included herein pursuant to a
Registration
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<PAGE>
Rights Agreement dated April 21, 1998 by and among the Company, Jefferies
and certain purchasers listed therein ("1998 Agreement").
(3) Of the 262,500 shares of Common Stock beneficially owned by Tercentennial
Energy Partners, L.P. prior to the offering, 175,000 were purchased in the
1997 Placement and are included herein pursuant to the 1997 Agreement and
87,500 were purchased in the 1998 Placement and are included herein
pursuant to the 1998 Agreement.
(4) Of the 75,000 shares of Common Stock beneficially owned by Quadrennial
Partners, L.P. prior to the offering, 50,000 were purchased in the 1997
Placement and are included herein pursuant to the 1997 Agreement and 25,000
were purchased in the 1998 placement and are included herein pursuant to
the 1998 Agreement.
(5) Of the 1,020,000 shares of Common Stock beneficially owned by Sands
Partnership No. 1 prior to the offering, 920,000 were purchased in the 1997
Placement and are included herein pursuant to the 1997 Agreement and
100,000 were purchased in the 1998 Placement and are included herein
pursuant to the 1998 Agreement.
(6) The shares of Common Stock beneficially owned prior to the offering were
purchased in the 1998 Placement. The shares are included in the
Registration Statement of which this Prospectus is a part pursuant to the
1998 Agreement.
(7) The shares of Common Stock beneficially owned by Jefferies are issuable to
Jefferies upon the exercise of (i) a warrant to purchase 345,325 shares of
Common Stock at an exercise price of $1.00 per share granted to Jefferies
for services rendered as placement agent in connection with the 1997
Placement and (ii) a warrant to purchase 100,000 shares of Common Stock at
an exercise price of $2.00 per share granted to Jefferies for services
rendered as placement agent in connection with the 1998 Placement.
USE OF PROCEEDS
All proceeds from the sale of the Offered Securities will go to the
Selling Stockholders. The Company will not receive any consideration for the
sale of the Offered Securities registered hereunder.
DESCRIPTION OF CAPITAL STOCK
COMMON STOCK
The Company's authorized Common Stock consists of 100,000,000 shares of
Common Stock, par value $.10 per share, ("Common Stock") of which as of June 30,
1998, 20,749,964 shares were issued and outstanding and 31,020,325 shares were
reserved for issuance upon exercise of outstanding options, warrants and
Preferred Stock conversion rights. Holders of Common Stock do not have
preemptive rights to subscribe for additional shares of Common Stock issued by
the Company.
Holders of the Common Stock are entitled to receive dividends as may be
declared by the Board of Directors out of funds legally available therefor,
subject to the rights of the holders of Preferred Stock. No dividend may be
declared or paid on the Common Stock, and no Common Stock may be purchased by
the Company, unless all accrued and unpaid dividends on the outstanding
Preferred Stock have been paid, except for a purchase of shares of the Common
Stock by the Company pursuant to Rule 13e-4(h)(5) of the Exchange Act. In the
event of liquidation, holders of the Common Stock are entitled to share pro rata
in any distribution of the Company's assets remaining after payment of
liabilities, subject to the preferences and rights of the holders of the
Preferred Stock. All of the outstanding shares of the Common Stock are fully
paid and non-assessable. Holders of Common Stock are entitled to cast one vote
for each share held of record on all matters submitted to a vote of stockholders
and are not entitled to cumulate votes for the election of directors.
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<PAGE>
PREFERRED STOCK
The Certificate of Incorporation permits the Board to establish by
resolution one or more series of preferred stock having such number of shares,
designation, relative voting rights, dividend rates, liquidation and other
rights, preferences, powers, qualifications, restrictions and limitations as may
be fixed by the Board without any further stockholder approval. Such rights,
preferences, powers, qualifications, restrictions and limitations as may be
established could have the effect of impeding or discouraging the acquisition of
control of the Company.
The Company's authorized preferred stock consists of 500,000 shares, par
value $25.00 per share. Currently, 10,000 shares of Convertible Preferred Stock,
Series A, par value $25.00 per share ("Preferred Stock") are issued and
outstanding. The Preferred Stock ranks prior to all other classes and series of
junior stock of the Company, including the Common Stock, with respect to rights
on liquidation, dissolution or winding up.
DIVIDENDS AND DISTRIBUTIONS. In the event that the Company declares a cash
dividend or makes any other distribution to holders of the Common Stock, the
holder of each share of Preferred Stock will be entitled to receive a dividend
or distribution in an amount equal to the amount of the dividend or distribution
received by a holder of the number of shares of Common Stock for which such
share of Preferred Stock is convertible.
VOTING RIGHTS. Each share of Preferred Stock entitles the owner thereof to
vote at all special and annual meetings of stockholders, or in connection with
any stockholder action taken in lieu of a meeting of stockholders, on all
matters voted on by holders of Common Stock, including the election of
directors, voting together as a single class with all other shares entitled to
vote thereon. Each holder of Preferred Stock is entitled to cast the number of
votes per share as is equal to the number of votes that such holder would be
entitled to cast if the holder had converted his shares of Preferred Stock into
Common Stock on the applicable record date. In addition, the affirmative vote of
the holders of at least 66-2/3% of the outstanding shares of Preferred Stock,
voting separately as a single class, is necessary to (i) authorize, adopt or
approve any amendment to the Certificate of Incorporation that would increase or
decrease the par value of the shares of Preferred Stock or alter or change the
powers, preferences or special rights of the shares of Preferred Stock; (ii)
amend, alter or repeal the Certificate of Incorporation so as to affect the
shares of Preferred Stock adversely; or (iii) authorize, increase the authorized
number of shares of, or issue any additional shares of Preferred Stock. Holders
of Preferred Stock have the exclusive right, voting
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<PAGE>
separately as a single class, to elect three directors of the Company, one of
which director shall be elected to each of the Company's three classes, until
such time as the number of outstanding shares of Preferred Stock represent on a
fully-diluted basis less than 5% of the total number of shares of Common Stock
outstanding. The presence in person or by proxy of the holders of record of
one-third of the total number of shares of Preferred Stock then outstanding and
entitled to vote shall be necessary and sufficient to constitute a quorum for
all matters on which the holders of Preferred Stock vote separately as a class.
REDEMPTION. The shares of Preferred Stock are not redeemable.
REACQUIRED SHARES. Any shares of Preferred Stock converted, exchanged or
otherwise acquired by the Company will be retired and canceled, and will become
authorized but unissued shares of preferred stock, par value $25.00 per share,
to be reissued upon the filing of an appropriate certificate of designation.
Such shares may not be reissued as shares of Preferred Stock or any other parity
stock unless all of the shares of Preferred Stock are already converted,
exchanged or otherwise reacquired.
LIQUIDATION, DISSOLUTION OR WINDING UP. In the event of any liquidation,
dissolution or winding up of the Company, no distribution will be made to the
holders of shares of Common Stock or any other class of stock of the Company
ranking junior to the Preferred Stock until the holders of the shares of
Preferred Stock shall have received a liquidating distribution in the amount of
$10.00 per share. Neither the consolidation or merger of the Company with
another person nor the sale or other distribution to another person of all or
substantially all of the assets, property or business of the Company will be
considered a liquidation, dissolution or winding up of the Company for these
purposes.
CONVERSION. Each holder of any shares of Preferred Stock will have the
right, at the holder's option, at any time and from time to time, to convert any
or all of such shares into Common Stock into a number of shares of Common Stock
equal to the product of the number of shares of Preferred Stock being so
converted multiplied by the quotient of (i) $2,750 per share of Preferred Stock
divided by (ii) $1.00 (the "Conversion Price"). The Conversion Price may be
subject to adjustment in certain events including (a) dividends (and other
distributions) payable in any class of capital stock of the Company on shares of
Common Stock; (b) the issuance to all holders of Common Stock of rights or
warrants, entitling holders of such rights or warrants to subscribe for or
purchase Common Stock at less than the current market price; (c) subdivisions or
combinations of Common Stock; (d) the issuance of any shares of capital stock in
reclassification of the Common Stock; or (e) any other action taken by the
Company affecting the Common Stock similar to or having an effect similar to the
actions described in (a) through (d).
REGISTRATION RIGHTS
Approximately 37,128,766 shares of Common Stock (of which 27,945,325
shares are issuable upon exercise of certain outstanding warrants or conversion
of outstanding shares of Preferred Stock) and 10,000 shares of Preferred Stock
(collectively, the "Shares") are entitled to certain rights with respect to
their registration under the Securities Act. In the event that the Company
proposes to register any of its securities under the Securities Act other than
on Forms S-4 or S-8, the holders of the Shares shall be entitled to include
their shares in such registration (a "piggyback registration") subject to the
right of the underwriters of any such offering to limit the number of such
shares. Certain holders of the Shares that participate in a piggyback or demand
registration will be subject to a 90-day lockup period on securities of the
Company not included in any such registration. The Company has agreed to pay all
expenses in connection with each registration statement prepared pursuant to the
Registration Agreement, other than underwriting discounts and selling
commissions, which shall be borne by the participating sellers in proportion to
the number of shares sold by each.
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<PAGE>
CERTAIN ANTI-TAKEOVER PROVISIONS
The Restated Certificate of Incorporation (the "Certificate") and Bylaws
of the Company and Delaware law contain several provisions that may make the
acquisition of control by the Company by means of a tender offer, open market
purchases, a proxy fight, or otherwise more difficult.
DELAWARE LAW
Section 203 of the Delaware General Corporation Law ("Section 203")
restricts certain transactions between a corporation organized under Delaware
law (or its majority-owned subsidiaries) and any person holding 15% or more of
the corporation's outstanding voting stock, together with the affiliates or
associates of such person (an "Interested Stockholder"). Section 203 prevents,
for a period of three years following the date that a person becomes an
Interested Stockholder, the following types of transactions between the
corporation and the Interested Stockholder (unless certain conditions, described
below, are met): (a) mergers or consolidations, (b) sales, leases, exchanges or
other transfers of 10% or more of the aggregate assets of the corporation, (c)
issuances or transfers by the corporation of any stock of the corporation which
would have the effect of increasing the Interested Stockholder's proportionate
share of the stock of any class or series of the corporation, (d) any other
transaction which has the effect of increasing the proportionate share of the
stock of any class or series of the corporation which is owned by the Interested
Stockholder, and (e) receipt by the Interested Stockholder of the benefit
(except proportionately as a stockholder) of loans, advances, guarantees,
pledges or other financial benefits provided by the corporation.
The three-year ban does not apply if either the proposed transaction or
the transaction by which the Interested Stockholder became an Interested
Stockholder is approved by the board of directors of the corporation prior to
the date such stockholder becomes an Interested Stockholder. Additionally, an
Interested Stockholder may avoid the statutory restriction, if, upon the
consummation of the transaction whereby such stockholder becomes an Interested
Stockholder, the stockholder owns at least 85% of the outstanding voting stock
of the corporation without regard to those shares owned by the corporation's
officers and directors or certain employee stock plans. Business combinations
are also permitted within the three-year period if approved by the board of
directors and authorized at an annual or special meeting of stockholders, by the
holders of at least 662/3% of the outstanding voting stock not owned by the
Interested Stockholder. In addition, any transaction is exempt from the
statutory ban if it is proposed at a time when the corporation has proposed, and
a majority of certain continuing directors of the corporation have approved, a
transaction with a party who is not an Interested Stockholder of the corporation
(or who becomes such with board approval) if the proposed transaction involves
(a) certain mergers or consolidations involving the corporation, (b) a sale or
other transfer of over 50% of the aggregate assets of the corporation, or (c) a
tender or exchange offer for 50% of more of the outstanding voting stock of the
corporation.
A corporation may, at its option, exclude itself from the coverage of
Section 203 by amending its certificate of incorporation or bylaws by action of
its stockholders to exempt itself from coverage, provided that such bylaw or
charter amendment shall not become effective until 12 months after the date it
is adopted. The Company has not adopted such a charter or bylaw amendment.
BOARD OF DIRECTORS
CLASSIFIED BOARD OF DIRECTORS. The Certificate and Bylaws provide for the
Company's board of directors (The "Board" or "Board of Directors") to be divided
into three classes of directors serving staggered three-year terms. As a result,
approximately one-third of the Board of Directors is elected each year. The
classification of directors will have the effect of making it more difficult for
stockholders of the Company to change the composition of the Board of Directors
in a relatively short period of time. At least
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<PAGE>
two annual meetings of stockholders, instead of one, will generally be required
to effect a change in a majority of the directors on the Board. In addition, one
director in each class is elected by the holders of Preferred Stock, voting as a
class.
NUMBER OF DIRECTORS. The Bylaws provide that the number of directors shall
be not less than three nor more than 15, the exact number to be fixed from time
to time by the Board of Directors. Vacancies in the Board or newly created
directorships resulting from an increase in the number of directors my be filled
by a majority of the remaining directors. Accordingly, the Board could prevent
any stockholder from obtaining majority representation on the Company's Board by
enlarging the size of the Board and filling the new directorships with the
Board's own nominees.
REMOVAL OF DIRECTORS. The Certificate and the Bylaws provide that a
director may be removed only for cause. "Cause" is defined to exist only if the
director has been (x) convicted of a felony, adjudicated to be liable for gross
negligence, recklessness or misconduct in the performance of his or her duty to
the Company in a manner of substantial importance to the Company or adjudicated
to be mentally incompetent, which mental incompetency directly affects his or
her ability as a director of the Company and (y) such conviction or adjudication
was made by a court of competent jurisdiction and is no longer subject to
appeal.
CERTAIN VOTING REQUIREMENTS IN THE CERTIFICATE AND BYLAWS
AMENDMENT OF CERTIFICATE. The affirmative vote of the holders of at least
662/3% of the voting power of all outstanding voting shares of the Company is
required to alter, amend, adopt any provision inconsistent with, or repeal the
provisions of the Certificate of Incorporation relating to the election, removal
and classification of directors and amendment of the Bylaws.
AMENDMENTS TO BYLAWS. The Certificate and Bylaws further provide that the
Board has the power to make, alter, amend and repeal the Bylaws (except so far
as bylaws adopted by the stockholders of the Company otherwise provide).
Notwithstanding the foregoing, the Bylaws may not be altered, amended or
repealed, and no provision inconsistent therewith may be adopted, by action of
the stockholders without the affirmative vote of at least 662/3% of the voting
power of all the outstanding shares of the Company.
SUPERMAJORITY VOTE FOR CERTAIN TRANSACTIONS. Under Delaware law, and
subject to certain exceptions, unless a greater vote is required in the
corporation's certificate of incorporation, a merger, consolidation or
dissolution of a corporation may be approved by a majority vote of the
outstanding stock of the corporation entitled to vote thereon. The Certificate
of Incorporation contains provisions that require the approval of holders of at
least 80% of the voting power of the then outstanding shares of capital stock of
the Company entitled to vote as a condition for any of the following actions:
(i) a merger or consolidation, (ii) a share exchange, (iii) the adoption of any
plan or proposal for liquidation, dissolution or reorganization and (iv) a sale,
lease or other disposition of all or substantially all of the Company's assets
(on a consolidated basis). The 80% voting requirement is not applicable if such
action is approved by a majority of the Continuing Directors of the Company
prior to the transaction. The term "Continuing Director" is defined to mean (i)
any member of the Board as of December 31, 1992, (ii) any new director who is
proposed to be a director of the Company by a majority of the Continuing
Directors then on the Board and (iii) any successor of a Continuing Director who
is recommended to succeed a continuing Director by a majority of the Continuing
Directors then on the Board. The affirmative vote of the holders of at least 80%
of the voting power of all outstanding voting shares of the Company is required
to amend, repeal, or adopt any provisions inconsistent with, the provisions of
the Certificate of Incorporation described in this paragraph.
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<PAGE>
APPROVAL OF CERTAIN TRANSACTIONS BY PREFERRED STOCK DIRECTOR. The Bylaws
require the approval of a majority of the entire Board of Directors, which
majority must include at least one director elected by a class vote of the
holders of Preferred Stock, to take, approve or otherwise ratify the following
actions: (i) the issuance of equity securities or options, warrants or other
subscription or purchase rights with respect to equity securities of the Company
or any of its subsidiaries, (ii) the declaration of any dividend, (iii) the
incurrence, assumption, and/or refinancing of any indebtedness of the Company or
any of its subsidiaries, (iv) the adoption of any employee stock option or
similar plan, (v) the entering into of an employment or consulting agreement
with an aggregate payment exceeding $100,000 per annum, (vi) (x) any merger or
consolidation of the Company or any of its subsidiaries with one or more Persons
or (y) the merger or consolidation of one or more persons into or with the
Company or any of its subsidiaries, (vii) any sale, conveyance, exchange or
transfer to another Person of (x) the voting stock of the Company or any of its
subsidiaries or (y) all or substantially all of the assets of the Company or any
of its subsidiaries, (viii) outside of the ordinary course of business, (x) any
sale, conveyance, exchange, transfer or lease or other disposition to another
Person of any material assets, rights or properties of the Company or any of its
subsidiaries or (y) any purchase, lease or other acquisition of any material
assets, rights or properties of another Person, (ix) subject to exceptions,
expenditures by the Company or any of its subsidiaries in excess of $300,000,
(x) the formation of any Company or entity, all of the shares or equity
interests of which are not owned by the Company, directly or indirectly, (xi)
any material changes in accounting methods or policies of the Company or any of
its subsidiaries, (xii) any amendment, modification or restatement of the
Restated Certificate of Incorporation and Bylaws of the Company, or the
certificate of incorporation of any subsidiary of the Company, (xiii) the
settlement of any claim, proceeding, arbitration or other action involving the
Company if the Company or any subsidiary thereof would be required to pay an
aggregate amount in excess of $50,000 in connection with such settlement, (xiv)
the approval or amendment of the annual operating budget of the Company, (xv)
taking any other action which is other than in the ordinary course of business,
and (xvi) agreeing to take any of the foregoing actions. For purposes of this
paragraph, "Person" means any individual, corporation, partnership, limited
liability company, firm, joint venture, association, joint stock company, trust,
unincorporated organization, governmental authority or other entity.
PLAN OF DISTRIBUTION
All or part of the Common Stock offered hereby may be sold by the Selling
Stockholders from time to time in transactions on the OTC Bulletin Board, in
negotiated transactions or otherwise at market prices prevailing at the time of
sale or at prices related to such market prices, either directly or through
brokers or to dealers, to the extent that such prices are obtainable and
satisfactory to the Selling Stockholders. It is anticipated that any commissions
with respect to such sales will not exceed regular brokerage commissions. The
Selling Stockholders, and brokers executing selling orders on behalf of the
Selling Stockholders and dealers to whom the Selling Stockholders may sell, may
be deemed "underwriters" within the meaning of the Securities Act. Any profit
represented by the excess of the selling price over the cost of the shares sold
in the case of dealers, or any commission received in the case of brokers, may
be deemed to be underwriting discounts or commissions under the Securities Act.
In connection with the sales of Offered Securities, the Selling
Stockholders may enter into hedging transactions with broker-dealers. In
connection with such transactions, the broker-dealers may engage in short sales
of shares of Common Stock registered hereunder in the course of hedging the
positions they assume with the Selling Stockholders. The Selling Stockholders
may also sell shares of Common Stock short and redeliver the shares to close out
such short positions. The Selling Stockholders may also enter into option or
other transactions with broker-dealers which require the delivery to the
broker-dealer of the shares of Common Stock registered hereunder, which the
broker-dealer may resell or otherwise transfer pursuant to this Prospectus.
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<PAGE>
The Company will inform the Selling Stockholders that the anti-
manipulation rules under Regulation M under the Exchange Act may apply to their
sales in the market and will furnish the Selling Stockholders upon request of a
copy of these rules. The Company will also inform the Selling Stockholders of
the need for delivery of copies of this Prospectus in connection with the sale
of any of the Offered Securities registered hereunder.
The expenses of registration incurred in connection with this offering,
estimated at $50,000, will be paid by the Company, but all selling and other
expenses incurred by Selling Stockholders will be borne by such Selling
Stockholders.
The Selling Stockholders may sell all or part of the Common Stock offered
hereby pursuant to Rule 144 under the Securities Act.
LEGAL MATTERS
The validity of the Common Stock offered hereby has been passed upon for
the Company by Butler & Binion, L.L.P., Houston, Texas.
EXPERTS
The consolidated financial statements of the Company as of December 31,
1997 and 1996 and for each of the two years in the period ended December 31,
1997, incorporated in this prospectus by reference from the Company's annual
report on Form 10-KSB, have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report which is incorporated herein by reference
and have been so incorporated in reliance upon the report of such firm given
upon the authority of said firm as experts in auditing and accounting.
The financial statements of 1818 Oil Corp. as of December 31, 1997 and
1996 and for each of the two years in the period ended December 31, 1997,
incorporated herein by reference to the Company's Report on Form 8-K/A, filed
May 29, 1998, have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given upon the authority
of said firm as experts in auditing and accounting.
Information incorporated by reference into this prospectus regarding the
estimated quantities of oil and gas reserves and the discounted present value of
future pre-tax cash flows therefrom is based upon estimates of such reserves and
present values prepared by or derived from estimates included in the Company's
Annual Report on Form 10-KSB for the year ended December 31, 1997, prepared by
Netherland Sewell and Associates, independent petroleum engineers, and
incorporated herein by reference. All of such information has been so included
herein in reliance upon the authority of such firm as experts in such matters.
- 18 -
<PAGE>
================================================================================
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION
NOT CONTAINED IN THIS PROSPECTUS; ANY INFORMATION OR REPRESENTATION NOT
CONTAINED HEREIN MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN VAALCO ENERGY, OFFER TO SELL, AS
A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN INC. THOSE TO WHICH
IT RELATES OR AN OFFER TO ANY PERSON IN ANY STATE WHERE SUCH OFFER WOULD BE
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE HEREUNDER SHALL
UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN
THE FACTS SET FORTH IN THIS PROSPECTUS OR THE AFFAIRS OF THE COMPANY SINCE THE
DATE HEREOF.
TABLE OF CONTENTS
PAGE
----
Available Information ............................... 1
Incorporation of Certain
Documents by Reference ........................... 1
The Company ......................................... 2
Risks Factors ....................................... 3
Selling Stockholders ................................ 10
Use of Proceeds ..................................... 12
Description of Capital Stock ........................ 12
Plan of Distribution ................................ 17
Legal Matters ....................................... 18
Experts ............................................. 18
5,745,325 Shares
VAALCO ENERGY,
INC.
COMMON STOCK
----------------------------------------
P R O S P E C T U S
----------------------------------------
JULY , 1998
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
All capitalized terms used and not defined in Part II of this Registration
Statement shall have the meanings assigned to them in the Prospectus which forms
a part of this Registration Statement.
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses payable by VAALCO Energy, Inc. (the "Company") in
connection with the issuance and distribution of the Offered Securities to be
registered are as follows:
Securities Act registration fee................................ $ 4,289
Printing costs................................................. 10,000
Legal fees and expenses........................................ 25,000
Accounting fees and expenses................................... 10,000
Miscellaneous.................................................. 711
Total.................................................... 50,000
======
All of the foregoing estimated costs, expenses and fees will be borne by
the Company.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware,
pursuant to which the Company is incorporated, provides generally and in
pertinent part that a Delaware corporation may indemnify its directors and
officers against expenses, judgments, fines, and settlements actually and
reasonably incurred by them in connection with any civil, criminal,
administrative, or investigative suit or action except actions by or in the
right of the corporation if, in connection with the matters in issue, they acted
in good faith and in a manner they reasonably believed to be in or not opposed
to the best interests of the corporation, and in connection with any criminal
suit or proceeding, if in connection with the matters in issue, they had no
reasonable cause to believe their conduct was unlawful. Section 145 further
provides that in connection with the defense or settlement of any action by or
in the right of the corporation, a Delaware corporation may indemnify its
directors and officers against expenses actually and reasonably incurred by them
if, in connection with the matters in issue, they acted in good faith and in a
manner they reasonably believed to be in or not opposed to the best interests of
the corporation, except that no indemnification may be made in respect of any
claim, issue, or matter as to which such person has been adjudged liable to the
corporation unless the Delaware Court of Chancery or other court in which such
action or suit is brought approves such indemnification. Section 145 further
permits a Delaware corporation to grant its directors and officers additional
rights of indemnification through bylaw provisions and otherwise, and or
purchase indemnity insurance on behalf of its directors and officers. Article
Eight of the Restated Certificate of Incorporation of the Company and Article
VII the Bylaws of the Company provide, in general, that the Company may
indemnify its officers and directors to the full extent of Delaware law.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibit Number and Description.
1. Underwriting Agreement. *
2. Plan of acquisition, reorganization, arrangement, liquidation or
succession.*
-2-
<PAGE>
4. Instruments defining the rights of security holders, including
indentures
4.1 -- Restated Certificate of Incorporation
4.2 -- Certificate of Amendment to Restated Certificate of
Incorporation
4.3 -- Bylaws
4.4 -- Amendments to Bylaws
5. Opinion re legality
5.1 Opinion of Butler & Binion, L.L.P.
8. Opinion re tax matters*
15. Letter on unaudited interim financial information*
23. Consents of experts and counsel
23.1 -- Consent of Deloitte & Touche LLP
23.2 -- Consent of PricewaterhouseCoopers L.L.P.
23.3 -- Consent of Butler & Binion, L.L.P. (included in their
opinion filed as Exhibit 5.1)
23.4 -- Consent of Netherland Sewell and Associates
24. Power of attorney
24.1 -- (Included herein on signature page)
25. Statement of eligibility of trustee*
26. Invitations for competitive bids*
27. Financial Data Schedule*
99. Additional Exhibits
99.1 -- Registration Rights Agreement among the Company and The
1818 Fund II, L.P., dated April 21, 1998 (incorporated by
reference to Exhibit 2.3 to the Company's Current Report
on Form 8-K, dated April 21, 1998, File No. 000-20928)
99.2 -- Registration Rights Agreement dated April 21, 1998, by and
among the Company, Jefferies & Company, Inc. and the
inventors listed therein. (incorporated by reference to
Exhibit 2.4 to the Company's Current Report on Form 8-K,
dated April 21, 1998, File No. 000-20928)
99.3 -- Registration Rights Agreement, dated July 28, 1997, by and
among the Company, Jefferies & Company, Inc. and the
investors listed therein (incorporated by reference to
Exhibit 10.1 to the Company's Quarterly Report on Form
10-QSB for the quarter period ended June 30, 1997, File
No. 000-20928).
- ----------------
* Inapplicable to this filing
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by section 10(a)(3) of the
Securities Act of 1933, as amended;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information in the registration statement; and Notwithstanding the
foregoing, any increase or decrease in volume of securities offered (if
the total dollar value of securities offered would not exceed that which
was
-3-
<PAGE>
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) Include any additional or changed material information on the
plan of distribution.
Paragraphs (1)(i) and (1)(ii) of this section do not apply if the
information required in a post-effective amendment is incorporated by reference
from periodic reports filed by the Company under the Securities Exchange Act of
1934.
(2) That for determining liability under the Securities Act of 1933, as
amended, treat each such post-effective amendment as a new registration
statement of the securities offered and the offering of the securities shall be
the initial bona fide offering.
(3) To file a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended, may be permitted to directors, officers, and
controlling persons of the Company pursuant to the foregoing provisions, or
otherwise, the Company has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act of 1933, as amended, and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or paid
by a director, officer, or controlling person of the Company in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933, as amended, and will be governed by the
final adjudication of such issue.
-4-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the undersigned registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Houston, State of Texas on the 13th
day of July, 1998.
VAALCO ENERGY, INC.
By: /s/ ROBERT L. GERRY III
Robert L. Gerry III
Chairman of the Board and
Chief Executive Officer
-5-
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Robert L. Gerry III and W. Russell Scheirman, and
each of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, for him in his name, place and stead, in any
and all capacities, to sign any and all amendments (including amendments that
register additional securities of the same class to be declared effective in
accordance with Rule 462(b) promulgated under the Securities Act of 1933, as
amended, and post-effective amendments) to this Registration Statement and any
new Registration Statement that registers additional securities in accordance
with said Rule 462, and to file the same, with all exhibits hereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents or either of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons in the
capacities and on the dates indicated.
NAME TITLE DATE
---- ----- ----
/s/ ROBERT L. GERRY III Chairman of the Board July 13, 1998
Robert L. Gerry III and Chief Executive
Officer (Principal
Executive Officer)
/s/ W. RUSSELL SCHEIRMAN President, Chief July 13, 1998
W. Russell Scheirman Financial Officer and
Director (Principal
Financial and
Accounting Officer)
/s/ VIRGIL A. WALSTON, JR. Vice Chairman of the July 13, 1998
Virgil A. Walston, Jr. Board and Chief
Operating Officer
/s/ LAWRENCE L. TUCKER Director July 13, 1998
Lawrence L. Tucker
/s/ T. MICHAEL LONG Director July 13, 1998
T. Michael Long
/s/ WALTER W. GRIST Director July 13, 1998
Walter W. Grist
/s/ ARNE R. NIELSON Director July 13, 1998
Arne R. Nielson
-6-
EXHIBIT 4.1
RESTATED CERTIFICATE OF INCORPORATION
OF
VAALCO ENERGY, INC.
(Originally incorporated February 28, 1989
under the name Gladstone Resources Ltd.)
ARTICLE ONE
The name of the corporation is VAALCO Energy, Inc.
ARTICLE TWO
The address of its registered office in the State of Delaware is
Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County
of New Castle, Delaware. The name of its registered agent at such address is The
Corporation Trust Company.
ARTICLE THREE
The purpose of the corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of
Delaware.
ARTICLE FOUR
The aggregate number of shares which the corporation has authority to issue
is 50,500,000, of which 50,000,000 shares shall be a class designated as Common
Stock with a par value of $0.10 per share, and 500,000 shares shall be a class
designated as Preferred Stock with a par value of $25.00 per share. The Board of
Directors is authorized, subject to limitations prescribed by law and the
provisions of this Article Four, to provide for the issuance of shares of
Preferred Stock in series, and, by filing a certificate pursuant to the
applicable law of the State of Delaware, to establish from time to time the
number of shares to be included in each such series, and to fix the designation,
powers, preferences and rights of the shares of each series and the
qualifications, limitations or restrictions thereof.
The authority of the Board with respect to each series shall include, but
not be limited to, determination of the following:
(a) The number of shares constituting that series and the distinctive
designation of that series;
(b) The dividend rate on the shares of that series, whether dividends
shall be cumulative, and if so, from which date or dates, and the relative
rights of priority, if any, of payment of dividends on shares of that
series;
(c) Whether that series shall have voting rights, in additional to
the voting rights provided by law, and the terms of such voting rights;
(d) Whether that series shall have conversion privileges, and, if so,
the term and conditions of such conversion, including provision for
adjustments of the conversion rate in such events as the Board of Directors
shall determine:
(e) Whether or not the shares of that series shall be redeemable,
and, if so, the terms and conditions of such redemption, including the date
or date upon or after which they shall be redeemable, and the amount per
share payable in case of redemption, which amount may vary under different
conditions and at different redemption dates;
(f) Whether that series shall have a sinking fund for the redemption
or purchase of shares of that series, and if so, the terms and amount of
such sinking fund;
(g) The rights of the shares of that series in the event of voluntary
or involuntary liquidation, dissolution or winding up of the corporation,
and the relative rights of priority, if any, of payment of shares of that
series;
(h) Any other relative rights, preferences and limitations of that
series.
<PAGE>
Dividends on outstanding shares of Preferred Stock shall be paid or
declared and set apart for payment before any dividends shall be paid or
declared and set apart for payment on the common shares with respect to the same
dividend period.
If upon any voluntary or involuntary liquidation, dissolution or winding up
of the corporation, the assets available for distribution to holders of shares
of Preferred Stock of all series shall be insufficient to pay such holders the
full preferential amount to which they are entitled, then such assets shall be
distributed ratably among the shares of all series of Preferred Stock in
accordance with the respective preferential amounts (including unpaid cumulative
dividends, if any) payable with respect thereto.
ARTICLE FIVE
SECTION 1. NO WRITTEN BALLOT. Directors need not be elected by written
ballot unless required by the bylaws of the corporation.
SECTION 2. NUMBER, ELECTION AND TERMS OF DIRECTORS. Except as otherwise
fixed pursuant to the provisions of Article Four hereof relating to the rights
of the holders of any class or series of stock having a preference over the
Common Stock as to dividends or upon liquidation to elect additional directors
under specified circumstances, the number of directors of the corporation shall
be fixed from time to time by or pursuant to the bylaws; provided that such
number shall not be less than three nor more than fifteen. The directors, other
than those who may be elected by the holders of any class or series of stock
having preference over the Common Stock as to dividends or upon liquidation,
shall be classified, with respect to the time for which they severally hold
office, into three classes, each as nearly equal in number as possible, as shall
be provided in the manner specified in the bylaws, one class (Class I) to hold
office initially for a term expiring at the annual meeting of stockholders to be
held in 1994, another class (Class II) to hold office initially for a term
expiring at the annual meeting of stockholders to be held in 1995, and another
class (Class III) to hold office initially for a term expiring at the annual
meeting of stockholders to be held in 1996, with the members of each class to
hold office until successors are elected and qualified. At each annual meeting
of the stockholders of the corporation, the successors to the class of directors
whose term expires at that meeting shall be elected to hold office for a term
expiring at the annual meeting of stockholders to be held in the third year
following the year of their elections.
SECTION 3. REMOVAL OF DIRECTORS. Subject to the rights of any class or
series of stock having preference over the Common Stock as to dividends or upon
liquidation to elect additional directors under specified circumstances, any
director may be removed from office only for cause. Except as may otherwise be
provided by law, cause for removal shall be construed to exist only if: (a) the
director whose removal is proposed has been convicted of a felony by a court of
competent jurisdiction and such conviction is no longer subject to direct
appeal; (b) such director has been adjudicated by a court of competent
jurisdiction to be liable for gross negligence, recklessness or misconduct in
the performance of his or her duty to the corporation in a manner of substantial
importance to the corporation and such adjudication is no longer subject to
direct appeal; or (c) such director has been adjudicated by a court of competent
jurisdiction to be mentally incompetent, which mental incompetency directly
affects his or her ability as a director of the corporation, and such
adjudication is no longer subject to direct appeal. Any action for removal must
be brought within three months of the date on which such conviction or
adjudication is no longer subject to direct appeal.
SECTION 4. BYLAW AMENDMENTS. The Board of Directors shall have power to
make, alter, amend and repeal the bylaws (except so far as the bylaws adopted by
the stockholders shall otherwise provide). Any bylaws made by the Board of
Directors under the powers conferred hereby may be altered, amended or repealed
by the directors or by the stockholders. Notwithstanding the foregoing and
anything contained in this Certificate of Incorporation to the contrary, the
bylaws shall not be altered, amended or repealed by action of the stockholders
and no provision inconsistent therewith shall be adopted by the stockholders
without the affirmative vote of the holders of at least 66 2/3% of the voting
power of all the shares of the corporation entitled to vote generally in the
election of directors, voting together as a single class.
2
<PAGE>
SECTION 5. AMENDMENT, REPEAL, ETC. Notwithstanding anything contained in
this Certification of Incorporation to the contrary, the affirmative vote of the
holders of at least 66 2/3% of the voting power of the then outstanding shares
of capital stock of the corporation entitled to vote generally in the election
of directors ("Voting Stock"), voting together as a single class, shall be
required to alter, amend, adopt any provision inconsistent with, or repeal, this
Article Five or any provision thereof.
ARTICLE SIX
SECTION 1. VOTE REQUIRED FOR CERTAIN ACTIONS. In addition to any
affirmative vote required by law or this Certificate of Incorporation, unless
approved by a majority of the Continuing Directors (as hereinafter defined), the
affirmative vote of the holders of at least 80% of the Voting Stock, voting
together as a single class, shall be required for the approval or authorization
of (i) any merger or consolidation of the corporation with or into another
corporation, (ii) any share exchange with the corporation, (iii) the adoption of
any plan or proposal for the liquidation, dissolution or reorganization of the
corporation and (iv) any sale, lease or other disposition of all or
substantially all the assets of the corporation (on a consolidated basis). Such
affirmative vote shall be required notwithstanding the fact that no vote may be
required, or that a lesser percentage may be specified, by law or in any
agreement with any national securities exchange or otherwise.
SECTION 2. CONTINUING DIRECTORS. For purposes of this Article Six, the
term "Continuing Directors" shall mean (i) any member of the Board of
Directors of the corporation as of December 31, 1992, (ii) any new director who
is proposed to be a director of the corporation by a majority of the Continuing
Directors then on the Board of Directors of the corporation and (iii) any
successor of a Continuing Director who is recommended to succeed a Continuing
Director by majority of the Continuing Directors then on the Board of Directors
of the corporation.
SECTION 3. AMENDMENT. Notwithstanding any other provision of this
Certificate of Incorporation or the bylaws (and notwithstanding the fact that a
lesser percentage may be specified by law, this Certificate of Incorporation or
the bylaws), the affirmative vote of the holders of 80% or more of the
outstanding Voting Stock, voting together as a single class, shall be required
to amend or repeal, or adopt any provisions inconsistent with, this Article Six.
ARTICLE SEVEN
The corporation reserves the right to amend or repeal any provision
contained in this Certificate of Incorporation in the manner now or hereafter
prescribed by statute or by this Certificate of Incorporation. All rights
conferred upon stockholders herein are granted subject to this reservation.
ARTICLE EIGHT
No director shall personally be liable to the corporation or the
stockholders for monetary damages for any breach of his fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the corporation or the stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under section 174 of the Delaware General Corporation Law, or (iv)
for any transaction from which the director derived an improper personal
benefit. If the Delaware General Corporation Law or other applicable law is
amended after approval by the stockholders of this article to authorize
corporate action further eliminating or limiting the personal liability of
directors, then the liability of a director of the corporation shall be
eliminated or limited to the fullest extent permitted by the Delaware General
Corporation Law or such other applicable law, as so amended. Any repeal or
modification of this article by the stockholders shall not adversely affect any
right or protection of a director existing at the time of such repeal or
modification.
IN WITNESS WHEREOF, this Restated Certificate of Incorporation, which (i)
restates and integrates and does not further amend the provisions of the
Corporation's Certificate of Incorporation, as heretofore amended, and (ii)
except in accordance with Section 245 of the General Corporation Laws of the
State of Delaware, contains no discrepancy between the Corporation's Certificate
of Incorporation, as heretofore
3
<PAGE>
amended, and the provisions of this Restated Certificate of Incorporation,
having been duly adopted by the Board of Directors of the Corporation in
accordance with the provisions of Section 245 of the General Corporation Laws of
the State of Delaware, has been executed this 15th day of September, 1997 by W.
Russell Scheirman, its authorized officer.
/s/ W. RUSSELL SCHEIRMAN
Title: President
4
EXHIBIT 4.2
CERTIFICATE OF AMENDMENT OF
THE CERTIFICATE OF INCORPORATION
OF VAALCO ENERGY INC.
VAALCO Energy Inc., a Delaware corporation (the "Corporation"), does
hereby certify:
I. That at a meeting of the Board of Directors of the Corporation,
resolutions were duly adopted setting forth a proposed amendment to the
Certificate of Incorporation of the Corporation, declaring the amendment to
be advisable and calling a meeting of stockholders of the Corporation for
consideration thereof. The resolution setting forth the proposed amendment
is as follows:
"RESOLVED FURTHER, that to increase the authorized shares of the
Corporation's Common Stock from 50,000,000 shares to 100,000,000 shares
the Certificate of Incorporation of the Corporation shall be amended by
deleting the first paragraph of Article Four and substituting thereof
the following as the first paragraph of Article Four:
The aggregate number of shares which the Corporation has authority to
issue is 100,500,000 of which 100,000,000 shares shall be a class
designated as Common Stock with a par value of $.10 per share, and
500,000 shares shall be a class designated as Preferred Stock with a
par value of $25.00 per share. The Board of Directors is authorized,
subject to limitations prescribed by law and the provisions of this
Article Four, to provide for the issuance of shares of Preferred
Stock in series, and, by filing a certificate pursuant to the
applicable law of the State of Delaware, to establish from time to
time the number of shares to be included in each such series, and to
fix the designation, powers, preferences and rights of the shares of
each series and the qualifications, limitations or restrictions
thereof."
II. That pursuant to resolutions of its Board of Directors, a meeting
of the stockholders of said Corporation was duly called and held on June
24, 1998, upon notice and in accordance with Section 222 of the General
Corporation Law of the State of Delaware at which meeting the necessary
number of shares as required by statute were voted in favor of the
amendment.
III. That said amendment was duly adopted and in accordance with
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, VAALCO Energy Inc. has caused this Certificate to be
signed by W. Russell Scheirman, an authorized officer, this 24th day of June,
1998.
VAALCO Energy, Inc.
/s/ W. RUSSELL SCHEIRMAN
W. Russell Scheirman, President, Chief
Financial Officer and Director
EXHIBIT 4.3
VAALCO ENERGY INC.
BYLAWS
ARTICLE I
OFFICES
Section I. The registered office shall be in the City of Wilmington,
County of Newcastle, State of Delaware.
Section 2. The corporation may also have offices at such other places both
within and without the State of Delaware as the board of directors may from time
to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders shall be held at such place
either within or without the State of Delaware as shall be designated from time
to time by the board of directors and stated in the notice of the meeting.
Section 2. The annual meeting of the shareholders of the corporation, for
the election of directors and the transaction of such other business as may
properly come before the meeting, shall be held at such time and date as shall
be designated by the board of directors from time to time and stated in the
notice of the meeting. Such annual meeting shall be called in the same manner as
provided in these bylaws for special meetings of the shareholders, except that
for the purposes of such meeting need be enumerated in the notice and proxies of
such meeting only to the extent required by law in the case of annual meetings.
Section 3. Written notice of the annual meeting stating the place, date
and hour of the meeting shall be given to each stockholder entitled to vote at
such meeting not less than 10 nor more than 60 days before the date of the
meeting.
Section 4. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
Section 3. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the president and shall be called by the
president or secretary at the request of a majority of the board of directors,
or at the request in writing of stockholders owning a majority in amount of the
entire capital stock of the corporation issued and outstanding and entitled to
vote. Such request shall state the purpose or purposes of the proposed meeting.
Section 6. Written notice of a special meeting stating the place, date and
hour of the meeting and the purpose or purposes for which the meeting is called,
shall be given not less than ten nor more than 60 days before the date of the
meeting, to each stockholder entitled to vote at such meeting.
Section 7. Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the stock issued and outstanding
and entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the certificate of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the stockholders, the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have power to adjourn
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the meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than 30 days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
Section 9. When a quorum is present at any meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statutes of
Delaware or of the certificate of incorporation a different vote is required, in
which case such express provision shall govern and control the decision of such
question.
Section 10. Unless otherwise provided in the certificate of incorporation
each stockholder shall at every meeting of the stockholders be entitled to one
vote in person or by proxy for each share of the capital stock having voting
power held by such stockholder, but no proxy shall be voted after three years
from its date unless the proxy provides for a longer period.
Section 11. Unless otherwise provided in the certificate of incorporation
any action required to be taken at any annual or special meeting of stockholders
of the corporation, or any action which may be taken at any annual or special
meeting of such stockholders, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Prompt notice of the taking of the corporate action without a meeting
by less than unanimous written consent shall be given to those stockholders who
have not consented in writing.
ARTICLE III
DIRECTORS
Section 1. There shall at all times be at least one director of the
corporation. The number of directors shall from time to time be fixed and
determined by the directors and shall be set forth in the notice of any meeting
of stockholders held for the purpose of electing directors.
Section 2. Vacancies and newly created directorships resulting from any
increase in the authorized number of directors may be filled by a majority of
the directors then in office, though less than a quorum, or by a sole remaining
director, and the directors so chosen shall hold office until the next annual
election and until their successors are duly elected and shall qualify, unless
sooner displaced. If there are no directors in office, then an election of
directors may be held in the manner provided by statute. Any director may be
removed either for or without cause at any special meeting of the stockholders
duly called and held for such purpose.
Section 3. The business of the corporation shall be managed by its board
of directors which may exercise all such powers of the corporation and do all
such lawful acts and things as are not by statute or by the certificate of
incorporation or by these bylaws directed or required to be exercised or done by
the stockholders.
Section 4. The board of directors of the corporation may hold meetings,
both regular and special, either within or without the State of Delaware.
Section 5. The first meeting of each newly elected board of directors
shall be held at the place of, and immediately following, the annual meeting of
the stockholders and no notice of such meeting shall be necessary to the newly
elected directors in order legally to constitute the meeting, provided a quorum
shall be present. In the event such meeting is not held at such time and place,
the meeting may be held at such time and place as shall be specified in a notice
given as hereinafter provided for special meetings of the board of directors, or
as shall be specified in a written waiver signed by all of the directors.
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Section 6. Regular meetings of the board of directors may be held without
notice at such time and at such place as shall from time to time be determined
by the board.
Section 7. Special meetings of the board may be called by the chairman or
vice chairman on 48 hours' notice to each director, either personally or by mail
or by telegram. Special meetings shall be called by the president or secretary
in like manner and on like notice on the written request of two directors. The
attendance of a director at any meeting shall constitute a waiver of notice of
such meeting, except where a director attends a meeting for the sole purpose of
objecting to the transaction of any business because the meeting is not lawfully
called convened. Neither the business to be transacted at, nor the purpose of,
any special meeting of the board of directors need be specified in the notice or
waiver of notice of such meeting, except that notice shall be given of any
proposed amendment to these bylaws if it is to be adopted at any special meeting
or with respect to any other matter where notice is required by statute.
Section 8. At all meetings of the board a majority of the directors shall
constitute a quorum for the transaction of business and the act of a majority of
the directors present at any meeting at which there is a quorum shall be the act
of the board of directors, except as may be otherwise specifically provided by
statute or by the certificate of incorporation. If a quorum shall not be present
at any meeting of the board of directors, the directors present thereat may
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present.
Section 9. Any action required or permitted to be taken at any meeting of
the board of directors or of any committee thereof may be taken without a
meeting, if all members of the board or committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with the minutes of
proceedings of the board or committee.
Section 10. Members of the board of directors, or any committee designated
by the board of directors, may participate in a meeting of the board of
directors, or any committee, by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.
Section 11. The board of directors may, by resolution passed by a majority
of the whole board, designate one or more committees, each committee to consist
of one or more of the directors of the corporation. The board may designate one
or more directors as alternate members of any committee, who may replace any
absent or qualified member at any meeting of the committee. Any such committee,
to the extent provided in the resolution of the board of directors, shall have
and may exercise all the powers and authority of the board of directors in the
management of the business and affairs of the corporation, and may authorize the
seal of the corporation to be affixed to all papers which may require it; but no
such committee shall have the power or authority in reference to amending the
certificate of incorporation, adopting an agreement of merger or consolidation,
recommending to the stockholders the sale, lease or exchange of all or
substantially all property and assets of the corporation, recommending to the
stockholders a dissolution of the corporation or a revocation of a dissolution,
or amending the bylaws of the corporation; and, unless the resolution or the
certificate of incorporation expressly so provide, no committee shall have the
power or authority to declare a dividend or to authorize the issuance of stock.
Such committee or committees shall have such name or names as may be determined
from time to time by resolution adopted by the board of directors.
Section 12. Each committee shall keep regular minutes of its meetings and
report the same to the board of directors when required.
Section 13 The board of directors shall have the authority to fix the
compensation of directors. The directors may be paid their expenses, if any, of
attendance at each meeting of the board of directors and may be paid a fixed sum
for attendance at each meeting of the board of directors or a stated salary as
director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
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Section 14. The board of director's may appoint such advisory directors as
if may deem appropriate, each of whom will hold office until the next annual
meeting of the directors following their election. The advisory directors shall
have the right to attend meetings of the board of directors and to advise the
board concerning the affairs of the corporation, but shall not have the right to
vote.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes of Delaware or
of the certificate of incorporation or of these bylaws, or otherwise, notice is
required to be given to any director or stockholder, it shall not be construed
to mean personal notice, but such notice may be given in writing, by mail,
addressed to such director or stockholder, at his address as it appears on the
records of the corporation, with postage thereon prepaid, and such notice shall
be deemed to be given at the time when the same shall be deposited in the United
States mail. Notice to directors may also be given personally or by telegram.
Section 2. Whenever any notice is required to be given under the
provisions of the statutes or of the certificate of incorporation or of these
bylaws, or otherwise, a waiver thereof in writing, signed by the person or
persons entitled to said notice, whether before or after the time stated
therein, shall be deemed equivalent thereto.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chose by the board of
directors and shall be a chairman and chief executive officer, a vice chairman
and chief operating officer, president, one or more vice presidents (an one or
more of whom may be designated executive vice president or senior vice
president), a chief financial officer and a secretary. Any number of offices may
be held by the same person. Such officers shall be chosen by the board of
directors at its first meeting after each annual meeting of stockholders.
Section 2. The board of directors may from time to time appoint such other
officers and agents as it shall deem necessary, who shall hold their offices for
such terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the board.
Section 3. The salaries of all officers and agents of the corporation
shall be fixed by the board of directors or pursuant to its direction.
Section 4. The officers of the corporation shall hold office until their
successors are chosen and qualify. Any officer elected or appointed by the board
of directors may be removed at any time by the affirmative vote of a majority of
the board of directors. Any vacancy occurring in any office of the corporation
shall be filled by the board of directors.
Section 5. Any officer may resign at any time by giving written notice to
the board of directors or to the vice chairman and chief operating officer,
president or secretary. Such resignation shall take effect at the time specified
in the notice, and, unless otherwise specified in the notice, the acceptance of
such resignation shall not be necessary to make it effective.
Section 6. The chairman and chief executive officer shall preside at all
meetings of the board of directors and he shall have and perform such other
duties as from time to time may be assigned to him by the board of directors. He
shall be the chief executive officer of the corporation.
Section 7. The vice chairman and chief operating officer shall perform the
duties of the chairman and chief executive officer in his absence or during any
disability or refusal to act, shall be the chief operating officer of the
corporation, shall preside at all meetings of the stockholders, shall have
general powers and duties of supervision and active management of the business
of the corporation and shall see that all orders and resolutions of the board of
directors are carried into effect. He shall execute bonds, mortgages and other
contracts requiring a seal, under the seal of the corporation, except where
required or permitted by law to be otherwise signed and executed and except
where the signing and execution thereof shall be expressly delegated by the
board of directors to some other officer or agent of the corporation. He shall
have and
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perform such other duties and powers as may from time to time be assigned to him
by the board of directors.
Section 8. The president shall perform the duties of vice chairman and
chief operating officer in the event of his absence, disability or refusal to
act and shall perform such other duties as may be assigned to him by the board
of directors.
Section 9. In the absence of the president or in the event of his
inability or refusal to act, any vice president may perform the duties of the
president, and when so acting, shall have all the powers of and be subject to
all the restrictions upon the president. A vice president shall perform such
other duties and have such other powers as the board of directors may from time
to time prescribe.
Section 10. The secretary shall attend all meetings of the board of
directors and all meetings of the stockholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the stockholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the board of directors, chief
executive officer or chief operating officer. He shall have custody of the
corporate seal of the corporation and he, or an assistant secretary, shall have
authority to affix the same to any instrument requiring it and when so affixed,
it may be attested by his signature or by the signature of such assistant
secretary. The board of directors may give general authority to any other
officer to affix the seal of the corporation and to attest the affixing by his
signature.
Section 11. Any assistant secretary may, in the absence of the secretary
or in the event of his inability or refusal to act, perform the duties and
exercise the powers of the secretary and shall perform such other duties and
have such other powers as the board of directors may from time to time
prescribe.
Section 12. The chief financial officer shall have the broadest possible
powers with respect to the borrowing, investing and disbursing of corporate
funds, the retention of accountants and auditors, and the giving of security for
corporate debt; he shall have the custody of and responsibility for the
corporate funds and securities; shall keep full and accurate accounts of
receipts and disbursements in books belonging to the corporation; shall deposit
all moneys and other valuable effects in the name and to the credit of the
corporation in such depositories as he may prudently select; and, in general,
shall perform all of the financial, insurance, data processing and other related
work of the corporation. He shall disburse the funds of the corporation as may
be ordered by the board of directors, or the chief operating officer, taking
proper vouchers for such disbursements, and shall render to the chief operating
officer and the board of directors, at its regular meetings, or when the board
of directors so requires, an account of all his transactions as treasurer and of
the financial condition of the corporation. He may on behalf of the corporation
sign notes, bonds, credit agreements, mortgages, security agreements,
assignments and other security devices and may in general exercise broad powers
over the property of the corporation in connection with any borrowing. If
required by the board of directors, he shall give the corporation a bond in such
sum and with such sureties as shall be satisfactory to the board of directors
for the faithful performance of the duties of his office and for the restoration
to the corporation, in case of his death, resignation, retirement or removal
from office, of all books, papers, vouchers, money and other property of
whatever kind in his possession or under his control belonging to the
corporation.
Section 13. Any assistant treasurer may, in the absence of the treasurer
or in the event of his inability or refusal to act, perform the duties and
exercise the powers of the treasurer and shall perform such other duties and
have such other powers as the board of directors may from time to time
prescribe.
ARTICLE VI
CERTIFICATES OF STOCK
Section 1. Every holder of stock in the corporation shall be entitled to
have a certificate, signed by the president or a vice president, and the
secretary or an assistant secretary, of the corporation, certifying the number
of shares owned by him in the corporation. If the corporation shall be
authorized to issue more than
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one class of stock or more than one series of any class, the powers,
designations, preferences and relative, participating, optional or other special
rights of each class of stock or series thereof and the qualification,
limitations or restrictions of such preferences or rights shall be set forth in
full or summarized on the face or back of the certificate which the corporation
shall issue to represent such class or series of stock; provided that, except as
otherwise provided in Section 202 of the General Corporation Law of Delaware, in
lieu of the foregoing requirements, there may be set forth on the face or back
of the certificate which the corporation shall issue to represent such class or
series of stock, a statement that the corporation will furnish without charge to
each stockholder who so requests the powers, designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualifications, limitations or restrictions of such
preferences or rights.
Section 2. Any of or all the signatures on any stock certificate issued by
the corporation may be facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued by the corporation with the
same effect as if he or it were such officer, transfer agent or registrar at the
date of issue.
Section 3. The board of directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the board of directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it shall require
and/or to give the corporation a bond in such sum as it may direct as indemnity
against any claim that may be made against the corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.
Section 4. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
Section 5. In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution of allotment of any rights, or entitled to exercise any rights in
respect of any changes, conversion or exchange of stock or for the purpose of
any other lawful action, the board of directors may fix, in advance, a record
date, which shall not be more than 60 nor less than ten days before the date of
such meeting, nor more than 60 days prior to any other action. A determination
of stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided however,
that the board of directors may fix a new record date for the adjourned meeting.
Section 6. The corporation shall be entitled to treat the registered owner
of any share or shares of stock as the absolute owner thereof for all purposes
and shall not be bound to recognize any equitable or other claim to or interest
in such share or shares on the part of any other person, whether or not it shall
have express or other notice thereof, except as otherwise provided by the laws
of Delaware.
ARTICLE VII
INDEMNIFICATION AND INSURANCE
Section 1. The corporation shall indemnify any person who was or is a
party or who was or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the corporation),
by reason of the fact that he is or was a director, advisory director, officer,
employee or agent of the corporation or of any entity a majority of the voting
stock of which is owned by the corporation, or is or was serving at the request
of the corporation as a director, advisory director, officer, employee or agent
of
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another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
Section 2. The corporation shall indemnify any person who was or is a
party or who was or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he is or was a director,
advisory director, officer, employee or agent of the corporation or of any
entity a majority of the voting stock of which is owned by the corporation, or
is or was serving at the request of the corporation as a director, advisory
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery of the State of Delaware or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all of the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the Court of
Chancery of the State of Delaware or such other court shall deem proper.
Section 3. To the extent that any person who is or was a director,
advisory director, officer, employee or agent of the corporation or of any
entity a majority of the voting stock of which is owned by the corporation, or
who is or was serving at the request of the corporation as a director, advisory
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in Sections 1
and 2 of this Article VII, or in defense of any claim, issue or matter therein,
he shall be indemnified against expenses (including attorneys' fees) actually
and reasonably incurred by him in connection therewith. Any other
indemnification under Sections 1 and 2 of this Article VII shall be made by the
corporation only as authorized in the specific case upon a determination that
indemnification is proper in the circumstances because the applicable standard
of conduct set forth therein has been met. Such determination shall be made (a)
by the board of directors of the corporation by a majority vote of a quorum
consisting of directors who were not parties to such action, suit or proceeding,
or (b) if such quorum is not obtainable, or, even if obtainable a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion, or (c) by the stockholders of the corporation.
Section 4. Expenses incurred in defending a civil or criminal action, suit
or proceeding shall be paid by the corporation in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of the director, advisory director, officer, employee or agent to
repay such amount if it shall ultimately be determined that he is not entitled
to be indemnified by the corporation pursuant to this Article VII.
Section 5. The indemnification and advancement of expenses provided by, or
granted pursuant to, the other Sections of this Article VII shall not be deemed
exclusive of any other right to which those seeking indemnification or
advancement of expenses may be entitled to from the corporation or any other
entity under any statute, other bylaw, agreement, provision of the corporation's
certificate of incorporation, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office. The indemnification and advancement
of expenses
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provided by, or granted pursuant to, this Article VII and shall continue as to a
person who has ceased to be a director, advisory director, officer, employee or
agent and shall inure to the benefit of the heirs, executors and administrators
of such a person. However, any amount actually received as the proceeds of any
such other indemnification shall be deducted from the amount, if any, which he
may be entitled to receive pursuant to this Article VII.
Section 6. By action of its board of directors, notwithstanding any
interest of the directors in the action, to the full extent permitted by the
General Corporation Law of the State of Delaware, the corporation may purchase
and maintain insurance, in such amounts and against such risks as the board of
directors deems appropriate, on behalf of any person who is or was a director,
advisory director, officer, employee or agent of the corporation, or of any
entity a majority of the voting stock of which is owned by the corporation, or
who is or was serving at the request of the corporation as a director, advisory
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power or would be required to
indemnify him against such liability under the provisions of this Article VII,
or of the corporation's certificate of incorporation or of the General
Corporation Law of the State of Delaware.
ARTICLE VIII
GENERAL PROVISIONS
Section 1. Dividends upon the capital stock of the corporation, subject to
the provisions of the certificate of incorporation, if any, may be declared by
the board of directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property or in shares of the capital stock,
subject to the provisions of the certificate of incorporation.
Section 2. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
Section 3. All checks, notes and contracts of the corporation shall be
signed by such officer or officers or such other person or persons as the board
of directors may from time to time designate.
Section 4. The fiscal year of the corporation shall be fixed by resolution
of the board of directors.
Section 5. The corporate seal shall have inscribed thereon the name of the
corporation, the year of its organization and the words "Corporate Seal,
Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
Section 6. Any payments made to an officer of the corporation such as a
salary, commission, bonus, interest, or rent, or entertainment expenses incurred
by him, which shall be disallowed in whole or in part as a deductible expense by
the Internal Revenue Service, shall be reimbursed by such officer to the
corporation to the full extent of such disallowance. It shall be the duty of the
directors, as a board, to enforce payment of each such amount disallowed.
ARTICLE IX
AMENDMENTS
Section 1. These bylaws may be altered, amended or repealed or new bylaws
may be adopted by the board of directors at any regular meeting of the board of
directors or at any special meeting of the board of directors if notice of such
alteration, amendment, repeal or adoption of new bylaws is contained in the
notice of such special meeting.
8
EXHIBIT 4.4
VAALCO ENERGY, INC.
AMENDMENTS TO BYLAWS, ADOPTED JANUARY 8, 1993
Article III, Section 1 of the Bylaws of the Company is amended to read in
its entirety as follows:
"Section 1. Except as otherwise fixed pursuant to the provisions of
Article Four of the certificate of incorporation relating to the rights of
the holders of any class or series of stock having a preference over the
common stock as to dividends or upon liquidation to elect additional
directors under specified circumstances, the number of directors of the
corporation shall be fixed from time to time by the directors and shall be
set forth in the notice of any meeting of stockholders held for the purpose
of electing directors; provided that such number shall not be less than
three nor more than fifteen."
Article III, Section 2 of the Bylaws of the Company is amended to read in
its entirety as follows:
"Section 2. Vacancies and newly created directorships resulting from
any increase in the authorized number of directors may be filled by a
majority of the directors then in office, though less than a quorum, or by
a sole remaining director. Any directors so chosen shall hold office for a
term expiring at the annual meeting of stockholders at which the term of
the class to which they have been elected expires and until their
successors are duly elected and shall qualify, unless sooner displaced. If
there are no directors in office, then an election of directors may be held
in the manner provided by statute. Subject to the rights of any class or
series of stock having preference over the common stock as to dividends or
upon liquidation to elect additional directors under specified
circumstances, any director may be removed from office only for cause.
Except as may otherwise be provided by law, cause for removal shall be
construed to exist only if: (a) the director whose removal is proposed has
been convicted of a felony by a court of competent jurisdiction and such
conviction is no longer subject to direct appeal; (b) such director has
been adjudicated by a court of competent jurisdiction to be liable for
gross negligence, recklessness or misconduct in the performance of his or
her duty to the corporation in a manner of substantial importance to the
corporation and such adjudication is no longer subject to direct appeal; or
(c) such director has been adjudicated by a court of competent jurisdiction
to be mentally incompetent, which mental incompetency directly affects his
or her ability as a director of the corporation, and such adjudication is
no longer subject to direct appeal. Any action for removal must be brought
within three months of the date on which such conviction or adjudication is
no longer subject to direct appeal."
The first sentence of Article III, Section 5 of the Bylaws of the Company
is deleted and replaced in its entirety by the following:
"A meeting of the board of directors shall be held at the place of,
and immediately following, the annual meeting of stockholders and no notice
of such meeting shall be necessary to any newly elected directors to
legally constitute the meeting, provided a quorum shall be present."
A typographical error in the second sentence of Article VII, Section 5 of
the Bylaws of the Company is corrected so that such sentence reads as follows:
"The indemnification and advancement of expenses provided by, or
granted pursuant to, this Article Vii shall continue as to a person who
has ceased to be a director, advisory director, officer, employee or
agent and shall inure to the benefit of the heirs, executors and
administrators of such a person."
Article VII, Section 4 of the Bylaws of the Company is amended to read in
its entirety as follows:
"Section 4. Expenses, including attorneys' fees, incurred by a
director, advisory, director, officer, employee or agent in defending any
civil, criminal, administrative or investigative action, suit or proceeding
shall be paid by the corporation in advance of the final disposition of
such action, suit or proceeding upon receipt of an undertaking by or on
behalf of the director, advisory director, officer,
<PAGE>
employee or agent to repay such amount if it shall ultimately be determined
that he or she is not entitled to be indemnified by the corporation
pursuant to this Article VII."
Article IX, Section 1 of the Bylaws of the Company is amended to read in
its entirety as follows:
"Section 1. The board of directors shall have power to make, alter,
amend and repeal the bylaws (except so far as the bylaws adopted by the
stockholders shall otherwise provide). Any bylaws made by the board of
directors under the powers conferred hereby may be altered, amended or
repealed by the directors or by the stockholder. Notwithstanding the
foregoing and anything contained in the certificate of incorporation to the
contrary, the bylaws shall not be altered, amended or repealed by action of
the stockholders and no provision inconsistent therewith shall be adopted
by the stockholders without the affirmative vote of the holders of at least
66 2/3% of the voting power of all the shares of the corporation entitled
to vote generally in the election of directors, voting together as a single
class."
2
<PAGE>
VAALCO ENERGY, INC.
AMENDMENT TO BYLAWS, ADOPTED FEBRUARY 9, 1998
Article III, Section 15 of the Bylaws of the Company is amended to read in
its entirety as follows:
"SECTION 15. Notwithstanding anything to the contrary contained
herein, the board of directors shall not take, approve or otherwise ratify
any of the following actions without the consent of at least a majority of
the directors constituting the entire board of directors, which majority
shall include at least one director elected by a class vote of the holders
of shares of Convertible Preferred Stock, Series A, par value $25.00 per
share (the "Preferred Stock"), of the corporation:
(i) other than equity securities of the corporation that may be
issued to employees, consultants or directors of the corporation
pursuant to a stock option plan or other employee benefit arrangement
approved by the board of directors (in accordance with this Section) or
upon conversion of the Preferred Stock, any issuance of or agreement to
issue any equity securities of the corporation or any subsidiary
thereof, or rights of any kind convertible into or exchangeable for any
equity securities of capital stock of the corporation or any subsidiary
thereof, or any option, warrant or other subscription or purchase right
with respect to equity securities of the corporation or any subsidiary
thereof;
(ii) the declaration of any dividend;
(iii) incur, assume, and/or refinance any indebtedness for
borrowed money (including letter of credit reimbursement obligations) of
the corporation or any of its subsidiaries;
(iv) adopt any employee stock option or similar plan;
(v) enter into any employment or consulting agreements or
arrangements with an aggregate payment amount exceeding $100,000 per
annum;
(vi) (x) any transaction of merger or consolidation of the
corporation or any subsidiary thereof with one or more Persons or (y)
any transaction of merger or consolidation of one or more Persons into
or with the corporation or any subsidiary thereof;
(vii) any sale, conveyance, exchange or transfer to another Person
of (x) the voting stock of the corporation or any subsidiary thereof or
(y) all or substantially all of the assets of the corporation or any
subsidiary thereof;
(viii) outside of the ordinary course of business, (x) any sale,
conveyance, exchange, transfer or lease or other disposition to another
Person of any material assets, rights or properties of the corporation
or any subsidiary thereof or (y) any purchase, lease or other
acquisition of any material assets, rights or properties of another
Person;
(ix) any expenditure by the corporation or any subsidiary thereof
in excess of $300,000, except if (a) such expenditure has been
explicitly identified and explicitly approved by the board of directors
of the corporation in the annual operating budget of the corporation or
otherwise, (b) such expenditure is a payment of the corporation or any
subsidiary thereof as a result of the receipt by the corporation or any
subsidiary thereof of an "Authorization for Expense" delivered to the
corporation or any subsidiary thereof by the operator of a joint venture
in which the corporation is a participant and the budget for such joint
venture was approved by the board of directors of the corporation or (c)
in the case of an emergency, an officer of the corporation believes, in
his best judgment, that such expenditure is required as a necessary and
proper measure for the protection of life, health, the environment and
property and such officer immediately notifies the board of directors of
the corporation of the details of such emergency and the measures taken
in connection therewith;
(x) form any corporation or entity, all of the shares or equity
interests of which are not owned by the corporation, directly or
indirectly;
1
<PAGE>
(xi) any material changes in accounting methods or policies of the
corporation or any subsidiary thereof;
(xii) any amendment, modification or restatement of the Restated
Certificate of Incorporation and By-laws of the corporation, or the
certificate of incorporation of any subsidiary of the corporation
(including, without limitation, a change in the number of directors
which constitute the corporation's board of directors) and any amendment
or modification of this Section 15;
(xiii) settle any claim, proceeding, arbitration or other action
involving the corporation if the corporation or any subsidiary thereof
would be required to pay an aggregate amount in excess of $50,000 in
connection with such settlement;
(xiv) approve or amend the annual operating budget of the
corporation;
(xv) take any other action which is other than in the ordinary
course of its business; and
(xvi) agree to take any of the foregoing actions.
For the purposes of this Section 15, "Person" shall mean any
individual, corporation, partnership, limited liability company, firm,
joint venture, association, joint stock company, trust, unincorporated
organization, governmental authority or other entity."
2
EXHIBIT 5.1
OPINION OF BUTLER & BINION, L.L.P.
July 14, 1998
VAALCO Energy, Inc.
4600 Post Oak Place, Suite 309
Houston, Texas 77027
RE: REGISTRATION STATEMENT ON FORM S-3
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-3 to be filed by you
with the Securities and Exchange Commission on or about July 14, 1998 (the
"Registration Statement") in connection with the registration under the
Securities Act of 1933, as amended, of a total of 5,745,325 shares of your
Common Stock (the "Shares"), to be offered for sale by the Selling Stockholders
named therein. We understand that the shares are to be sold by the Selling
Stockholders to the public as described in the Registration Statement. As legal
counsel for VAALCO Energy, Inc., we have examined the proceedings taken, and are
familiar with the proceedings proposed to be taken, by you in connection with
the sale and issuance of the Shares.
It is our opinion that, upon completion of the proceedings being taken or
contemplated by us, as your counsel, to be taken prior to the issuance of the
Shares and assuming the conversion of certain warrants in accordance with their
terms, the Shares, when sold in the manner described in the Registration
Statement and in accordance with the resolutions adopted by the Board of
Directors of the Company, will be legally and validly issued, fully paid and
nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement, including the prospectus constituting a part thereof, and further
consent to the use of our name wherever it appears in the Registration Statement
and any amendments thereto.
Very truly yours,
/s/ Butler & Binion, L.L.P.
BUTLER & BINION, L.L.P.
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
VAALCO Energy, Inc. on Form S-3 of our report dated March 26, 1998, appearing in
the Annual Report on Form 10-KSB of VAALCO Energy, Inc. for the year ended
December 31, 1997 and to the reference to us under the heading "Experts" in the
Prospectus, which is part of this Registration Statement.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Houston, Texas
July 13, 1998
EXHIBIT 23.2
CONSENT OF INDEPENDANT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement on
Form S-3 of our report dated February 27, 1998, on our audits of the financial
statements on 1818 Oil Corp. included in Form 8-K/A filed on May 29, 1998. We
also consent to the reference to our firm under the caption "Experts."
/s/ PricewaterhouseCoopers LLP
PRICEWATERHOUSECOOPERS LLP
New York, New York
July 10, 1998
[NETHERLAND, SEWELL & ASSOCIATES, INC. LETTERHEAD]
CONSENT OF NETHERLAND, SEWELL & ASSOCIATES, INC.
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 and related prospectus of our reports dated March 27,
1997, and march 24, 1998, that were utilized as a basis for VAALCO Energy,
Inc.'s Form 10-KSB for the periods ended December 31, 1996 and 1997, and to all
references to our Firm included in this Registration Statement.
NETHERLAND, SEWELL & ASSOCIATES, INC.
By: /s/ DANNY D. SIMMONS
Danny D. Simmons
Senior Vice President
Houston, Texas
July 14, 1998
