NOMINATION LETTER
Published on April 14, 2008
Exhibit 99.2
Nanes
Delorme Partners I LP
April 11,
2008
BY FACSIMILE AND
FEDERAL EXPRESS
VAALCO
Energy, Inc.
4600 Post
Oak Place, Suite 309
Houston,
Texas 77027
Attn:
Corporate Secretary
|
|
Re:
|
Notice of Intention to Nominate
Individuals for Election as Directors
at
|
|
|
the
2008 Annual Meeting of Stockholders of VAALCO Energy,
Inc.
|
Dear
Sir:
This
letter shall serve as notice to VAALCO Energy, Inc., a Delaware corporation
(“VAALCO” or the “Company”) as to the nomination by Nanes Delorme Partners I LP,
a Delaware limited partnership (“Nanes Delorme Partners”), of three (3) nominees
for election to the Board of Directors of VAALCO (the “VAALCO Board”) at the
2008 annual meeting of stockholders of VAALCO, or any other meeting of
stockholders held in lieu thereof, and any adjournments, postponements,
reschedulings or continuations thereof (the “Annual Meeting”).
This
letter and the Exhibits attached hereto are collectively referred to as the
“Notice.” As of April 11, 2008, Nanes Delorme Partners was the
beneficial owner of 4,700,000 shares of common stock, par value $0.10 per share
(the “Common Stock”), of VAALCO, 1,000 shares of which are held of
record. Nanes Delorme Partners hereby nominates and notifies the
Company of its intent to nominate Julien Balkany, Leonard Toboroff and Clarence
Cottman III, as nominees (the “Nominees”) to be elected to the VAALCO Board at
the Annual Meeting. Nanes Delorme Partners believes that the terms of
the three (3) Class I directors currently serving on the VAALCO Board expire at
the Annual Meeting. To the extent there are in excess of three (3)
vacancies on the VAALCO Board to be filled by election at the Annual Meeting
or VAALCO increases
the size of the VAALCO Board above its existing size, Nanes Delorme Partners
reserves the right to nominate additional nominees to be elected to the VAALCO
Board at the Annual Meeting. Additional nominations made pursuant to
the preceding sentence are without prejudice to the position of Nanes Delorme
Partners that any attempt to increase the size of the current VAALCO Board or to
reconstitute or reconfigure the classes on which the current directors serve
constitutes an unlawful manipulation of VAALCO’s corporate
machinery. If this Notice shall be deemed for any reason by a court
of competent jurisdiction to be ineffective with respect to the nomination of
any of the Nominees at the Annual Meeting, or if any individual Nominee shall be
unable to serve for any reason, this Notice shall continue to be effective with
respect to the remaining Nominee(s) and as to any replacement Nominee(s)
selected by Nanes Delorme Partners. Nanes Delorme Partners reserves
the right to withdraw its nomination of one or more of the
Nominees. In the event Nanes Delorme Partners withdraws its
nomination of one or more of the Nominees, this Notice shall continue to be
effective with respect to the remaining Nominee(s).
Information
concerning Nanes Delorme Partners and the Nominees is set forth
below:
|
(i)
|
Name
and address, as
believed to appear on VAALCO’s books, of the stockholder giving the Notice
is as follows:
|
|
Name
|
Address
|
|
Nanes
Delorme Partners I LP
|
230
Park Avenue, 7th Floor
New
York, NY 10169
|
|
(ii)
|
Class and number of shares of
Common Stock of VAALCO which are owned beneficially and of record by the
stockholder giving the
Notice:
|
|
Name
|
Beneficial
Ownership
|
|
Nanes
Delorme Partners I LP
|
4,700,000
shares of Common Stock, including 1,000 shares held of
record.
|
|
(iii)
|
Representation by the
stockholder giving the
Notice.
|
Nanes
Delorme Partners hereby represents that it (i) is a holder of record of 1,000
shares of Common Stock of the Company, (ii) is entitled to vote at the Annual
Meeting and (iii) intends to appear in person or by proxy to nominate the
Nominees at the Annual Meeting.
|
(iv)
|
Arrangements
and understandings between the stockholder and each Nominee and any other
person or persons pursuant to which the nominations are to be made by the
stockholder:
|
Nanes
Delorme Partners has executed or intends to execute letter agreements pursuant
to which it agrees to indemnify Messrs. Toboroff and Cottman against claims
arising from the solicitation of proxies from VAALCO stockholders in connection
with the Annual Meeting and any related transactions.
Nanes
Delorme Partners has also executed or intends to execute letter agreements
pursuant to which it agrees to compensate each of Messrs. Toboroff and Cottman
(i) $25,000 in cash as soon as reasonably practicable after submission of this
letter and (ii) solely in the event that Nanes Delorme Partners withdraws its
nomination of any such nominee prior to the Annual Meeting, other than as a
result of such nominee failing to provide Nanes Delorme Partners with
information which it reasonably requests, an additional $25,000 within ten
business days following the date of such withdrawal.
2
Nanes
Delorme Partners, Nanes Balkany Partners LLC, a Delaware limited liability
company and the general partner of Nanes Delorme Partners (“Nanes Balkany
Partners”), Nanes Balkany Management LLC, a Delaware limited liability company
and the investment manager of Nanes Delorme Partners (“Nanes Balkany
Management”), Julien Balkany (“Mr. Balkany”) and Daryl Nanes (“Mr. Nanes” and,
together with Nanes Delorme Partners, Nanes Balkany Partners, Nanes Balkany
Management and Mr. Balkany, the “Nanes-Balkany Group”) are parties to a joint
filing agreement, dated March 11, 2008, and have jointly filed a Schedule 13D
with respect to the Common Stock. Reference is made to the Schedule
13D initially filed on March 11, 2008 as it has been and may be amended from
time to time, as filed and to be filed with the Securities and Exchange
Commission, for information regarding the entities that are or may be deemed to
be members in a group described therein, as well as beneficial ownership of
shares of Common Stock by members of the Nanes-Balkany Group.
On the
date hereof, the Nanes-Balkany Group and Messrs. Toboroff and Cottman
(collectively, the “Group”) have entered into the Joint Filing and Solicitation
Agreement in which the parties have agreed, among other things, (i) to the joint
filing on behalf of each of them of statements on Schedule 13D with respect to
the securities of VAALCO, (ii) to solicit proxies or written consents for the
election of the Nominees or any other person designated by the parties to the
VAALCO Board at the Annual Meeting and (iii) to take such other actions as the
parties deem advisable.
Other
than as stated herein, there are no arrangements or understandings between Nanes
Delorme Partners and each Nominee or any other person or persons pursuant to
which the nominations described herein are to be made.
|
(v)
|
Name
and business address of each of the
Nominees:
|
|
Name
|
Business
Address
|
|
Julien
Balkany
|
c/o
Nanes Delorme Partners I LP
230
Park Avenue, 7th Floor
New
York, NY 10169
|
|
Leonard
Toboroff
|
c/o
Corinthian Capital Group, LLC
153
East 53rd
Street, 59th
Floor
New
York, NY 10021
|
|
Clarence
Cottman III
|
c/o
Legacy Energy, Inc.
1135
Eugenia Place, Suite C
Carpinteria,
CA 93013
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(vi)
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Principal
occupation or employment of each of the
Nominees:
|
Julien Balkany, a French
citizen, has been serving as a managing member of Nanes Balkany Partners, the
general partner of Nanes Delorme Partners, a U.S.-based hedge fund, since
January 2008. Nanes Delorme Partners pursues active investments in publicly
traded oil and gas exploration and production companies. Concomitantly, Mr.
Balkany has been a Managing Director at Nanes Delorme Capital Management LLC, a
New York based financial advisory and broker-dealer firm, managing its oil and
gas investment banking business, since 2005. Mr. Balkany has executed several
hundred million dollars worth of oil & gas transactions on both the buy-side
and sell-side. Mr. Balkany's most notable M&A assignments in Africa have
included advising Maurel & Prom, Heritage Oil Corp, Afren Plc, Perenco,
Vitol, Candax Energy, Carthago Oil, Range Energy and Surestream Petroleum.
Before joining Nanes Delorme Partners and Nanes Delorme Capital Management LLC,
Mr. Balkany worked at Pierson Capital, a U.S. private investment firm focused
primarily on emerging markets, from 2003 to 2005. Prior to that Mr. Balkany
gained significant expertise in the Latin America Debt Capital Markets Group of
Bear Stearns. Mr. Balkany studied Political Science at the Institute
of Political Studies (France) and Finance at UC Berkeley. Mr. Balkany
is also fluent in French and Spanish.
3
Leonard Toboroff, a United
States citizen, has been serving as a director and Vice Chairman of the Board of
Allis-Chalmers Energy Inc., a provider of products and services to the oil and
gas industry listed on the NYSE, since May 1989, and served as Executive Vice
President from May 1989 until February 2002. Concurrently, Mr.
Toboroff has been an Executive Director of Corinthian Capital Group, LLC, a
private equity fund, since October 2005, a director of Engex Corp., a closed-end
mutual fund, and a director of NOVT Corporation, a former developer of advanced
medical treatments for coronary and vascular disease, since April
2006. Mr. Toboroff has also been a director of SP Acquisition
Holdings Inc., a blank check company managed by Warren G. Lichtenstein and other
Steel Partners Group officers, since June 2007. Mr. Toboroff served
as a director and Vice President of Varsity Brands, Inc. (formerly Riddell
Sports Inc.), a provider of goods and services to the school spirit industry,
from April 1998 until it was sold in September 2003. Mr. Toboroff has previously
served as a director of American Bakeries Co., Ameriscribe Corporation and
Saratoga Spring Water Co. and has been a practicing attorney continuously since
1961. Mr. Toboroff is a graduate of Syracuse University and The
University of Michigan Law School.
Clarence Cottman III, a United
States citizen, has over twenty-five years of experience in the oil and gas
industry. Currently, Mr. Cottman has been the President and Founder
of Legacy Energy Inc., a U.S. private oil and gas exploration and production
company with assets in Louisiana and California, since 2006, Vice Chairman of
PetroFalcon Corp. (ticker: PFC CN), an oil and gas exploration and production
company focused on Venezuela and listed on the Toronto Stock Exchange, since
2007, a consultant to Vantage Marketplace (a wholly-owned subsidiary of Goldman
Sachs) since 2007, and a private investor in numerous energy
ventures. Mr. Cottman has served as Chief Financial Officer and
Director of PetroFalcon Corporation from 1999 until 2006. From 1997
to 2000, Mr. Cottman was Managing Director of Pacific Oil and Gas
LLC. Prior to co-founding Pacific Oil and Gas LLC, Mr. Cottman was at
Benton Oil & Gas from 1989 to 1997 where he held various senior positions
including Vice President of Business Development. Mr. Cottman has
also worked for Sun Exploration & Production Company. Mr. Cottman
holds a BA from Rochester Institute of Technology and an MBA from the University
of Rhode Island.
4
|
(vii)
|
Class
and number of shares of stock of VAALCO which are beneficially owned by
each of the Nominees:
|
|
Name
|
Beneficial
Ownership of Common Stock*
|
|
Julien
Balkany
|
4,700,000
|
|
Leonard
Toboroff
|
None
|
|
Clarence
Cottman III
|
None
|
|
(viii)
|
Other
information relating to each of the Nominees that is required to be
disclosed in solicitations of proxies for the election of directors
pursuant to Regulation 14A under the Securities Exchange Act of 1934, as
amended:
|
Each of
the Nominees has consented to be named as a nominee in any proxy statement filed
by Nanes Delorme Partners in connection with the solicitation of proxies or
written consents for the election of the Nominees to the VAALCO Board and to
serve as a director of VAALCO, if so elected. Such consents are
attached hereto as Exhibit
B.
Please
see Exhibit A
for information regarding purchases and sales during the past two years by the
Nominees and the Nanes-Balkany Group in securities of VAALCO.
Except as
set forth in this Notice (including the Exhibits attached hereto),
(i) during the last 10 years, no Nominee has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors); (ii) no
Nominee directly or indirectly beneficially owns any securities of VAALCO;
(iii) no Nominee owns any securities of VAALCO which are owned of record
but not beneficially; (iv) no Nominee has purchased or sold any securities
of VAALCO during the past two years; (v) no part of the purchase price or
market value of the securities of VAALCO owned by any Nominee is represented by
funds borrowed or otherwise obtained for the purpose of acquiring or holding
such securities; (vi) no Nominee is, or within the past year was, a party
to any contract, arrangements or understandings with any person with respect to
any securities of VAALCO, including, but not limited to, joint ventures, loan or
option arrangements, puts or calls, guarantees against loss or guarantees of
profit, division of losses or profits, or the giving or withholding of proxies;
(vii) no associate of any Nominee owns beneficially, directly or
indirectly, any securities of VAALCO; (viii) no Nominee owns beneficially,
directly or indirectly, any securities of any parent or subsidiary of VAALCO;
(ix) no Nominee or any of his associates was a party to any transaction, or
series of similar transactions, since the beginning of VAALCO’s last fiscal
year, or is a party to any currently proposed transaction, or series of similar
transactions, to which VAALCO or any of its subsidiaries was or is to be a
party, in which the amount involved exceeds $120,000; and (x) no Nominee or
any of his associates has any arrangement or understanding with any person with
respect to any future employment by VAALCO or its affiliates, or with respect to
any future transactions to which VAALCO or any of its affiliates will or may be
a party.
* As a
managing member of Nanes Balkany Partners and Nanes Balkany Management, Mr.
Balkany may be deemed to beneficially own the 4,700,000 shares of Common Stock
of VAALCO owned by Nanes Delorme Partners. Mr. Balkany disclaims
beneficial ownership of such shares held by Nanes Delorme Partners, except to
the extent of his pecuniary interest therein. As a member of the
Group, Messrs. Toboroff and Cottman may be deemed to beneficially own the
4,700,000 shares of Common Stock of VAALCO owned by Nanes Delorme
Partners. Each of Messrs. Toboroff and Cottman disclaim beneficial
ownership of such shares.
5
Nanes
Delorme Partners does not have a substantial interest in any matters to be acted
upon at the Annual Meeting except as otherwise set forth herein.
Please
address any correspondence to our counsel, Olshan Grundman Frome Rosenzweig
& Wolosky LLP, Park Avenue Tower, 65 East 55th Street,
New York, New York 10022, Attention: Adam Finerman, Esq., telephone (212)
451-2289, facsimile (212) 451-2222. The giving of this Notice is not
an admission that any procedures for notice concerning the nomination of
directors to the VAALCO Board are legal, valid or binding, and Nanes Delorme
Partners reserves the right to challenge their validity.
|
Very
truly yours,
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||
|
NANES
DELORME PARTNERS I LP
|
||
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By:
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Nanes
Balkany Partners LLC
|
|
|
General
Partner
|
||
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By:
|
/s/
Daryl Nanes
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|
|
Name:
Daryl Nanes
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||
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Title: Managing
Member
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||
6
EXHIBIT
A
TRANSACTIONS
IN SECURITIES OF VAALCO ENERGY,
INC.
DURING
THE PAST TWO YEARS
|
Class
of
Security
|
Quantity
Purchased
/ (Sold)
|
Price
Per
Share
($)
|
Date
of
Purchase
/ Sale
|
|
NANES
DELORME PARTNERS I LP*
|
|||
|
Common
Stock
|
1,000
|
4.6300
|
11/28/2007
|
|
Common
Stock
|
40,000
|
4.4432
|
12/05/2007
|
|
Common
Stock
|
45,000
|
4.5998
|
12/14/2007
|
|
Common
Stock
|
50,000
|
4.5940
|
12/17/2007
|
|
Common
Stock
|
50,000
|
4.5948
|
12/18/2007
|
|
Common
Stock
|
50,000
|
4.7314
|
12/19/2007
|
|
Common
Stock
|
108,000
|
4.8648
|
12/20/2007
|
|
Common
Stock
|
45,000
|
4.7796
|
12/27/2007
|
|
Common
Stock
|
200,000
|
4.6887
|
12/31/2007
|
|
Common
Stock
|
50,000
|
4.5871
|
01/02/2008
|
|
Common
Stock
|
75,000
|
4.6810
|
01/04/2008
|
|
Common
Stock
|
100,000
|
4.5602
|
01/07/2008
|
|
Common
Stock
|
130,000
|
4.7468
|
01/08/2008
|
|
Common
Stock
|
15,000
|
4.7434
|
01/09/2008
|
|
Common
Stock
|
25,000
|
4.7654
|
01/10/2008
|
|
Common
Stock
|
60,000
|
4.9277
|
01/11/2008
|
|
Common
Stock
|
80,000
|
4.8779
|
01/15/2008
|
|
Common
Stock
|
1,000
|
5.0430
|
01/16/2008
|
|
Common
Stock
|
100,000
|
4.7917
|
01/18/2008
|
|
Common
Stock
|
200,000
|
4.3459
|
01/22/2008
|
|
Common
Stock
|
200,000
|
4.1646
|
01/23/2008
|
|
Common
Stock
|
150,000
|
4.4521
|
01/24/2008
|
|
Common
Stock
|
183,000
|
4.4643
|
01/25/2008
|
|
Common
Stock
|
325,000
|
4.6157
|
01/28/2008
|
|
Common
Stock
|
221,000
|
4.6623
|
01/29/2008
|
|
Common
Stock
|
196,000
|
4.7365
|
01/30/2008
|
|
Common
Stock
|
20,000
|
4.3048
|
02/22/2008
|
|
Common
Stock
|
130,000
|
4.4257
|
02/27/2008
|
|
Common
Stock
|
61,000
|
4.4376
|
02/28/2008
|
* For the
period 11/28/07 through 1/30/08, a limited partner of Nanes Delorme Partners I
LP purchased 2,700,000 Shares of VAALCO Energy, Inc. On 2/14/08, the
limited partner contributed such Shares, with an aggregate purchase price of
approximately $12,558,213, in order to subscribe for and purchase interests in
Nanes Delorme Partners I LP. Nanes Delorme Partners I LP
assumed the same cost basis for the contributed shares and valued its
contribution at the limited partner’s own cost.
|
Common
Stock
|
39,000
|
4.4361
|
02/29/2008
|
|
Common
Stock
|
400,000
|
4.5100
|
03/03/2008
|
|
Common
Stock
|
490,000
|
4.5435
|
03/04/2008
|
|
Common
Stock
|
230,000
|
4.5729
|
03/05/2008
|
|
Common
Stock
|
131,000
|
4.5466
|
03/06/2008
|
|
Common
Stock
|
248,000
|
4.5369
|
03/07/2008
|
|
Common
Stock
|
55,000
|
4.6948
|
03/10/2008
|
|
Common
Stock
|
196,000
|
4.7588
|
03/11/2008
|
NANES BALKANY PARTNERS
LLC
None
NANES BALKANY MANAGEMENT
LLC
None
JULIEN
BALKANY
None
DARYL
NANES
None
LEONARD
TOBOROFF
None
CLARENCE COTTMAN
III
None
EXHIBIT
B
NOMINEE
CONSENTS
JULIEN
BALKANY
230 Park
Avenue, 7th Floor
New York,
NY 10169
April 11,
2008
VAALCO
Energy, Inc.
4600 Post
Oak Place, Suite 309
Houston,
Texas 77027
Attn:
Corporate Secretary
Dear
Sir:
You are
hereby notified that the undersigned consents to (i) being named as a nominee in
the notice provided by Nanes Delorme Partners I LP, a Delaware limited
partnership (“Nanes Delorme Partners”) of its intention to nominate the
undersigned as a director of VAALCO Energy, Inc. (“VAALCO”) at the 2008 annual
meeting of stockholders, or any other meeting of stockholders held in lieu
thereof, and any adjournments, postponements, reschedulings or continuations
thereof (the “Annual Meeting”), (ii) being named as a nominee in any proxy
statement filed by Nanes Delorme Partners in connection with the solicitation of
proxies or written consents for election of the undersigned at the Annual
Meeting and (iii) serving as a director of VAALCO if elected at the Annual
Meeting.
|
Very
truly yours,
|
| /s/ Julien Balkany |
|
Julien
Balkany
|
LEONARD
TOBOROFF
153 East
53rd Street, 59th Floor
New York,
NY 10021
April 11,
2008
VAALCO
Energy, Inc.
4600 Post
Oak Place, Suite 309
Houston,
Texas 77027
Attn:
Corporate Secretary
Dear
Sir:
You are
hereby notified that the undersigned consents to (i) being named as a nominee in
the notice provided by Nanes Delorme Partners I LP, a Delaware limited
partnership (“Nanes Delorme Partners”) of its intention to nominate the
undersigned as a director of VAALCO Energy, Inc. (“VAALCO”) at the 2008 annual
meeting of stockholders, or any other meeting of stockholders held in lieu
thereof, and any adjournments, postponements, reschedulings or continuations
thereof (the “Annual Meeting”), (ii) being named as a nominee in any proxy
statement filed by Nanes Delorme Partners in connection with the solicitation of
proxies or written consents for election of the undersigned at the Annual
Meeting and (iii) serving as a director of VAALCO if elected at the Annual
Meeting.
|
Very
truly yours,
|
| /s/ Leonard Toboroff |
|
Leonard
Toboroff
|
CLARENCE
COTTMAN III
1135
Eugenia Place, Suite C
Carpinteria,
CA 93013
April 11,
2008
VAALCO
Energy, Inc.
4600 Post
Oak Place, Suite 309
Houston,
Texas 77027
Attn:
Corporate Secretary
Dear
Sir:
You are
hereby notified that the undersigned consents to (i) being named as a nominee in
the notice provided by Nanes Delorme Partners I LP, a Delaware limited
partnership (“Nanes Delorme Partners”) of its intention to nominate the
undersigned as a director of VAALCO Energy, Inc. (“VAALCO”) at the 2008 annual
meeting of stockholders, or any other meeting of stockholders held in lieu
thereof, and any adjournments, postponements, reschedulings or continuations
thereof (the “Annual Meeting”), (ii) being named as a nominee in any proxy
statement filed by Nanes Delorme Partners in connection with the solicitation of
proxies or written consents for election of the undersigned at the Annual
Meeting and (iii) serving as a director of VAALCO if elected at the Annual
Meeting.
|
Very
truly yours,
|
| /s/ Clarence Cottman III |
|
Clarence
Cottman III
|