Document:

Exhibit 10.1

		

			Exhibit 10.1

		

		

			 

		

		
			EXECUTIVE EMPLOYMENT AGREEMENT
		

		
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			between
		

		
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			VAALCO ENERGY, INC.
		

		
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			and
		

		
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			William R. Thomas
		

		
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			(Effective as of February 1, 2020)
		

		
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						TABLE OF CONTENTS

				
	
					
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						﻿Article 1. EMPLOYMENT AND DUTIES

					
					
						1

				
	
					
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						﻿1.1

					
					
						 

					
					
						Definitions

					
					
						1

				
	
					
						﻿1.2

					
					
						 

					
					
						Employment; Effective Date

					
					
						1

				
	
					
						﻿1.3

					
					
						 

					
					
						Positions

					
					
						1

				
	
					
						﻿1.4

					
					
						 

					
					
						Duties and Services

					
					
						2

				
	
					
						﻿1.5

					
					
						 

					
					
						Other Interests

					
					
						2

				
	
					
						﻿1.6

					
					
						 

					
					
						Duty of Loyalty

					
					
						2

				
	
					
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						﻿Article 2. TERM AND TERMINATION OF EMPLOYMENT

					
					
						2

				
	
					
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						﻿2.1

					
					
						 

					
					
						Term of Employment

					
					
						2

				
	
					
						﻿2.2

					
					
						 

					
					
						Notice of Termination

					
					
						3

				
	
					
						﻿2.3

					
					
						 

					
					
						Resignations

					
					
						3

				
	
					
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						﻿Article 3. COMPENSATION AND BENEFITS

					
					
						 

				
	
					
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						﻿3.1

					
					
						 

					
					
						Base Salary

					
					
						3

				
	
					
						﻿3.2

					
					
						 

					
					
						Targeted Cash Bonus

					
					
						3

				
	
					
						﻿3.3

					
					
						 

					
					
						Business and Entertainment Expenses

					
					
						3

				
	
					
						﻿3.4

					
					
						 

					
					
						Vacation

					
					
						4

				
	
					
						﻿3.5

					
					
						 

					
					
						Employee and Executive Benefits Generally

					
					
						4

				
	
					
						﻿3.6

					
					
						 

					
					
						Proration

					
					
						4

				
	
					
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						﻿Article 4. RIGHTS AND PAYMENTS UPON TERMINATION

					
					
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						﻿4.1

					
					
						 

					
					
						Rights and Payments upon Termination

					
					
						4

				
	
					
						﻿4.2

					
					
						 

					
					
						Limitation on Other Severance Benefits

					
					
						6

				
	
					
						﻿4.3

					
					
						 

					
					
						Release Agreement

					
					
						6

				
	
					
						﻿4.4

					
					
						 

					
					
						Notice of Termination

					
					
						7

				
	
					
						﻿4.5

					
					
						 

					
					
						No Mitigation

					
					
						7

				
	
					
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						﻿Article 5. CONFIDENTIAL INFORMATION AND  RESTRICTIVE COVENANTS

					
					
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						﻿5.1

					
					
						 

					
					
						Access to Confidential Information and Specialized Training

					
					
						7

				
	
					
						﻿5.2

					
					
						 

					
					
						Agreement Not to Use or Disclose Confidential Information

					
					
						7

				
	
					
						﻿5.3

					
					
						 

					
					
						Duty to Return Company Documents and Property

					
					
						8

				
	
					
						﻿5.4

					
					
						 

					
					
						Further Disclosure

					
					
						8

				
	
					
						﻿5.5

					
					
						 

					
					
						Inventions

					
					
						9

				
	
					
						﻿5.6

					
					
						 

					
					
						Non-Solicitation Restriction

					
					
						9

				
	
					
						﻿5.7

					
					
						 

					
					
						Non-Competition Restriction

					
					
						10

				
	
					
						﻿5.8

					
					
						 

					
					
						No-Recruitment Restriction

					
					
						10

				

		
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						﻿5.9

					
					
						 

					
					
						Forfeiture of Severance Payment

					
					
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						﻿5.10

					
					
						 

					
					
						Tolling

					
					
						11

				
	
					
						﻿5.11

					
					
						 

					
					
						Reformation

					
					
						11

				
	
					
						﻿5.12

					
					
						 

					
					
						No Previous Restrictive Agreements

					
					
						11

				
	
					
						﻿5.13

					
					
						 

					
					
						Conflicts of Interest

					
					
						11

				
	
					
						﻿5.14

					
					
						 

					
					
						Remedies

					
					
						11

				
	
					
						﻿5.15

					
					
						 

					
					
						No Disparaging Comments

					
					
						12

				
	
					
						﻿5.16

					
					
						 

					
					
						Company Documents and Property

					
					
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						﻿Article 6. GENERAL PROVISIONS

					
					
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						﻿6.1

					
					
						 

					
					
						Matters Relating to Section 409A of the Code

					
					
						13

				
	
					
						﻿6.2

					
					
						 

					
					
						Withholdings; Right of Offset

					
					
						14

				
	
					
						﻿6.3

					
					
						 

					
					
						Nonalienation

					
					
						14

				
	
					
						﻿6.4

					
					
						 

					
					
						Incompetent or Minor Payees

					
					
						14

				
	
					
						﻿6.5

					
					
						 

					
					
						Indemnification

					
					
						14

				
	
					
						﻿6.6

					
					
						 

					
					
						Successors and Assigns

					
					
						14

				
	
					
						﻿6.7

					
					
						 

					
					
						Notice

					
					
						15

				
	
					
						﻿6.8

					
					
						 

					
					
						Mandatory Arbitration of Disputes

					
					
						15

				
	
					
						﻿6.9

					
					
						 

					
					
						Severability

					
					
						17

				
	
					
						﻿6.10

					
					
						 

					
					
						No Third Party Beneficiaries

					
					
						17

				
	
					
						﻿6.11

					
					
						 

					
					
						Waiver of Breach

					
					
						17

				
	
					
						﻿6.12

					
					
						 

					
					
						Survival of Certain Provisions

					
					
						17

				
	
					
						﻿6.13

					
					
						 

					
					
						Entire Agreement; Amendment and Termination

					
					
						17

				
	
					
						﻿6.14

					
					
						 

					
					
						Interpretive Matters

					
					
						18

				
	
					
						﻿6.15

					
					
						 

					
					
						Governing Law; Jurisdiction

					
					
						18

				
	
					
						﻿6.16

					
					
						 

					
					
						Executive Acknowledgment

					
					
						18

				
	
					
						﻿6.17

					
					
						 

					
					
						Counterparts

					
					
						18

				
	
					
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						﻿Appendix A

					
					
						 

					
					
						 

					
					
						A-1

				
	
					
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						﻿Appendix B

					
					
						 

					
					
						 

					
					
						B-1

				

		
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		EXECUTIVE EMPLOYMENT AGREEMENT
		

		
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			THIS AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT (the “Agreement”), effective as of February 1, 2020 (the “Effective Date”), is made and entered into by and between VAALCO Energy, Inc., a Delaware corporation (hereafter “Company”) and William R. Thomas (hereafter “Executive”).  The Company and Executive may sometimes hereafter be referred to singularly as a “Party” or collectively as the “Parties.”
		

		
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			W I T N E S S E T H:
		

		
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			WHEREAS, the Company desires to continue to secure the employment services of Executive subject to the terms and conditions hereafter set forth; and
		

		
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			WHEREAS, Executive is willing to enter into this Agreement upon the terms and conditions hereafter set forth; and
		

		
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			NOW, THEREFORE, in consideration of Executive’s employment with the Company, and the mutual promises, covenants and obligations contained herein, the Parties hereby agree as follows:
		

		
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			Article 1. 
EMPLOYMENT AND DUTIES
		

		
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			1.1    Definitions.  In addition to the terms defined in the text hereof, terms with initial capital letters as used herein have the meanings assigned to them, for all purposes of this Agreement, in the Definitions Appendix hereto, unless the context reasonably requires a broader, narrower or different meaning.  The Definitions Appendix, as attached hereto, is part of this Agreement and incorporated herein.
		

		
			1.2    Employment; Effective Date.  Effective as of the Effective Date and continuing for the Employment Period (as defined in Section 0), the Executive’s employment by the Company shall be subject to the terms and conditions of this Agreement.
		

		
			1.3    Positions.  As of the Effective Date, the Executive will serve as the President of the Company (“President”).  In addition, Executive is currently serving as a member of the Board of Directors of the Company (the “Board of Directors”) pursuant to a Settlement Agreement, dated December 22, 2015, among the Company, Group 42, Inc. and certain other persons named therein (the “Group 42 Agreement”), and will continue serving as a “Director Designee” under the terms of the  Group 42 Agreement (“Director Designee”).  The Company shall maintain the Executive in the position of President of the Company, and/or in such other positions as the Parties mutually may agree, for the Employment Period.  In addition, the Company shall nominate the Executive for re-election to the Board of Directors as and when his term expires during the Employment Period, unless otherwise determined by the Board of Directors.  As a Director Designee, the Executive shall continue to serve as a member of the Board of Directors in the event that the Executive’s position changes from President to some other position with the Company and, moreover, any termination of his employment with the Company shall not, in and of itself, affect Executive’s status as a Director Designee.  
		

		
			
		

		 

		

			 

		

		

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		1.4    Duties and Services.  The Executive agrees to serve in the positions referred to in Section 0 and to perform diligently and to the best of his abilities the duties and services appertaining to such offices, as well as such additional duties and services appropriate to such offices upon which the Parties mutually may agree from time to time or, with respect to his duties as President, that are assigned to him by the Board of Directors.  The Executive’s employment shall also be subject to the policies maintained and established by the Company from time to time, as the same may be amended or otherwise modified.
		

		
			Executive shall at all times use his best efforts to in good faith comply with United States and foreign laws applicable to Executive’s actions on behalf of the Company and its Affiliates.  Executive understands and agrees that he may be required to travel extensively at times for purposes of the Company’s business.
		

		
			1.5    Other Interests.  The Executive agrees that, during the Employment Period, he will devote his primary business time, energy and best efforts to the business and affairs of the Company and its Affiliates, and not to engage, directly or indirectly, in any other business or businesses, whether or not similar to that of the Company or an Affiliate, except with the consent of the Board of Directors.  The foregoing notwithstanding, the Parties recognize and agree that the Executive may engage in passive personal investments (such as real estate investments and rental properties) and other civic and charitable activities (such as continued service on non-profit and/or educational boards) that do not conflict with the business and affairs of the Company or interfere with the Executive’s performance of his duties hereunder without the necessity of obtaining the consent of the Board of Directors; provided, however, Executive agrees that if the Compensation Committee of the Board of Directors (the “Compensation Committee”) determines that continued service with one or more civic or charitable entities is inconsistent with the Executive’s duties hereunder and gives written notice to the Executive, he will promptly resign from such position(s).
		

		
			1.6    Duty of Loyalty.  The Executive acknowledges and agrees that the Executive owes a fiduciary duty of loyalty, fidelity, and allegiance to use his best efforts to act at all times in the best interests of the Company and its Affiliates.  In keeping with these duties, the Executive shall make full disclosure to the Company of all business opportunities pertaining to the Company’s business, and he shall not appropriate for the Executive’s own benefit any business opportunity concerning the subject matter of such fiduciary relationship.
		

		
			Article 2. 
TERM AND TERMINATION OF EMPLOYMENT
		

		
			2.1    Term of Employment.  Unless sooner terminated pursuant to other provisions hereof, the Company agrees to continue to employ the Executive for the period beginning on the Effective Date and ending at the end of the day on July 31, 2020 (the “Initial Term of Employment”).  Beginning effective as of August 1, 2020 (the “Initial Extension Date”), the term of employment hereunder may be extended for such period as the parties mutually agree in writing.  
		

		
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		In addition, the Company and Executive shall each have the right to give Notice of Termination at will, with or without cause, at any time, subject to the terms and conditions of this Agreement regarding the rights and duties of the Parties upon termination of employment.
		

		
			The Initial Term of Employment, and any extension of employment hereunder, shall be referred to herein as a “Term of Employment.”  The entire period from the Effective Date through the date of Executive’s termination of employment with the Company, for whatever reason, shall be referred to herein as the “Employment Period.”
		

		
			2.2    Notice of Termination.  If the Company or the Executive desires to terminate the Executive’s employment hereunder at any time prior to expiration of the Term of Employment, such Party shall do so by giving written Notice of Termination to the other Party, provided that no such action shall alter or amend any other provisions hereof or rights arising hereunder.  No further extensions of the Term of Employment hereunder shall occur pursuant to Section 0 after the giving of such Notice of Termination.
		

		
			2.3    Resignations.  Notwithstanding any other provision of this Agreement, upon the termination of the Executive’s employment hereunder for any reason, unless otherwise requested by the Compensation Committee, Executive shall immediately resign from all officer positions and all boards of directors of any Affiliates of which he may be a member.   The Executive hereby agrees to execute any and all documentation of such resignations upon request by the Company, but he shall be treated for all purposes as having so resigned upon termination of his employment, regardless of when or whether he executes any such documentation.
		

		
			Article 3. 
COMPENSATION AND BENEFITS
		

		
			3.1    Base Salary.  During the Employment Period, the Executive shall receive a minimum annual base salary of Four Hundred Thousand dollars ($400,000), which shall be prorated for any period of less than 12 months (the “Base Salary”).  The Compensation Committee shall review the Executive’s Base Salary on an annual basis and may, in its sole discretion, increase, but not decrease, the Base Salary, and references in this Agreement to “Base Salary” shall refer to annual Base Salary as so increased.  The Base Salary shall be paid in equal installments in accordance with the Company’s policy, as in effect from time to time, for payment of the Base Salary to Executive, but no less frequently than on a monthly basis.
		

		
			3.2    Targeted Cash Bonus.  For the Initial Term of Employment, the Executive shall be eligible to receive a bonus equal to the Executive’s annual Base Salary (the “Target Bonus”), based on performance in relation to the Company’s scorecard for executives as determined by the Company’s Compensation Committee. 
		

		
			3.3    Business and Entertainment Expenses.  Subject to the Company’s standard policies and procedures with respect to expense reimbursement as applied to its executives generally, the Company shall reimburse the Executive for, or pay on behalf of the Executive, the reasonable and appropriate expenses incurred by the Executive for business related purposes, including dues and fees to industry and professional organizations and costs of entertainment and business development.  Executive shall be reimbursed for the reasonable attorney’s fees that he incurs for 
		

		 

		

			 

		

		

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		assistance with respect to negotiating and preparing this Agreement, and subject to such reasonable procedures as may be established by the Company. 
		

		
			3.4    Vacation.  During each full year of the Term of Employment, the Executive shall be entitled to five (5) weeks of paid vacation in accordance with the Company’s vacation policy, as in effect from time to time.
		

		
			3.5    Employee and Executive Benefits Generally.  During the Employment Period, the Executive shall be eligible for participation in employee and executive benefits, including without limitation, qualified and supplemental retirement, savings and deferred compensation plans, medical and life insurance plans, and other fringe benefits, as in effect from time to time for the Company’s most senior executives; provided, however, that Executive acknowledges and agrees that he shall not be a participant in, and he hereby waives any right to participate in, (a) any bonus plan, program or other arrangement offered to any other officers or employees of the Company or its Affiliates and (b) any severance plan (as the same may be amended from time to time) that generally covers the employees of the Company or its Affiliates, such as to preclude duplicative severance benefits with those provided to Executive under the terms of this Agreement.
		

		
			3.6    Proration.  Except as otherwise set forth in this Agreement, any payments or benefits payable to Executive hereunder in respect of any calendar year during which Executive is employed by the Company for less than the entire year, unless otherwise provided in the applicable plan or arrangement, shall be prorated in accordance with the number of days in such calendar year during which he is so employed.
		

		
			Article 4. 
RIGHTS AND PAYMENTS UPON TERMINATION
		

		
			4.1    Rights and Payments upon Termination.  Executive’s right to compensation and benefits for periods after the date on which his employment terminates with the Company and all Affiliates (the “Termination Date”) shall be determined in accordance with this 0, as follows:
		

		
			(a)    Minimum Payments.  Executive shall be entitled to the following minimum payments under this Section 0, in addition to any other payments or benefits to which he is entitled to receive under the terms of this Agreement or any employee benefit plan or program:
		

		
			(i)    his accrued and unpaid Base Salary through the Termination Date;
		

		
			(ii)    his accrued and unused vacation days through the Termination Date; and
		

		
			(iii)    reimbursement of his reasonable business expenses that were incurred but unpaid as of the Termination Date.
		

		
			Such salary and accrued vacation days shall be paid to Executive within five (5) Business Days following the Termination Date in a cash lump sum less applicable 
		

		

		

		 

		

			 

		

		

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			withholding.  Business expenses shall be reimbursed in accordance with the Company’s normal policy and procedures.
		

		
			(b)    Regular Severance Benefits.  In the event that during the Term of Employment Executive should incur a Severance Payment Event at a time when he is serving as the President, then in addition to the Minimum Payments under Section 0, above, the Company shall pay to Executive as additional compensation (the “Severance Payment”), an amount equal to fifty thousand dollars ($50,000), net of applicable taxes and other withholdings, within sixty (60) days following the Termination Date.
		

		
			(c)    CIC Severance Benefits.  In the event that during the Term of Employment Executive should incur a CIC Severance Payment Event at a time when he is serving as the President,  then in addition to the Minimum Payments and Regular Severance Benefits under Sections 0 and 0 above, an additional severance benefit (the “Additional Payment”) shall be provided to Executive or, in the event of his death before receiving such benefit, to his Designated Beneficiary following his death, in a lump sum amount equal to the unpaid portion of the full Target Bonus, payable within sixty (60) days following the Termination Date (net of applicable taxes and other withholdings), without any required condition relating to the scorecard for executives as described in Section 3.2.
		

		
			(d)    Subsidized COBRA Coverage. Except as provided in Section 0 below, in the event that (i) the Term of Employment expires without renewal, (ii) during the Term of Employment while he is serving as President, Executive should incur a Severance Payment Event, the Company and its Affiliates shall maintain continued group health plan coverage following the Termination Date under any of the Company’s group health plans that covered Executive immediately before the Termination Date which are subject to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, as codified in Code Section 4980B and Part 6 of Subtitle B of Title I of ERISA (“COBRA”), subject to the terms and conditions of such plans, for Executive and his eligible covered spouse and other eligible covered dependents (together, “Dependents”), for a period of one (1) year following the Termination Date and at no cost to Executive and his Dependents.
		

		
			After the Termination Date, Executive, and his Dependents, if any, must first elect and maintain any COBRA continuation coverage that they are entitled to receive under the terms and conditions of the applicable plan and COBRA.  Executive and his Dependents shall not be required to make any premium payments for the portion of any such COBRA coverage period that does not extend beyond the maximum one-year period referenced above.  In all other respects, Executive and his Dependents shall be treated the same as other COBRA qualified beneficiaries under the terms and conditions of the group health plan and COBRA during the entire period while COBRA coverage remains in effect.
		

		
			The continuation coverage described above shall be provided in a manner that is intended to satisfy an exception to Code Section 409A, and therefore not be treated as an arrangement providing for nonqualified deferred compensation that is subject to taxation under Code Section 409A.
		

		

		

		 

		

			 

		

		

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			4.2    Limitation on Other Severance Benefits.
		

		
			(a)    Limitation on Other Severance Payments.  For purposes of clarity, in the event that (i) Executive voluntarily resigns or otherwise voluntarily terminates his own employment during the Term of Employment, except for (A) Good Reason or (B) due to his death or Disability, or (ii) Executive’s employment is terminated due to a No Severance Benefits Event, then, in either such event under clause (i) or (ii), the Company shall have no obligation to provide the severance benefits described in Sections 0 or 0.  However, in that case, Executive shall still be entitled to receive the severance benefits provided under Section 0.  
		

		
			(b)    Limitation on Subsidized COBRA Coverage. In the event that Executive’s employment is terminated due to a No Severance Benefits Event, then the Company shall have no obligation to provide the subsidized COBRA coverage described in Section 0.  In such event, the Company shall offer COBRA coverage (as required by COBRA) but not at the discounted rate as described in Section 0.    
		

		
			(c)    No Duplication of Severance Benefits.  Notwithstanding Section 0, if Executive receives or is entitled to receive any severance benefit under any change of control policy, or any agreement with, or plan or policy of, the Company or any Affiliate, the Termination Benefits under Sections 0 and 0 that are provided to or on behalf of Executive shall be offset by any similar severance benefits to be received by Executive, and Executive shall thus be entitled to receive the greater of such other severance benefits or the benefits provided under this Agreement, and not any duplicate or consecutive benefits.  The severance benefits provided under this Agreement shall also supersede and replace any duplicative severance benefits of the same kind under any severance pay plan or program that the Company or any Affiliate maintains for employees generally and that otherwise may cover Executive.
		

		
			4.3    Release Agreement.  In order to receive any Termination Benefits, Executive must first execute the Release on a form provided by the Company in substantially the same form as attached hereto as Appendix B, together with any changes thereto that the Company deems to be necessary or appropriate to comply with applicable law or regulation.  Pursuant to the Release, thereby Executive agrees to release and waive, in return for such Termination Benefits, any claims that he may have against the Company including, without limitation, for unlawful discrimination or retaliation (e.g., Title VII of the U.S. Civil Rights Act); provided, however, the Release shall not release any claim by or on behalf of Executive for any payment or benefit that is due and payable under the terms of this Agreement prior to the receipt thereof.
		

		
			The Company shall deliver the Release to Executive within ten (10) days after the Executive’s Termination Date.  The Executive must return the executed Release within the twenty-one (21) or forty-five (45) day period, as applicable and set out in the Release, following the date of his receipt of the Release.  If the conditions set forth in the preceding sentence are not satisfied by Executive, the Termination Benefits shall be fully forfeited hereunder.
		

		
			If the Release delivery and non-revocation period spans two taxable years, the Termination Benefits will always be paid in the second taxable year.  The Company shall also execute the 
		

		 

		

			 

		

		

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		Release.  No Termination Benefits shall be payable or provided by the Company unless and until the Release has been executed by Executive, has not been revoked, and is no longer subject to revocation by Executive.  
		

		
			4.4    Notice of Termination.  Any termination of employment by the Company or Executive shall be communicated by Notice of Termination to the other Party.
		

		
			4.5    No Mitigation.  Executive shall not be required to mitigate the amount of any payment or other benefits provided under this Agreement by seeking other employment.
		

		
			Article 5. 
CONFIDENTIAL INFORMATION AND 
RESTRICTIVE COVENANTS
		

		
			5.1    Access to Confidential Information and Specialized Training.  In connection with his employment and continuing on an ongoing basis during the Employment Period, the Company and its Affiliates will give Executive access to Confidential Information, which Executive did not have access to or knowledge of before the execution of this Agreement.  Executive acknowledges and agrees that all Confidential Information is confidential and a valuable, special and unique asset of the Company that gives the Company an advantage over its actual and potential, current and future competitors.  Executive further acknowledges and agrees that Executive owes the Company a fiduciary duty to preserve and protect all Confidential Information from unauthorized disclosure or unauthorized use, that certain Confidential Information constitutes “trade secrets” under applicable laws, and that unauthorized disclosure or unauthorized use of the Confidential Information would irreparably injure the Company or any Affiliate.
		

		
			The Company also agrees to provide Executive with Specialized Training, which Executive does not have access to or knowledge of before the execution of this Agreement and continuing on an ongoing basis during his employment.
		

		
			5.2    Agreement Not to Use or Disclose Confidential Information.  Both during the term of Executive’s employment and after his termination of employment for any reason (including wrongful termination), Executive shall hold all Confidential Information in strict confidence, and shall not use any Confidential Information except for the benefit of the Company or its Affiliates, in accordance with the duties assigned to Executive.  Executive shall not, at any time (either during or after the term of Executive’s employment), disclose any Confidential Information to any Person (except other Persons who have a need to know the information in connection with the performance of services for the Company or an Affiliate), or copy, reproduce, modify, decompile or reverse engineer any Confidential Information, or remove any Confidential Information from the Company’s premises, without the prior written consent of the Compensation Committee, or permit any other Person to do so.  Executive shall take reasonable precautions to protect the physical security of all documents and other material containing Confidential Information (regardless of the medium on which the Confidential Information is stored).  This agreement and covenant applies to all Confidential Information, whether now known or later to become known to Executive.
		

		

		

		 

		

			 

		

		

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		The Executive shall hold in a fiduciary capacity for the benefit of the Company all Confidential Information relating to the Company or any of its Affiliates, and their respective businesses, that has been obtained by the Executive during the Executive’s employment by the Company and which is not public knowledge (other than by acts of the Executive or representatives of the Executive in violation of this Agreement).
		

		
			Following the termination of the Executive’s employment with the Company for any reason, the Executive shall not, without the prior written consent of the Company or as may otherwise be required by law or legal process, communicate or divulge any such Confidential Information to any Person other than the Company and those designated by it.
		

		
			The Company has and will disclose to the Executive, or place the Executive in a position to have access to or develop, trade secrets and Confidential Information of the Company or its Affiliates; and/or has and will place the Executive in a position to develop business goodwill on behalf of the Company or its Affiliates; and/or has and will entrust the Executive with business opportunities of the Company or its Affiliates.  As part of the consideration for the compensation and benefits to be paid to the Executive hereunder; to protect the trade secrets and Confidential Information of the Company and its Affiliates that have been and will in the future be disclosed or entrusted to the Executive, the business goodwill of the Company and its Affiliates that has been and will in the future be developed in the Executive, or the business opportunities that have been and will in the future be disclosed or entrusted to the Executive; and as an additional incentive for the Company to enter into this Agreement, the Company and the Executive agree to the noncompetition and the nonsolicitation obligations set forth in this Agreement.
		

		
			5.3    Duty to Return Company Documents and Property.  Upon the termination of Executive’s employment with the Company and its Affiliates, for whatever reason, Executive shall immediately return and deliver to the Company any and all papers, books, records, documents, memoranda and manuals, e-mail, electronic or magnetic recordings or data, including all copies thereof, belonging to the Company or an Affiliate or relating to their businesses, in Executive’s possession or under his control, and regardless of, whether prepared by Executive or others.  If at any time after the Employment Period, Executive determines that he has any Confidential Information in his possession or under his control, Executive shall immediately return to the Company all such Confidential Information, including all copies (including electronic versions) and portions thereof.
		

		
			Within one (1) day after the end of the Employment Period for any reason, the Executive shall return to Company all Confidential Information which is in his possession, custody or control.
		

		
			5.4    Further Disclosure. Executive shall promptly disclose to the Company all ideas, inventions, computer programs, and discoveries, whether or not patentable or copyrightable, which he may conceive or make, alone or with others, during the Employment Period, whether or not during working hours, and which directly or indirectly:
		

		
			(a)    relate to matters within the scope, field, duties or responsibility of Executive’s employment with the Company; or
		

		

		

		 

		

			 

		

		

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		(b)    are based on any knowledge of the actual or anticipated business or interest of the Company; or
		

		
			(c)    are aided by the use of time, materials, facilities or information of the Company.
		

		
			Executive assigns to the Company, without further compensation, all rights, titles and interest in all such ideas, inventions, computer programs and discoveries in all countries of the world.  Executive recognizes that all ideas, inventions, computer programs and discoveries of the type described above, conceived or made by Executive alone or with others within six (6) months after termination of employment (voluntary or otherwise), are likely to have been conceived in significant part either while employed by the Company or as a direct result of knowledge Executive had of Confidential Information.  Accordingly, Executive agrees that such ideas, inventions or discoveries shall be presumed to have been conceived during his employment with the Company, unless and until the contrary is clearly established by Executive.
		

		
			5.5    Inventions.  Any and all writings, computer software, inventions, improvements, processes, procedures and/or techniques which Executive may make, conceive, discover, or develop, either solely or jointly with any other Person, at any time during the Employment Period, whether at the request or upon the suggestion of the Company or otherwise, which relate to or are useful in connection with any business now or hereafter carried on or contemplated by the Company or an Affiliate, including developments or expansions of its present fields of operations, shall be the sole and exclusive property of the Company.  Executive shall take all actions necessary so that the Company can prepare and present applications for copyright or Letters Patent therefor, and can secure such copyright or Letters Patent wherever possible, as well as reissue renewals, and extensions thereof, and can obtain the record title to such copyright or patents.  Executive shall not be entitled to any additional or special compensation or reimbursement regarding any such writings, computer software, inventions, improvements, processes, procedures and techniques.  Executive acknowledges that the Company from time to time may have agreements with other Persons which impose obligations or restrictions on the Company or an Affiliate regarding inventions made during the course of work thereunder or regarding the confidential nature of such work.  Executive agrees to be bound by all such obligations and restrictions and to take all reasonable action which is necessary to discharge the obligations of the Company or an Affiliate with respect thereto.
		

		
			5.6    Non-Solicitation Restriction.  To protect the Confidential Information, and in the event of Executive’s termination of employment for any reason, it is necessary to enter into the following restrictive covenants which are ancillary to the enforceable promises between the Company and Executive in this Agreement.  Executive hereby covenants and agrees that he will not, directly or indirectly, either individually or as a principal, owner, partner, agent, consultant, contractor, employee, or as a director or officer of any corporation or other association, or in any other manner or capacity whatsoever, except on behalf of the Company or an Affiliate, solicit business, or attempt to solicit business, in products or services competitive with any products or services provided by the Company or any Affiliate, from the Company’s or Affiliate’s partners or clients (or any prospective partner or client) as of the Termination Date, or any other Person with whom the Company or Affiliate did business, or had a business relationship with, within the one (1) year period immediately preceding the Termination Date.
		

		
			
		

		 

		

			 

		

		

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		5.7    Non-Competition Restriction.  The Executive shall not, directly or indirectly, for himself or for any other Person, in any geographic area or market anywhere in the continent of Africa or in the territorial waters of any country located in Africa, where (a) the Company or any Affiliate is conducting any business or actively reviewing prospects or (b) the Company or any Affiliate has conducted any business during the previous 12‐month period:
		

		
			(i)    engage in any business competitive with the oil and gas exploration and production business activity conducted by the Company or its Affiliates and that is known to Executive or reasonably should be known to Executive (the “Business”); or
		

		
			(ii)    render advice or services to, or otherwise assist, any Person who is engaged, directly or indirectly, in any business that is competitive with the Business.
		

		
			For these purposes, if less than five percent (5%) of the revenues of any business are derived from activities competitive with the Business, then the first business shall not be considered to be competitive with the Business.  These noncompetition obligations shall apply (a) during the period that the Executive is employed by the Company and (b) for a period of one (1) year after the Termination Date for whatever reason.
		

		
			5.8    No-Recruitment Restriction.  Executive agrees that during the Employment Period, and for a period of two (2) years from the end of the Employment Period for whatever reason, Executive will not, directly or indirectly, or by acting in concert with others, solicit or influence any employee of the Company or any Affiliate to terminate or reduce such Person’s employment with the Company or any Affiliate.
		

		
			The Executive shall not, directly or indirectly, for the Executive or for any other Person, in any geographic area or market where the Company or any of its Affiliates is conducting any business or has during the previous twelve (12) months conducted such business, induce any employee of the Company of any of its Affiliates to terminate his or her employment with the Company or such Affiliates, or hire or assist in the hiring of any such employee by any Person not affiliated with the Company, unless such employee has terminated employment with the Company and its Affiliates for at least thirty (30) days before such initial solicitation.  These nonsolicitation obligations shall apply during the period that the Executive is employed by the Company and during the two-year period commencing on the Termination Date.  Notwithstanding the foregoing, the provisions of this Section 0 shall not restrict the ability of the Company or its Affiliates to take any action with respect to the employment or the termination of employment of any of its employees, or for the Executive to participate in his capacity as an officer of the Company.
		

		
			5.9    Forfeiture of Severance Payment. A “Forfeiture Event” for purposes of this Agreement will occur if (a) Executive violates any of the covenants or restrictions contained in Sections 0 through 0, or (b) the Company learns of facts within one (1) year following Executive’s Termination Date that, if such facts had been known by the Company as of the Termination Date, would have resulted in the termination of Executive’s employment hereunder for Cause, as determined by the Compensation Committee.  In the event of a Forfeiture Event, within thirty (30) days of being notified by the Company in writing of the Forfeiture Event, Executive shall pay to the Company the full the amount of the Additional Payment received by Executive pursuant to Section 0, net of any tax withholdings that were previously withheld from such payment.  
		

		 

		

			 

		

		

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		Executive specifically recognizes and affirms that this Section 0 is a material part of this Agreement without which the Company would not have entered into this Agreement.  Executive further covenants and agrees that should all or any part or application of this Section 0 be held or found invalid or unenforceable for any reason whatsoever by a court of competent jurisdiction or arbitrator in an action between Executive and the Company, then Executive shall promptly pay to the Company the amount of the Additional Payment, or such lesser amount as shall be determined to be the maximum reasonable and enforceable amount by a court or arbitrator, as applicable.
		

		
			5.10    Tolling.  If Executive violates any of the restrictions contained in Sections 0 through 0, the restrictive period will be suspended and will not run in favor of Executive from the time of the commencement of any violation until the time when Executive cures the violation to the Company’s reasonable satisfaction.
		

		
			5.11    Reformation.  It is expressly understood and agreed that the Company and the Executive consider the restrictions contained in this Article 5 to be reasonable and necessary to protect the Confidential Information and reasonable business interests of the Company or its Affiliates.  Nevertheless, if any of the aforesaid restrictions are found by a court having jurisdiction to be unreasonable, or overly broad as to geographic area or time, or otherwise unenforceable, the Parties intend for the restrictions therein set forth to be modified by such court or arbitrator so as to be reasonable and enforceable and, as so modified, to be fully enforced in the geographic area and for the time period to the full extent permitted by law.
		

		
			5.12    No Previous Restrictive Agreements.  Executive represents that, except for agreements he disclosed in writing to the Company, he is not bound by the terms of any agreement with any previous employer or other Person to (a) refrain from using or disclosing any trade secret or confidential or proprietary information in the course of Executive’s employment by the Company or (b) refrain from competing, directly or indirectly, with the business of such previous employer or any other Person.  Executive further represents that his performance of all the terms of this Agreement and his work duties for the Company does not, and will not, breach any agreement to keep in confidence proprietary information, knowledge or data acquired by Executive in confidence or in trust prior to Executive’s employment with the Company, and Executive will not disclose to the Company or induce the Company to use any confidential or proprietary information or material belonging to any previous employer or other Person.
		

		
			5.13    Conflicts of Interest.  In keeping with his fiduciary duties to Company, Executive hereby agrees that he shall not become involved in a conflict of interest, or upon discovery thereof, allow such a conflict to continue at any time during the Employment Period.  Moreover, Executive agrees that he shall abide by the Company’s Code of Conduct, as it may be amended from time to time, and immediately disclose to the Board of Directors any known facts which might involve a conflict of interest of which the Board of Directors was not aware.
		

		
			5.14    Remedies.  Executive acknowledges that the restrictions contained in this 0, in view of the nature of the Company’s business, are reasonable and necessary to protect the Company’s legitimate business interests, and that any violation of this Agreement would result in irreparable injury to the Company.  In the event of a breach or a threatened breach by Executive of any provision of 0, the Company shall be entitled to a temporary restraining order and injunctive relief restraining Executive from the commission of any breach, and to recover the Company’s attorneys’ 
		

		 

		

			 

		

		

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		fees, costs and expenses related to the breach or threatened breach.  Nothing contained in this Agreement shall be construed as prohibiting the Company from pursuing any other remedies available to it for any such breach or threatened breach, including, without limitation, the recovery of money damages, attorneys’ fees, and costs.  These covenants and disclosures shall each be construed as independent of any other provisions in this Agreement, and the existence of any claim or cause of action by Executive against the Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of such covenants and agreements.
		

		
			The Executive acknowledges that money damages would not be sufficient remedy for any breach of Article 5 by the Executive, and the Company shall also be entitled to specific performance as an available remedy for any such breach or any threatened breach.  The remedies provided in this Section 0 shall not be deemed the exclusive remedies for a breach of 0, but shall be in addition to all remedies available at law or in equity.
		

		
			5.15    No Disparaging Comments.  Executive and the Company shall refrain from any criticisms or disparaging comments about each other or in any way relating to Executive’s employment or separation from employment; provided, however, that nothing in this Agreement shall apply to or restrict in any way the communication of information by the Company or any of its Affiliates or by the Executive to any state or federal law enforcement agency.  The Company and Executive will not be in breach of this covenant solely by reason of testimony or disclosure that is required for compliance with applicable law or regulation or by compulsion of law.  A violation or threatened violation of this prohibition may be enjoined by a court of competent jurisdiction.  The rights under this provision are in addition to any and all rights and remedies otherwise afforded by law to the Parties.
		

		
			Executive acknowledges that in executing this Agreement, he has knowingly, voluntarily, and intelligently waived any free speech, free association, free press or First Amendment to the United States Constitution (including, without limitation, any counterpart or similar provision or right under the Texas Constitution or any other state constitution which may be deemed to apply) rights to disclose, communicate, or publish disparaging information or comments concerning or related to the Company or its Affiliate; provided, however, nothing in this Agreement shall be deemed to prevent Executive from testifying fully and truthfully in response to a subpoena from any court or from responding to an investigative inquiry from any governmental agency.
		

		
			5.16    Company Documents and Property.  All writings, records, and other documents and things comprising, containing, describing, discussing, explaining, or evidencing any Confidential Information, and all equipment, components, parts, tools, and the like in Executive’s custody, possession or control that have been obtained or prepared in the course of Executive’s employment with the Company shall be the exclusive property of the Company, shall not be copied and/or removed from the premises of the Company, except in pursuit of the business of the Company, and shall be delivered to the Company, without Executive retaining any copies or electronic versions,  promptly upon notification of the termination of Executive’s employment or at any other time requested by the Company. The Company shall have the right to retain, access, and inspect all property of any kind in the office or premises of the Company.
		

		

		

		 

		

			 

		

		

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		Article 6. 
GENERAL PROVISIONS
		

		
			6.1    Matters Relating to Section 409A of the Code.  Notwithstanding any provision in this Agreement to the contrary, if the payment of any compensation or benefit provided hereunder (including, without limitation, any Termination Benefits) would be subject to additional taxes and interest under Section 409A of the Code (“Section 409A”), then the following provisions shall apply:
		

		
			(a)    Notwithstanding anything to the contrary in this Agreement, with respect to any amounts payable to Executive under this Agreement in connection with a termination of Executive’s employment that would be considered “non-qualified deferred compensation” that is subject to, and not exempt under, Section 409A, a termination of employment shall not be considered to have occurred under this Agreement unless and until such termination constitutes Executive’s Separation From Service.
		

		
			(b)    Notwithstanding anything to the contrary in this Agreement, to the maximum extent permitted by applicable law, the Termination Benefits provided to Executive pursuant to this Agreement shall be made in reliance upon Treasury Regulation Section 1.409A-1(b)(9)(iii) (relating to separation pay plans) or Treasury Regulation Section 1.409A-1(b)(4) (relating to short-term deferrals).  However, to the extent any such payments are treated as “non-qualified deferred compensation” subject to Section 409A, and if Executive is determined by the Company at the time of his Separation From Service to be a “specified employee” for purposes of Section 409A, then to the extent delayed payment of the Termination Benefits to which Executive is entitled under this Agreement is required in order to avoid a prohibited payment under Section 409A, such severance payment shall not be made to Executive before the earlier of (1) the expiration of the six-month period measured from the date Executive’s Separation From Service or (2) the date of Executive’s death.  Upon the earlier of such dates, all payments deferred pursuant to this Section 0 shall be paid in a lump sum to Executive (or to Executive’s Designated Beneficiary in the event of his death).
		

		
			(c)    The determination of whether Executive is a “specified employee” for purposes of Section 409A at the time of his Separation From Service shall be made by the Company in accordance with the requirements of Section 409A.
		

		
			(d)    Notwithstanding anything to the contrary in this Agreement or in any separate Company policy, with respect to any in-kind benefits and reimbursements provided under this Agreement during any tax year of Executive shall not affect in-kind benefits or reimbursements to be provided in any other tax year of Executive and are not subject to liquidation or exchange for another benefit.  Reimbursement requests must be timely submitted by Executive, and if timely submitted, reimbursement payments shall be made to Executive as soon as administratively practicable following such submission in accordance with the Company’s policy regarding reimbursements, but in no event later than the last day of Executive’s taxable year following the taxable year in which the expense was incurred.  This Section 0 shall only apply to in-kind benefits and reimbursements that would result in taxable compensation income to Executive.
		

		

		

		 

		

			 

		

		

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		(e)    This Agreement is intended to be written, administered, interpreted and construed in a manner such that no payment under this Agreement becomes subject to (1) the gross income inclusion under Section 409A or (2) the interest and additional tax under Section 409A (collectively, “Section 409A Penalties”), including, where appropriate, the construction of defined terms to have meanings that would not cause the imposition of the Section 409A Penalties.  For purposes of Section 409A, each payment that Executive may be eligible to receive under this Agreement shall be treated as a separate and distinct payment and shall not collectively be treated as a single payment.    If any provision of this Agreement would cause Executive to incur the Section 409A Penalties, the Company may, after consulting with Executive, reform such provision to comply with Section 409A or to preclude imposition of the Section 409A Penalties, to the full extent permitted under Section 409A.
		

		
			6.2    Withholdings; Right of Offset.  The Company may withhold and deduct from any benefits and payments made or to be made pursuant to this Agreement (a) all federal, state, local, foreign, and other taxes as may be required pursuant to any law or governmental regulation or ruling, (b) all other normal employee deductions made with respect to Company’s employees generally, and (c) any advances made to Executive and owed to Company.
		

		
			6.3    Nonalienation.  The right to receive payments under this Agreement shall not be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge or encumbrance by Executive, his dependents or beneficiaries, or to any other Person who is or may become entitled to receive such payments hereunder.  The right to receive payments hereunder shall not be subject to or liable for the debts, contracts, liabilities, engagements or torts of any Person who is or may become entitled to receive such payments, nor may the same be subject to attachment or seizure by any creditor of such Person under any circumstances, and any such attempted attachment or seizure shall be void and of no force and effect.
		

		
			6.4    Incompetent or Minor Payees.  Should the Compensation Committee determine, in its discretion, that any Person to whom any payment is payable under this Agreement has been determined to be legally incompetent or is a minor, any payment due hereunder, notwithstanding any other provision of this Agreement to the contrary, may be made in any one or more of the following ways:  (a) directly to such Person; (b) to the legal guardian or other duly appointed personal representative of the individual or the estate of such Person; or (c) to such adult or adults as have, in the good faith knowledge of the Compensation Committee, assumed custody and support of such Person; and any payment so made shall constitute full and complete discharge of any liability under this Agreement in respect to the amount paid.
		

		
			6.5    Indemnification.  The Company agrees to indemnify the Executive with respect to any acts or omissions he may commit during the period during which he is an officer, director and/or employee of the Company or any Affiliate, and to provide him with coverage under any directors’ and officers’ liability insurance policies, in each case on terms not less favorable than those provided to any of its other directors and officers as in effect from time to time.
		

		
			6.6    Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the Company and any successor of the Company (whether direct or indirect, by purchase, merger, consolidation or otherwise), and this Agreement shall inure to the benefit of and be 
		

		 

		

			 

		

		

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		enforceable by Executive’s legal representatives.  The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.  As used in this Agreement, “Company” shall mean the Company as previously defined and any successor by operation of law or otherwise, as well as any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement.  Except as provided in the preceding provisions of this Section 0, this Agreement, and the rights and obligations of the Parties hereunder, are personal in nature and neither this Agreement, nor any right, benefit, or obligation of either Party hereto, shall be subject to voluntary or involuntary assignment, alienation or transfer, whether by operation of law or otherwise, without the written consent of the other Party.
		

		
			6.7    Notice.  Each Notice or other communication required or permitted under this Agreement shall be in writing and transmitted, delivered, or sent by personal delivery, prepaid courier or messenger service (whether overnight or same-day), or prepaid certified United States mail (with return receipt requested), addressed (in any case) to the other Party at the address for that Party set forth below or under that Party’s signature on this Agreement, or at such other address as the recipient has designated by Notice to the other Party.
		

		
			To the Company:    VAALCO Energy, Inc.
		

		
			        9800 Richmond Avenue, Suite 700
		

		
			        Houston, Texas 77042
		

		
			        Attention:  General Counsel & Corporate Secretary

		

		
			To Executive:        William R. Thomas
		

		
			       (as set forth below his signature)
		

		
			Each Notice or communication so transmitted, delivered, or sent (a) in person, by courier or messenger service, or by certified United States mail (return receipt requested) shall be deemed given, received, and effective on the date delivered to or refused by the intended recipient (with the return receipt, or the equivalent record of the courier or messenger, being deemed conclusive evidence of delivery or refusal), or (b) by email or facsimile shall be deemed given, received, and effective on the date of actual receipt (with the confirmation of transmission being deemed conclusive evidence of receipt, except where the intended recipient has promptly Notified the other Party that the transmission is illegible). Nevertheless, if the date of delivery or transmission is not a Business Day, or if the delivery or transmission is after 4:00 p.m. (local time at the recipient) on a Business Day, the Notice or other communication shall be deemed given, received, and effective on the next Business Day.
		

		
			6.8    Mandatory Arbitration of Disputes.  Except as provided in subsection 0 of this Section 0, any Dispute must be resolved by binding arbitration in accordance with the following:
		

		
			(a)    Either Party may begin arbitration by filing a demand for arbitration in accordance with the Arbitration Rules and concurrently Notifying the other Party of that 
		

		 

		

			 

		

		

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		demand.  If the Parties are unable to agree upon the choice of an arbitrator within twenty (20) Business Days after the demand for arbitration was filed (and do not agree to an extension of that 20-day period), either Party may request the Houston, Texas, office of the American Arbitration Association (“AAA”) to appoint the arbitrator in accordance with the Arbitration Rules.  The arbitrator, as so appointed hereunder, is referred to herein as the “Arbitrator”.
		

		
			(b)    The arbitration shall be conducted in the Houston, Texas, metropolitan area, at a place and time agreed upon by the Parties with the Arbitrator, or if the Parties cannot agree, as designated by the Arbitrator.  The Arbitrator may, however, call and conduct hearings and meetings at such other places as the Parties may mutually agree or as the Arbitrator may, on the motion of one Party, determine to be necessary to obtain significant testimony or evidence.
		

		
			(c)    The Arbitrator may authorize any and all forms of discovery upon a Party’s showing of need that the requested discovery is likely to lead to material evidence needed to resolve the Dispute and is not excessive in scope, timing, or cost.
		

		
			(d)    The arbitration shall be subject to the Federal Arbitration Act and conducted in accordance with the Arbitration Rules to the extent that they do not conflict with this Section 0.  The Parties and the Arbitrator may, however, agree to vary to provisions of this Section 0 or the matters otherwise governed by the Arbitration Rules.
		

		
			(e)    The arbitration hearing shall be held within sixty (60) days after the appointment of the Arbitrator.  The Arbitrator’s final decision or award shall be made within thirty (30) days after the hearing.  That final decision or award by the Arbitrator shall be deemed issued at the place of arbitration.  The Arbitrator’s final decision or award shall be based on this Agreement and applicable law.
		

		
			(f)    The Arbitrator’s final decision or award may include injunctive relief in response to any actual or impending breach of this Agreement or any other actual or impending action or omission by a Party in connection with this Agreement.
		

		
			(g)    The Arbitrator’s final decision or award shall be final and binding upon the Parties, and judgment upon that decision or award may be entered in any court having jurisdiction.  The Parties shall have any appeal rights afforded to them under the Federal Arbitration Act.
		

		
			(h)    Nothing in this Section 0 shall limit the right of either Party to apply to a court having jurisdiction to: (1) enforce the agreement to arbitrate in accordance with this Section 0; (2) seek provisional or temporary injunctive relief in response to an actual or impending breach of the Agreement or otherwise so as to avoid an irreparable damage or maintain the status quo, until a final arbitration decision or award is rendered or the Dispute is otherwise resolved; or (3) challenge or vacate any final Arbitrator’s decision or award that does not comply with this Section 0.  In addition, nothing in this Section 0 prohibits the Parties from resolving any Dispute (in whole or in part) by mutual agreement at any 
		

		 

		

			 

		

		

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		time, including, without limitation, through the use of personal negotiations or mediation with a third party.
		

		
			(i)    The Arbitrator may proceed to an award notwithstanding the failure of any Party to participate in such proceedings.  The prevailing Party in the arbitration proceeding may be entitled to an award of reasonable attorneys’ fees incurred in connection with the arbitration in such amount, if any, as determined by the Arbitrator in his discretion.  The costs of the arbitration shall be borne equally by the Parties unless otherwise determined by the Arbitrator in the award.
		

		
			(j)    The Arbitrator shall be empowered to impose sanctions and to take such other actions as it deems necessary to the same extent a judge could impose sanctions or take such other actions pursuant to the Federal Rules of Civil Procedure and applicable law.  Each Party agrees to keep all Disputes and arbitration proceedings strictly confidential except for the disclosure of information required by applicable law.
		

		
			(k)    Executive acknowledges that by agreeing to this provision, he knowingly and voluntarily waives any right he may have to a jury trial based on any claims he has, had, or may have against the Company or an Affiliate, including any right to a jury trial under any local, municipal, state or federal law.
		

		
			6.9    Severability.  It is the desire of the Parties hereto that this Agreement be enforced to the maximum extent permitted by law, and should any provision contained herein be held unenforceable by a court of competent jurisdiction or arbitrator (pursuant to Section 0), the Parties hereby agree and consent that such provision shall be reformed to create a valid and enforceable provision to the maximum extent permitted by law; provided, however, if such provision cannot be reformed, it shall be deemed ineffective and deleted herefrom without affecting any other provision of this Agreement.  This Agreement should be construed by limiting and reducing it only to the minimum extent necessary to be enforceable under then applicable law.
		

		
			6.10    No Third Party Beneficiaries.  This Agreement shall be binding upon and inure to the benefit of the Parties hereto, and to their respective successors and permitted assigns hereunder, but otherwise this Agreement shall not be for the benefit of any Persons who are third parties.
		

		
			6.11    Waiver of Breach.  No waiver by either Party of a breach of any provision of this Agreement by the other Party, or of compliance with any condition or provision of this Agreement to be performed by the other Party, will operate or be construed as a waiver of any subsequent breach by the other Party or any similar or dissimilar provision or condition at the same or any subsequent time.  The failure of either Party to take any action by reason of any breach will not deprive such Party of the right to take action at any time while such breach continues.
		

		
			6.12    Survival of Certain Provisions.  Wherever appropriate to the intention of the Parties, the respective rights and obligations of the Parties hereunder shall survive any termination or expiration of this Agreement or following the Executive’s Termination Date.
		

		
			6.13    Entire Agreement; Amendment and Termination.  This Agreement contains the entire agreement of the Parties with respect to the matters covered herein; moreover, this Agreement supersedes all prior and contemporaneous agreements and understandings, oral or 
		

		 

		

			 

		

		

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		written, between the Parties concerning the subject matter hereof.  This Agreement may be amended, waived or terminated only by a written instrument that is identified as an amendment, waiver or termination hereto and that is executed by or on behalf of each Party.
		

		
			6.14    Interpretive Matters.  In the interpretation of the Agreement, except where the context otherwise requires:
		

		
			(a)    Headings.  The Agreement headings are for reference purposes only and will not affect in any way the meaning or interpretation of this Agreement.
		

		
			(b)    The terms “including” and “include” do not denote or imply any limitation.
		

		
			(c)    The conjunction “or” has the inclusive meaning “and/or”.
		

		
			(d)    The singular includes the plural, and vice versa, and each gender includes each of the others.
		

		
			(e)    The term “month” refers to a calendar month.
		

		
			(f)    Reference to any statute, rule, or regulation includes any amendment thereto or any statute, rule, or regulation enacted or promulgated in replacement thereof.
		

		
			(g)    The words “herein”, “hereof”, “hereunder” and other compounds of the word “here” shall refer to the entire Agreement and not to any particular provision;
		

		
			(h)    All amounts referenced herein are in U.S. dollars.
		

		
			6.15    Governing Law; Jurisdiction.  All matters or issues relating to the interpretation, construction, validity, and enforcement of this Agreement shall be governed by the laws of the State of Texas, without giving effect to any choice-of-law principle that would cause the application of the laws of any jurisdiction other than Texas.  Jurisdiction and venue of any action or proceeding relating to this Agreement or any Dispute (to the extent arbitration is not required under Section 0) shall be exclusively in the federal and state courts of competent jurisdiction in Houston, Texas.
		

		
			6.16    Executive Acknowledgment.  Executive acknowledges that (a) he is knowledgeable and sophisticated as to business matters, including the subject matter of this Agreement, (b) he has read this Agreement and understands its terms and conditions, (c) he has had ample opportunity to discuss this Agreement with his legal counsel prior to execution, and (d) no strict rules of construction shall apply for or against the drafter or any other Party.  Executive represents that he is free to enter into this Agreement including, without limitation, that he is not subject to any covenant not to compete or other restrictive covenant that would conflict with his employment duties and covenants under this Agreement.
		

		
			6.17    Counterparts.  This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute one and the same instrument.  Each counterpart may consist of a copy hereof containing multiple signature pages, each signed by one Party hereto, but together signed by both Parties.
		

		
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			[Signature page follows.]
		

		
			 
		

		

		

		 

		

			 

		

		

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		IN WITNESS WHEREOF, Executive has hereunto set his hand and Company has caused this Agreement to be executed in its name and on its behalf by its duly authorized officer, to be effective as of the Effective Date.
		

		
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						WITNESS:

					
					
						 

					
					
						 

					
					
						EXECUTIVE:

					
					
						 

				
	
					
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						Signature:

					
					
						/s/ Andres Morera

					
					
						 

					
					
						Signature:

					
					
						/s/ William R. Thomas

				
	
					
						Name:

					
					
						Andres Morera

					
					
						 

					
					
						Name:

					
					
						William R. Thomas

				
	
					
						Date:

					
					
						March 18, 2020

					
					
						 

					
					
						Date:

					
					
						March 18, 2020

				

		
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			Executive’s Address for Notices:
		

		
			William R. Thomas
		

		
			2727 Kirby Drive
		

		
			Houston, Texas 77098
		

		
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						ATTEST:

					
					
						 

					
					
						 

					
					
						COMPANY:

					
					
						 

				
	
					
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						VAALCO ENERGY, INC.

					
					
						 

				
	
					
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						By:

					
					
						/s/ Michael G. Silver

					
					
						 

					
					
						By:

					
					
						/s/ Andrew Fawthrop

				
	
					
						Name:

					
					
						Michael G. Silver

					
					
						 

					
					
						Name:

					
					
						Andrew Fawthrop

				
	
					
						Title:

					
					
						General Counsel

					
					
						 

					
					
						Title:

					
					
						Chairman of the Board

				
	
					
						Date:

					
					
						March 18, 2020

					
					
						 

					
					
						Date:

					
					
						March 18, 2020

				

		
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		APPENDIX A
		

		
			Definitions Appendix
		

		
			1.    “Affiliate” has the same meaning ascribed to such term in Rule 12b-2 under the Securities Exchange Act of 1934, as amended from time to time.
		

		
			2.    “Anticipatory Termination” means a Separation From Service of the Executive within the time period that begins on the first day of the month that is three (3) months immediately preceding the first day of the month containing the Change in Control Date and ends on the Change in Control Date, but only if the Executive’s Separation From Service was due to (a) a termination by the Company without Cause or (b) a termination by the Executive for Good Reason.  For purposes of clarification and not limitation, a Separation From Service for Cause, or due to Executive’s death or Disability or his voluntary resignation without Good Reason, is not an Anticipatory Termination.
		

		
			3.    “Arbitration Rules” means the Rules for Employment Arbitrations of the American Arbitration Association, as in effect at the time of arbitration of a Dispute.
		

		
			4.    “Board” means the then-current Board of Directors of the Company.
		

		
			5.    “Business Day” means any Monday through Friday, excluding any such day on which banks are authorized to be closed in Texas.
		

		
			6.    “Cause” shall mean the termination by the Company of the Executive’s employment with the Company by reason of (a) the conviction of the Executive by a court of competent jurisdiction as to which no further appeal can be taken of a crime involving moral turpitude or a felony; (b) the commission by the Executive of a material act of fraud upon the Company or any Subsidiary, or any customer or supplier thereof; (c) the misappropriation of any funds or property of the Company or any Subsidiary, or any customer or supplier thereof, by the Executive; (d) the willful and continued failure by the Executive to perform the material duties assigned to him that is not cured to the reasonable satisfaction of the Company within 30 days after written notice of such failure is provided to Executive by the Board or the Compensation Committee (or by an officer of the Company who has been designated by the Board or the Compensation Committee for such purpose); (e) the engagement by the Executive in any direct and material conflict of interest with the Company or any Subsidiary without compliance with the Company’s or Subsidiary’s conflict of interest policy, if any, then in effect; or (f) the engagement by the Executive, without the written approval of the Board or the Compensation Committee, in any material activity which competes with the business of the Company or any Subsidiary or which would result in a material injury to the business, reputation or goodwill of the Company or any Subsidiary.
		

		
			7.    “Change in Control” means the occurrence of any one or more of the following events: 
		

		

		

		 

		

			 

		

		

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		(a)    The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a “Person”)) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of fifty percent (50%) or more of either (i) the then outstanding shares of common stock of the Company (the “Outstanding Company Stock”) or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that the following acquisitions shall not constitute a Change in Control: (i) any acquisition directly from the Company or any Subsidiary, (ii) any acquisition by the Company or any Subsidiary or by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Subsidiary, or (iii) any acquisition by any corporation pursuant to a reorganization, merger, consolidation or similar business combination involving the Company (a “Merger”), if, following such Merger, the conditions described in Section 7.8(c) (below) are satisfied;
		

		
			(b)    Individuals who, as of the Effective Date, constitute the Board of Directors of the Company (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the Effective Date whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board;
		

		
			(c)    The consummation of a Merger involving the Company, unless immediately following such Merger, (i) substantially all of the holders of the Outstanding Company Voting Securities immediately prior to Merger beneficially own, directly or indirectly, more than fifty percent (50%) of the common stock of the corporation resulting from such Merger (or its parent corporation) and (ii) at least a majority of the members of the board of directors of the corporation resulting from such Merger (or its parent corporation) were members of the Incumbent Board at the time of the execution of the initial agreement providing for such Merger; or
		

		
			(d)    The sale consummation, or other disposition of all or substantially all of the assets of the Company, unless immediately following such sale or other disposition, (i) substantially all of the holders of the Outstanding Company Voting Securities immediately prior to the consummation of such sale or other disposition beneficially own, directly or indirectly, more than fifty percent (50%) of the common stock of the corporation acquiring such assets in substantially the same proportions as their ownership of Outstanding Company Voting Securities immediately prior to the consummation of such sale or disposition, and (ii) at least a majority of the members of the board of directors of such corporation (or its parent corporation) were members of the Incumbent Board at the time of execution of the initial agreement or action of the Board of Directors providing for such sale or other disposition of assets of the Company.
		

		

		

		 

		

			 

		

		

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		Notwithstanding the foregoing provisions of this Change in Control definition, to the extent that any payment (or acceleration of payment) under the Agreement is considered to be deferred compensation that is subject to, and not exempt under, Code Section 409A, then the term Change in Control hereunder shall be construed to have the meaning as set forth in Code Section 409A, but only with respect to the payment (or acceleration of payment) of such deferred compensation and to the extent inconsistent with the foregoing provisions of this definition as determined by the Incumbent Board.
		

		
			8.    “Change in Control Date” means the first date upon which a Change in Control event occurs, provided that such date is during (a) the Employment Period or (b) the three-month period following the end of the Employment Period, as specified in the definition of “Anticipatory Termination” if applicable.
		

		
			9.    “CIC Window Period” means (a) the time period beginning on the Change in Control Date and ending on the last day of the six  (6) consecutive month period that begins immediately following the last day of the month containing the Change in Control Date, or (b) following an Anticipatory Termination, the occurrence of a Change in Control (which Change in Control must qualify as a “change in control event” within the meaning of Section 409A) within the three-month period that is specified in the definition of “Anticipatory Termination”.
		

		
			10.    “Code” means the Internal Revenue Code of 1986, as amended, or its successor.  References herein to any Section of the Code shall include any successor provisions of the Code.
		

		
			11.    “Confidential Information” means any information or material known to, or used by or for, the Company or an Affiliate (whether or not owned or developed by the Company or an Affiliate and whether or not developed by Executive) that is not generally known by other Persons in the Business.  For all purposes of the Agreement, Confidential Information includes, but is not limited to, the following: all trade secrets of the Company or an Affiliate; all non-public information that the Company or an Affiliate has marked as confidential or has otherwise described to Executive (either in writing or orally) as confidential; all non-public information concerning the Company’s or Affiliate’s products, services, prospective products or services, research, prospects, leases, surveys, seismic data, drilling data, designs, prices, costs, marketing plans, marketing techniques, studies, test data, leasehold and royalty owners, investors, suppliers and contracts; all business records and plans; all personnel files; all financial information of or concerning the Company or an Affiliate; all information relating to the Company’s operating system software, application software, software and system methodology, hardware platforms, technical information, inventions, computer programs and listings, source codes, object codes, copyrights and other intellectual property; all technical specifications; any proprietary information belonging to the Company or an Affiliate; all computer hardware or software manuals of the Company or an Affiliate; all Company or Affiliate training or instruction manuals; all Company or Affiliate electronic data; and all computer system passwords and user codes.
		

		
			12.    “Designated Beneficiary” means Executive’s surviving spouse, if any, as determined for purposes of the Code.  If there is no such surviving spouse at the time of Executive’s death, then the Designated Beneficiary shall be Executive’s estate.
		

		

		

		 

		

			 

		

		

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		13.    “Disability” shall mean that Executive is entitled to receive long‐term disability (“LTD”) income benefits under the LTD plan or policy maintained by the Company or an Affiliate that covers Executive.  If, for any reason, Executive is not covered under such LTD plan or policy, then “Disability” shall mean a “permanent and total disability” as defined in Code Section 22(e)(3) and Treasury regulations thereunder.  Evidence of such Disability shall be certified by a physician acceptable to both the Company and Executive.  In the event that the Parties are not able to agree on the choice of a physician, each shall select one physician who, in turn, shall select a third physician to render such certification.  All costs relating to the determination of whether Executive has incurred a Disability shall be paid by the Company.  Executive agrees to submit to any examinations that are reasonably required by the attending physician or other healthcare service providers to determine whether he has a Disability.
		

		
			14.    “Dispute” means any dispute, disagreement, controversy, claim, or cause of action arising in connection with or relating to this Agreement or Executive’s employment or termination of employment hereunder, or the validity, interpretation, performance, breach, modification or termination of this Agreement.
		

		
			15.    “Good Reason” means, with respect to Executive, the occurrence of any one or more of the following events which first occurs during the Employment Period, except as a result of actions taken in connection with termination of Executive’s employment for Cause or Disability, and without Executive’s specific written consent:
		

		
			(a)    The assignment to Executive of any duties that are materially inconsistent with Executive’s executive position, which in this definition includes status, reporting relationship to the Board of Directors, office, title, scope of responsibility over corporate level staff or operations functions, or responsibilities as an officer of the Company, or any other material diminution in Executive’s position, authority, duties, or responsibilities, other than (in any case or circumstance) an isolated and inadvertent action not taken in bad faith that is remedied by the Company within thirty (30) Business Days after Notice thereof to the Company by Executive; or
		

		
			(b)    The Company requires Executive to be based at any office or location that is farther than forty (40) miles from Executive’s principal office location located in the Houston, Texas, metropolitan area, except for required business travel; or
		

		
			(c)    Any failure by the Company to obtain an assumption of this Agreement by its successor in interest, or any action or inaction that constitutes a material breach by the Company of this Agreement.
		

		
			Notwithstanding the foregoing definition of “Good Reason”, Executive cannot terminate his employment under the Agreement for Good Reason unless Executive (1) first provides written Notice to the Compensation Committee of the event (or events) that Executive believes constitutes a Good Reason event (above) within sixty (60) days from the first occurrence date of such event, and (2) provides the Company with at least thirty (30) Business Days to cure, correct or mitigate the Good Reason event so that it either (A) does not constitute a Good Reason event hereunder or (B) Executive specifically agrees, in writing, that after any such modification or accommodation by the Company, such event does not constitute a Good Reason event hereunder.
		

		

		

		 

		

			 

		

		

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		16.    “No Severance Benefits Event” means termination of Executive’s employment under the Agreement for Cause.
		

		
			17.    “Notice” means a written communication complying with Section 0 (“Notify” has the correlative meaning).
		

		
			18.    “Notice of Termination” means a written Notice which (a) indicates the specific termination provision in the Agreement that is being relied upon, (b) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated, and (c) if the Termination Date is other than the date of receipt of such Notice, specifies the termination date (which date shall be not more than sixty (60) days after the giving of such Notice).  Any termination of Executive by the Company for Cause, or by Executive for Good Reason, shall be communicated by Notice of Termination to the other Party.  The failure by Executive or the Company to set forth in the Notice of Termination any fact or circumstance that contributes to a showing of Good Reason or Cause shall not waive any right of such Party, or preclude such Party from asserting, such fact or circumstance in enforcing such Party’s rights.
		

		
			19.    “Person” means any individual, firm, corporation, partnership, limited liability company, trust, or other entity, including any successor (by merger or otherwise) of such entity.
		

		
			20.    “Release” means a separation and release agreement, in such form as is prepared and delivered by the Company to Executive.  The Release shall not release any claim by or on behalf of Executive for any payment or other benefit that is required under this Agreement and not conditioned upon execution and non-revocation of the Release prior to the receipt thereof, except as may otherwise be agreed to by Executive.
		

		
			21.    “Separation From Service” means Executive’s “separation from service” with the Company and its Affiliates, as such term is defined under Code Section 409A.
		

		
			22.    “Severance Payment Event” means either a (a) “CIC Severance Payment Event” or (b) “Regular Severance Payment Event”, as such terms are defined below.
		

		
			(a)    “CIC Severance Payment Event” means: the Executive’s Separation From Service with the Company and all Affiliates which occurs within the CIC Window Period and while the Executive holds the position of President,  other than a Separation From Service that is (1) voluntarily by the Executive unless for Good Reason,  (2) due to Executive’s death or Disability, or (3) for Cause.  Any other Separation From Service of the Executive shall not be a CIC Severance Payment Event.
		

		
			(b)    “Regular Severance Payment Event” means the Executive’s Separation From Service while the Executive holds the position of President that is (1) not a CIC Severance Payment Event and (2) due to: (A) an involuntary  termination of Executive’s employment by the Company except for Cause, (B) termination of Executive’s employment due to his death or Disability, or (C) termination of employment by Executive for Good Reason.  Any other Separation From Service of the Executive shall not be a Regular Severance Payment Event.
		

		

		

		 

		

			 

		

		

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		For all purposes of this definition of “Severance Payment Event”, any transfer of the Executive’s employment from the Company to an Affiliate, from an Affiliate to the Company, or from one Affiliate to another Affiliate, is not a Separation From Service of the Executive (though any such transfer might, depending on the circumstances, constitute or result in a Separation From Service by the Executive for Good Reason).  Any termination by the Company of the Executive for Cause, or by the Executive for Good Reason, shall be communicated by Notice of Termination to the other Party.
		

		
			23.    “Specialized Training” includes the training the Company provides to Executive that is unique to its business and enhances Executive’s ability to perform his job duties effectively, which includes, without limitation, orientation training, operation methods training, and computer and systems training.
		

		
			24.    “Subsidiary” means a corporation or other entity, whether incorporated or unincorporated, of which at least a majority of the voting securities is owned, directly or indirectly, by the Company.
		

		
			25.    “Termination Benefits” means the benefits described in Section 0 and Section 0.
		

		
			26.    “Termination Date” means the date on which Executive’s employment terminates with the Company and all Affiliates.  Notwithstanding anything herein to the contrary, the date on which a “separation from service” under Code Section 409A is effective shall be the Termination Date with respect to any payment or benefit to or on behalf of Executive that constitutes deferred compensation that is subject to, and not exempt from or excepted under, Code Section 409A.
		

		
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			[Appendix B follows.]
		

		
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		APPENDIX B
		

		
			TO
		

		
			EXECUTIVE EMPLOYMENT AGREEMENT
		

		
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			RELEASE AGREEMENT
		

		
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			In consideration of the Termination Benefits as set forth in that certain Executive Employment Agreement (the “Employment Agreement”) dated as of February 1, 2020, and as it may be amended thereafter, by and between VAALCO Energy, Inc. (the “Company”) and William R. Thomas (“Executive”), this Release Agreement (the “Agreement”) is made and entered into by the Company and the Executive (each a “Party” and together, the “Parties”). 
		

		
			By signing this Release Agreement, Executive and the Company hereby agree as follows:
		

		
			1.         Purpose.  The purpose of this Agreement is to provide for the orderly termination of the employment relationship between the Parties, and to voluntarily resolve any actual or potential disputes or claims that Executive has, had or may ever have, as of the date of Executive’s execution of this Agreement, against (a) the Company and all of its parents, predecessors, successors, Affiliates (as defined in the Employment Agreement), divisions, related companies and organizations, and its and their present and former agents, employees, managers, officers, directors, attorneys, stockholders, plan fiduciaries, assigns, agents, representatives, and all other Persons (as defined in the Employment Agreement) acting by, through or in concert with any of them and (b) all compensation and benefit plans and programs sponsored or maintained by the Company and the administrators, trustees, insurers, and fiduciaries of such plans and programs (hereinafter, all the persons and entities in clauses (a) and (b) being individually and collectively referred to as the “Released Parties”).  Neither the fact that this Agreement has been proposed or executed, nor the terms of this Agreement, are intended to suggest, or should be construed as suggesting, that the Released Parties have acted unlawfully or violated any federal, state or local law or regulation, or any other duty, policy or contract involving Executive.
		

		
			2.         Termination of Employment.  Effective as of the close of business on ______________ (the “Termination Date”), Executive’s employment with the Company and all of its Affiliates has voluntarily terminated. 
		

		
			3.        Termination Benefits.  In consideration for Executive’s execution of, and required performance under, this Agreement, the Company shall provide Executive with the Termination Benefits (as defined in the Employment Agreement, which definition and other terms in the Employment Agreement are incorporated herein by this reference).  Executive confirms and agrees that he would not otherwise have received, or been entitled to receive, the Termination Benefits if he did not enter into this Agreement.  
		

		
			4.        Waiver of Additional Compensation or Benefits.  The Termination Benefits to be paid to Executive constitutes the entire amount of compensation and consideration due to Executive under the Employment Agreement and this Agreement, and Executive 
		

		 

		

			 

		

		

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		acknowledges that he has no right to seek, and will not seek, any additional or different compensation or consideration for executing or performing under the Employment Agreement or this Agreement.  
		

		
			5.         Non-Disparagement.  Executive hereby agrees not to disclose, communicate, or publish any disparaging or negative information, writings, electronic communications, comments, opinions, facts, or remarks, of any kind, about the Company and/or any of the other Released Parties; provided, however, that this paragraph shall have no application to any evidence or testimony required by any court or other government entity, including but not limited to, the U.S. Equal Employment Opportunity Commission (“EEOC”) or any similar federal, state or local agency, under compulsion of law. Executive acknowledges that in executing this Agreement, Executive has knowingly, voluntarily and intelligently waived any free speech or First Amendment rights under the United States Constitution or applicable state counterpart to disclose, publish or communicate any such disparaging information about the Company and/or any of the other Released Parties.  
		

		
			6.         Executive Representations.  Executive expressly acknowledges and represents, and intends for the Company to rely upon the following in entering the Agreement:
		

		
			(a)       Executive has not filed any complaints, claims or actions against the Company or any of the other Released Parties with any court, agency, or commission regarding the matters encompassed by this Agreement and, by executing this Agreement, Executive hereby waives the right to recover monetary damages in any proceeding that (1) Executive may bring before the EEOC or any state or local human rights commission or (2) may be brought by the EEOC or any state or local human rights commission by or on Executive’s behalf. 
		

		
			(b)       Executive understands that he is, by entering into this Agreement, releasing the Released Parties, including the Company, from any and all claims he has, had or may ever have against them under federal, state or local laws, which have arisen on or before the execution date of this Agreement.
		

		
			(c)        Executive understands that he is, by entering into this Agreement, waiving all claims that he has, had or may ever have against the Released Parties under the federal Age Discrimination in Employment Act of 1967, as amended, which have arisen on or before the execution date of this Agreement. 
		

		
			(d)       Executive agrees that this Agreement shall be binding on him and his heirs, administrators, representatives, executors, successors, and assigns, and shall inure to the benefit of his heirs, administrators, representatives, executors, successors and assigns. 
		

		
			(e)        Executive has reviewed all aspects of this Agreement, and has carefully read and fully understands all of the provisions and effects of this Agreement. 
		

		
			(f)        Executive has been, and is hereby, advised in writing to consult with an attorney of his own choice before signing this Agreement. 
		

		

		

		 

		

			 

		

		

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		(g)       Executive is knowingly and voluntarily entering into this Agreement, and has relied solely and completely upon his own judgment and, if applicable, the advice of his own attorney in entering into this Agreement. 
		

		
			(h)       Executive is not relying upon any representations, promises, predictions, projections or statements made by or on behalf of the Company or any of the other Released Parties, other than those that are specifically stated in this Agreement.
		

		
			(i)         Executive does not waive rights or claims that may arise after the date this Agreement is signed below.
		

		
			(j)        This Agreement shall be, in all cases, construed as a whole according to its fair meaning, and not strictly for or against any of the Parties.
		

		
			(k)       Executive will receive payment of consideration under this Agreement that is beyond what Executive was entitled to receive before entering into this Agreement.
		

		
			7.         Release.  Executive, on behalf of himself and his heirs, executors, administrators, successors and assigns, irrevocably and unconditionally releases, waives and forever discharges the Released Parties from and against any and all claims, demands, actions, causes of action, charges, complaints, liabilities, obligations, promises, sums of money, agreements, representations, controversies, disputes, damages, suits, right, sanctions, costs (including attorneys’ fees), losses, debts and expenses of any nature whatsoever, whether known or unknown, fixed or contingent, which Executive has, had or may ever have against the Released Parties arising out of, concerning, or related to, his employment or separation from employment with the Company and its Affiliates, from the beginning of time and up to and including the date Executive executes this Agreement below.  This Agreement includes, without limitation, (a) law or equity claims; (b) contract (express or implied) or tort claims; (c) claims arising under any federal, state or local laws of any jurisdiction that prohibit age, sex, race, national origin, color, disability, religion, veteran, military status, sexual orientation or any other form of discrimination, harassment, hostile work environment or retaliation (including, without limitation, the Age Discrimination in Employment Act of 1967, the Older Workers Benefit Protection Act, the Americans with Disabilities Act of 1990, the Americans with Disabilities Act Amendments Act of 2008, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Civil Rights Acts of 1866 and/or 1871, 42 U.S.C. Section 1981, the Rehabilitation Act, the Family and Medical Leave Act, the Sarbanes-Oxley Act, the Employee Polygraph Protection Act, the Worker Adjustment and Retraining Notification Act, the Equal Pay Act of 1963, the Lilly Ledbetter Fair Pay Act, the Uniformed Services Employment and Reemployment Rights Act of 1994, the Genetic Information and Nondiscrimination Act of 2008, the Texas Labor Code, Section 1558 of the Patient Protection and Affordable Care Act of 2010, the Consolidated Omnibus Budget Reconciliation Act of 1985, and any other federal, state or local laws of any jurisdiction); (d) claims under any other federal, state, local, municipal or common law whistleblower protection, discrimination, wrongful discharge, anti-harassment or anti-retaliation statute or ordinance; (e) claims arising under ERISA; or (f) any other statutory or common law claims related to Executive’s employment or separation from employment with the Company and its Affiliates.  Executive further 
		

		 

		

			 

		

		

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		represents that, as of the date of his execution of this Agreement, he has not been the victim of any illegal or wrongful acts by any of the Released Parties, including, without limitation, discrimination, retaliation, harassment or any other wrongful act based on sex, age, race, religion, or any other legally protected characteristic.  
		

		
			Notwithstanding the foregoing, this Agreement specifically does not release any claim or cause of action by or on behalf of Executive (or his beneficiary) (i) for any payment or other benefit that is required under the terms of either the Employment Agreement or pursuant to any Plan (as defined in the Employment Agreement) prior to the receipt thereof by or on behalf of Executive or (ii) arising out of the Company’s obligation to indemnify the Executive in his capacity as a director, officer or employee of the Company or any Affiliate thereof, or as a former director, officer or employee of the Company or any Affiliate as provided in the Company’s by-laws, any agreement to which the Executive is a party or beneficiary, at law, or otherwise.
		

		
			8.         Entire Agreement.  This Agreement sets forth the entire agreement between the Parties and fully supersedes and replaces any and all prior agreements or understandings, written or oral, between the Parties pertaining to the subject matter of this Agreement. 
		

		
			9.         Severability.  Should any provision of this Agreement be declared or be determined by any court of competent jurisdiction to be illegal, invalid or unenforceable, the Agreement shall first be reformed to make the provision at issue enforceable and effective to the full extent permitted by law.  If such reformation is not possible, all remaining provisions of this Agreement shall otherwise remain in full force and effect and shall be construed as if such illegal, invalid or unenforceable provision has not been included herein.
		

		
			10.       Twenty-One Calendar Days to Consider Offer of Termination Benefits.  Executive shall have, and by signing this Agreement Executive acknowledges and represents that he has been given, a period of twenty-one (21) calendar days to consider whether to elect to sign this Agreement, and to thereby waive and release the rights and claims addressed in this Agreement.  Although Executive may sign this Agreement prior to the end of the twenty-one (21) calendar day period, Executive may not sign this Agreement on or before the Termination Date.  In addition, if Executive signs this Agreement prior to the end of the twenty-one (21) calendar day period, Executive shall be deemed, by doing so, to have certified and agreed that the decision to make such election prior to the expiration of the twenty-one (21) calendar day period is knowing and voluntary and was not induced by the Company through:  (a) fraud, misrepresentation or a threat to withdraw or alter the offer prior to the end of the twenty-one (21) calendar day period; or (b) an offer to provide different terms or benefits in exchange for signing the Agreement prior to the expiration of the twenty-one (21) calendar day period.  The procedure for Executive to accept this Agreement is to return a fully executed, dated and witnessed Agreement to the Chairman or Secretary of the Company’s Board of Directors prior to the deadline.
		

		
			11.       Seven Day Revocation Period.  Executive understands and acknowledges that he may revoke this Agreement at any time within seven (7) calendar days after he signs this Agreement.  To revoke this Agreement, Executive must deliver written notification of such revocation to the attention of the Chairman or the Secretary of the Company’s Board of 
		

		 

		

			 

		

		

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		Directors, within seven (7) calendar days after the date that he signs this Agreement.  Executive further understands that if he does not revoke this Agreement within seven (7) calendar days following his execution of the Agreement (excluding the date of execution), the Agreement will become effective, binding and enforceable on both Parties.
		

		
			12.       Agreement not to Sue.  Except as required by law that cannot be waived, Executive agrees that he will not commence, maintain, initiate, or prosecute, or cause, encourage, assist, volunteer, advise or cooperate with any other Person (as defined in the Executive Employment Agreement) to commence, maintain, initiate or prosecute, any action, lawsuit, proceeding, charge, petition, complaint or claim before any court, agency or tribunal against the Company or any Affiliate arising from, concerned with, or otherwise relating to, in whole or in part, Executive’s employment or separation from employment with the Company, or any of the matters discharged and released in this Agreement.  Notwithstanding the preceding sentence or any other provision of this Agreement or the Employment Agreement, this release and the Employment Agreement are not intended to interfere with Executive’s right to file a charge with the EEOC or a state or local human rights commission in connection with any claim that Executive believes he may have against the Company or its Affiliates, or to cooperate or provide truthful testimony to the EEOC or a state or local human rights commission with respect to any investigation.  However, by executing this Agreement, Executive hereby waives the right to recover monetary damages in any proceeding he may bring before the EEOC or any state or local human rights commission or in any proceeding brought by the EEOC or any state or local human rights commission (or any other agency) on Executive’s behalf.
		

		
			13.       Confidentiality of Agreement.  Executive agrees to keep this Agreement and its terms confidential.  Executive agrees and understands that he is prohibited from disclosing any terms of this Agreement to anyone, except that he may disclose the terms of this Agreement to his attorney, his spouse, his financial advisor or as otherwise required by compulsion of law.  The Company acknowledges and agrees that it is prohibited from disclosing any terms of this Agreement to any third parties, except that the Company may disclose the terms of this Agreement to its attorneys, accountants, and other Persons (as defined in the Employment Agreement) with a need to know, or as otherwise required by compulsion of law.
		

		
			14.       Agreement to Return Company Property/Documents.  Executive acknowledges that his employment with the Company and its Affiliates has terminated effective as of the Termination Date.  Accordingly, Executive agrees that, in accordance with the Company’s policy:  (i) Executive will not take with him, copy, alter, destroy or delete any files, documents or other materials whether or not embodying or recording any Confidential Information (as defined in the Employment Agreement), including copies, without obtaining in advance the written consent of an authorized Company representative; and (ii) Executive will promptly return to the Company all Confidential Information, documents, files, records and tapes (written or electronically stored) that are in Executive’s possession or under his control, and Executive shall not use or disclose such materials in any way or in any format, including written information in any form, information stored by electronic means, and any and all copies of such materials.  Executive further agrees that he will return to the Company immediately all Company property, including, without limitation, 
		

		 

		

			 

		

		

			B-5

		

 

		

			 

		

		any Company-provided keys, equipment, computer and computer equipment, devices, any other Company cellular phones, Company credit cards, business cards, data, lists, information, correspondence, notes, memorandums, reports or other writings prepared by the Company or Executive on behalf of the Company or an Affiliate. 
		

		
			15.       Waiver.  A Party’s waiver of any breach or violation of any provision of this Agreement shall not operate as, or be construed to be, a waiver of any later breach of the same or other provision by such Party.
		

		
			16.       Miscellaneous.  The Parties understand and agree that if a violation of any term of this Agreement is asserted, the Party who asserts such violation shall have the right to seek specific performance of that term and/or any other necessary and proper relief as permitted by law or equity, including but not limited to, damages awarded by any court of competent jurisdiction, and the prevailing Party shall be entitled to recover its reasonable costs and attorneys’ fees.
		

		
			Nothing in this Agreement will be construed to prevent Executive from challenging the validity of this Agreement under the Age Discrimination in Employment Act or Older Workers Benefit Protection Act.  Executive further understands and agrees that if he, or someone acting on his behalf, files, or causes to be filed, any such claim, charge, complaint or action against the Company, an Affiliate or any other Released Party, Executive hereby expressly fully waives and relinquishes any right to recover any damages or other relief, whatsoever, from the Company, its Affiliates and/or other Persons, including costs and attorneys’ fees.
		

		
			17.       Binding Effect.  This Agreement shall be binding upon and inure to the benefit of the Parties, and their respective heirs, executors, beneficiaries, personal representatives, successors and permitted assigns hereunder, but otherwise this Agreement shall not be for the benefit of any third parties.
		

		
			18.       Survival of Certain Provisions. Wherever appropriate to the intention of the Parties, the respective rights and obligations of the Parties hereunder shall survive any termination or expiration of this Agreement 
		

		
			19.       Choice of Law.  This Agreement shall be governed by, and construed and interpreted in accordance with, the laws of the State of Texas without regard to principles of conflict of laws.  Jurisdiction and venue of any action or proceeding relating to this Agreement, or any dispute hereunder, shall be exclusively in a federal or state court of competent jurisdiction in the Houston, Texas, metropolitan area, and the Parties hereby waive any objection to such jurisdiction or venue including, without limitation, to the effect that it is inconvenient.  
		

		
			20.       Counterparts.  The Parties agree that this Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall be deemed one and the same instrument.
		

		
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			[Signature page follows.]
		

		

		

		 

		

			 

		

		

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		Please review this document carefully as it includes a release of claims.
		

		
			IN WITNESS WHEREOF, Executive has executed and entered into this Agreement, and the Company has caused this Agreement to be executed in its name and on its behalf by its duly authorized officer, to be effective as of the date this Agreement is executed by Executive as set forth beneath his signature below.
		

		
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			This document was presented to Executive on March 18, 2020.
		

		
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						COMPANY:

					
						 

					
						VAALCO ENERGY, INC.

					
					
						 

					
					
						 

				
	
					
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						By: _________________________

					
					
						 

					
					
						 

				
	
					
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						Name: _________________________

					
					
						 

					
					
						 

				
	
					
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						Title: _________________________

					
					
						 

					
					
						 

				
	
					
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						Dated this ___ day of  _____ 2020

					
					
						 

					
					
						 

				
	
					
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						EXECUTIVE:

					
					
						 

					
					
						WITNESS:

				
	
					
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						By: _________________________

					
					
						 

					
					
						 

				
	
					
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						Witness signature

				
	
					
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						Name: _________________________

					
					
						 

					
					
						Name: _________________________

				
	
					
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						Dated this ___ day of  _____ 2020

					
					
						 

					
					
						Dated this __ day of ______ 2020

				
	
					
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						Address for Executive:

					
					
						 

					
					
						 

				
	
					
						_________________________

					
					
						 

					
					
						 

				
	
					
						_________________________

					
					
						 

					
					
						 

				
	
					
						_________________________

					
					
						 

					
					
						 

				
	
					
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			B-7ck0001559484-ex43_309.htm

 

Exhibit 4.3

DESCRIPTION OF THE REGISTRANT’S SECURITIES

REGISTERED PURSUANT TO SECTION 12 OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Resource Real Estate Opportunity REIT II, Inc. has shares of its common stock, $0.01 par value per share, registered under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  References in the following discussion to “we,” “our” and “us” and similar references mean Resource Real Estate Opportunity REIT II, Inc., excluding its subsidiaries, unless the context otherwise requires or otherwise expressly stated, and references to “you” and “your” mean holders of our common stock.

 

Description of Our Common Stock

 

The following description of our common stock does not purport to be complete and is subject to and qualified in its entirety by reference to Maryland law and to our charter and bylaws, copies of which are filed as exhibits to the Annual Report on Form 10-K to which this Exhibit 4.3 is a part.

General 

Our charter provides that we may issue up to 1,010,050,000 shares of capital stock, of which 1,000,000,000 shares are designated as common stock, par value $0.01 per share, 50,000 shares are designated as convertible stock, par value $0.01 per share and 10,000,000 shares are designated as preferred stock, par value $0.01 per share. In addition, our board of directors may amend our charter to increase or decrease the amount of our authorized shares. 

Common Stock 

All shares of our common stock have equal rights as to earnings, assets, distributions and voting. When the shares of our common stock are issued in the manner contemplated, they will be duly authorized, validly issued, fully paid and non-assessable. Distributions may be paid to the holders of our common stock, if and when authorized by our board of directors and declared by us out of funds legally available therefore, subject to any preferential rights of any preferred stock that we issue in the future. Holders of shares of our common stock do not have preemptive rights, which means that you will not have an automatic option to purchase any new shares that we issue, nor do holders of our shares have any preference, conversion, exchange, sinking fund, redemption or appraisal rights. In the event of our liquidation, dissolution or winding up, each share of our common stock would be entitled to share ratably in all of our assets that are legally available for distribution after payment of or adequate provision for all our known debts and other liabilities and subject to any preferential rights of holders of preferred stock, if any preferred stock is outstanding at such time. Subject to our charter restrictions on the transfer and ownership of our common stock and except as may be specified otherwise in the terms of any class or series of our common stock, each share of our common stock entitles the holder to one vote on all matters submitted to a vote of stockholders, including the election of our directors. Except as provided with respect to any other class or series of stock, the holders of our common stock possess exclusive voting power. There is no cumulative voting in the election of directors, which means that holders of a majority of our outstanding common shares can elect all of our directors and holders of less than a majority of such shares will be unable to elect any director. 

Our board of directors has authorized the issuance of shares of our capital stock without certificates. Information regarding restrictions on the transferability of our shares that, under Maryland law, would otherwise have been required to appear on our share certificates will instead be furnished to stockholders upon request and without charge. 

We maintain a stock ledger that contains the name and address of each stockholder and the number of shares that the stockholder holds. With respect to uncertificated stock, we will continue to treat the stockholder registered on our stock ledger as the owner of the shares until the new owner delivers a properly executed form to us, which form we will provide to any registered holder upon request. 

1

 

 

Convertible Stock 

Our authorized capital stock includes 50,000 shares of convertible stock, par value $0.01 per share. We have issued 50,000 of such shares to our advisor in exchange for 5,000 shares of common stock. No additional consideration is due upon the conversion of the convertible stock.  There will be no distributions paid on shares of convertible stock. The conversion of the convertible stock into common shares, in satisfaction of our obligation to pay our advisor an incentive fee, will dilute the value of our shares of common stock. 

With certain limited exceptions, shares of convertible stock shall not be entitled to vote on any matter, or to receive notice of, or to participate in, any meeting of stockholders of the company at which they are not entitled to vote. However, the affirmative vote of the holders of more than two-thirds of the outstanding shares of convertible stock is required (A) for the adoption of any amendment, alteration or repeal of a provision of the charter or (B) to effect or validate a consolidation with or merger of our company into another entity, that adversely changes the preferences, limitations or relative rights of the shares of convertible stock. 

Upon the occurrence of (A) our making total distributions on the then outstanding shares of our common stock equal to the issue price of those shares (that is, the price paid for those shares) plus a 7% cumulative, non-compounded, annual return on the issue price of those outstanding shares; or (B) the listing of the shares of common stock for trading on a national securities exchange, each outstanding share of our convertible stock will convert into the number of shares of our common stock described below. Before we will be able to pay distributions to our stockholders equal to the aggregate issue price of our then outstanding shares plus a 7% cumulative, non-compounded, annual return on the issue price of those outstanding shares, we will need to sell a portion of our assets. Thus, the sale of one or more assets will be a practical prerequisite for conversion under clause (A) above. 

Upon the occurrence of either such event, each share of convertible stock shall, unless our advisory agreement with our advisor has been terminated or not renewed on account of a material breach by our advisor, generally be converted into a number of shares of common stock equal to 1/50,000 of the quotient of: 

 

				
	
 
	
•
	
 
	
(A) 15% of the amount, if any, by which 

 

				
	
 
	
•
	
 
	
(1) the value of the company as of the date of the event triggering the conversion plus the total distributions paid to our stockholders through such date on the then outstanding shares of our common stock exceeds 

 

				
	
 
	
•
	
 
	
(2) the sum of the aggregate issue price of those outstanding shares plus a 7% cumulative, non-compounded, annual return on the issue price of those outstanding shares as of the date of the event triggering the conversion, divided by 

 

				
	
 
	
•
	
 
	
(B) the value of the company divided by the number of outstanding shares of common stock, in each case, as of the date of the event triggering the conversion. In the case of conversion upon the listing of our shares, the conversion of the convertible stock will not occur until the 31st trading day after the date of such listing.

However, if our advisory agreement with our advisor expires without renewal or is terminated (other than because of a material breach by our advisor) prior to each such triggering event described in the foregoing paragraph (an “advisory agreement termination”), then upon either such triggering event the holder of the convertible stock will be entitled to a prorated portion of the number of shares of common stock determined by the foregoing calculation, where such proration is based on the percentage of time we were advised by our advisor. 

As used above and in our charter, “value of the company” as of a specific date means our actual value as a going concern on the applicable date based on the difference between (A) the actual value of all of our assets as determined in good faith by our board, including a majority of the conflicts committee, and (B) all of our liabilities as set forth on our balance sheet for the period ended immediately prior to the determination date, provided that (1) if such value is being determined in connection with a change of control that establishes our net worth, then the value shall be the net worth established thereby and (2) if such value is being determined in connection with the listing of our common stock for trading on a national securities exchange, then the value shall be the number of outstanding shares of common stock multiplied by the closing price of a single share of common stock, averaged over a period of 30 trading days after the date of listing. If the holder of shares of convertible stock disagrees with the value determined by the board, then each of the holder of the convertible stock and us shall name one appraiser and the two named appraisers shall promptly agree in good faith to the appointment of one other appraiser whose 

2

 

 

determination of the value of the company shall be final and binding on the parties. The cost of such appraisal shall be shared evenly between us and our advisor. 

Our charter provides that if we: 

 

				
	
 
	
•
	
 
	
reclassify or otherwise recapitalize our outstanding common stock (except to change the par value, or to change from no par value to par value, or to subdivide or otherwise split or combine shares); or 

 

				
	
 
	
•
	
 
	
consolidate or merge with another entity in a transaction in which we are either (1) not the surviving entity or (2) the surviving entity but that results in a reclassification or recapitalization of our common stock (except to change the par value, or to change from no par value to par value, or to subdivide or otherwise split or combine shares), 

then we or the successor or purchasing business entity must provide that the holder of each share of our convertible stock outstanding at the time one of the above events occurs will continue to have the right to convert the convertible stock upon an event triggering conversion. After one of the above transactions occurs, the convertible stock will be convertible into the kind and amount of stock and other securities and property received by the holders of common stock in the transaction that occurred, such that upon conversion, the holders of convertible stock will realize as nearly as possible the same economic rights and effects as described above in the description of the conversion of our convertible stock. This right will apply to successive reclassifications, recapitalizations, consolidations, and mergers until the convertible stock is converted. 

Our board of directors will oversee the conversion of the convertible stock to ensure that any shares of common stock issuable in connection with the conversion is calculated in accordance with the terms of our charter and to evaluate the impact of the conversion on our REIT status. If, in the good faith judgment of our board, full conversion of the convertible stock would jeopardize our status as a REIT, then only such number of shares of convertible stock (or fraction of a share thereof) shall be converted into a number of shares of common stock such that our REIT status would not be jeopardized. The conversion of the remaining shares of convertible stock will be deferred until the earliest date after our board of directors determines that such conversion will not jeopardize our qualification as a REIT. Any such deferral will not otherwise alter the terms of the convertible stock. 

Preferred Stock 

Our charter authorizes our board of directors to designate and issue one or more classes or series of preferred stock without stockholder approval. A majority of our conflicts committee who do not have an interest in the transaction must approve any issuance of preferred stock. In addition, our charter empowers our conflicts committee to retain its own legal and financial advisors at the expense of the Company. Our board of directors may determine the relative rights, preferences and privileges of each class or series of preferred stock so issued, which may be more beneficial than the rights, preferences and privileges attributable to our common stock. The issuance of preferred stock could have the effect of delaying or preventing a change in control. Our board of directors has no present plans to issue preferred stock but may do so at any time in the future without stockholder approval. 

Restriction on Ownership of Shares 

Ownership Limit 

To maintain our REIT qualification, not more than 50% in value of our outstanding shares may be owned, directly or indirectly, by five or fewer individuals (including certain entities treated as individuals under the Internal Revenue Code) during the last half of each taxable year. In addition, at least 100 persons who are independent of us and each other must beneficially own our outstanding shares for at least 335 days per 12-month taxable year or during a proportionate part of a shorter taxable year. We may prohibit certain acquisitions and transfers of shares so as to ensure our continued qualification as a REIT under the Internal Revenue Code. However, we cannot assure you that this prohibition will be effective. 

To help ensure that we meet these tests, our charter prohibits any person or group of persons from acquiring, directly or indirectly, beneficial ownership of more than 9.8% of our aggregate outstanding shares unless exempted by our board of directors. Our board of directors may waive this ownership limit with respect to a particular person if the board receives evidence that ownership in excess of the limit will not jeopardize our REIT status. For purposes 

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of this provision, we treat corporations, partnerships and other entities as single persons. 

This limitation does not apply to the holder(s) of our convertible stock or the common stock issued upon conversion of our convertible stock. However, our board of directors may defer the timing of the conversion of all or a portion of our convertible stock if it determines that full conversion could jeopardize our qualification as a REIT under then applicable federal income tax laws and regulation. Any such deferral will not otherwise alter the terms of the convertible stock, and such stock will convert at the earliest date after our board of directors determines that such conversion will not jeopardize our qualification as a REIT. 

Any attempted transfer of our shares that, if effective, would result in a violation of our ownership limit or would result in our shares being owned by fewer than 100 persons will be null and void and will cause the number of shares causing the violation to be automatically transferred to a trust for the exclusive benefit of one or more charitable beneficiaries. The prohibited transferee will not acquire any rights in the shares. The automatic transfer will be deemed to be effective as of the close of business on the business day prior to the date of the attempted transfer. We will designate a trustee of the trust that will not be affiliated with us or the prohibited transferee. We will also name one or more charitable organizations as a beneficiary of the share trust. 

Shares held in trust will remain issued and outstanding shares and will be entitled to the same rights and privileges as all other shares of the same class or series. The prohibited transferee will not benefit economically from any of the shares held in trust, will not have any rights to dividends or distributions and will not have the right to vote or any other rights attributable to the shares held in the trust. The trustee will receive all dividends and distributions on the shares held in trust and will hold such dividends or distributions in trust for the benefit of the charitable beneficiary. The trustee may vote any shares held in trust. 

Within 20 days of receiving notice from us that any of our shares have been transferred to the trust for the charitable beneficiary, the trustee will sell those shares to a person designated by the trustee whose ownership of the shares will not violate the above restrictions. Upon the sale, the interest of the charitable beneficiary in the shares sold will terminate and the trustee will distribute the net proceeds of the sale to the prohibited transferee and to the charitable beneficiary as follows. The prohibited transferee will receive the lesser of (i) the price paid by the prohibited transferee for the shares or, if the prohibited transferee did not give value for the shares in connection with the event causing the shares to be held in the trust (e.g., a gift, devise or other similar transaction), the market price (as defined in our charter) of the shares on the day of the event causing the shares to be held in the trust and (ii) the price received by the trustee from the sale or other disposition of the shares. Any net sale proceeds in excess of the amount payable to the prohibited transferee will be paid immediately to the charitable beneficiary. If, prior to our discovery that shares have been transferred to the trust, the shares are sold by the prohibited transferee, then (i) the shares shall be deemed to have been sold on behalf of the trust and (ii) to the extent that the prohibited transferee received an amount for the shares that exceeds the amount he was entitled to receive, the excess shall be paid to the prohibited trustee upon demand. 

In addition, shares held in the trust for the charitable beneficiary will be deemed to have been offered for sale to us, or our designee, at a price per share equal to the lesser of (i) the price per share in the transaction that resulted in the transfer to the trust (or, in the case of a devise or gift, the market price at the time of the devise or gift) and (ii) the market price on the date we, or our designee, accept the offer. We will have the right to accept the offer until the trustee has sold the shares. Upon a sale to us, the interest of the charitable beneficiary in the shares sold will terminate and the trustee will distribute the net proceeds of the sale to the prohibited transferee. 

 

Any person who acquires or attempts to acquire shares in violation of the foregoing restrictions or who would have owned the shares that were transferred to any such trust must give us immediate written notice of such event, and any person who proposes or attempts to acquire or receive shares in violation of the foregoing restrictions must give us at least 15 days’ written notice prior to such transaction. In both cases, such persons shall provide to us such other information as we may request in order to determine the effect, if any, of such transfer on our status as a REIT. 

The foregoing restrictions will continue to apply until our board of directors determines it is no longer in our best interest to continue to qualify as a REIT. The ownership limit does not apply to any underwriter in an offering of our shares or to a person or persons exempted from the ownership limit by our board of directors based upon appropriate assurances that our qualification as a REIT would not be jeopardized. 

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Within 30 days after the end of each taxable year, every owner of 5% or more of our outstanding capital stock will be asked to deliver to us a statement setting forth the number of shares owned directly or indirectly by such person and a description of how such person holds the shares. Each such owner shall also provide us with such additional information as we may request in order to determine the effect, if any, of his or her beneficial ownership on our status as a REIT and to ensure compliance with our ownership limit. 

These restrictions could delay, defer or prevent a transaction or change in control of our company that might involve a premium price for our shares of common stock or otherwise be in the best interests of our stockholders. 

 

Suitability Standards and Minimum Purchase Requirements

 

Our charter provides that, until our common stock is listed on a national securities exchange, to purchase our common stock, the purchaser must represent to us:

 

	
 
	
(i)
	
that such purchaser (or, in the case of sales to fiduciary accounts, that the beneficiary, the fiduciary account or the grantor or donor who directly or indirectly supplies the funds to purchase the shares if the grantor or donor is the fiduciary) has a minimum annual gross income of $70,000 and a net worth (excluding home, home furnishings and automobiles) of not less than $70,000; or

 

	
 
	
(ii)
	
that such purchaser (or, in the case of sales to fiduciary accounts, that the beneficiary, the fiduciary account or the grantor or donor who directly or indirectly supplies the funds to purchase the shares if the grantor or donor is the fiduciary) has a net worth (excluding home, home furnishings and automobiles) of not less than $250,000.

 

Each purchase of shares of common stock shall comply with the requirements regarding minimum initial and subsequent cash investment amounts set forth in our then effective registration statement as such registration statement has been amended or supplemented as of the date of such purchase or any higher or lower applicable state requirements with respect to minimum initial and subsequent cash investment amounts in effect as of the date of the issuance or transfer.  Subsequent purchasers, i.e., potential purchasers of your shares, must also meet the net worth or income standards, and unless you are transferring all of your shares, you may not transfer your shares in a manner that causes you or your transferee to own fewer than the number of shares required to meet the minimum purchase requirements, except for the following transfers without consideration: transfers by gift, transfers by inheritance, intrafamily transfers, family dissolutions, transfers to affiliates and transfers by operation of law. These suitability and minimum purchase requirements are applicable until our shares of common stock are listed on a national securities exchange, and these requirements may make it more difficult for you to sell your shares.

Meetings and Special Voting Requirements 

An annual meeting of our stockholders will be held each year, at least 30 days after delivery of our annual report. Special meetings of stockholders may be called only upon the request of a majority of our directors, a majority of our independent directors, our chief executive officer, our president or upon the written request of stockholders holding at least 10% of the shares entitled to be cast on any issue proposed to be considered at the special meeting. Upon receipt of a written request of common stockholders holding at least 10% of the shares entitled to be cast stating the purpose of the special meeting, our secretary will provide all of our stockholders written notice of the meeting and the purpose of such meeting. The meeting must be held not less than 15 days or more than 60 days after the distribution of the notice of the meeting. The presence in person or by proxy of stockholders entitled to cast a majority of all the votes entitled to be cast at any stockholder meeting constitutes a quorum. Unless otherwise provided by the Maryland General Corporation Law or our charter, the affirmative vote of a majority of all votes cast is necessary to take stockholder action. With respect to the election of directors, each candidate nominated for election to the board of directors must receive a majority of the votes present, in person or by proxy, in order to be elected. Therefore, if a nominee receives fewer “for” votes than “withhold” votes in an election, then the nominee will not be elected. 

Our charter provides that the concurrence of the board is not required in order for the common stockholders to amend the charter, dissolve the corporation or remove directors. However, we have been advised that Section 2-604 

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and Section 3-403 of the Maryland General Corporation Law do require board approval in order to amend our charter or dissolve, respectively. Without the approval of a majority of the shares of common stock entitled to vote on the matter, the board of directors may not: 

 

				
	
 
	
•
	
 
	
amend the charter to adversely affect the rights, preferences and privileges of the common stockholders; 

 

				
	
 
	
•
	
 
	
amend charter provisions relating to director qualifications, fiduciary duties, liability and indemnification, conflicts of interest, investment policies or investment restrictions; 

 

				
	
 
	
•
	
 
	
cause our liquidation or dissolution after our initial investment in property; 

 

				
	
 
	
•
	
 
	
sell all or substantially all of our assets other than in the ordinary course of business; or 

 

				
	
 
	
•
	
 
	
cause our merger or reorganization. 

Advance Notice for Stockholder Nominations for Directors and Proposals of New Business 

Our bylaws provide that with respect to an annual meeting of stockholders, nominations of individuals for election to the board of directors and the proposal of business to be considered by stockholders may be made only: 

 

				
	
 
	
•
	
 
	
pursuant to our notice of the meeting; 

 

				
	
 
	
•
	
 
	
by the board of directors; or 

 

				
	
 
	
•
	
 
	
by a stockholder who gives notice of the nomination or proposal not less than 90 days prior to the first anniversary of the date of the mailing of the notice for the preceding year’s annual stockholders’ meeting. 

Our bylaws contain a similar notice requirement in connection with nominations for directors at a special meeting of stockholders called for the purpose of electing one or more directors. Failure to comply with the notice provisions will make stockholders unable to nominate directors or propose new business. The purpose of requiring stockholders to give us advance notice of nominations and other business is to afford our board of directors a meaningful opportunity to consider the qualifications of the proposed nominees and the advisability of any other proposed business and, to the extent deemed necessary or desirable by our board of directors, to inform stockholders and make recommendations about such qualifications or business, as well as to provide a more orderly procedure for conducting meetings of stockholders. 

Inspection of Books and Records 

As a part of our books and records, we maintain at our principal office an alphabetical list of the names of our common stockholders, along with their addresses and telephone numbers and the number of shares held by each of them. We update this stockholder list at least quarterly. Except as noted below, the list is available for inspection at our principal office by a common stockholder or his or her designated agent upon request of the stockholder and we will mail this list to any common stockholder within 10 days of receipt of his or her request. We may impose a reasonable charge for expenses incurred in reproducing such list. Stockholders, however, may not sell or use this list for a commercial purpose other than in the interest of the applicant as a stockholder relative to the affairs of our company. The purposes for which stockholders may request this list include matters relating to their voting rights. Each common stockholder who receives a copy of the stockholder list shall keep such list confidential and share such list only with its employees, representatives or agents who agree in writing to maintain the confidentiality of the stockholder list. 

If our advisor or our board of directors neglects or refuses to exhibit, produce or mail a copy of the stockholder list as requested, our advisor or board, as the case may be, shall be liable to the common stockholder requesting the list for the costs, including attorneys’ fees, incurred by that stockholder for compelling the production of the stockholder list and any actual damages suffered by any common stockholder for the neglect or refusal to produce the list. It shall be a defense that the actual purpose and reason for the requests for inspection or for a copy of the stockholder list is not for a proper purpose but is instead for the purpose of securing such list of stockholders or other information for the purpose of selling such list or copies thereof, or of using the same for a commercial purpose other than in the interest of the applicant as a stockholder relative to the affairs of our company. We may require that the stockholder requesting the stockholder list represent that the request is not for a commercial purpose 

6

 

 

unrelated to the stockholder’s interest in our company. The remedies provided by our charter to stockholders requesting copies of the stockholder list are in addition to, and do not in any way limit, other remedies available to stockholders under federal law, or the law of any state. As the operations of both RRE Opportunity Holdings II, LLC and our Operating Partnership will be conducted by us, an inspection of the our books and records would include an inspection of the books and records of RRE Opportunity Holdings II, LLC and our Operating Partnership. 

Control Share Acquisitions 

The Maryland General Corporation Law provides that control shares of a Maryland corporation acquired in a control share acquisition have no voting rights except to the extent approved by a vote of two-thirds of the votes entitled to be cast on the matter. Shares owned by the acquirer, by officers or by directors who are employees of the corporation are excluded from shares entitled to vote on the matter. Control shares are voting shares of stock that, if aggregated with all other shares owned by the acquirer or with respect to which the acquirer has the right to vote or to direct the voting of (except solely by virtue of revocable proxy) would entitle the acquirer to exercise voting power in electing directors within one of the following ranges of voting powers: 

 

				
	
 
	
•
	
 
	
one-tenth or more but less than one-third; 

 

				
	
 
	
•
	
 
	
one-third or more but less than a majority; or 

 

				
	
 
	
•
	
 
	
a majority or more of all voting power. 

Control shares do not include shares the acquiring person is then entitled to vote as a result of having previously obtained stockholder approval. A control share acquisition means the acquisition of control shares, but does not include the acquisition of shares (i) under the laws of descent and distribution, (ii) under the satisfaction of a pledge or other security interest created in good faith and not for the purpose of circumventing this subtitle, or (iii) under a merger, consolidation, or share exchange effected under the control share acquisition statute if the corporation is a party to the merger, consolidation, or share exchange. 

A person who has made or proposes to make a control share acquisition may compel the board of directors of the corporation to call a special meeting of stockholders to be held within 50 days of the demand to consider the voting rights of the shares. The right to compel the calling of a special meeting is subject to the satisfaction of certain conditions, including an undertaking to pay the expenses of the meeting. If no request for a meeting is made, the corporation may itself present the question at any stockholders meeting. 

If voting rights are not approved at the meeting or if the acquiring person does not deliver an acquiring person statement as required by the statute, then the corporation may repurchase for fair value any or all of the control shares, except those for which voting rights have previously been approved. The right of the corporation to repurchase control shares is subject to certain conditions and limitations. Fair value is determined, without regard to the absence of voting rights for the control shares, as of the date of the last control share acquisition by the acquirer or of any meeting of stockholders at which the voting rights of the shares are considered and not approved. If voting rights for control shares are approved at a stockholders meeting and the acquirer becomes entitled to vote a majority of the shares entitled to vote, all other stockholders may exercise appraisal rights. The fair value of the shares as determined for purposes of these appraisal rights may not be less than the highest price per share paid in the control share acquisition. 

The control share acquisition statute does not apply to shares acquired in a merger, consolidation or share exchange if the corporation is a party to the transaction or to acquisitions approved or exempted by the charter or bylaws of the corporation. 

Our bylaws contain a provision exempting from the control share acquisition statute any and all acquisitions by any person of share of our stock. There can be no assurance that this provision will not be amended or eliminated at any time in the future. 

Business Combinations 

Under the Maryland General Corporation Law, “business combinations” between a Maryland corporation and 

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an interested stockholder or an affiliate of an interested stockholder are prohibited for five years after the most recent date on which the interested stockholder becomes an interested stockholder. These business combinations include mergers, consolidations, share exchanges, or, in circumstances specified in the statute, asset transfers or issuances or reclassifications of equity securities. An interested stockholder is defined as: 

 

				
	
 
	
•
	
 
	
any person who beneficially owns 10% or more of the voting power of the corporation’s shares; or 

 

				
	
 
	
•
	
 
	
an affiliate or associate of the corporation who, at any time within the two-year period before the date in question, was the beneficial owner of 10% or more of the voting power of the then outstanding voting stock of the corporation. 

A person is not an interested stockholder under the statute if the board of directors approved in advance the transaction by which he or she otherwise would have become an interested stockholder. However, in approving a transaction, the board of directors may provide that its approval is subject to compliance, at or after the time of approval, with any terms and conditions determined by the board. 

After the five-year prohibition, any business combination between the corporation and an interested stockholder generally must be recommended by the board of directors of the corporation and approved by the affirmative vote of at least: 

 

				
	
 
	
•
	
 
	
80% of the votes entitled to be cast by holders of outstanding voting stock of the corporation; and 

 

				
	
 
	
•
	
 
	
two-thirds of the votes entitled to be cast by holders of voting stock of the corporation other than shares held by the interested stockholder with whom or with whose affiliate the business combination is to be effected, or held by an affiliate or associate of the interested stockholder. 

These super-majority vote requirements do not apply if the corporation’s common stockholders receive a minimum price, as defined under the Maryland General Corporation Law, for their shares in the form of cash or other consideration in the same form as previously paid by the interested stockholder for its shares. 

 

The statute permits various exemptions from its provisions, including business combinations that are exempted by the board of directors before the time that the interested stockholder becomes an interested stockholder. We have opted out of these provisions by resolution of our board of directors. However, our board of directors may, by resolution, opt in to the business combination statute in the future. 

Subtitle 8 

Subtitle 8 of Title 3 of the Maryland General Corporation Law permits a Maryland corporation with a class of equity securities registered under the Exchange Act, and at least three independent directors to elect to be subject, by provision in its charter or bylaws or a resolution of its board of directors and notwithstanding any contrary provision in the charter or bylaws, to any or all of five provisions: 

 

				
	
 
	
•
	
 
	
a classified board, 

 

				
	
 
	
•
	
 
	
a two-thirds vote requirement for removing a director, 

 

				
	
 
	
•
	
 
	
a requirement that the number of directors be fixed only by vote of the directors, 

 

				
	
 
	
•
	
 
	
a requirement that a vacancy on the board be filled only by the remaining directors and for the remainder of the full term of the directorship in which the vacancy occurred, and 

 

				
	
 
	
•
	
 
	
a majority requirement for the calling of a special meeting of stockholders. 

Although our board has no current intention to opt in to any of the above provisions permitted under Maryland law, our charter does not prohibit our board from doing so. Becoming governed by any of these provisions could discourage an extraordinary transaction (such as a merger, tender offer or sale of all or substantially all of our assets) that might provide a premium price for holders of our securities. Note that through provisions in our charter and bylaws unrelated to Subtitle 8, we already vest in our board of directors the exclusive power to fix the number of directors. Our bylaws may be amended by our stockholders or the board of directors. 

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Tender Offer by Stockholders 

Our charter provides that any tender offer made by a stockholder, including any “mini-tender” offer, must comply with certain notice and disclosure requirements. These procedural requirements with respect to tender offers apply to any widespread solicitation for shares of our stock at firm prices for a limited time period. 

In order for one of our stockholders to conduct a tender offer to another stockholder, our charter requires that the stockholder comply with Regulation 14D of the Exchange Act, and provide us with notice of such tender offer at least ten business days before initiating the tender offer. Pursuant to our charter, Regulation 14D would require any stockholder initiating a tender offer to provide: 

 

				
	
 
	
•
	
 
	
specific disclosure to stockholders focusing on the terms of the offer and information about the bidder; 

 

				
	
 
	
•
	
 
	
the ability to allow stockholders to withdraw tendered shares while the offer remains open; 

 

				
	
 
	
•
	
 
	
the right to have tendered shares accepted on a pro rata basis throughout the term of the offer if the offer is for less than all of our shares; and 

 

				
	
 
	
•
	
 
	
that all stockholders of the subject class of shares be treated equally. 

In addition to the foregoing, there are certain ramifications to stockholders should they attempt to conduct a noncompliant tender offer. If any stockholder initiates a tender offer without complying with the provisions set forth above, in our sole discretion, we shall have the right to redeem such noncompliant stockholder’s shares and any shares acquired in such tender offer. The noncomplying stockholder shall also be responsible for all of our expenses in connection with that stockholder’s noncompliance. 

 

Restrictions on Roll-Up Transactions 

A Roll-up Transaction is a transaction involving the acquisition, merger, conversion or consolidation, directly or indirectly, of us and the issuance of securities of an entity that is created or would survive after the successful completion of a Roll-up Transaction, which we refer to as a Roll-up Entity. This term does not include: 

 

				
	
 
	
•
	
 
	
a transaction involving our securities that have been for at least 12 months listed on a national securities exchange; or 

 

				
	
 
	
•
	
 
	
a transaction involving only our conversion into a trust or association if, as a consequence of the transaction, there will be no significant adverse change in the voting rights of our common stockholders, the term of our existence, the compensation to our advisor or our investment objectives. 

In connection with any proposed Roll-up Transaction, an appraisal of all our assets will be obtained from a competent independent appraiser. Our assets will be appraised on a consistent basis, and the appraisal will be based on an evaluation of all relevant information and will indicate the value of our assets as of a date immediately preceding the announcement of the proposed Roll-up Transaction. If the appraisal will be included in a prospectus used to offer the securities of a Roll-Up Entity, the appraisal will be filed with the SEC and, if applicable, the states in which registration of such securities is sought, as an exhibit to the registration statement for the offering. The appraisal will assume an orderly liquidation of assets over a 12-month period. The terms of the engagement of the independent appraiser will clearly state that the engagement is for our benefit and the benefit of our stockholders. A summary of the appraisal, indicating all material assumptions underlying the appraisal, will be included in a report to our stockholders in connection with any proposed Roll-up Transaction. 

In connection with a proposed Roll-up Transaction, the person sponsoring the Roll-up Transaction must offer to our common stockholders who vote “no” on the proposal the choice of: 

 

			
	
 
	
(1)
	
accepting the securities of the Roll-up Entity offered in the proposed Roll-up Transaction; or 

 

			
	
 
	
(2)
	
one of the following: 

 

			
	
 
	
(A)
	
remaining as common stockholders of us and preserving their interests in us on the same terms and conditions as existed previously; or 

 

			
	
 
	
(B)
	
receiving cash in an amount equal to the stockholders’ pro rata share of the appraised value of our net assets. 

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We are prohibited from participating in any proposed Roll-up Transaction: 

 

				
	
 
	
•
	
 
	
that would result in our common stockholders having democracy rights in a Roll-up Entity that are less than those provided in our charter and bylaws with respect to the election and removal of directors and the other voting rights of our common stockholders, annual and special meetings of common stockholders, the amendment of our charter and our dissolution; 

 

				
	
 
	
•
	
 
	
that includes provisions that would operate to materially impede or frustrate the accumulation of shares by any purchaser of the securities of the Roll-up Entity, except to the minimum extent necessary to preserve the tax status of the Roll-up Entity, or that would limit the ability of an investor to exercise the voting rights of its securities of the Roll-up Entity on the basis of the number of shares of common stock that such investor has held in us; 

 

				
	
 
	
•
	
 
	
in which investors’ rights of access to the records of the Roll-up Entity would be less than those provided in our charter and described above under “—Inspection of Books and Records”; or 

 

				
	
 
	
•
	
 
	
in which any of the costs of the Roll-up Transaction would be borne by us if the Roll-up Transaction would not be approved by our common stockholders. 

 

 

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