SETTLEMENT AGREEMENT
Exhibit 99.1
Execution
Version
THIS
SETTLEMENT AGREEMENT (the “Agreement”),
is effective the 22nd day of
January, 2009, among Toreador Resources Corporation, a Delaware corporation (the
“Company”),
Nanes Balkany Partners I LP, a Delaware limited partnership (“Nanes
Balkany”), Xxxxx X. Xxxxxx, an individual (“Xxxxxx”),
Xxxx X. XxXxxxxxxx, an individual (“XxXxxxxxxx”),
Xxxxxx Xxxxxxx, an individual (“Balkany”),
Xxxxx X. XxXxxxxx, an individual (“XxXxxxxx”),
and Xxxxx Xxxx, an individual (“Hill”)
(Balkany, XxXxxxxx and Xxxx are each a “New
Director” and collectively, the “New
Directors”).
WHEREAS,
Nanes Balkany has given notice of its intention, at the 2009 annual meeting of
the Company’s stockholders, or any other meeting of stockholders held in lieu
thereof, and at any adjournments, postponements, reschedulings or continuations
thereof (“2009 Annual
Meeting”), to nominate three (3) nominees to be elected to the Company’s
board of directors (“Board”);
and
WHEREAS, the Company
and Nanes Balkany have each determined that it is in their respective best
interests and in the best interests of the Company’s stockholders to enter into
this Agreement whereby, among other things, the Company will appoint the New
Directors to the Board and Nanes Balkany will abandon its nomination of
directors, in each case as more fully provided herein;
NOW,
THEREFORE, in consideration of the premises, the mutual covenants and agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE
I.
Section
1.1 Board Matters; Nominations
at 2009 Annual Meeting.
(a) Subject
to the terms hereof and contemporaneously herewith, Nanes Balkany and its
Affiliates hereby withdraw their nominations for director in connection with the
2009 Annual Meeting by way of that certain letter to the Company dated January
14, 2009. For purposes of this Agreement, “Affiliate” means, with
respect to any person, any other person that directly, or indirectly through one
or more intermediaries, controls, is controlled by, or is under common control
with, such first person, and any employees, officers, directors, managers,
members or partners of any such person.
(b) Subject
to the terms hereof and contemporaneously herewith, the Company has taken all
requisite action (including the calling of a special meeting of the Board to
approve such actions) to:
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(i)
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accept
and recognize the resignations of Xxxxxx and XxXxxxxxxx as directors of
the Company as of the date hereof (as set forth in Section 1.3) so that,
in addition to Xxxxx X. Xxxxxx’x prior resignation as a director of the
Company, there are three (3) vacancies on the
Board;
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(ii)
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elect
each of the New Directors to serve as a director of the Company to fill
the three (3) vacancies thus created and to serve in such capacity until
the 2009 Annual Meeting or until their successors are duly elected and
qualified; and
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(iii)
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elect
Hill as the non-executive Chairman of the Board to serve in such capacity
until the appointment of his successor as non-executive Chairman of the
Board.
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(c) Subject
to the terms hereof, the Company hereby covenants and agrees that at the 2009
Annual Meeting the New Directors will be nominated for election as directors of
the Company for terms expiring at the 2010 annual meeting of the Company’s
stockholders (“2010 Annual
Meeting”) or until their successors are duly elected and
qualified. Prior to the 2009 Annual Meeting, (i) the Board shall
recommend (and shall not change such recommendation in a manner adverse to the
New Directors unless required to do so by the Board's fiduciary duties) that the
Company's stockholders vote in favor of the New Directors at the 2009 Annual
Meeting and (ii) the Company shall solicit proxies for the election of the New
Directors at the 2009 Annual Meeting.
(d) Subject
to the terms hereof, the Company also hereby covenants and agrees that in
addition to the nomination of the New Directors as set forth herein (i) up to a
maximum number of four (4) individuals (which may include current directors of
the Company) (the “Additional
Nominees”) shall be nominated at the 2009 Annual Meeting for election as
directors of the Company for terms commencing at the close of the 2009 Annual
Meeting in accordance with the recommendations of the Nominating and Corporate
Governance Committee of the Board; (ii) at the 2009 Annual Meeting, the Board
shall recommend (and shall not change such recommendations unless required to do
so by the Board’s fiduciary duties) that the Company’s stockholders vote in
favor of the Additional Nominees; and (iii) the Company shall solicit proxies
for the election of the Additional Nominees at the 2009 Annual Meeting; it being
understood that the Nominating and Corporate Governance Committee shall consider
the nomination of Xxx X. Xxxxx, as previously made by Xxxxxxxx Xxxxxxx, Xxxxxxx
Xxx, the Estate of Xxxxxxx X. Xxx, Deceased, Auberty Co., Inc., Auberty 2001
Trust and Wilco Properties, Inc. for election commencing at the close of the
2009 Annual Meeting.
(e) At
any time prior to the 2010 Annual Meeting, should either Balkany or XxXxxxxx
resign from the Board, be rendered unable to serve on the Board by reason of
death or disability, or decide not to seek election to the Board at the 2009
Annual Meeting or the 2010 Annual Meeting, Nanes Balkany shall, with the consent
of the Company (which consent shall not be unreasonably withheld or delayed), be
entitled to designate a replacement for Balkany or XxXxxxxx as a director (or
nominee for director) who is deemed reasonably qualified by the Board, and the
Company shall take all necessary action to implement the foregoing as promptly
as practicable. Any such designated replacement who becomes a Board
member under this Section 1.1(e) shall be deemed to be a New Director for all
purposes under this Agreement and, prior to his or her appointment to the Board,
shall be required to agree in writing, to the extent applicable, to the
provisions of Section 1.1(f) and (g) of this Agreement.
(f) Subject
to the terms hereof, the Company also hereby covenants and agrees to recommend
to the full Board and seek the approval of Hill as non-executive Chairman of the
Board until after the 2010 Annual Meeting.
(g) Each
New Director agrees to provide to the Company upon its request, without
unreasonable delay, true and complete information regarding such New Director
required by law to be included in the Company's proxy materials relating to the
2009 Annual Meeting.
(h) The
Company agrees that each New Director shall receive (i) the same benefits of
director and officer insurance, and any indemnity and exculpation arrangements
available generally to the directors on the Board and (ii) the same compensation
for his or her service as a director as the compensation received by other
directors on the Board.
Section
1.2 Board Committees. The
Company agrees that Balkany and Hill shall be offered, promptly upon the
execution of this Agreement, the opportunity to assume the following roles in
the Board’s committees: (i) Balkany shall be elected to serve as a member of the
Executive Committee and the Nominating and Corporate Governance Committee, and
(ii) Hill shall be elected to serve as member of the Executive Committee,
Nominating and Corporate Governance Committee, Audit Committee and the
Compensation Committee; provided that in all
such cases that each of Balkany and Hill shall be entitled to be a member of any
committee of the Board only if he meets any independence or other requirements
under applicable law and the rules and regulations of the Nasdaq Stock Market or
other securities exchange that the Company's securities may then be traded for
service on such committee.
Section
1.3 Resignations.
Simultaneously with the execution of this Agreement and the Separation and
Mutual Release Agreement by and between Xxxxxx and the Company attached as Exhibit A hereto, the
Release Agreement by and between Xxxxxx and Nanes Balkany attached as Exhibit B hereto, the
Resignation and Mutual Release Agreement by and between XxXxxxxxxx and the
Company attached as Exhibit C hereto, the
Release Agreement by and between XxXxxxxxxx and Nanes Balkany attached as Exhibit D hereto, and
a separate Indemnity Agreement by and between Xxxxxx and the Company and by and
between XxXxxxxxxx and the Company in the form attached as Exhibit E hereto,
Xxxxxx hereby irrevocably resigns as the President and Chief Executive Officer
and a director of the Company, and XxXxxxxxxx hereby irrevocably resigns as a
director of the Company. The parties hereto agree and acknowledge
that the preceding sentence shall serve as Xxxxxx’x and XxXxxxxxxx’x formal
irrevocable resignations delivered to the Company and upon execution of this
Agreement and the agreements attached as Exhibits A through
E, all of which
agreements shall be executed concurrently with the execution of this Agreement,
no additional agreement, notice or action shall be necessary to immediately
effectuate such resignations in accordance therewith. Xxxxxx and
XxXxxxxxxx each agree that he shall not contest or seek to contest the validity
or effectiveness of such resignations.
Section
1.4 Severance
Agreement. As set forth in the Separation and Mutual Release
Agreement attached as Exhibit A, the
Company hereby acknowledges that Xxxxxx will be due certain severance payments
under Section 3(d)(ii) of his Employment Agreement with the Company, dated March
12, 2008 and the Company shall pay such amounts promptly in accordance with the
terms of such agreement.
Section
1.5 Appointment of New
Officer. Subject to the terms hereof and contemporaneously
herewith, XxXxxxxx will be appointed as the interim Chief Executive Officer and
President of the Company. While serving as interim Chief Executive
Officer, XxXxxxxx’x compensation and benefits shall be $35,000 per month plus
substantially similar benefits as paid to the previous President and Chief
Executive Officer, under the terms and conditions set forth in that certain
Letter Agreement attached as Exhibit F hereto to
be executed concurrently with the execution of this
Agreement. Promptly upon the execution of this Agreement, the Board
will form a search committee for the purpose of conducting a search for the new
President and Chief Executive Officer of the Company (the “Search
Committee”). Hill and Balkany shall serve as members of the
Search Committee, and Hill shall serve as chairman of the Search
Committee. The Search Committee shall conduct the search utilizing a
nationally-recognized search firm and may consider XxXxxxxx for the new
President and Chief Executive Officer role, but Xxxxxx shall not be considered
as a candidate. The new President and Chief Executive Officer of the
Company must be appointed by the Board no later than the earlier of the date of
completion of the Company’s proxy statement for the 2009 Annual Meeting or April
15, 2009.
Section
1.6 Solicitation. From
the date hereof until the conclusion of the 2010 Annual Meeting, neither Nanes
Balkany nor any of its Affiliates nor Balkany nor XxXxxxxx shall, directly or
indirectly, other than as contemplated by this Agreement and other than in a
manner consistent with the recommendations of the Board to the Company's
stockholders, (i) solicit proxies or consents for the voting of any securities
of the Company or otherwise become a “participant,” directly or indirectly, in
any “solicitation” of “proxies” or consents to vote, or become a “participant”
in any election contest involving the Company or the Company's securities (as
such terms are defined in Regulation 14A under the Securities Exchange Act of
1934, as amended, (the “Exchange
Act”)), (ii) seek to advise or influence any person with respect to the
voting of any securities of the Company, (iii) initiate, propose or otherwise
“solicit” the Company's stockholders for the approval of stockholder proposals,
(iv) otherwise communicate with the Company's stockholders or others pursuant to
Rule 14a-1(l)(2)(iv) under the Exchange Act, or (v) otherwise engage in any
course of conduct with the purpose of causing stockholders of the Company to
vote contrary to the recommendation of the Board on any matter presented to the
Company's stockholders for their vote. The 2010 Annual Meeting shall
be held no later than June 30, 2010.
Section
1.7 Voting. At
the 2009 Annual Meeting, Nanes Balkany shall cause all shares of Common Stock
beneficially owned by it and its Affiliates to be present at such meeting for
purposes of establishing a quorum and to be voted for the New Directors and the
other nominees recommended by the Board.
Section
1.8 Prohibited Actions.
Subject to the terms hereof, the Company agrees that it shall not from the date
hereof until after the 2010 Annual Meeting, (i) increase the size of the Board
to more than seven (7) directors; (ii) change any provisions of the Company’s
Bylaws or Certificate of Incorporation that would adversely affect the ability
of the stockholders of the Company to nominate directors, fill vacancies on the
Board, remove directors, or take any substantially similar action without
approval of a majority of the Board, including Balkany; or (iii) otherwise amend
any of its charters or policies in a manner that would be inconsistent with the
terms hereof or adverse to the stockholders of the Company.
Section
1.9 Stock Ownership by
Directors. Promptly upon the execution of this Agreement, the
Company shall adopt a policy requiring all Board members to beneficially own or
represent at least 50,000 shares of the Company’s common stock within (i) six
months of the execution of this Agreement, or (ii) six months from the date he
or she is first appointed or elected to the Board. This policy shall
deem any shares of Company common stock to satisfy such stock ownership
requirement if the Board member (i) purchases the Company common stock on the
open market, (ii) obtains shares of Company common stock as a result of the
exercise of options, and (iii) holds restricted shares of the Company common
stock, including any such holdings that are not vested. The minimum
holdings requirement shall not be satisfied by a Board member’s holdings of
unexercised options to purchase the Company’s common stock.
Section
1.10 Expenses. The Company
shall promptly reimburse Nanes Balkany for all reasonable, documented
out-of-pocket costs and expenses incurred prior to the execution of this
Agreement and in connection with activities relating to the potential election
contest with the Company, including any Securities and Exchange Commission
filings relating to the Company and associated legal fees; provided, that the
costs and expenses to be paid or reimbursed by the Company to Nanes Balkany
pursuant to this Section 1.10 shall not exceed $85,000.
Section
1.11 Stockholder Rights
Plan. The Company agrees to take all necessary actions to
redeem all rights previously issued to stockholders under the Company’s Rights
Agreement, dated as of November 20, 2008, within fifteen (15) days of the
Company obtaining all necessary consents (the “Consents”)
under its Loan and Guarantee Agreement. The Company shall employ
reasonable best efforts to obtain the Consents as soon as
practicable.
Section
1.12 Form 8-K. The Company
agrees to disclose this Agreement in a Form 8-K filed with the Securities and
Exchange Commission in the time period required by applicable law and to file
this Agreement as an exhibit to such Form 8-K.
Section
1.13 Press
Release. In conjunction with the filing of the Form 8-K, Nanes
Balkany and the Company shall coordinate the filing of a press release in the
form attached as Exhibit G hereto
announcing the execution of this Agreement.
Section
1.14 Indemnity
Agreement. Concurrently with the execution of this Agreement,
a separate Indemnity Agreement by and between Balkany and the Company, by and
between XxXxxxxx and the Company, and by and between Hill and the Company in the
form attached as Exhibit H hereto
shall be executed by such parties.
ARTICLE
II.
Section
2.1 Representations and
Warranties.
(a) Each
of the parties hereto represents and warrants to the other party
that:
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(i)
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such
party has all requisite authority and power to execute and deliver this
Agreement and to consummate the transactions contemplated
hereby;
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(ii)
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the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by
all required action on the part of such party and no other proceedings on
the part of such party are necessary to authorize the execution and
delivery of this Agreement or to consummate the transactions contemplated
hereby;
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(iii)
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the
Agreement has been duly and validly executed and delivered by such party
and constitutes the valid and binding obligation of such party enforceable
against such party in accordance with its terms;
and
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(iv)
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this
Agreement will not result in a violation of any terms or provisions of any
agreements to which such person is a party or by which such party may
otherwise be bound or of any law, rule, license, regulation, judgment,
order or decree governing or affecting such
party.
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(b) Nanes
Balkany hereby represents and warrants to the Company that neither Nanes
Balkany, nor its Affiliates, have formed with any other stockholders a “group”
within the meaning of Section 13(d)(3) of the Exchange Act, with respect to the
securities of the Company.
(c) The
parties hereto acknowledge, warrant and represent that they have carefully read
this Agreement, understand it, have consulted with and received the advice of
counsel regarding this Agreement, agree with its terms, are duly authorized to
execute it and freely, voluntarily and knowingly execute it.
Section
2.2 General.
(a) This
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the parties hereto and the respective successors, personal representatives
and assigns of the parties hereto. Neither Nanes Balkany, nor its
Affiliates, may assign any of its rights or obligations under this Agreement to
any other person.
(b) This
Agreement contains the entire agreement between the parties with respect to the
subject matter hereof and thereof and supersedes all prior and contemplated
arrangements and understandings with respect thereto.
(c) This
Agreement may be signed in counterparts, each of which shall constitute an
original and all of which together shall constitute one and the same
Agreement.
(d) All
notices and other communications required or permitted hereunder shall be
effective upon receipt and shall be in writing and may be delivered in person,
by facsimile, electronic mail, express delivery service or U.S. mail, in which
event it may be mailed by first-class, certified or registered, postage prepaid,
addressed to the party to be notified at the respective addresses set forth
below, or at such other addresses which may hereinafter be designated in
writing:
If to the
Company:
Toreador
Resources Corporation
00000
Xxxx Xxxx, Xxxxx 0000
Xxxxxx,
Xxxxx 00000-0000
Fax: (000)
000-0000
with a
copy to:
Xxxxxx
and Xxxxx, LLP
Attn: Xxxxxx
X. Xxxxxx
0000
Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx,
Xxxxx 00000
Fax: 000-000-0000
If to Nanes Balkany or
Balkany:
000
Xxxxxxx Xxxxxx, Xxxxx 00X
Xxx Xxxx,
Xxx Xxxx 00000
Fax: (000)
000-0000
with a
copy to:
Xxxxxx
Xxxxxxxx Frome Xxxxxxxxxx & Xxxxxxx LLP
Attn: Xxxxxx
Xxxxxxx
Park
Avenue Tower
00 Xxxx
00xx Xxxxxx
Xxx Xxxx,
Xxx Xxxx 00000
Fax: (000)
000-0000
If
to XxXxxxxx:
00
Xxxxxxx Xxxxx Xxxxx
Xxxxxxx,
Xxxxxxx, Xxxxxx X0X 0X0
Fax: (000)
000-0000
with a
copy to:
Xxxxxx
Xxxxxxxx Frome Xxxxxxxxxx & Xxxxxxx LLP
Attn: Xxxxxx
Xxxxxxx
Park
Avenue Tower
00 Xxxx
00xx Xxxxxx
Xxx Xxxx,
Xxx Xxxx 00000
Fax: (000)
000-0000
If to Hill:
000
Xxxxxxx Xxxxx
Xxxxxxx,
XX 00000
If to Xxxxxx:
0000
Xxxxxxxxx, Xx. 000
Xxxxxx,
XX 00000
with a
copy to:
Xxxxxx X.
Xxxxxxxxxxx
Xxxxxxxx
& Xxxxxx LLP
0000
Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxx,
XX 00000
Fax: (000)
000-0000
If to XxXxxxxxxx:
0000
Xxxxxxxx Xxx, Xxxxx 000
Xxx
Xxxxxx, XX 00000
with a
copy to:
Xxxxxx X.
Xxxxxxxxxxx
Xxxxxxxx
& Xxxxxx LLP
0000
Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxx,
XX 00000
Fax: (000)
000-0000
(e) This
Agreement and the legal relations hereunder between the parties hereto shall be
governed by and construed in accordance with the laws of the State of Delaware
applicable to contracts made and performed therein, without giving effect to the
principles of conflicts of law thereof.
(f) Whenever
possible, each provision of this Agreement shall be interpreted in such manner
as to be effective and valid, but if any provision of this Agreement is held to
be invalid or unenforceable in any respect, such invalidity or unenforceability
shall not render invalid or unenforceable any other provision of this
Agreement.
(g) It
is hereby agreed and acknowledged that it will be impossible to measure in money
the damages that would be suffered if the parties fail to comply with any of the
obligations herein imposed on them and that in the event of any such failure, an
aggrieved person will be irreparably damaged and will not have an adequate
remedy at law. Any such person, therefore, shall be entitled to
injunctive relief, including specific performance, to enforce such obligations,
without the posting of any bond, and, if any action should be brought in equity
to enforce any of the provisions of this Agreement, none of the parties hereto
shall raise the defense that there is an adequate remedy at law.
(h) Each
party hereto shall do and perform or cause to be done and performed all such
further acts and things and shall execute and deliver all such other agreements,
certificates, instruments and documents as any other party hereto reasonably may
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated
hereby.
(i) Each
of the parties hereto hereby irrevocably and unconditionally consents to submit
to the exclusive jurisdiction of the courts of the State of Delaware and of the
United States of America, in each case located in the County of New Castle, for
any action, proceeding or investigation in any court or before any governmental
authority arising out of or relating to this Agreement and the transactions
contemplated hereby (and agrees not to commence any action, proceeding or
investigation relating thereto except in such courts), and further agrees that
service of any process, summons, notice or document by registered mail to its
respective address set forth in this Agreement shall be effective service of
process for any action, proceeding or investigation brought against it in any
such court. Each of the parties hereto hereby irrevocably and unconditionally
waives any objection to the laying of venue of any action, proceeding or
investigation arising out of this Agreement or the transactions contemplated
hereby in the courts of the State of Delaware or the United States of America,
in each case located in the County of New Castle, and hereby further irrevocably
and unconditionally waives and agrees not to plead or claim in any such court
that any such action, proceeding or investigation brought in any such court has
been brought in an inconvenient forum.
Settlement
Agreement
9
Execution
Version
IN
WITNESS WHEREOF, the parties have entered this Agreement
effective as of the date set forth above.
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TOREADOR
RESOURCES CORPORATION, a Delaware corporation
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By:
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/s/ Xxxxxxx X. Xxxxxxx | ||
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Name:
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Xxxxxxx X. Xxxxxxx | ||
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Title:
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SR VP & CFO | ||
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NANES
BALKANY PARTNERS I LP, a Delaware limited partnership
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By:
Nanes Balkany Partners LLC, its General Partner
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By:
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/s/
Xxxxxx Xxxxxxx
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Name:
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Xxxxxx
Xxxxxxx
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Title:
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Managing
Member
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By:
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/s/
Xxxxx X. Xxxxxx
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Name:
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Xxxxx
X. Xxxxxx
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By:
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/s/
Xxxx X. XxXxxxxxxx
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Name:
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Xxxx
X. XxXxxxxxxx
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By:
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/s/
Xxxxxx Xxxxxxx
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Name:
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Xxxxxx
Xxxxxxx
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By:
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/s/
Xxxxx Xxxx
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Name:
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Xxxxx
Xxxx
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By:
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/s/
Xxxxx X. XxXxxxxx
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Name:
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Xxxxx
X. XxXxxxxx
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Settlement
Agreement
10
