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EXHIBIT 1
FINAL EXECUTION COPY
AMENDMENT NO. 1 TO RIGHTS AGREEMENT
This AMENDMENT NO. 1, dated as of June 25, 1998, is between TOREADOR
ROYALTY CORPORATION, a Delaware corporation (the "Company"), and CONTINENTAL
STOCK TRANSFER AND TRUST COMPANY, as rights agent (the "Rights Agent").
W I T N E S S E T H:
WHEREAS, the Company and the Rights Agent entered into a Rights
Agreement dated as of April 3, 1995 (the "Rights Agreement");
WHEREAS, pursuant to Section 27 of the Rights Agreement, the Company
desires to amend the Rights Agreement as set forth below;
NOW THEREFORE, the Rights Agreement is hereby amended as follows:
Section 1. Amendment of Section 1.
(a) Section 1 of the Rights Agreement is amended by deleting
the definition of "Acquiring Person" and substituting in lieu thereof the
following:
"'Acquiring Person' shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and
Associates (as such terms are hereinafter defined) of such Person,
shall be the Beneficial Owner (as such term is hereinafter defined) of
22% or more of the Common Shares of the Company then outstanding; but
shall not include the Company, any Subsidiary (as such term is
hereinafter defined) of the Company, any employee benefit plan of the
Company or any Subsidiary of the Company, or any entity holding Common
Shares for or pursuant to the terms of any such plan. Notwithstanding
the foregoing, no Person shall become an Acquiring Person (i) as the
result of an acquisition of Common Shares by the Company which, by
reducing the number of Common Shares outstanding, increases the
proportionate number of Common Shares beneficially owned by such Person
to 22% or more of the Common Shares of the Company then outstanding;
provided, however, that if a Person shall become the Beneficial Owner
of 22% or more of the Common Shares of the Company then outstanding by
reason of share purchases by the Company and shall, after such share
purchases by the Company, become the Beneficial Owner of any additional
Common Shares of the Company (other than pursuant to a stock split,
stock dividend, recapitalization or similar transaction), then such
Person shall be deemed to be an Acquiring Person, or (ii) pursuant to a
Qualifying Offer.
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Notwithstanding anything contained in this Agreement to the
contrary, any group formed among all the parties to that certain
Stockholder Voting Agreement dated as of June 25, 1998, by and among
the Gralee Persons (as defined therein), the Xxxx Xxxx Persons (as
defined therein) and certain other stockholders of the Company, shall
not be deemed an Acquiring Person."
(b) Section 1 of the Rights Agreement is amended by adding
thereto, following the definition of "Preferred Shares" and prior to the
definition of "Redemption Date", the following:
"'Qualifying Offer' shall mean an all-cash tender offer for
all outstanding Common Shares of the Company which meets all of the
following requirements:
(i) the Person or group making the tender offer must,
prior to or upon commencing such offer, (A) have reasonably
demonstrated to the Board of Directors that such Person or group has
then available and has irrevocably committed in writing to the Company
to utilize for purposes of the offer if consummated, and to set apart
and maintain available for such purposes until the offer is consummated
or withdrawn, cash or cash equivalents in an amount which will be
sufficient to pay for all Common Shares outstanding on a fully diluted
basis and all related expenses, or (B) have provided the Company firm
written commitments from responsible financial institutions, which have
been accepted by such Person or group, to provide, subject only to
customary terms and conditions (which shall in no event include
conditions requiring access by such financial institutions to
non-public information to be provided by the Company, conditions based
on the accuracy of any information concerning the Company other than
such as would be the subject of representations and warranties in a
public financing by the Company, or conditions requiring the Company to
make any representations, warranties or covenants in connection with
such financing) funds for such offer which, when added to the amount of
cash and cash equivalents which such Person or group then has available
and has irrevocably committed in writing to the Company to utilize for
purposes of the offer if consummated, and to set apart and maintain
available for such purposes until the offer is consummated or
withdrawn, will be sufficient to pay for all Common Shares outstanding
on a fully diluted basis and all related expenses;
(ii) such Person or group must own, after
consummating such offer, at least two-thirds of the then outstanding
Common Shares of the Company not beneficially owned by such Person or
group prior to making the offer;
(iii) the price per Common Share offered in such
offer must be at least 30% above the average daily closing prices of
the Common Shares for the 20 consecutive Trading Days ending on the
fourth Trading Day preceding the commencement of the offer, provided
that if another tender offer for Common Shares of the Company (a
"Competing Offer") is commenced during the pendency of a Qualifying
Offer (the "First Offer"), such Competing Offer shall constitute a
Qualifying Offer only if, in addition to satisfying the requirements of
clauses (i), (ii), (iv) and (v) hereof, the per Common Share price
offered in such Competing Offer is at least 10% higher than the per
Common Share price offered in the
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First Offer, provided further that in no event shall the price per
Common Share offered in the initial offer or the Competing Offer be
less than $5.00;
(iv) such offer must remain open for at least 60
Business Days and must be extended for at least 20 Business Days after
the last increase in the price offered and after any bona fide higher
alternative offer is made and shall be subject only to customary terms
and conditions, which shall in no event include satisfaction of any
conditions relating to the business, financial condition, results of
operations or prospects of the Company other than such as are based on
information publicly disclosed by the Company; and
(v) prior to or upon commencing such offer, such
Person or group must irrevocably commit in writing to the Company and
in the offer to purchase relating to the offer:
(A) to consummate promptly upon completion of the
offer an all- cash transaction whereby all Common Shares of the Company
not tendered into the offer will be acquired at the same price per
Common Share paid pursuant to the offer, and otherwise not to purchase
any Common Shares following completion of the offer,
(B) that such Person or group will not materially
amend such offer, except to increase the price offered, and
(C) that such Person or group will not make any
offer for any equity securities of the Company for six months after
commencement of the original offer if the original offer does not
result in the tender of the number of Common Shares required to be
purchased pursuant to clause (ii) above, unless a Competing Offer which
meets the conditions for a Qualifying Offer (including the proviso in
clause (iii) above) is commenced by another Person or Persons not
affiliated or associated with, acting in concert with, or instigated or
financed by, the Person or group making the original offer or with whom
the arrangement or understanding relating to the Company or any assets
or securities of it or any of its Subsidiaries."
Section 2. Amendment of Section 3. Section 3 of the Rights Agreement is
amended by deleting the reference to "20%" in subsection (a) thereof, and
substituting "22%" in lieu thereof.
Section 3. Amendment of Section 23. Section 23 of the Rights Agreement
is amended by deleting subsection (a) thereof and substituting in lieu thereof
the following:
"(a) The Company may, at its option, by approval of at least
70 percent of the members of the entire Board of Directors and with the
concurrence of a majority of the Continuing Directors, at any time
prior to the earliest of (i) the Close of Business on the tenth day
following the Stock Acquisition Date (or, if the Stock Acquisition Date
shall have occurred prior to the Record Date, the Close of Business on
the tenth day following the Record Date) or (ii) the Final Expiration
Date, redeem all but not less than all the then
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outstanding Rights at a redemption price of $.01 per Right,
appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such redemption
price being hereinafter referred to as the "Redemption Price");
provided, however, that if, following the occurrence of a Stock
Acquisition Date and following the expiration of the right of
redemption pursuant to clause (i) of this Section 23(a) but prior to
any Triggering Event, (A) a Person who is an Acquiring Person shall
have transferred or otherwise disposed of a number of Common Shares in
one transaction or series of transactions, not directly or indirectly
involving the Company or any of its Subsidiaries, which did not result
in the occurrence of a Triggering Event such that such Person is
thereafter a Beneficial Owner of 10% or less of the outstanding Common
Shares of the Company, and (B) there are no other Persons, immediately
following the occurrence of the event described in clause (A), who are
Acquiring Persons, then the right of redemption shall be reinstated and
thereafter be subject to the provisions of this Section 23. The
redemption of the Rights by the Board of Directors may be made
effective at such time, on such basis and with such conditions as the
Board of Directors in its sole discretion may establish.
Notwithstanding anything in this Agreement to the contrary, the Rights
shall not be exercisable after the occurrence of a Flip-In Event until
such time as the Company's right of redemption hereunder has expired.
For purposes of this Section 23, the term "Continuing Director" shall
mean a member of the Board of Directors of the Company who either was a
member of the Board of Directors on the date of this Agreement or who
subsequently became a director of the Company and whose initial
appointment, initial election or initial nomination for election by the
Company's shareholders subsequent to such date was approved by a vote
of a majority of the Continuing Directors then on the Board of
Directors of the Company."
Section 4. Amendment of Section 27. Section 27 of the Rights Agreement
is amended by deleting the first two sentences thereof and substituting in lieu
thereof the following:
"Prior to the Distribution Date, the Company may by approval of at
least 70 percent of the members of the entire Board of the Directors,
and the Rights Agent shall if the Company so directs, supplement or
amend any provision of this Agreement in any manner without the
approval of any holders of Common Shares. From and after the
Distribution Date, the Company may by approval of at least 70 percent
of the members of the entire Board of Directors, and the Rights Agent
shall if directed by the Company, from time to time supplement or amend
this Agreement without the approval of any holders of Right
Certificates in order (i) to cure any ambiguity, (ii) to correct or
supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, (iii) to shorten or
lengthen any time period herein or (iv) to change or supplement any
other provisions, hereunder in any manner which the Board of Directors
may deem necessary or desirable so long as the interests of the holders
of the Rights or Right Certificates (other than an Acquiring Person or
any Affiliate or Associate of an Acquiring Person) shall not be
materially and adversely affected thereby; provided, however, this
Agreement may not be supplemented or amended to lengthen, pursuant to
clause (iii) of this sentence, (A) a time period governing redemption
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of the Rights if the Rights are not then redeemable, or (B) any other
time period unless such lengthening is for the purpose of protecting,
enhancing or clarifying the - rights of, and/or the benefits to, the
holders of Rights (other than an Acquiring Person or any Affiliate or
Associate of an Acquiring Person)."
Section 5. Effectiveness. This Amendment No. 1 shall be deemed
effective as of June 24, 1998 as if executed by both parties hereto on such
date. Except as amended hereby, the Rights Agreement shall remain in full force
and effect and shall be otherwise unaffected hereby.
Section 6. Miscellaneous. This Amendment No. 1 shall be deemed to be a
contract made under the laws of the State of Delaware and for all purposes shall
be governed by and construed in accordance with the laws of such state
applicable to contracts to be made and performed entirely within such state.
This Amendment No. 1 may be executed in any number of counterparts, each of such
counterparts shall for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same instrument. If any
term, provision, covenant or restriction of this Amendment No. 1 is held by a
court of competent jurisdiction or other authority to be invalid, illegal, or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Amendment No. 1 shall remain in full force and effect and
shall in no way be affected, impaired or invalidated.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1
to be duly executed as of the date and year first above written.
TOREADOR ROYALTY CORPORATION
By: /s/ XXXX XXXX XXXXXXXXXX
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Name: Xxxx Xxxx XxXxxxxxxx
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Title: Chairman
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CONTINENTAL STOCK TRANSFER & TRUST
COMPANY
By: /s/ XXXXXXX X. XXXXXXXXX
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Name: Xxxxxxx X. Xxxxxxxxx
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Title: Vice President
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