-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, INwhb/ZiX85mg3b3SDTpQ2ly5JhQZbh7YIdiFSmULmoH/X/MOPW9OVIb6E8DHNkF QJw7ldYJNvuIo+G+FGJTOQ== 0000950134-98-005860.txt : 19980714 0000950134-98-005860.hdr.sgml : 19980714 ACCESSION NUMBER: 0000950134-98-005860 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 19980710 SROS: NONE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: TOREADOR ROYALTY CORP CENTRAL INDEX KEY: 0000098720 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 750991164 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-06308 FILM NUMBER: 98664312 BUSINESS ADDRESS: STREET 1: 530 PRESTON COMMONS WEST STREET 2: 8117 PRESTON ROAD CITY: DALLAS STATE: TX ZIP: 75225 BUSINESS PHONE: 2143690080 MAIL ADDRESS: STREET 1: 530 PRESTON COMMONS WEST STREET 2: 8117 PRESTON ROAD CITY: DALLAS STATE: TX ZIP: 75225 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: VIG PETER R CENTRAL INDEX KEY: 0001065751 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 259581581 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 101 PARK AVENUE CITY: NEW YORK STATE: NY ZIP: 10178 BUSINESS PHONE: 18009662141 MAIL ADDRESS: STREET 1: 101 PARK AVENUE CITY: NEW YORK STATE: NY ZIP: 10178 SC 13D 1 SCHEDULE 13D 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934* TOREADOR ROYALTY CORPORATION (NAME OF ISSUER) COMMON STOCK, $.15625 PAR VALUE PER SHARE (TITLE OF CLASS OF SECURITIES) 891041 10 5 (CUSIP NUMBER) PETER R. VIG 101 PARK AVENUE NEW YORK, NEW YORK 10178 (800) 743-8443 (NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS) JUNE 26, 1998 (DATE OF EVENT WHICH REQUIRES FILING OF THIS STATEMENT) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box. [ ] NOTE: Six copies of this statement, including all exhibits, should be filed with the Commission. See Rule 13d-1(a) for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). Page 1 of 7 2
CUSIP NO. 891041 10 5 SCHEDULE 13D - ------------------------------------------------------------------------------------------------------------------------- (1) Names of Reporting Persons/S.S. or I.R.S. Identification Nos. of Above Persons PETER R. VIG - ------------------------------------------------------------------------------------------------------------------------- (2) Check the Appropriate Box if a Member of a Group (See Instructions) (a) [ ] (b) [x] - ------------------------------------------------------------------------------------------------------------------------- (3) SEC Use Only - ------------------------------------------------------------------------------------------------------------------------- (4) Source of Funds (See Instructions) OO (See Item 3) - ------------------------------------------------------------------------------------------------------------------------- (5) Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [ ] - ------------------------------------------------------------------------------------------------------------------------- (6) Citizenship or Place of Organization UNITED STATES OF AMERICA - ------------------------------------------------------------------------------------------------------------------------- (7) Sole Voting Power 290,900 Number of Shares --------------------------------------------------------------------------------------- Beneficially Owned By (8) Shared Voting Power 0 Each Reporting --------------------------------------------------------------------------------------- Person With (9) Sole Dispositive Power 290,900 --------------------------------------------------------------------------------------- (10) Shared Dispositive Power 0 - ------------------------------------------------------------------------------------------------------------------------- (11) Aggregate Amount Beneficially Owned by Each Reporting Person 290,900 - ------------------------------------------------------------------------------------------------------------------------- (12) Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) [x](1) - ------------------------------------------------------------------------------------------------------------------------- (13) Percent of Class Represented by Amount in Row (11) 5.65%(2) - ------------------------------------------------------------------------------------------------------------------------- (14) Type of Reporting Person (See Instructions) IN - -------------------------------------------------------------------------------------------------------------------------
- ------------------------ (1) Mr. Vig disclaims beneficial ownership of 6,600 shares of Common Stock held by his children. (2) Based on 5,146,771 shares of Common Stock issued and outstanding as of June 12, 1998 as disclosed in the Issuer's definitive proxy material filed with the Securities and Exchange Commission on July 1, 1998. Page 2 of 7 3 CUSIP NO. 891041 10 5 SCHEDULE 13D - ------------------------------------------------------------------------------- ITEM 1. SECURITY AND ISSUER The class of equity securities to which this statement relates is common stock, $.15625 par value per share (the "Common Stock") of Toreador Royalty Corporation, a Delaware corporation (the "Issuer"). The address of the principal executive offices of the Issuer is 530 Preston Commons West, 8117 Preston Road, Dallas, Texas 75225. ITEM 2. IDENTITY AND BACKGROUND Item 2(a)-(c) Peter R. Vig is an individual whose business address is 101 Park Avenue, 48th Floor, New York, New York 10178. Mr. Vig's principal occupation is Managing Director of Tiger Management, L.L.C., 101 Park Avenue, 48th Floor, New York, New York 10170. Item 2(d) During the past five years, the individual identified in this Item 2 has not been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). Item 2(e) During the last five years, the individual identified in this Item 2 was not a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION Peter R. Vig acquired 100,000 shares of Common Stock of the Issuer in consideration for his services to the Issuer as its President and Chief Executive Officer pursuant to the terms of a Restricted Stock Agreement dated August 1, 1998 between Mr. Vig and the Issuer. Mr. Vig acquired 200,000 shares of Common Stock of the Issuer upon exercise of a stock option at an exercise price of $3.00 per share. Mr. Vig purchased 66,900 shares of Common Stock of the Issuer in open market transactions on the Nasdaq National Market. Mr. Vig paid cash using personal funds to exercise the option for 200,000 shares and to purchase the 66,900 shares in open market transactions. The difference between the total number of shares purchased or acquired by Mr. Vig as described in this Item 3 and 290,900 shares of Common Stock beneficially owned by Mr. Vig as of the date hereof results from open market sales or gifts of shares of Common Stock by Mr. Vig. ITEM 4. PURPOSE OF TRANSACTION Mr. Vig acquired the securities for investment purposes. Subject to applicable law, Mr.Vig reserves the right from time to time to purchase additional shares of Common Stock, or sell in whole or in part shares of Common Stock, on the open market or in privately negotiated transactions. On June 25, 1998, certain stockholders of the Issuer affiliated with Lee Global Energy Fund, L.P. (the "Gralee Persons"), certain stockholders of the Issuer affiliated with Dane, Falb, Page 3 of 7 4 Stone & Co., Inc. (the "Dane Falb Persons") and the members of the current Board of Directors of the Issuer acting in their capacity as stockholders of the Issuer (collectively, the "Stockholders"), entered into a Stockholder Voting Agreement (the "Stockholder Agreement"), pursuant to which the Stockholders agreed to support the nomination and election of a slate of seven nominees standing for election as directors at the 1998 Annual Meeting of Stockholders of the Issuer. The Stockholder Agreement provides that the seven nominees are to be: J.W. Bullion, currently a director of the Issuer, Thomas P. Kellogg, Jr., currently a director of the Issuer; John Mark McLaughlin, currently a director of the Issuer (collectively referred to as the "Company Designees"); G. Thomas Graves III and William I. Lee (collectively referred to as the "Gralee Designees"); and Peter L. Falb and Edward Nathan Dane (collectively referred to as the "Dane Falb Designees"). The Stockholders also agreed that until the earlier to occur of (i) such time as (x) the Gralee Persons are no longer the beneficial owners in the aggregate of at least 514,677 shares of Common Stock, and (y) the Dane Falb Persons are no longer the beneficial owners in the aggregate of at least 514,677 shares of Common Stock, and (ii) the day immediately subsequent to the 2000 Annual Meeting of Stockholders of the Issuer (the "Effective Period"), the Stockholders would support these seven nominees for election at the 1999 and 2000 Annual Meetings of Stockholders if such nominees are willing to act as such. During the Effective Period, if one or more of the Company Designees declines or is otherwise unable to stand as nominee(s) for the election of directors at the 1999 or 2000 Annual Meetings, the Stockholders agreed that replacement nominee(s) shall be nominated by a committee of the Board of Directors consisting of the Company Designees as established pursuant to the Bylaws (the "Company Nominating Committee"). During the Effective Period, if one or more of the Gralee Designees declines or is otherwise unable to stand as nominee(s) for the election of directors at the 1999 or 2000 Annual Meetings, the Stockholders agreed that replacement nominee(s) shall be nominated by the Gralee nominating committee of the Board of Directors as established pursuant to the Bylaws (the "Gralee Nominating Committee"). During the Effective Period, if one or more of the Dane Falb Designees declines or is otherwise unable to stand as nominee(s) for the election of directors at the 1999 or 2000 Annual Meetings, the Stockholders agreed that replacement nominee(s) shall be nominated by the Falb nominating committee of the Board of Directors as established pursuant to the Bylaws (the "Falb Nominating Committee"). The Stockholders also agreed that during the Effective Period they will vote all shares of Common Stock which they are entitled to vote at the Annual Meeting and the 1999 and 2000 Annual Meetings in favor of each such nominee, and that they will vote to cause any vacancy among any of the Company Designees, the Gralee Designees or the Dane Falb Designees, respectively, to be filled by a person nominated by the Company Nominating Committee, the Gralee Nominating Committee or the Falb Nominating Committee, respectively. The Stockholder Agreement also provides, among other things, that no Stockholder will prior to December 31, 2000, except as otherwise provided by the Stockholder Agreement or as agreed to by five of the seven members of the Board of Directors of the Issuer then in office, (i) (A) seek election to, or seek to place a representative on, the Board of Directors of the Issuer, (B) engage in any solicitation of proxies with respect to any securities of the Issuer, or (C) become a participant in any election contest relating to the election of directors of the Issuer; (ii) initiate, propose or otherwise solicit stockholders of the Issuer for the approval of any stockholder proposal; (iii) vote in favor of any matter or proposal submitted to stockholders of the Issuer unless such matter or proposal is first recommended to stockholders by a vote of five of the seven members of the Board of Directors of the Issuer then in office; (iv) propose or seek to effect or seek permission to propose or effect other than as a stockholder on an equal basis (A) any form of business combination transaction or similar transaction with the Issuer, (B) any sale of assets of the Issuer, (C) any issuance or sale of equity securities of the Issuer or (D) any restructuring, Page 4 of 7 5 recapitalizing or similar transaction with the Issuer; (v) initiate, propose or otherwise solicit stockholders to amend or terminate that certain Rights Agreement dated as of April 3, 1995, as amended or supplemented (the "Rights Agreement"), between the Issuer and Continental Stock Transfer & Trust Company, as rights agent, or to redeem the rights issued under the Rights Agreement; or (vi) aid, encourage or act in concert with any person, firm, corporation, group or other entity to take any of the foregoing actions. The Issuer, the members of the current Board of Directors, the Gralee Persons and the Dane Falb Persons entered into an Agreement dated June 25, 1998 (the "Settlement Agreement") which provides for mutual releases by the parties and certain related entities (the "Released Parties") of all existing and future claims arising out of each Released Party's activities up to the date of the Settlement Agreement with respect to, or in any way connected with, the Issuer. The Settlement Agreement provides that until December 31, 2000, each party will refrain making any statement or taking any action (other than a sale of Common Stock) that is critical or disparaging of the other parties. The Settlement Agreement also provides that, for a period of six years after the date of such agreement, the Issuer will, subject to certain limitations, cause to be maintained in effect the Issuer's current directors' and officers' liability insurance policies for the benefit of those persons who are currently covered by such policies on terms no less favorable than the terms of such current insurance coverage. Except as set forth in this Item 4, Mr. Vig has no present plans or proposals that relate to or would result in any of the actions specified in clauses (a) through (j) of Item 4 of Schedule 13D. The summary set forth in this Item 4 of Schedule 13D of certain aspects of the transactions reported in this Schedule 13D does not purport to be a complete description of, and is qualified in its entirety by reference to, the various provisions of the various agreements and documents described herein and/or attached as exhibits to this Schedule 13D and incorporated herein by reference for all purposes. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER Item 5(a) Mr. Vig beneficially owns 290,900 shares of Common Stock (which is approximately 5.65% of the outstanding shares of Common Stock as of June 12, 1998 based on information in the Issuer's definitive proxy materials filed with the Securities and Exchange Commission on July 1, 1998). Mr. Vig may be deemed to beneficially own 6,600 shares of Common Stock held by Mr. Vig's children. Mr. Vig disclaims beneficial ownership with respect to these 6,600 shares of Common Stock. If the relationships described in Item 4 hereof constitute a group for purposes of Rule 13d-5 of the Act, then the group may collectively own an aggregate of 2,207,660 shares of Common Stock of the Issuer (which is approximately 42% of the outstanding shares of Common Stock of the Issuer as of June 12, 1998 based on information disclosed in the Issuer's definitive proxy materials filed with the Securities and Exchange Commission on July 1, 1998). Mr. Vig disclaims any beneficial ownership of the other Stockholders' shares and only claims beneficial ownership of 290,900 shares of Common Stock of the Issuer. Page 5 of 7 6 Item 5(b) Mr. Vig has the sole power (and no shared power) to vote or direct the vote or to dispose of direct the disposition of 290,900 shares of Common Stock. As stated above, Mr. Vig disclaims beneficial ownership or shared voting or dispositive power with respect to the 6,600 shares of Common Stock held by Mr. Vig's children and the other Stockholders' shares. Item 5(c) Except as otherwise described herein, Mr. Vig has not effected any transaction in the Common Stock of the Issuer during this time period commencing 60 days preceding the date of the event that required the filing of this Schedule 13D through the date hereof. Item 5(d) No person other than Mr. Vig has the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, Common Stock of the Issuer with respect to which this filing is made. Item 5(e) Not applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER Except as set forth in Item 4 or in the Exhibits filed herewith, there are no contracts, arrangements, understandings or relationships (legal or otherwise) between Mr. Vig and any other person with respect to the shares of Common Stock of the Issuer. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS The information required by this Item 7 is set forth in the Index to Exhibits accompanying this Schedule 13D filing. Page 6 of 7 7 SIGNATURES After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. July 8, 1998 /s/ Peter R. Vig ---------------------------- Peter R. Vig Page 7 of 7 8 INDEX TO EXHIBITS
Exhibit No. Description ----------- ----------- 1 Stockholder Voting Agreement dated as of June 25, 1998 by and among the Gralee Persons, the Dane Falb Persons and certain other stockholders of the Issuer.
EX-1 2 STOCKHOLDER VOTING AGREEMENT 1 EXHIBIT 1 FINAL EXECUTION COPY TOREADOR ROYALTY CORPORATION STOCKHOLDER VOTING AGREEMENT This STOCKHOLDER VOTING AGREEMENT, dated June 25, 1998 (the "Agreement") is made and entered into by and among Mr. G. Thomas Graves, III and Mr. William I. Lee, individuals whose business address is 4809 Cole Avenue, Suite 107, Dallas, Texas 75205, Lee Global Energy Fund, L.P., a Texas limited partnership ("Lee Global"), Gralee Capital Corp., a Texas corporation ("Gralee Capital"), and Gralee Partners, L.P., a Texas limited partnership ("Gralee Partners" and together with Mr. Graves, Mr. Lee, Lee Global and Gralee Capital, collectively referred to as the "Gralee Persons"); Mr. Peter Lawrence Falb and Mr. Edward Nathan Dane, individuals whose business address is 33 Broad Street, Boston, Massachusetts 02109, Firethorn I Limited Partnership, a Massachusetts limited partnership ("Firethorn"), the Hilary Bell Falb 1983 Trust (the "HBF Trust"), the Alison Forslund Falb 1985 Trust (the "AFF Trust"), the Forslund Irrevocable Trust (the "Forslund Trust"), and Dane, Falb, Stone & Co., Inc., a Massachusetts corporation ("Dane Falb" and, together with Mr. Falb, Mr. Dane, the HBF Trust, the AFF Trust, the Forslund Trust and Firethorn, collectively referred to as the "Dane Falb Persons"); and Mr. John V. Ballard, an individual whose address is 161-A Heritage Hills, Somers, New York 10589, Mr. J. W. Bullion, an individual whose business address is 1700 Pacific Avenue, Suite 3300, Dallas, Texas 75201, Mr. Thomas P. Kellogg, an individual whose business address is 50 Horseshoe Road, Darien, Connecticut 06820, Mr. John Mark McLaughlin, an individual whose business address is 2201 Sherwood Way, Suite 213, San Angelo, Texas 76901, Mr. Peter R. Vig, an individual whose business address is 101 Park Avenue, 48th Floor, New York, New York 10178, and Mr. Jack L. Woods, an individual whose business address is 294 North Bay Drive, Bullard, Texas 75757 (collectively referred to as "Current Management") (each of the persons constituting the Gralee Persons, the Dane Falb Persons and Current Management are sometimes collectively referred to as the "Stockholders"). W I T N E S S E T H: WHEREAS, each of the Stockholders is a holder of shares of Common Stock (as defined) of Toreador Royalty Corporation, a Delaware corporation (the "Company"); NOW, THEREFORE, in consideration of the foregoing and the mutual agreements set forth herein the parties to this Agreement hereby agree as follows: 1. Definitions of Certain Agreement Terms. For purposes of this Agreement, the terms hereinafter set forth shall have the following definitions unless otherwise specifically stated: "1998 Annual Meeting" means the 1998 annual meeting of stockholders of the Company at which the election of directors shall be considered. 2 "1999 Annual Meeting" means the 1999 annual meeting of stockholders of the Company at which the election of directors shall be considered. "2000 Annual Meeting" means the 2000 annual meeting of stockholders of the Company at which the election of directors shall be considered. "Board" means the Board of Directors of the Company. "Bylaws" means the Amended and Restated Bylaws of the Company as hereinafter amended or supplemented. "Common Stock" means the common stock, par value $.15625 per share, of the Company. "Company Nominating Committee" shall mean the continuing director nominating committee of the Board as established pursuant to the Bylaws. "Company Securities" means any securities issued by the Company, including the Common Stock and any other debt or equity securities of the Company that are outstanding as of the date hereof or may hereafter be issued. "Dane Falb Schedule 13D" means the Statement on Schedule 13D filed with the SEC on April 7, 1995 by Mr. Falb, Mr. Dane, Firethorn and Dane Falb, as amended through Amendment No. 5 thereto dated May 5, 1998. "Effective Period" shall mean the period commencing immediately subsequent to the 1998 Annual Meeting and ending on the earlier to occur of (i) such time as (x) the Gralee Persons are no longer the beneficial owners in the aggregate of at least 514,677 shares of Common Stock, and (y) the Dane Falb Persons are no longer the beneficial owners in the aggregate of at least 514,677 shares of Common Stock, and (ii) the day immediately subsequent to the 2000 Annual Meeting. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Falb Nominating Committee" shall mean the Falb nominating committee of the Board as established pursuant to the Bylaws. "Gralee Nominating Committee" shall mean the Gralee nominating committee of the Board as established pursuant to the Bylaws. "Lee Global Schedule 13D" means the Statement on Schedule 13D filed with the SEC on June 2, 1997 by Lee Global, as amended through Amendment No. 3 thereto dated April 28, 1998. "Person" means any individual, corporation, association, general or limited partnership, limited liability company, limited liability partnership, joint venture, trust, estate, other entity or organization or group. -2- 3 "Rights Agreement" means the rights agreement dated as of April 3, 1995 between the Company and Continental Stock Transfer & Trust Company, as rights agent, as amended or supplemented. "SEC" means the United States Securities and Exchange Commission. The terms "participant," "proxy" and "solicitation" shall be used as defined in Regulation 14A under the Exchange Act. The terms "beneficial ownership" and "group" shall be used as defined in Regulation 13D-G under the Exchange Act. The terms "affiliate" and "associate" shall be used as defined in Rule 12b-2 under the Exchange Act. 2. Nominations to the Company's Board of Directors at the 1998 Annual Meeting. (a) The Stockholders agree that they will support the nomination and the election of the following seven (7) nominees standing for election at the 1998 Annual Meeting to serve on the Board until the 1999 Annual Meeting and until their respective successors shall be duly elected and qualified: J. W. Bullion, current director of the Company; Thomas P. Kellogg, Jr., current director of the Company; and John Mark McLaughlin, current director of the Company (collectively referred to as the "Company Designees"); G. Thomas Graves, III and William I. Lee (collectively referred to as the "Gralee Designees"); and Peter Lawrence Falb and Edward Nathan Dane (collectively referred to as the "Dane Falb Designees"). The Gralee Persons and the Dane Falb Persons shall cause the Gralee Designees and the Dane Falb Designees, respectively, to consent to serving as members of the Board, and provide the biographical, beneficial ownership of Common Stock and other information required to be disclosed in the Company's proxy materials used for the solicitation of proxies at the 1998 Annual Meeting. (b) Each Stockholder shall vote (including the taking of any action by written consent, as necessary or appropriate), and shall cause its affiliates to vote (including the taking of any action by written consent, as necessary or appropriate), all shares of Common Stock which they are entitled to vote (or control the voting of, directly or indirectly) at the 1998 Annual Meeting in favor of the election of the nominees set forth in subsection (a) of this Section 2. 3. Nominations to the Company's Board of Directors at the 1999 Annual Meeting and 2000 Annual Meeting. During the Effective Period, the Stockholders agree as follows: (a) If the slate of nominees set forth in subsection (a) of Section 2 are willing and able to act as such at the 1999 Annual Meeting and the 2000 Annual Meeting, the Stockholders shall support the nomination and election of such seven nominees for election to the Board at the 1999 Annual Meeting and the 2000 Annual Meeting. (b) If one or more of the Company Designees declines or is otherwise unable to stand as nominee(s) for the election of directors at the 1999 Annual Meeting or the 2000 Annual Meeting, then the Stockholders agree the replacement nominee(s) shall be nominated by the Company Nominating Committee. If one or more of the Gralee Designees declines or is -3- 4 otherwise unable to stand as nominee(s) for the election of directors at the 1999 Annual Meeting or the 2000 Annual Meeting, then the Stockholders agree the replacement nominee(s) shall be nominated by the Gralee Nominating Committee. If one or more of the Dane Falb Designees declines or is otherwise unable to stand as nominee(s) for the election of directors at the 1999 Annual Meeting or the 2000 Annual Meeting, then the Stockholders agree the replacement nominee(s) shall be nominated by the Falb Nominating Committee. The Stockholders shall support the nomination and the election of the slate of nominees as selected in accordance with this subsection (b) for election to the Board at the 1999 Annual Meeting and the 2000 Annual Meeting. (c) Each Stockholder shall vote (including the taking of any action by written consent, as necessary or appropriate), and shall cause its affiliates to vote (including the taking of any action by written consent, as necessary or appropriate), all shares of Common Stock which they are entitled to vote (or control the voting of, directly or indirectly) at the 1999 Annual Meeting and the 2000 Annual Meeting in favor of the election of the nominees selected in accordance with subsection (a) or (b) of this Section 3. 4. Board Vacancies. During the Effective Period and notwithstanding any provision of the Bylaws with respect to the filling of vacancies on the Board to the contrary, the Stockholders agree to vote (including the taking of any action by written consent, as necessary or appropriate), and shall cause its affiliates to vote (including the taking of any action by written consent, as necessary or appropriate), all shares of Common Stock which they are entitled to vote (or control the voting of, directly or indirectly), and otherwise take commercially reasonable actions to cause vacancies on the Board to be filled as follows: (a) in the event that one or more of the Company Designees ceases to serve as a member of the Board during his term of office but prior to December 31, 2000, the resulting vacancy on the Board shall be filled by a person nominated by the Company Nominating Committee. (b) in the event that one or more of the Gralee Designees ceases to serve as a member of the Board during his term of office but prior to December 31, 2000, the resulting vacancy on the Board shall be filled by a person nominated by the Gralee Nominating Committee. (c) in the event that one or more of the Dane Falb Designees ceases to serve as a member of the Board during his term of office but prior to December 31, 2000, the resulting vacancy on the Board shall be filled by a person nominated by the Falb Nominating Committee. 5. Covenants. (a) The Gralee Persons and the Dane Falb Persons agree to withdraw their demand for a stockholder list and related information dated April 9, 1998 and April 27, 1998, respectively. -4- 5 (b) Except as otherwise provided in this Agreement or as agreed to by five (5) of the seven (7) members of the Board then in office, no Stockholder or its affiliates will prior to December 31, 2000: (i) (A) seek election to, or seek to place a representative on, the Board, (B) engage in any solicitation of proxies with respect to any Company Securities or (C) become a participant in any election contest relating to the election of directors of the Company; (ii) initiate, propose or otherwise solicit stockholders of the Company, for the approval of one or more stockholder proposals, as described in Rule 14a-8 under the Exchange Act, or otherwise; (iii) vote in favor of or execute a consent with respect to any matter or proposal submitted to the Company's stockholders by vote or otherwise unless such matter or proposal has first been recommended to stockholders by five (5) of the seven (7) members of the Board then in office, and such recommendation has not been withdrawn; it being understood that the Stockholders shall have no obligation to vote on any matter submitted to stockholders other than as provided in Sections 2 and 3 hereof; (iv) propose or seek to effect or seek permission of the Board or stockholders of the Company to propose or effect on behalf of or for the benefit of any Stockholder other than as a stockholder on an equal basis (A) any form of business combination transaction involving the Company, including without limitation a merger, consolidation, tender offer, share exchange or exchange offer, (B) any sale of assets of the Company, (C) any issuance or sale of equity securities of the Company or (D) any restructuring, recapitalizing or similar transaction with respect to the Company; (v) initiate, propose or otherwise solicit stockholders to amend or terminate the Rights Agreement, or to redeem the rights issued thereunder; or (vi) aid, encourage or act in concert with any person, firm, corporation, group or other entity to take any of the actions prohibited by Section 5(b) hereof. (c) With respect to Dane Falb discretionary accounts, the covenants in Section 5(b) shall apply only insofar as Dane Falb exercises discretionary authority with respect to Company Securities held in such accounts. 6. Representations and Warranties of the Gralee Persons. The Gralee Persons jointly and severally represent and warrant to Current Management as follows: (a) Each Gralee Person has the power and authority to execute, deliver and carry out the terms and provisions of this Agreement and to consummate the transactions contemplated hereby, and has taken all necessary action to authorize the execution, delivery and performance of this Agreement. -5- 6 (b) This Agreement has been duly and validly authorized, executed and delivered by each Gralee Person, and constitutes a valid and binding obligation of each Gralee Person, enforceable in accordance with its terms, subject to applicable bankruptcy, reorganization, insolvency or other laws affecting the enforcement of creditors' rights generally. (c) None of the Gralee Persons or any of its affiliates beneficially owns, or has any direct, indirect or contingent pecuniary interest in, any Company Securities other than as disclosed in the Lee Global Schedule 13D. (d) None of the Gralee Persons or any of its respective affiliates is a member of any group with respect to any Company Securities, and there are no other persons who are part of such a group with it or any of its affiliates, except as disclosed in the Lee Global Schedule 13D. 7. Representations and Warranties of the Dane Falb Persons. The Dane Falb Persons jointly and severally represent and warrant to Current Management as follows: (a) Each Dane Falb Person has the power and authority to execute, deliver and carry out the terms and provisions of this Agreement and to consummate the transactions contemplated hereby, and has taken all necessary action to authorize the execution, delivery and performance of this Agreement. (b) This Agreement has been duly and validly authorized, executed and delivered by each Dane Falb Person, and constitutes a valid and binding obligation of each Dane Falb Person, enforceable in accordance with its terms, subject to applicable bankruptcy, reorganization, insolvency or other laws affecting the enforcement of creditors' rights generally. (c) Except for an aggregate of 14,500 shares of Common Stock held by the HBF Trust, the AFF Trust and the Forslund Trust, none of the members of the Dane Falb Persons or any of its affiliates beneficially owns, or has any direct, indirect or contingent pecuniary interest in, any Company Securities other than as disclosed in the Dane Falb Schedule 13D. (d) None of the Dane Falb Persons or any of its respective affiliates is a member of any group with respect to any Company Securities, and there are no other persons who are part of such a group with it or any of its affiliates, except as disclosed in the Dane Falb Schedule 13D. 8. Representations and Warranties of Current Management Current Management jointly and severally represents and warrants to the Gralee Persons and the Dane Falb Persons as follows: (a) Each member of Current Management has the power and authority to execute, deliver and carry out the terms and provisions of this Agreement and to consummate the transactions contemplated hereby, and has taken all necessary action to authorize the execution, delivery and performance of this Agreement. -6- 7 (b) This Agreement has been duly and validly executed and delivered by each member of Current Management, and constitutes a valid and binding obligation of each member of Current Management, enforceable in accordance with its terms, subject to applicable bankruptcy, reorganization, insolvency or other laws affecting the enforcement of creditors' rights generally. 9. Successors, Assigns and Transferees. Subject to applicable laws regarding the sale or transfer of Common Stock by the Stockholders, the terms and provisions of this Agreement shall not be deemed to restrict or limit future sales of Common Stock by the Stockholders. The terms and provisions of this Agreement shall not bind, inure to the benefit of or be enforceable by or against the successors, assigns or transferees of each of the Stockholders. No Stockholder may assign its rights under this Agreement. 10. Survival of Representations. All representations, warranties and agreements made by the Stockholders in this Agreement or pursuant hereto shall survive the date hereof. 11. Entire Agreement; Amendments. This Agreement, including that certain Agreement of even date herewith among the Gralee Persons, the Dane Falb Persons, the Company, among other parties thereto, and such additional instruments as may be concurrently executed and delivered pursuant to this Agreement, constitutes the entire understanding of the parties with respect to its subject matter. There are no restrictions, agreements, promises, representations, warranties, covenants or undertakings other than those expressly set forth herein or in the documents delivered concurrently herewith. This Agreement may be amended only by a written instrument duly executed by all the parties hereto. 12. Headings. The section headings contained in this Agreement are for reference purposes only and shall not effect in any way the meaning or interpretation of this Agreement. 13. Notices, All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given if so given) by hand delivery, facsimile or by mail (registered or certified, postage prepaid, return receipt requested) to the respective parties as follows: If to the Gralee Persons: Gralee Capital Corp. 4809 Cole Avenue Suite 107 Dallas, Texas 75205 Attention: Mr. G. Thomas Graves, III Fax No: (214) 521-8834 -7- 8 with a copy to: Haynes & Boone, LLP 901 Main Street Suite 3100 Dallas, Texas 75202 Attention: Ms. Janice V. Sharry Fax No: (214) 651-5940 If to the Dane Falb Persons: Dane, Falb, Stone & Co., Inc. 33 Broad Street Boston, Massachusetts 02109 Attention: Mr. Peter Falb Fax No: (617) 742-2304 with a copy to: Richards, Layton & Finger 920 King Street Wilmington, Delaware 19801 Attn: Mr. Jesse Finkelstein Fax No.: (302) 658-6548 and: Choate, Hall & Stewart Exchange Place 53 State Street Boston, MA 02109 Attn: Ms. Carla Herwitz Fax No.: (617) 248-4000 If to Current Management: 2201 Sherwood Way Suite 213 San Angelo, Texas 76901 Attention: Mr. John Mark McLaughlin Fax: (915) 949-0480 -8- 9 with a copy to: Thompson & Knight, P.C. 1700 Pacific Avenue Suite 3300 Dallas, Texas 75201 Attention: Mr. Joe Dannenmaier Fax: (214) 969-1751 or to such other address as the person to whom notice is given may have previously furnished to the others in writing in the manner set forth above. 14. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware, without reference to the conflict of laws principles thereof. 15. Waiver. Any waiver by any party of a breach of any provision of this Agreement shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Agreement. The failure of a party to insist upon strict adherence to any term of this Agreement on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement. 16. Challenges to Agreement. Each party hereto shall not, and shall use its best efforts to cause its affiliates, associates and representatives not to, challenge the validity of any provisions of this Agreement. In the event that any part of this Agreement or any transaction contemplated hereby is temporarily, preliminarily or permanently enjoined or restrained by court of competent jurisdiction, the parties hereto shall use their reasonable best efforts to cause any such injunction or restraining order to be vacated or dissolved or otherwise declared or determined to be of no further force or effect. 17. Specific Performance. Each of the Stockholders acknowledges and agrees that irreparable harm would occur if any provision of this Agreement were not performed in accordance with the terms thereof, or were otherwise breached, and that such harm could not be remedied by an award of damages. Accordingly, the Stockholders agree that any non-breaching Stockholder shall be entitled to an injunction to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof. 18. Counterparts. This Agreement may be executed in counterparts, each of which shall be an original, but each of which together shall constitute one and the same Agreement. * * * * * -9- 10 IN WITNESS WHEREOF, and intending to be legally bound hereby, each of the undersigned parties has executed or caused this Agreement to be executed on the date first above written. LEE GLOBAL ENERGY FUND, L.P. By: Gralee Partners, L.P., its general partner By: Gralee Capital Corp., its general partner By: /s/ G. T. Graves, III ---------------------------------- Name: G. T. Graves, III -------------------------------- Title: President ------------------------------- GRALEE CAPITAL CORPORATION By: /s/ G. T. Graves, III ------------------------------------------ Name: G. T. Graves, III ------------------------------------- Title: President ------------------------------------ GRALEE PARTNERS, L.P. By: Gralee Partners, L.P., its general partner By: /s/ G. T. Graves, III -------------------------------------- Name: G. T. Graves, III --------------------------------- Title: President -------------------------------- /s/ G. Thomas Graves, III ---------------------------------- G. Thomas Graves, III /s/ Peter Lawrence Falb ---------------------------------- Peter Lawrence Falb /s/ Edward Nathan Dane ---------------------------------- Edward Nathan Dane -10- 11 FIRETHORN I LIMITED PARTNERSHIP By: Firethorn II Limited Partnership, its general partner By: Eaglerock Corporation, its general partner By: /s/ PETER L. FALB ------------------------------------- Name: Peter L. Falb -------------------------------- Title: Treasurer ------------------------------- THE HILARY BELL FALB 1983 TRUST By: /s/ Karen F. Falb, Trustee ----------------------------------------- Karen F. Falb, Trustee THE ALISON FORSLUND FALB 1985 TRUST By: /s/ Karen F. Falb, Trustee ----------------------------------------- Karen F. Falb, Trustee DANE, FALB, STONE & CO., INC. By: /s/ PETER L. FALB ----------------------------------------- Name: Peter L. Falb ------------------------------------ Title: Principal ----------------------------------- /s/ John V. Ballard ---------------------------------------- John V. Ballard /s/ J.W. Bullion --------------------------------------- J.W. Bullion /s/ Thomas P. Kellogg, Jr. --------------------------------------- Thomas P. Kellogg, Jr. -11- 12 /s/ John Mark McLaughlin -------------------------------- John Mark McLaughlin /s/ Peter R. Vig -------------------------------- Peter R. Vig /s/ Jack L. Woods -------------------------------- Jack L. Woods -12- 13 THE FORSLUND IRREVOCABLE TRUST By: /s/ Karen F. Falb, Trustee ---------------------------------- Karen F. Falb, Trustee -13- -----END PRIVACY-ENHANCED MESSAGE-----