-----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, K6mVeVHXM23BPkMzXsB1MWyUparSdcx48NEYPoSlsznFEXkxvelSyXfvaMnTW4jX raPoReP4y8Ke+E1CNzmFUg== 0001058217-98-000034.txt : 19980702 0001058217-98-000034.hdr.sgml : 19980702 ACCESSION NUMBER: 0001058217-98-000034 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 19980701 SROS: NONE GROUP MEMBERS: DANE EDWARD NATHAN ET AL GROUP MEMBERS: DANE, FALB, STONE & CO., INC. GROUP MEMBERS: EDWARD NATHAN DANE GROUP MEMBERS: FIRETHORN I LIMITED PARTNERSHIP 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/A SEC ACT: SEC FILE NUMBER: 005-06308 FILM NUMBER: 98659155 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: DANE EDWARD NATHAN ET AL CENTRAL INDEX KEY: 0000944803 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 030282431 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 33 BROAD STREET CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 617-742-2304 MAIL ADDRESS: STREET 1: 33 BROAD STREET CITY: BOSTON STATE: MA ZIP: 02109 SC 13D/A 1 AMENDMENT NO.6 TO SCHEDULE 13D UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D/A-6 UNDER THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO.6) TOREADOR ROYALTY CORPORATION - -------------------------------------------------------------------------------- (Name of issuer) COMMON STOCK $0.15625 PAR VALUE - -------------------------------------------------------------------------------- 891041 10 5 - -------------------------------------------------------------------------------- (Cusip Number) PETER L. FALB 33 BROAD STREET BOSTON, MA 02109 Telephone: (617) 742-0666 Facsimile (617) 742-2304 - -------------------------------------------------------------------------------- (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 [ ]. Check the following box if a fee is being paid with the statement [ ]. - -------------------------- -------------------------- CUSIP No. 891041 10 5 SCHEDULE 13D/A-6 Page 2 of 10 Pages - -------------------------------------------------------------------------------- 1. NAME OF REPORTING PERSON/S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON PETER LAWRENCE FALB ###-##-#### - -------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [ ] (B) [X] - -------------------------------------------------------------------------------- 3. SEC USE ONLY - -------------------------------------------------------------------------------- 4. SOURCE OF FUNDS PF - -------------------------------------------------------------------------------- 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E) [ ] - -------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION USA - -------------------------------------------------------------------------------- 7. SOLE VOTING POWER 111,000 NUMBER OF -------------------------------------------------- SHARES 8. SHARED VOTING POWER BENEFICIALLY OWNED BY 743,300 EACH -------------------------------------------------- REPORTING 9. SOLE DISPOSITIVE POWER PERSON WITH: 111,000 -------------------------------------------------- 10. SHARED DISPOSITIVE POWER 743,300 - -------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 854,300 - -------------------------------------------------------------------------------- 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ] - -------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 16.60% - -------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON IN ================================================================================ - -------------------------- -------------------------- CUSIP No. 891041 10 5 SCHEDULE 13D/A-6 Page 3 of 10 Pages - -------------------------------------------------------------------------------- 1. NAME OF REPORTING PERSON/S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON EDWARD NATHAN DANE ###-##-#### - -------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [ ] (B) [X] - -------------------------------------------------------------------------------- 3. SEC USE ONLY - -------------------------------------------------------------------------------- 4. SOURCE OF FUNDS 00 - -------------------------------------------------------------------------------- 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E) [ ] - -------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION USA - -------------------------------------------------------------------------------- 7. SOLE VOTING POWER 0 NUMBER OF -------------------------------------------------- SHARES 8. SHARED VOTING POWER BENEFICIALLY OWNED BY 743,300 EACH -------------------------------------------------- REPORTING 9. SOLE DISPOSITIVE POWER PERSON WITH: 0 -------------------------------------------------- 10. SHARED DISPOSITIVE POWER 743,300 - -------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 743,300 - -------------------------------------------------------------------------------- 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ] - -------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 14.44% - -------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON IN ================================================================================ - -------------------------- -------------------------- CUSIP No. 891041 10 5 SCHEDULE 13D/A-6 Page 4 of 10 Pages - -------------------------------------------------------------------------------- 1. NAME OF REPORTING PERSON/S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON FIRETHORN I LIMITED PARTNERSHIP 04-3064184 - -------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [ ] (B) [X] - -------------------------------------------------------------------------------- 3. SEC USE ONLY - -------------------------------------------------------------------------------- 4. SOURCE OF FUNDS 00 - -------------------------------------------------------------------------------- 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E) [ ] - -------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION MASSACHUSETTS - -------------------------------------------------------------------------------- 7. SOLE VOTING POWER 170,000 NUMBER OF -------------------------------------------------- SHARES 8. SHARED VOTING POWER BENEFICIALLY OWNED BY 0 EACH -------------------------------------------------- REPORTING 9. SOLE DISPOSITIVE POWER PERSON WITH: 170,000 -------------------------------------------------- 10. SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 170,000 - -------------------------------------------------------------------------------- 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ] - -------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 3.30% - -------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON PN ================================================================================ - -------------------------- -------------------------- CUSIP No. 891041 10 5 SCHEDULE 13D/A-6 Page 5 of 10 Pages - -------------------------------------------------------------------------------- 1. NAME OF REPORTING PERSON/S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON DANE, FALB, STONE & CO., INC. 04-2622331 - -------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [ ] (B) [X] - -------------------------------------------------------------------------------- 3. SEC USE ONLY - -------------------------------------------------------------------------------- 4. SOURCE OF FUNDS 00 - -------------------------------------------------------------------------------- 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E) [ ] - -------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION MASSACHUSETTS - -------------------------------------------------------------------------------- 7. SOLE VOTING POWER 572,500 NUMBER OF -------------------------------------------------- SHARES 8. SHARED VOTING POWER BENEFICIALLY OWNED BY 800 EACH -------------------------------------------------- REPORTING 9. SOLE DISPOSITIVE POWER PERSON WITH: 572,500 -------------------------------------------------- 10. SHARED DISPOSITIVE POWER 800 - -------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 573,300 - -------------------------------------------------------------------------------- 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ] - -------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 11.14% - -------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON IA ================================================================================ CUSIP No. 891041 10 5 The Schedule 13D previously filed by the undersigned (the "Reporting Persons") with respect to the Common Stock, $.15625 par value, of Toreador Royalty Corporation (the "Company") is hereby amended as follows: Item 4 is hereby supplemented as follows: ITEM 4 PURPOSE OF TRANSACTION: (a) Item 4 is hereby supplemented, as follows: Pursuant to a Stockholder Voting Agreement (the "Stockholder Agreement"), dated as of June 25, 1998, by and among the members of the current Board of Directors of the Company (the "Current Board") and certain stockholders of the Company represented by the Reporting Persons (the "Dane Falb Persons") and by Lee Global Energy Fund, L.P. (the "Gralee Persons" and together with all other parties to the Stockholder Agreement, the "Stockholders"), the Stockholders agreed to support the nomination and election of a slate of seven nominees standing for election as directors at the Company's 1998 Annual Meeting of Stockholders to be held on July 23, 1998. The seven nominees are: J.W. Bullion, currently a director of the Company, Thomas P. Kellogg, Jr., currently a director of the Company; John Mark McLaughlin, currently a director of the Company; G. Thomas Graves III and William I. Lee; and Peter L. Falb and Edward Nathan Dane. 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 Company Common Stock, and (y) the Dane Falb Persons are no longer the beneficial owners in the aggregate of at least 514,677 of the shares of Company Common Stock, and (ii) the day immediately subsequent to the 2000 Annual Meeting of Stockholders of the Company (the "Effective Period"), they would support these seven nominees (or their respective replacement designees) for election at the 1999 and 2000 Annual Meetings of Stockholders. The Stockholders also agreed that during the Effective Period they will vote all shares of Common Stock which they are entitled to vote in favor of each such nominee or replacement designee. The Stockholder Agreement further provides, among other things, that, except as otherwise provided in the Stockholder Agreement or with the agreement of five out of seven directors of the Company, no Stockholder will prior to December 31, 2000, (i) (A) seek election to, or seek to place a representative on, the Board of Directors of the Company, (B) engage in any solicitation of proxies with respect to any securities of the Company, or (C) become a participant in any election contest relating to the election of directors of the Company; Page 6 of 10 Pages CUSIP No. 891041 10 5 (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 Securities Exchange Act of 1934, or otherwise; (iii) vote in favor of or execute a consent with respect to any matter or proposal submitted to stockholders of the Company by vote or otherwise unless such matter or proposal has been first recommended to stockholders by a vote of five of the seven members of the Board of Directors 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 the Stockholder Agreement; (iv) propose or seek to effect or seek permission of the Board of Directors 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 or similar 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 the Company; (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 Company 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. With respect to the advisory clients of Dane, Falb, Stone & Company, Inc. ("Dane Falb"), the restrictions described in the foregoing paragraph, apply only insofar as Dane Falb exercises discretionary authority with respect to Company Common Stock held in such accounts. By letter agreement dated as of June 25, 1998, the Company has agreed to indemnify each of the Dane Falb designees from and against any losses incurred by either of them in connection with or related to their nominations to the Company's Board of Directors. In addition to the foregoing, the Company, the members of the current Board of Directors, the Gralee Persons and the Dane Falb Persons, have also 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 Company. The Settlement Agreement provides Page 7 of 10 Pages CUSIP No. 891041 10 5 that each party will refrain from public criticism of the other concerning the matters resolved by the Settlement Agreement. ITEM 5 IS AMENDED AND RESTATED TO READ IN ITS ENTIRETY AS FOLLOWS:
ITEM 5(A) SHARES BENEFICIALLY PERCENTAGE OWNED OF CLASS ------------ ---------- Peter L. Falb 854,300 16.60% Edward Nathan Dane 743,300 14.44% Dane, Falb, Stone & Co. Inc. 573,300 11.14% Firethorn I Limited Partnership 170,000 3.30%
ITEM 5(B)
SOLE SHARED SOLE SHARED VOTING VOTING DISPOSITIVE DISPOSITIVE POWER POWER POWER POWER ------ ------ ----------- ----------- Peter L. Falb 111,000 743,300 111,000 743,300 Edward Nathan Dane -- 743,300 -- 743,300 Dane, Falb, Stone & Co., Inc. 572,500 800 572,500 800 Firethorn I Limited Partnership 170,000 -- 170,000 --
As a result of being a party to the Stockholder Agreement, the Reporting Persons may be deemed to have indirect beneficial ownership of, and shared voting power with respect to, an additional 26.67% of the Company's Common Stock, consisting of 567,400 shares of Common Stock beneficially owned by the Grolee Persons (11.02%), and 785,960 shares of Common Stock beneficially owned by the Current Board (15.27%) ITEM 5(C) TRANSACTIONS IN THE PAST SIXTY DAYS:
NAME OF PERSON DATE NUMBER OF SHARES PRICE -------------- ---- ---------------- ----- Dane Falb 5/5/98 1,000 $4,250 Dane Falb 5/6/98 1,000 $4,250 Dane Falb 5/11/98 1,000 $4,500 Dane Falb 5/11/98 1,000 $4,500 Dane Falb 5/11/98 1,000 $4,500 Dane Falb 5/19/98 500 $2,190 Dane Falb 5/19/98 500 $2,190 Dane Falb 6/8/98 2,000 $7,500 Dane Falb 6/8/98 3,000 $7,500
Page 8 of 10 Pages ITEM 6 CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER: See Item 4 herein for a description of the Stockholder Agreement and Settlement Agreement. ITEM 7 EXHIBITS (a) Stockholder Agreement. Page 9 of 10 Pages CUSIP No. 891041 10 5 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.
June 30, 1998 /s/ Peter L. Falb ---------------------------------------- June 30, 1998 /s/ Edward Nathan Dane ---------------------------------------- DANE, FALB, STONE & CO., INC. June 30, 1998 By: /s/ Peter L. Falb, Treasurer ------------------------------------ June 30, 1998 By: /s/ Edward Nathan Dane, President ------------------------------------ FIRETHORN I LIMITED PARTNERSHIP By: FIRETHORN II LIMITED PARTNERSHIP, its general partner By: EAGLEROCK CORPORATION, its general partner June 30, 1998 By: /s/ Peter L. Falb, Treasurer ------------------------------------ June 30, 1998 By: /s/ Edward Nathan Dane, President ------------------------------------
Page 10 of 10 Pages EX-99 2 STOCKHOLDER VOTING AGREEMENT 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. "1999 Annual Meeting" means the 1999 annual meeting of stockholders of the Company at which the election of directors shall be considered. -1- "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. "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. -2- "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 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 -3- 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. (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; -4- (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. (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. -5- (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. (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. -6- 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 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 -7- 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 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 -8- 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- 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- 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- /s/ John Mark McLaughlin -------------------------------------------------- John Mark McLaughlin /s/ Peter R. Vig -------------------------------------------------- Peter R. Vig /s/ Jack L. Woods -------------------------------------------------- Jack L. Woods THE FORSLUND IRREVOCABLE TRUST By: /s/ Karen F. Falb, Trustee --------------------------------------------- Karen F. Falb, Trustee -12- -----END PRIVACY-ENHANCED MESSAGE-----