<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): JUNE 25, 1998
TOREADOR ROYALTY CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 0-2517 75-0991164
(STATE OR OTHER JURISDICTION (COMMISSION (IRS EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
530 PRESTON COMMONS WEST
8117 PRESTON ROAD
DALLAS, TEXAS 75225
(ADDRESS, INCLUDING ZIP CODE, OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (214) 369-0080
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Item 5. OTHER EVENTS.
BACKGROUND; AGREEMENTS WITH THE GRALEE PERSONS AND THE DANE FALB PERSONS
On July 31, 1997, Lee Global Energy Fund, L.P. ("Lee Global") sent a
letter to the Board of Directors of Toreador Royalty Corporation (the
"Company") requesting to meet with the Board to discuss various strategic
alternatives for the Company, including a sale of the Company or business
combination with Lee Global or another operating entity, and offering
assistance in structuring such a transaction. In September 1997, the Company
engaged Dain Rauscher Wessels as its financial advisor in evaluating strategic
alternatives available to the Company, including a sale of the Company, a
merger with another company and other forms of business combinations. On March
25, 1998, Dane, Falb, Stone & Co., Inc. sent a letter to the Company's Chairman
proposing additional or replacement members to the Company's Board of
Directors. On April 9, 1998, Lee Global sent another letter to the Board of
Directors requesting that the Board consider appointing Lee Global's designated
representatives to the Board of Directors as soon as possible. On that same
date, Lee Global sent a letter to the Company's Corporate Secretary demanding
the right to inspect the Company's stockholder list and its other books and
records, and to make copies or extracts therefrom. At an April 16, 1998
meeting, the Company met with certain of Lee Global's representatives to
discuss the matters raised in Lee Global's previous letters.
In an April 27, 1998 news release, the Company announced that it was
actively seeking acquisition and merger partners through Dain Rauscher Wessels.
Lee Global sent a letter to the Company dated April 28 stating that Lee Global
did not believe that it is in the best interest of the Company and its
stockholders to sell the Company or dispose of any of its assets at this time
and requesting further review of the Company's books and records. Dane, Falb,
Stone & Co., Inc. also sent a letter dated April 27, 1998 requesting to review
certain books and records of the Company.
Following negotiations among the members of the Board of Directors of
the Company, certain stockholders of the Company affiliated with Lee Global
(the "Gralee Persons") and certain stockholders affiliated with Dane, Falb,
Stone & Co., Inc. (the "Dane Falb Persons"), the Board of Directors determined
that it is in the best interest of the Company and its stockholders to avoid
the expense and uncertainties of a proxy contest initiated by one of more of
the Gralee Persons or the Dane Falb Persons, and that it is in the best
interest of the Company and its stockholders that certain persons chosen by the
Gralee Persons and the Dane Falb Persons be nominated for election as
directors.
On June 25, 1998, the Gralee Persons, the Dane Falb Persons and the
members of the Board of Directors acting in their capacity as stockholders of
the Company (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 Company. The Stockholder Agreement provides that the seven
nominees are to be: 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 (collectively referred to
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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 Company (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 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 then in office, (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; (ii) initiate, propose or otherwise solicit
stockholders of the Company for the approval of any stockholder proposal; (iii)
vote in favor of any matter or proposal submitted to stockholders of the
Company unless such matter or proposal is first recommended to stockholders by
a vote of five of the seven members of the Board of Directors 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 Company, (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
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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 Company, 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
Company. 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 Company will, subject to certain limitations, cause
to be maintained in effect the Company'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.
In connection with the Stockholder Agreement and the Settlement
Agreement, the Board of Directors approved an amendment to the Bylaws to become
effective immediately following the 1998 Annual Meeting of Stockholders and
expiring at the end of the Effective Period (the "Bylaw Amendment"). The Bylaw
Amendment (i) establishes the Company Nominating Committee, the Gralee
Nominating Committee and the Falb Nominating Committee of the Board of
Directors, (ii) sets the number of persons constituting the Board of Directors
at seven (7), and (iii) provides that three (3) persons shall be nominated as
directors on behalf of the Company by the Company Nominating Committee, two (2)
persons shall be nominated as directors on behalf of the Company by the Gralee
Nominating Committee and two (2) persons shall be nominated as directors on
behalf of the Company by the Falb Nominating Committee. The provisions of the
Bylaws implemented by the Bylaw Amendment may be amended or repealed only by
the affirmative vote of five of the members of the entire Board of Directors or
the holders of 75 percent of the outstanding Common Stock.
AMENDMENT TO RIGHTS AGREEMENT
The Board of Directors of the Company approved an amendment to the
Rights Agreement to increase the ownership percentage at which an acquiring
person triggers the rights issued under the Rights Agreement from 20 percent to
22 percent, and to incorporate an exemption for certain "Qualifying Offers."
Under the "Qualifying Offer" exemption, a person that acquires beneficial
ownership of 22 percent or more of the shares of Common Stock then outstanding
pursuant to a "Qualifying Offer" will not trigger the rights issued under the
Rights Agreement. Triggering of the rights as a result of a person acquiring a
22 percent or greater position normally results in dilution of the acquiring
person's ownership (unless the Board has taken action to redeem the rights or
otherwise make them inapplicable). The amendment specifically exempts any
group formed among all of the parties to the Stockholder Agreement from
triggering the rights issued under the Rights Agreement. Under the amendment,
a "Qualifying Offer" is an all-cash tender offer for all outstanding shares of
Common Stock which meets all of the following requirements:
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(i) Fully Financed. The offeror must, prior to or upon
commencing the offer, (A) have reasonably demonstrated to the Board of
Directors that the offeror 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
shares outstanding on a fully diluted basis and all related expenses,
or (B) have provided the Company firm written commitments from
responsible financial institutions, accepted by the offeror, to
provide funds for the offer which, when added to other funds of the
offeror available and committed to be used for purposes of the offer
if consummated, will be sufficient to pay for all shares outstanding
on a fully diluted basis and all related expenses. The terms of the
financing commitments must be subject only to customary terms and
conditions, which may not include (x) conditions requiring access by
the financial institutions to non-public information to be provided by
the Company, (y) conditions based on the accuracy of any information
concerning the Company other than such as would be the subject of
representations in a public financing by the Company, or (z)
conditions requiring the Company to make any representations,
warranties or covenants in connection with the financing.
(ii) Two-Thirds Requirement. The offeror must own,
immediately after consummating the offer, at least two-thirds of the
then outstanding shares of Common Stock not beneficially owned by the
offeror prior to making the offer.
(iii) 30 Percent Premium. The price per share offered in
the offer must be at least 30 percent above the average closing price
of the Common Stock for the 20 consecutive trading days ending on the
fourth trading day preceding the commencement of the offer. If
another tender offer is commenced during the pendency of a Qualifying
Offer, the second, competing offer will constitute a Qualifying Offer
if the per share price offered is at least 10 percent higher than the
price offered in the first offer and the other requirements for a
Qualifying Offer are satisfied. In no event may the price per share
offered in the initial or competing Qualifying Offer be less than
$5.00.
(iv) Duration and Conditions. The 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. The offer must be
subject only to customary terms and conditions, which may in no event
include any 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.
(v) Second Step Commitment. The offeror must irrevocably
commit, prior to or upon commencement of the offer, (A) to consummate
promptly upon completion of the offer an all-cash transaction whereby
all shares not tendered in the offer will be acquired at the same
price per share paid pursuant to the offer, and otherwise not to
purchase any shares of Common Stock following completion of the offer,
(B) that the offeror will not materially amend the terms of the offer
(other than an increase in the price offered) and
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(C) that the offeror will not make an offer for any equity securities
of the Company for six months after the commencement of the offer if
the original offer does not result in the tender of the required
minimum of two-thirds of the outstanding shares, except in certain
circumstances involving the making by an unrelated party of a competing
offer which constitutes a Qualifying Offer under the provisions
described in paragraph (iii) above.
The Rights Agreement has also been amended to require the approval of
at least 70 percent of the members of the entire Board of Directors to redeem
the rights or amend the Rights Agreement.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
Item Exhibit
---- -------
3.1 Amendment to Bylaws of Toreador Royalty
Corporation
10.1 Agreement dated June 25, 1998 by and between
the Company, the members of the current Board
of Directors, the Gralee Persons and the
Dane Falb Persons
10.2 Stockholder Voting Agreement dated June 25,
1998 by and between the Gralee Persons, the
Dane Falb Persons and certain other
stockholders of the Company
10.3 Amendment No. 1 to Rights Agreement dated
April 3, 1995, between the Company and
Continental Stock Transfer & Trust Company
(incorporated by reference to Registration
Statement on Form 8-A/A (Amendment No. 1) of
Toreador Royalty Corporation filed with the
Securities and Exchange Commission on July 1,
1998 (Registration No. 0-2517))
99.1 Press Release issued by Toreador Royalty
Corporation on June 29, 1998
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TOREADOR ROYALTY CORPORATION
Date: June 30, 1998 By: /s/ John Mark McLaughlin
------------------------------------
John Mark McLaughlin, Chairman of the
Board and President
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Item
Number Exhibit
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<S> <C>
3.1 Amendment to Bylaws of Toreador Royalty Corporation
10.1 Agreement dated June 25, 1998 by and between the Company, the
members of the current Board of Directors, the Gralee Persons and
the Dane Falb Persons
10.2 Stockholder Voting Agreement dated June 25, 1998 by and between the
Gralee Persons, the Dane Falb Persons and certain other
stockholders of the Company
10.3 Amendment No. 1 to Rights Agreement dated April 3, 1995, between
the Company and Continental Stock Transfer & Trust Company
(incorporated by reference to Registration Statement on Form 8-A/A
(Amendment No. 1) of Toreador Royalty Corporation filed with the
Securities and Exchange Commission on July 1, 1998 (Registration
No. 0-2517))
99.1 Press Release issued by Toreador Royalty Corporation on June 29,
1998
</TABLE>
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EXHIBIT 3.1
TOREADOR ROYALTY CORPORATION
CERTAIN RESOLUTIONS ADOPTED
AT BOARD OF DIRECTORS MEETING
HELD ON JUNE 24, 1998
Relating to Number of Directors
RESOLVED, that as permitted by Article III, Section 3.02 of the Amended
and Restated Bylaws (the "Bylaws") of the Corporation, the Board of Directors of
the Corporation hereby determines that the number of directors that shall
constitute the Board of Directors shall be seven (7).
Relating to Amendment to the Bylaws
WHEREAS, the Board of Directors has determined that it is in the best
interest of the Corporation and its stockholders to amend the Bylaws of the
Corporation by adding a new Article XI thereto, in the form attached hereto as
Exhibit A;
NOW, THEREFORE, BE IT RESOLVED, that the Bylaw Amendment is hereby
approved and adopted, effective during the period specified therein.
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EXHIBIT A
ARTICLE XI
GOVERNANCE PROVISION
During the Effective Period (as defined), the following Bylaws shall be
in effect and govern those affairs of the Corporation to which they relate
notwithstanding anything in these Bylaws to the contrary.
11.1 Definitions Applicable to Article XI. As used in this Article XI,
the following terms have the meanings ascribed to them in this Section 11.1.
(a) "1998 ANNUAL MEETING" shall mean the 1998 annual meeting of
stockholders of the Corporation at which the election of directors shall be
considered.
(b) "2000 ANNUAL MEETING" shall mean the 2000 annual meeting of
stockholders of the Corporation at which the election of directors shall be
considered.
(c) "AFFILIATE" AND "ASSOCIATE," when used with reference to any
Person, shall have the respective meanings ascribed to such terms in Rule 12b-2
promulgated under the Exchange Act, as in effect on June 25, 1998.
(d) "BENEFICIAL OWNER" shall have the meaning ascribed to such term in
Rule 13d-3 promulgated under the Exchange Act, as in effect on June 25, 1998.
(e) "COMPANY DESIGNEES" shall mean J. W. Bullion, Thomas P. Kellogg,
Jr., John Mark McLaughlin and any successors thereto selected by the Company
Nominating Committee.
(f) "COMPANY NOMINATING COMMITTEE" shall have the meaning ascribed to
it in Section 11.3.
(g) "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) Lee Global Energy Fund L.P., together with its affiliates and
associates (the "Gralee Persons"), are no longer the beneficial owners in the
aggregate of at least 514,677 shares of the Corporation's Common Stock, par
value $.15625 ("Common Stock"), and (y) Peter Lawrence Falb, Mr. Edward Nathan
Dane, the Hilary Bell Falb 1983 Trust, the Alison Forslund Falb 1985 Trust, the
Forslund Irrevocable Trust, Firethorn I Limited Partnership and Dane, Falb,
Stone & Co., Inc., together with their respective affiliates and associates (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.
(h) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
A-1
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EXHIBIT A
(i) "FALB DESIGNEES" shall mean Peter Lawrence Falb and Edward Nathan
Dane and any successors thereto selected by the Falb Nominating Committee.
(j) "FALB NOMINATING COMMITTEE" shall have the meaning ascribed to it
in Section 11.3.
(k) "GRALEE DESIGNEES" shall mean G. Thomas Graves, III, William I. Lee
and any successors thereto selected by the Gralee Nominating Committee.
(l) "GRALEE NOMINATING COMMITTEE" shall have the meaning ascribed to it
in Section 11.3.
11.2. The Composition of the Effective Period Board; Nomination. During
the Effective Period, the number of directors comprising the full Board of
Directors of the Corporation will be seven (7). Three (3) persons shall be
nominated as directors on behalf of the Corporation by the Company Nominating
Committee. Two (2) persons shall be nominated as directors on behalf of the
Corporation by the Gralee Nominating committee. Two (2) persons shall be
nominated as directors on behalf of the Corporation by the Falb Nominating
Committee.
11.3. Nominating Committees. The Corporation's Board of Directors shall
have (a) a continuing director nominating committee (the "COMPANY NOMINATING
COMMITTEE"), (b) a Gralee nominating committee (the "GRALEE NOMINATING
COMMITTEE") and (c) a Falb nominating committee (the "FALB NOMINATING
COMMITTEE"). The Company Nominating Committee shall consist of J. W. Bullion,
Thomas P. Kellogg, Jr., John Mark McLaughlin and any successors thereto selected
by the Company Nominating Committee for so long as each is a director of the
Corporation. The Gralee Nominating Committee shall consist of G. Thomas Graves,
III, William I. Lee and any successors thereto selected by the Gralee Nominating
Committee for so long as each is a director of the Corporation. The Falb
Nominating Committee shall consist of Peter Lawrence Falb, Edward Nathan Dane
and any successors thereto selected by the Falb Nominating Committee for so long
as each is a director of the Corporation. The Company Nominating Committee shall
have the exclusive power on behalf of the Board of Directors to nominate persons
for election as directors of the Corporation as Company Designees and to fill
positions on the Board of Directors vacated by Company Designees. The Gralee
Nominating Committee shall have the exclusive power on behalf of the Board of
Directors of the Corporation to nominate persons for election as directors of
the Corporation as Gralee Designees and to fill positions on the Board of
Directors vacated by Gralee Designees. The Falb Nominating Committee shall have
the exclusive power on behalf of the Board of Directors to nominate persons for
election as directors of the Corporation as Falb Designees and to fill positions
on the Board of Directors vacated by Falb Designees.
11.4. Amendments to Article XI. During the Effective Period, the
provisions of Article XI of the Bylaws may be amended or repealed only by the
affirmative vote of five of the members of the entire Board of Directors or the
holders of 75% of the outstanding Common Stock.
A-2
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EXHIBIT 10.1
FINAL EXECUTION COPY
AGREEMENT
This AGREEMENT, dated June 25, 1998 (the "Agreement"), 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
Corporation, 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 and Firethorn, collectively referred to as the "Dane Falb
Persons"); Toreador Royalty Corporation, a Delaware corporation (the
"Company"); and the other persons identified on Exhibit A, (together with the
Company, collectively referred to as the "Company Related Parties"). The
Gralee Persons, the Dane Falb Persons and the Company Related Parties are
sometimes collectively referred to herein as the "Parties."
W I T N E S S E T H:
WHEREAS, the Gralee Persons and the Dane Falb Persons have indicated
to the Company's Board of Directors as constituted on the date hereof (the
"Current Board") that they desire one or more of their respective designees to
be nominated for election to the Board of Directors of the Company (the
"Board") at the 1998 annual meeting of stockholders of the Company at which the
election of directors is to be considered (the "1998 Annual Meeting");
WHEREAS, the Gralee Persons and the Dane Falb Persons have also
indicated to the Current Board their intention to solicit proxies for the
election of their respective designees and in opposition to the slate of
nominees of the Current Board (the "Proxy Contest");
WHEREAS, each of the Gralee Persons and the Dane Falb Persons has
determined that its and the Company's best interests would be served by (i) not
engaging in the Proxy Contest, and (ii) the receipt of the other rights and
benefits set forth herein;
WHEREAS, the Company has determined that the best interests of the
Company and its stockholders would be served by (i) not engaging in the Proxy
Contest and avoiding any further proxy contest with any Gralee Person or Dane
Falb Person until December 31, 2000, and (ii) the receipt of other rights and
benefits set forth herein;
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WHEREAS, the Gralee Persons, the Dane Falb Persons and certain other
stockholders of the Company have entered into a Stockholder Voting Agreement
regarding nominations to the Board (the "Stockholder Voting Agreement"); and
WHEREAS, the Board has heretofore adopted the resolutions attached
hereto as Exhibit B (the "Resolutions");
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements set forth herein the Parties 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:
"Common Stock" means the common stock, par value $.15625 per share, of
the Company.
"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.
"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. Date of 1998 Annual Meeting. The Company will hold its 1998
Annual Meeting on July 23, 1998. The Company agrees that it will not postpone
the annual meeting, or adjourn the annual meeting, except to the extent
necessary to finalize the results of the meeting.
3. Press Release. Promptly after execution and delivery of this
Agreement, the Company shall issue the press release in the form of Exhibit C
attached hereto. No Party to this Agreement nor any of their respective
affiliates, associates or representatives shall issue any other press release
or other publicly available document that is inconsistent with, or is otherwise
contrary to, the statements in such press release. Each of the Parties agrees
that until December 31, 2000, neither such Party nor such Party's affiliates
shall make any statement or take any action (other than a sale of Company
Securities) that is critical or disparaging of the other Parties or the
management of the Company.
4. SEC Filings. All Company filings with the Securities and
Exchange Commission will be submitted to each member of the Board elected at
the 1998 Annual Meeting, the 1999 annual meeting at which the election of
directors is to be considered, and the 2000 annual meeting of stockholders at
which the election of directors is to be considered, prior to the filing
thereof by the Company.
5. Actions prior to 1998 Annual Meeting. Prior to the 1998
Annual Meeting, the Company Related Parties agree that such parties will not
take any action to (i) amend the
2
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Company's Certificate of Incorporation, as amended, or Bylaws, as amended, or
(ii) amend, change, alter or repeal the Resolutions.
6. Representations and Warranties of the Gralee Persons. The
Gralee Persons jointly and severally represent and warrant to the Company
Related Parties 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.
7. Representations and Warranties of the Dane Falb Persons. The
Dane Falb Persons jointly and severally represent and warrant to the Company
Related Parties 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.
8. Representations and Warranties of the Company. The Company
Related Parties hereby represent and warrant to the Gralee Persons and the Dane
Falb Persons as follows:
(a) The Company has the corporate 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 the Company and constitutes a valid and binding
agreement of the Company, enforceable in accordance with its terms, subject to
applicable bankruptcy, reorganization, insolvency or other laws affecting the
enforcement of creditors' rights generally.
3
<PAGE> 4
9. Release of Claims.
(a) Each of the Parties (a "Releasing Party"), on behalf
of itself and all of its affiliates, successors and assigns, jointly and
severally releases and discharges each of the other Parties, together with its
present and former affiliates, officers, directors, employees, agents,
attorneys, successors and assigns (each, a "Released Person"), from any and all
claims, losses, demands, liabilities, obligations, indemnities, charges and
causes of action (collectively, "Claims") of any and all nature whatsoever
whether based on tort, contract, statute, equitable theory of recovery, or
otherwise, whether now known, unknown, unforeseen, or unsuspected, which the
Releasing Party may now or in the future have jointly or severally against the
Released Persons, individually or in combination with others, from the
beginning of time until the effective date of this Agreement and which arise
out of any Released Person's activities to the date hereof with respect to, or
are in any way connected with, the Company, including without limitation the
issuance, acquisition, ownership, holding, or voting of any Company Securities,
the management or conduct of the Company's affairs by any Released Person
acting as or entitled to nominate a member of the Board.
(b) With respect to the releases set forth above, each
person or entity granting or receiving such a release (i) agrees that such
releases do not preclude any Party hereto from seeking to enforce any
undertaking or promise contained in the Settlement Documents (as defined below)
or from seeking redress for the breaches of any representation or warranty
contained in the Settlement Documents; (ii) agrees not to directly or
indirectly encourage or pursue with or before any federal, state or other
governmental agency, authority or court any claim or complaint against any of
the Released Persons, including but not limited to any such claim or complaint
relating to matters covered by the Settlement Documents (other than the
enforcement of any undertaking or promise contained therein); and (iii) agrees
not to challenge, and shall use its best efforts to cause each of its
affiliates, associates and representatives not to challenge, the validity of
any provisions of the Settlement Documents.
(c) Except as may be otherwise required by law, the
Gralee Persons and the Dane Falb Persons will not encourage or cooperate with
plaintiffs in any subsequently initiated derivative, class action or
stockholder litigation related to the Company Related Parties. In the event
that any part of this Agreement is temporarily, preliminarily or permanently
enjoined or restrained by a court of competent jurisdiction, the Parties hereto
shall use their commercially reasonable 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.
10. Insurance Coverage. For six years after the date of this
Agreement, the Company shall be required to maintain or obtain officers' and
directors' liability insurance covering the persons who are as of the date of
this Agreement covered by the Company's officers and directors liability
insurance policy in such persons' capacities as officers or directors of the
Company with respect to matters existing or occurring at or prior to the date
of this Agreement on terms not less favorable than those in effect on the date
hereof in terms of coverage and amounts; provided, however, that if the
aggregate annual premiums for such insurance at any time during such period
shall exceed 200% of the per annum rate of premium currently paid by the
Company for such insurance on the date of this Agreement, the Company shall
provide the maximum coverage that shall then be available at an annual premium
equal to 200% of such rate.
4
<PAGE> 5
11. Miscellaneous.
(a) No Duress, etc.. The Parties hereto agree that this
Agreement is entered into without duress, in good faith and for sufficient
consideration, and that it is fair, just and reasonable to all Parties.
(b) Full Knowledge; Independent Advice, etc.. All
Parties have received or have had made available to them all financial and
other information they or their counsel considered necessary to an informed
judgment concerning this Agreement. Each Party has received independent legal
advice, has conducted such investigation as he or his counsel thought
appropriate, and has consulted with such other independent advisors as each of
them and their counsel deemed appropriate, regarding this Agreement and their
rights and asserted rights in connection therewith. None of the Parties is
relying upon any representations or statements made by any other Party, or such
other Party's employees, agents, representatives or attorneys, regarding this
Agreement or its preparation except to the extent such representations are
expressly set forth herein.
(c) Reasonable Efforts. All Parties hereto agree to
exercise all commercially reasonable efforts and to take all commercially
reasonable steps necessary to effectuate the settlement set forth in this
Agreement.
(d) Successors and Assigns. All the terms and provisions
of this Agreement shall inure to the benefit of and shall be enforceable by the
Parties hereto and their respective heirs, successors and assigns, and upon any
corporation or other entity into or with which any Party hereto may merge,
combine or consolidate (provided that the Party is the survivor in such merger,
combination or consolidation); provided, however, that no Party may assign its
rights under this Agreement without the other Parties' written consent.
(e) Survival of Representations. All representations,
warranties and agreements made by the Gralee Persons, the Dane Falb Persons and
the Company Related Parties in this Agreement or pursuant hereto shall survive
the date hereof.
(f) Entire Agreement; Amendments. This Agreement,
including the documents attached hereto as Exhibits to be executed and
delivered concurrently with this Agreement, the Stockholder Voting Agreement,
and such additional instruments as may be concurrently executed and delivered
pursuant to this Agreement (collectively, the "Settlement Documents"),
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 in
the Settlement Documents. This Agreement may be amended only by a written
instrument duly executed by the Parties or their respective successors or
assigns.
(g) 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.
5
<PAGE> 6
(h) 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 Company Related Parties:
Toreador Royalty Corporation
8117 Preston Road
Suite 530
Dallas, Texas 75225
Fax No: (214) 369-3183
with a copy to:
Thompson & Knight, P.C.
1700 Pacific Avenue
Suite 3300
Dallas, Texas 75201
Attention: Mr. Joe Dannenmaier
Fax No: (214) 969-1751
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
6
<PAGE> 7
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
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.
(i) 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.
(j) 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.
(k) Specific Performance. Each of the Parties
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 Parties hereto agree that any non-breaching Party
shall be entitled to an injunction to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof.
7
<PAGE> 8
(l) 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.
8
<PAGE> 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 Capital Corp., 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
9
<PAGE> 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
-------------------------------------
TOREADOR ROYALTY CORPORATION
By: /s/ John Mark McLaughlin
-------------------------------------------
Name: John Mark Mclaughlin
--------------------------------------
Title: Chairman
-------------------------------------
10
<PAGE> 11
/s/ John Mark McLaughlin
----------------------------------------------
John Mark McLaughlin
/s/ John V. Ballard
----------------------------------------------
John V. Ballard
/s/ J. W. Bullion
----------------------------------------------
J. W. Bullion
/s/ Thomas P. Kellogg, Jr.
----------------------------------------------
Thomas P. Kellogg, Jr.
/s/ Peter R. Vig
----------------------------------------------
Peter R. Vig
/s/ Jack L. Woods
----------------------------------------------
Jack L. Woods
11
<PAGE> 12
THE FORSLUND IRREVOCABLE TRUST
By: /s/ Karen F. Falb, Trustee
------------------------------------
Karen F. Falb, Trustee
12
<PAGE> 1
EXHIBIT 10.2
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.
<PAGE> 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.
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<PAGE> 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
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<PAGE> 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.
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<PAGE> 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.
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<PAGE> 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.
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<PAGE> 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
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<PAGE> 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-
<PAGE> 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-
<PAGE> 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-
<PAGE> 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-
<PAGE> 12
/s/ John Mark McLaughlin
--------------------------------
John Mark McLaughlin
/s/ Peter R. Vig
--------------------------------
Peter R. Vig
/s/ Jack L. Woods
--------------------------------
Jack L. Woods
-12-
<PAGE> 13
THE FORSLUND IRREVOCABLE TRUST
By: /s/ Karen F. Falb, Trustee
----------------------------------
Karen F. Falb, Trustee
-13-
<PAGE> 1
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
TOREADOR ELECTS NEW PRESIDENT;
FOUR NEW DIRECTORS NOMINATED;
AGGRESSIVE EXPLORATION STRATEGY REAFFIRMED
DALLAS, June 29, 1998 -- Toreador Royalty Corporation (NASDAQ: TRGL)
today announced that G. Thomas Graves III has been elected president and chief
executive officer, effective at the conclusion of the company's upcoming annual
shareholder meeting. It also announced that four new board nominees will be
submitted to shareholders.
G. Thomas Graves III currently serves as President and Director of
Wilco Properties, Inc., a privately held oil and gas exploration company and as
Managing Partner of Gralee Partners, LP, an asset management company. Mr.
Graves served as an officer of Triton Energy Corporation from 1986 to 1993 and
also served as Chairman and Chief Executive of Triton Europe Plc, a London
Stock Exchange listed company engaged in the oil and gas exploration industry
from October 1991 to September 1993.
John Mark McLaughlin, chairman and president, said "We are very
pleased to announce the election of Tom Graves as president of Toreador, and
the new candidates for director. We believe that with our new president and
four new board members, the company will be well positioned to enhance
shareholder value."
Toreador had retained Dain Rauscher Wessels as financial advisor to
help it identify and evaluate strategic options to create maximum shareholder
value, including possible acquisitions, a merger or other forms of
transactions.
"What emerged from our broad assessment of strategic options was the
conclusion that for the foreseeable future the optimum means of increasing
shareholder value is to continue with our aggressive efforts to generate
exploration activity on our mineral acreage and to increase our exploration
activity through acquisitions," said McLaughlin.
He said that three current directors chose not to stand for reelection
at the next shareholder meeting: John V. Ballard, Peter R. Vig and Jack Woods.
New candidates for election to the board are G. Thomas Graves III, William I.
Lee, Edward N. Dane and Peter L. Falb. Graves is president of Gralee Capital
Corp., and Lee is a controlling stockholder of Gralee Capital Corp. and former
CEO and chairman of Triton Energy Corporation. Gralee Capital Corp. is the
general partner of Lee Global Energy Fund, which owns 10.4 percent of
Toreador's outstanding common stock. Dane and Falb are principals of Dane,
Falb, Stone & Co., an investment advisory firm in Boston, which together with
certain affiliates, owns 16.59 percent of Toreador's outstanding common stock.
McLaughlin also said that the board of directors amended Toreador's
stockholder rights plan to make it "chewable", meaning that the plan will not
be triggered by a fully financed, all cash for all shares offer that is at
least $5 per share and at a 30 percent premium over the recent average market
price. The ownership percentage at which an acquiring person triggers the plan
has been increased from 20 percent to 22 percent.
Toreador Royalty Corporation owns in excess of 530,000 net mineral
acres located primarily in the Texas Panhandle and West Texas. In addition,
the company owns working or royalty interests in Texas, New Mexico, Oklahoma,
Arkansas and Louisiana.
CONTACT: JOHN MARK MCLAUGHLIN, CHAIRMAN AND PRESIDENT OR
ED MARHANKA, VICE PRESIDENT
(214) 369-0080
