JOHN MARK MCLAUGHLIN
TOREADOR ROYALTY CORPORATION
INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT, made as of May 15, 1997, by and between Toreador Royalty Corporation, a Delaware
corporation (the "Company"), and John Mark McLaughlin ("Optionee") in connection with the grant of an
Incentive Option (hereinafter defined) under the Toreador Royalty Corporation 1990 Stock Option Plan (the
W I T N E S S E T H :
WHEREAS, Optionee is an employee of the Company or an Affiliate (hereinafter defined) in a key position and
the Company desires to encourage Optionee to own Common Stock (hereinafter defined) and to give Optionee
added incentive to advance the interests of the Company through the Plan and desires to grant Optionee an
Incentive Option (hereinafter defined) to purchase shares of Common Stock of the Company under terms and
conditions established by the Board (hereinafter defined).
NOW, THEREFORE, the Company and Optionee hereby agree as follows:
1. Definitions. As used in this Agreement, the following terms shall have the following meanings, respectively:
(a) "Affiliate" shall have the meaning set forth in
Section 1.2 of the Plan and shall include any party now or hereafter coming within that definition.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(d) "Committee" shall mean the committee appointed pursuant to Section 3 of the Plan.
(e) "Common Stock" shall mean the $.15625 par value Common Stock of the Company.
(f) "Fair Market Value" shall have the meaning set forth in Section 1.8 of the Plan.
(g) "Incentive Option" shall mean a stock option that is intended to be or is denominated as an incentive stock
option (within the meaning of Section 422 of the Code).
2. Grant of Option and Option Period. The Company hereby grants to Optionee as of the date of this Agreement
(the "Grant Date"), subject to the provisions of Section 3 hereof and as hereinafter set forth, the