Exhibit 10.1
EXECUTION COPY
 
PROJECT NUMBER 25485
Loan and Guarantee Agreement
among
TOREADOR RESOURCES CORPORATION
as Guarantor
TOREADOR TURKEY LTD.
as Borrower and Guarantor
TOREADOR ROMANIA LTD.
as Borrower and Guarantor
MADISON OIL FRANCE SAS
as Borrower and Guarantor
TOREADOR ENERGY FRANCE S.C.S
as Borrower and Guarantor
TOREADOR INTERNATIONAL HOLDING L.L.C.
as Guarantor
and
INTERNATIONAL FINANCE CORPORATION
Dated December 28, 2006
 

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TABLE OF CONTENTS

              Article/         Section   Item   Page No.
 
            ARTICLE I     2  
 
            Definitions and Interpretation     2  
 
           
Section 1.01.
  Definitions     2  
Section 1.02.
  Financial Calculations     32  
Section 1.03.
  Interpretation     32  
Section 1.04.
  Business Day Adjustment     33  
 
            ARTICLE II     33  
 
            The Facility     33  
 
           
Section 2.01.
  The Facility     33  
Section 2.02.
  Facility Procedure and Rollover     34  
Section 2.03.
  Interest     35  
Section 2.04.
  Change in Interest Period     37  
Section 2.05.
  Default Rate Interest     37  
Section 2.06.
  Repayment     38  
Section 2.07.
  Prepayment and Mandatory Prepayment     38  
Section 2.08.
  Fees     41  
Section 2.09.
  Currency and Place of Payments     42  
Section 2.10.
  Allocation of Partial Payments     43  
Section 2.11.
  Increased Costs     43  
Section 2.12.
  Unwinding Costs     43  
Section 2.13.
  Suspension or Cancellation by IFC     44  
Section 2.14.
  Cancellation by the Borrowers     45  
Section 2.15.
  Taxes     45  
Section 2.16.
  Expenses     45  
Section 2.17.
  Limitation of Liability     47  
 
            ARTICLE III     47  
 
            Guarantee     47  
 
           
Section 3.01.
  Guarantee     47  
Section 3.02.
  Indemnity     48  
Section 3.03.
  Continuing Guarantee     48  
Section 3.04.
  No Set-off     48  
Section 3.05.
  Taxes     48  
Section 3.06.
  Currency and Place of Payment     49  

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              Article/         Section   Item   Page No.
Section 3.07.
  Certificate Conclusive     50  
Section 3.08.
  Allocation     50  
Section 3.09.
  Waivers and Defenses     50  
Section 3.10.
  Immediate Recourse     51  
Section 3.11.
  Non-Competition     51  
Section 3.12.
  Bankruptcy or Liquidation of Company     52  
Section 3.13.
  Appropriation of Monies     52  
Section 3.14.
  Reinstatement     52  
Section 3.15.
  Additional Security     53  
Section 3.16.
  Limitation of Liability     53  
 
            ARTICLE IV     53  
 
            Representations and Warranties     53  
 
           
Section 4.01.
  Representations and Warranties of Each Obligor     53  
Section 4.02.
  Representations and Warranties of Madison Oil and Toreador France     57  
Section 4.03.
  IFC Reliance     58     ARTICLE V     58  
 
            Conditions of Disbursement     58  
 
           
Section 5.01.
  Conditions of First Disbursement     58  
Section 5.02.
  Conditions of All Disbursements     60  
Section 5.03.
  Additional Conditions of the first A Loan     63  
Section 5.04.
  Certification     64  
Section 5.05
  Conditions for IFC Benefit     64  
 
            ARTICLE VI     64  
 
            Particular Covenants     64  
 
           
Section 6.01.
  Affirmative Covenants     64  
Section 6.02.
  Negative Covenants     70  
Section 6.03.
  Reporting Requirements     77  
Section 6.04.
  Insurance     80     ARTICLE VII     83  
 
            Events of Default     83  
 
           
Section 7.01.
  Acceleration after Default     83  

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              Article/         Section   Item   Page No.
Section 7.02.
  Events of Default     84  
Section 7.03.
  Bankruptcy     87  
 
            ARTICLE VIII     87  
 
            Miscellaneous     87  
 
           
Section 8.01.
  Saving of Rights     87  
Section 8.02.
  Notices     88  
Section 8.03.
  English Language     89  
Section 8.04.
  Term of Agreement     89  
Section 8.05.
  Applicable Law and Jurisdiction     90  
Section 8.06.
  Disclosure of Information     91  
Section 8.07.
  Indemnification     92  
Section 8.08.
  Successors and Assignees     92  
Section 8.09.
  Amendments, Waivers and Consents     93  
Section 8.10.
  Counterparts     93  

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              Article/         Section   Item   Page No. ANNEX A     96  
 
            PROJECT COST AND FINANCIAL PLAN     96  
 
            ANNEX B     97  
 
            KEY AUTHORIZATIONS     97  
 
            ANNEX C     99  
 
            INSURANCE REQUIREMENTS     99  
 
            ANNEX D     102  
 
            PROHIBITED ACTIVITIES     102  
 
            SCHEDULE 1     104  
 
            FORM OF CERTIFICATE OF INCUMBENCY AND AUTHORITY     104  
 
            SCHEDULE 2     106  
 
            FORM OF REQUEST FOR LOANS     106  
 
            SCHEDULE 3     109  
 
            FORM OF LOAN RECEIPT     109  
 
            SCHEDULE 4     110  
 
            FORM OF SERVICE OF PROCESS LETTER     110  
 
            SCHEDULE 5     112  
 
            IFC BASE CASE ASSUMPTIONS     112  
 
            SCHEDULE 6     115  
 
            FORM OF LETTER TO COMPANY’S AUDITORS     115  
 
            SCHEDULE 7     117  
 
            INFORMATION TO BE INCLUDED IN QUARTERLY AND ANNUAL REVIEW OF
OPERATIONS     117  
 
            SCHEDULE 8     123  
 
            GROUP OWNERSHIP     123  

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LOAN AND GUARANTEE AGREEMENT
LOAN AND GUARANTEE AGREEMENT (the “Agreement”) dated December 28, 2006, between:

(A)   TOREADOR RESOURCES CORPORATION, a corporation organized and existing under
the laws of Delaware, as a guarantor (the “Company”);   (B)   TOREADOR TURKEY
LTD., a company organized and existing under the laws of the Cayman Islands, as
a borrower, and as a guarantor (“Toreador Turkey”);   (C)   TOREADOR ROMANIA
LTD., a company organized and existing under the laws of the Cayman Islands, as
a borrower, and as a guarantor (“Toreador Romania”);   (D)   MADISON OIL FRANCE
SAS, a sociétés par actions simplifies, organized and existing under the laws of
France, as a borrower and a guarantor (“Madison Oil”);   (E)   TOREADOR ENERGY
FRANCE S.C.S, a sociétés en commandite simple, organized and existing under the
laws of France, as a borrower and a guarantor (“Toreador France”);   (F)  
TOREADOR INTERNATIONAL HOLDING L.L.C., a limited liability company organized and
existing under the laws of Hungary, as a guarantor (“Toreador International”);
and   (G)   INTERNATIONAL FINANCE CORPORATION, an international organization
established by Articles of Agreement among its member countries including the
Cayman Islands (“IFC”),

the parties listed as (B), (C), (D) and (E) being each a “Borrower” and the
parties listed as (A) to (F) being each a “Guarantor” (in the case of the
parties listed as (B), (C), (D) and (E), such parties being a Guarantor with
respect to the obligations of the other Borrowers) and the Borrowers and the
Guarantors together being the “Obligors”.

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ARTICLE I
Definitions and Interpretation
     Section 1.01. Definitions. Wherever used in this Agreement, the following
terms have the meanings opposite them:

              “A Loan”   the principal amount of each borrowing under the A Loan
Facility or, as the context requires, the principal amount outstanding of that
borrowing; provided that for avoidance of doubt, and in accordance with
Section 2.02(c) hereof, on each Interest Payment Date all A Loans (including
Rollover Loans) outstanding prior to such Interest Payment Date shall (to the
extent not repaid and subject to the fulfillment of the conditions for the
making of each Rollover Loan set forth in Section 5.02 (Conditions of All
Disbursements) and Section 5.04 (Certification)) be rolled over into a single A
Loan on such Interest Payment Date;
 
            “A Loan Facility”   the facility specified in Section 2.01(a)(i)
(Loan Procedure and Rollover) or, as the context requires, its principal amount
from time to time outstanding thereunder;
 
            “A Loan Interest Rate”   for any Interest Period, the rate at which
interest is payable on each A Loan during that Interest Period, determined in
accordance with Section 2.03 (Interest) and, if applicable, Section 2.04 (Change
in Interest Period);
 
            “Accounting Standards”   United States Generally Accepted Accounting
Principles promulgated by the Financial Accounting Standards Board (“FASB”),
together with pronouncements thereon from time to time by FASB and applied on a
consistent basis;
 
            “Accounts Agreements”   upon execution, the French Accounts
Agreement, the Turkish Accounts Agreement and the Romanian Accounts Agreement;

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              “Additional Compensation”   as of the date of any calculation, an
amount equal to:  
 
  (i)   (A)   US$10,000,000 (except in respect of any calculation made in
respect of the payments due after December 15, 2014, in which case such number
shall be US$5,000,000); divided by
 
           
 
      (B)   the product of two (2) and Adjusted Tangible Net Worth in respect of
the immediately preceding Financial Year;
 
                multiplied by
 
                (ii)   EBITDAX for the Company in respect of the immediately
preceding Financial Year;
 
            “Adjusted Financial Debt”   Financial Debt on a Consolidated Basis,
excluding any Financial Debt incurred in respect of the Existing Convertible
Senior Notes;
 
            “Adjusted Tangible Net Worth”   as of the date of any calculation:
 
                (i)   Tangible Net Worth of the Company as at December 31, 2005
as reflected in its audited annual financial statements for Financial Year 2005;
plus
 
                (ii)   the positive or negative amount of net income in any
subsequent Financial Year as reflected in the annual audited financial
statements of the Company for that Financial Year; provided that for the purpose
of this definition, any income derived from any revaluation of assets, disposal
of assets or other extraordinary gains shall not be counted in net income; less

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                  (iii)   the amount of any dividend or distribution made by the
Company in the Financial Year referred to in (ii) above,
 
                as such calculation is determined by the Auditors and agreed by
IFC;
 
            “Affiliate”   with respect to any Person, any other Person directly
or indirectly controlling, controlled by or under common control with, such
Person (for purposes of this definition, “control” means the power to direct the
management or policies of a Person, directly or indirectly, whether through the
ownership of shares or other securities, by contract or otherwise, provided that
the direct or indirect ownership of fifty one per cent (51%) or more of the
voting share capital of a Person shall be deemed to constitute control of that
Person, and “controlling” and “controlled” have corresponding meanings);
 
            “Annual Monitoring Report”   the annual monitoring report setting
out the specific social, environmental and developmental impact information to
be provided by the Company in respect of the Project, which form shall be in
form and substance satisfactory to IFC, and as such form may be amended or
supplemented from time to time with IFC’s consent;
 
           
“Applicable Margin”
                (i)   with respect to the A Loan, two percent (2%) per annum;
and
 
                (ii)   with respect to the C Loan:
 
           
 
      (x)   one point five percent (1.5%) per annum, until the date of
disbursement of the first A Loan; and

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      (y)   zero point five percent (0.5%) per annum, on and after the date of
disbursement of the first A Loan;
 
            “Auditors”   Grant Thornton or such other firm that the Company
appoints from time to time as its auditors pursuant to Section 6.01(e)
(Affirmative Covenants);
 
            “Authority”   any national, supranational, regional or local
government or governmental, administrative, fiscal, judicial, or
government-owned body, department, commission, authority, tribunal, agency or
entity, or central bank (or any Person, whether or not government owned and
howsoever constituted or called, that exercises the functions of a central
bank);
 
            “Authorization”   any consent, registration, filing, agreement,
notarization, certificate, license, approval, permit, authority or exemption
from, by or with any Authority, whether given by express action or deemed given
by failure to act within any specified time period and all corporate, creditors’
and shareholders’ approvals or consents;
 
            “Authorized Representative”   in respect of any Obligor, any natural
person who is duly authorized by the relevant Obligor to act on its behalf for
the purposes specified in, and, in respect of the Company and each Borrower,
whose name and a specimen of whose signature appear on, the Certificate of
Incumbency and Authority most recently delivered by such Person to IFC;
 
            “Available Amount”   the lesser of:
 
           
 
  (i)   (A)   the C Loan in an amount not to exceed $10,000,000, plus
 
           
 
      (B)   the Maximum Facility Amount, as cancelled in accordance with
Section 2.13

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- 6 -

                 
 
              (Suspension or Cancellation by IFC) or Section 2.14 (Suspension or
Cancellation by the Borrowers), or as reduced in accordance with Section 2.06(b)
(Repayment) from time to time; and
 
                    (ii)   the Borrowing Base Amount,
 
                    minus:
 
                      (1 )   the amount of any outstanding Loans under the
Facility; and
 
                      (2 )   in relation to any proposed Loan (other than a
Rollover Loan), the amount of any Loans that have been requested by the
Borrowers and are due to be made under the Facility on or before the date of the
proposed Loan;
 
                “Availability Period”     (i )   with respect to the A Loan
Facility, the period from the date of this Agreement to June 30, 2011; and
 
                    (ii)   with respect to the C Loan Facility, the period from
the date of this Agreement to June 30, 2007;
 
                “Borrowing Base Amount”   for the relevant Calculation Period:
 
                      (i )   the Loan-Life NPV; divided by
 
               
 
  (ii)   (A)   1.2 for Financial Years 2006 and 2007;
 
               
 
          (B)   1.3 for Financial Year 2008; and
 
               
 
          (C)   1.4 for Financial Year 2009 and thereafter;
 
                “Borrowing Base Assets”   all oil and gas assets (including
concessions) with respect to which the Company or any of the other

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                  Obligors has from time to time any Proved Reserves determined
in accordance with the Reserves Criteria, and, includes for avoidance of doubt,
any assets in France, Hungary, Turkey, Romania and the United States of America,
which are, more fully described in the most current Reserves Certification;
 
            “Business Day”   a day when banks are open for business in New York,
New York or, solely for the purpose of determining the applicable Interest Rate
other than pursuant to Section 2.03 (d) (ii) (Interest), London, England;
 
            “C Loan”   the principal amount of the C Loan Facility or, as the
context requires, the principal amount outstanding of that facility;
 
            “C Loan Facility”   the facility specified in Section 2.01(a)(ii)
(The Facility) or, as the context requires, its principal amount from time to
time outstanding;
 
            “C Loan Interest Rate”   for any Interest Period, the rate at which
interest is payable on the C Loan during that Interest Period, determined in
accordance with Section 2.03 (Interest) and, if applicable, Section 2.04 (Change
in Interest Period);
 
            “Calculation Period”   for any calculation, a period of four (4)
consecutive quarters most recently ended prior to the event requiring the
calculation for which financial statements have been or should have been
delivered to IFC pursuant to Section 6.03 (Reporting Requirements);
 
            “CAO”   Compliance Advisor Ombudsman, the independent accountability
mechanism for IFC that impartially responds to environmental and social concerns
of affected communities and aims to enhance outcomes;

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              “CAO’s Role”   (i)   to respond to complaints by persons who have
been or are likely to be directly affected by the social or environmental
impacts of IFC projects; and
 
                (ii)   to oversee audits of IFC’s social and environmental
performance, particularly in relation to sensitive projects, and to ensure
compliance with IFC’s social and environmental policies, guidelines, procedures
and systems;
 
            “Certificate of Incumbency and Authority”   a certificate provided
to IFC by each of the Company and the Borrowers in the form of Schedule 1;
 
            “Charter”   with respect to any Obligor, the memorandum and articles
of association, statutes, or other constitutive document of such Obligor;
 
            “Change of Control”   any of the following circumstances:
 
                (i)   any Obligor sells, transfers, pledges or otherwise
disposes of any shares held by it in another Obligor as of the date hereof,
other than a transfer from such Obligor to another Obligor; or
 
                (ii)   Control of any Obligor is otherwise transferred without
IFC’s prior written consent, other than a transfer of Control to another
Obligor; or
 
                (iii)   any of the Obligors ceases to be the Operator of the
respective Borrowing Base Assets of which it is the Operator as of the date
hereof (except (A) in Turkey where TPAO may take operatorship over certain of
the concessions listed in the most recent Reserve Certification, and (B) for a
sale or

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                      transfer permitted under Section 6.02 (o) (Negative
Covenants)); or
 
                (iv)   the board of directors at any date of the Company shall
cease to consist of a majority of directors who have continued in such capacity
for at least one (1) year as of such date;
 
            “Consolidated” or “Consolidated Basis”  
(with respect to any financial statements to be provided, or any financial
calculation to be made, under or for the purposes of this Agreement and any
other Transaction Document) the method referred to in Section 1.02 (c)
(Financial Calculations); and the entities whose accounts are to be consolidated
are the Company and all of its Subsidiaries or other entities which are required
to be consolidated in accordance with the Accounting Standards;
 
            “Contingent Facility Amount”   fifteen million Dollars
($15,000,000);   “Contract Assignment(s)”   the instrument or instruments
pursuant to which the relevant Obligors grant to IFC a first ranking security
interest in all of their respective rights, interests and benefits under certain
gas sales agreements, marketing agreements and oil sales agreement identified
therein, and all warranties, guarantees and undertakings issued thereunder,
together with the notices and acknowledgements and consents in the forms
attached thereto, which instrument shall be in form and substance satisfactory
to IFC;
 
            “Control”   the power to direct the management or policies of a
Person, directly or indirectly, whether through the ownership of shares or other
securities, by contract or otherwise, provided that the direct or indirect
ownership of fifty-one per cent (51%) or more of the voting share capital of a
Person is deemed to

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                  constitute control of that Person, and “Controlling” and
“Controlled” have corresponding meanings;
 
            “Corrective Action Plan”   the plan dated November 3, 2006, a copy
of which is attached hereto as an annex to ESRS setting out specific social and
environmental measures to be undertaken by the Company and certain of the
Obligors, to enable the Project to be in compliance with the Performance
Standards, as such action plan may be amended or supplemented from time to time
with IFC’s consent;
 
            “Derivative Transaction”   any swap agreement, cap agreement, collar
agreement, futures contract, forward contract or similar arrangement with
respect to interest rates, currencies or commodity prices;
 
            “Discount Rate”   ten per cent (10%) per annum;
 
            “Dollars” and “$”   the lawful currency of the United States of
America;
 
            “EBITDA”   in respect of any period, earnings before interest,
taxes, depreciation and amortization;
 
            “EBITDAX”   in respect of any period, earnings before interest,
taxes, depreciation, amortization, and expensed exploration expenditures (and
for the avoidance of doubt, EBITDAX excludes any write-off of exploration
costs);
 
            “Environmental and Social     Manager”   a technically qualified
Person, satisfactory to IFC, appointed by the Obligors pursuant to
Section 6.01(q) (Affirmative Covenants);
 
            “Environmental, Health and Safety     Guidelines”   IFC Guidelines
for Oil and Gas Developments (Offshore) (December 2000), IFC Occupational Health
and Safety Guidelines (June 2003), and World Bank Guidelines for Oil and Gas
Development (Onshore) (July 1998) copies of

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                  which have been delivered to, and receipt of which have been
acknowledged by, the Company by letter dated November 3, 2006, which guidelines
are incorporated herein by reference;
 
            “Event of Default”   any one of the events specified in Section 7.02
(Events of Default);
 
            “ESRS”   the Environmental and Social Review Summary dated
November 3, 2006 and the Corrective Action Plan attached thereto prepared by IFC
and approved by the Obligors;
 
            “Existing Convertible Senior     Notes”   5% Convertible Senior
Notes due October 1, 2025, issued by Toreador Resources Corporation in an
aggregate principal amount of eighty six million and two hundred and fifty
thousand Dollars ($86,250,000);
 
            “Facility”   together, the facilities described in Section 2.01 (The
Facility) comprising the A Loan Facility and the C Loan Facility;
 
            “Final Maturity Date”   June 15, 2015;
 
            “Financial Debt”   with respect to any Person:
 
                (i)   any indebtedness of such Person for borrowed money;
 
                (ii)   the outstanding principal amount of any bonds,
debentures, notes, loan stock, commercial paper, acceptance credits, bills or
promissory notes drawn, accepted, endorsed or issued by such Person;
 
                (iii)   any indebtedness of such Person for the deferred
purchase price of assets or services (except trade accounts incurred and payable
in the ordinary course of business to trade creditors within ninety (90) days of
the date

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                      they are incurred and which are not more than thirty
(30) days overdue);
 
                (iv)   non-contingent obligations of such Person to reimburse
any other Person for amounts paid by that Person under a letter of credit or
similar instrument (excluding any letter of credit or similar instrument issued
for the account of such Person with respect to trade accounts incurred and
payable in the ordinary course of business to trade creditors within ninety
(90) days of the date they are incurred and which are not more than thirty
(30) days overdue);
 
                (v)   the amount of any obligation of such Person in respect of
any Financial Lease;
 
                (vi)   amounts raised by such Person under any other transaction
having the financial effect of a borrowing and which would be classified as a
borrowing under the Accounting Standards;
 
                (vii)   the amount of the obligations of such Person under
derivative transactions entered into in connection with the protection against
or benefit from fluctuation in any rate or price (but only the net amount owing
by such Person after marking the relevant derivative transactions to market);
 
                (viii)   any premium payable by such Person on a mandatory
redemption or replacement of any of the foregoing items;
 
                (ix)   all indebtedness of the types described in the foregoing
items secured by a lien on any property owned by such Person, whether or not
such indebtedness has been assumed by such Person;

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                  (x)   all obligations of such Person to pay a specified
purchase price for goods and services, whether or not delivered or accepted
(i.e., take or pay or similar obligations);
 
                (xi)   any repurchase obligation or liability of such Person
with respect to accounts or notes receivable sold by such Person, any liability
of such Person under any sale and leaseback transactions that do not create a
liability on the balance sheet of such Person, any obligation under a “synthetic
lease” or any obligation arising with respect to any other transaction which is
the functional equivalent of or takes the place of borrowing but which does not
constitute a liability on the balance sheet of such Person; and
 
                (xii)   the amount of any obligation in respect of any guarantee
or indemnity for any of the foregoing items incurred by any other Person;
 
            “Financial Lease”   any lease or hire purchase contract which would,
under the Accounting Standards, be treated as a finance or capital lease;
 
            “Financial Plan”   the proposed sources of financing for the Project
as set out in Annex A (Project Cost and Financial Plan);
 
            “Financial Year”   the accounting year of the Obligors commencing
each year on January 1 and ending on the following December 31, or such other
period as any Obligor, with IFC’s consent, from time to time designates as its
accounting year;
 
            “Financing Documents”   together:
 
                (i)   this Agreement; and
 
                (ii)   the Security Documents;

 

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“French Accounts Agreement”
  the agreement or agreements between certain of the Obligors, IFC and an
account bank in France acceptable to IFC providing for the establishment of
accounts in France into which all of the revenues of Madison Oil and/or Toreador
France will be deposited, and the Reserve Account, and security over such
accounts in favour of IFC, which agreement shall be in a form and substance
satisfactory to IFC;
 
        “Gas Prices”   in respect of any Obligor in any jurisdiction:
 
       
 
  (i)   if such Obligor has entered into any Long Term Contracts, as of any
date, the lower of (A) the average of contracted price determined in accordance
with such Long Term Contracts and (B) the World Bank Group forecast Oil
Equivalent Price; and
 
       
 
  (ii)   if such Obligor has not entered into any Long Term Contract, as of any
date, the lower of (A) such Obligor’s average gas sale price in the prior four
(4) quarters and (B) the World Bank forecast Oil Equivalent Price;
 
        “Gas Sales Agreements”   together, the Romania Gas Sales Agreement and,
upon execution, the Turkish Gas Sales Agreement;
 
        “Guarantee”   the Guarantors’ guarantee of the Guaranteed Obligations,
as set forth in Article III;
 
        “Guaranteed Obligations”   all present and future Obligations of the
Borrowers;
 
        “Guarantors”   each entity identified as a Guarantor in the introductory
paragraph of this Agreement (including the Borrowers in the capacity of
Guarantor);
 
       
“IFC Base Case Assumptions”
  the economic and technical assumptions and principles used in respect of the
IFC Base Case, as

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- 15 -

                  set forth in Schedule 5 and as applied in a manner acceptable
to IFC;
 
            “Increased Costs”   the amount certified in an Increased Costs
Certificate to be the net incremental costs of, or reduction in return to, IFC
in connection with the making or maintaining of the Loans that result from:
 
                (i)   any change in any applicable law or regulation or
directive (whether or not having the force of law) or in its interpretation or
application by any Authority charged with its administration; or
 
                (ii)   compliance with any request from, or requirement of, any
central bank or other monetary or other Authority;
 
                which, in either case, after the date of this Agreement:
 
           
 
      (A)   imposes, modifies or makes applicable any reserve, special deposit
or similar requirements against assets held by, or deposits with or for the
account of, or loans made by, IFC;
 
           
 
      (B)   imposes a cost on IFC as a result of IFC having made the Loans or
reduces the rate of return on the overall capital of IFC that it would have
achieved, had IFC not made the Loans;
 
           
 
      (C)   changes the basis of taxation on payments received by IFC in respect
of the Loans (otherwise than by a change in taxation of the overall net income
of IFC imposed by the jurisdiction of its incorporation or in

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- 16 -

             
 
          any political subdivision of any such jurisdiction); or
 
           
 
      (D)   imposes on IFC any other condition regarding the making or
maintaining of the Loans;
 
           
“Increased Costs Certificate”
  a certificate provided from time to time by IFC, certifying:
 
                (i)   the circumstances giving rise to the Increased Costs;
 
                (ii)   that the costs of IFC have increased or the rate of
return of either of them has been reduced;
 
                (iii)   that IFC has, in its opinion, exercised reasonable
efforts to minimize or eliminate the relevant increase or reduction, as the case
may be; and
 
                (iv)   the amount of Increased Costs and describing in
reasonable detail, the basis and calculation of such Increased Costs;
 
           
“Independent Reserve Engineer”
  Laroche Petroleum Consultants Ltd. or such other independent reserves engineer
selected by the Company and acceptable to IFC who shall from time to time carry
out the Reserve Certification and other services reasonably required by IFC;
 
           
“Interest Coverage Ratio”
  for any Calculation Period, the result obtained by dividing the:
 
                (i)   EBITDA for such Calculation Period; by
 
                (ii)   the aggregate amount of all interest paid or payable for
such period, net of any interest actually earned during such Calculation Period,

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              all such amounts calculated on a Consolidated Basis;
 
       
“Interest Determination Date”
  except as otherwise provided in Section 2.03 (d) (ii) (Interest), the second
Business Day before the beginning of each Interest Period;
 
        “Interest Payment Date”   June 15 and December 15 in each year or, in
the case of any Interest Period of less than six (6) months, pursuant to
Section 2.04 (Change in Interest Period), any day that is the 15th day of the
month in which the relevant Interest Period ends;
 
        “Interest Period”   each period of six (6) months or, in the
circumstances referred to in Section 2.04 (Change in Interest Period), each
period of three (3) months or one (1) month determined pursuant to that Section,
in each case beginning on an Interest Payment Date and ending on the day
immediately before the next following Interest Payment Date, except in the case
of the first period applicable to each Loan when it means the period beginning
on the date on which that Loan is made and ending on the day immediately before
the next following Interest Payment Date;
 
       
“Interest Rate”
  (i)   with respect to the A Loan, the A Loan Interest Rate; and
 
       
 
  (ii)   with respect to the C Loan, the C Loan Interest Rate;
 
       
“Joint Operating Agreements”
      together:
 
       
 
  (i)   the Operating Agreement dated September 28, 1995, as amended from time
to time, among Arco Turkey Inc., TPAO and Stratic Energy Corporation;

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- 18 -

         
 
  (ii)   the joint operating agreement dated March 15, 1985, as amended from
time to time, between Arco Turkey Inc. and TPAO with respect to the Cendere
field in Turkey; and
 
       
 
  (iii)   the joint operating agreement dated May 2, 2005 between Madison Oil
Turkey Inc. and HEMA Enerji A.S;
 
        “Liabilities”   the aggregate of all obligations of any Person to pay or
repay money, including, without limitation:
 
       
 
  (i)   Financial Debt of such Person;
 
       
 
  (ii)   the amount of all liabilities of such Person (actual or contingent)
under any conditional sale or a transfer with recourse or obligation to
repurchase, including, without limitation, by way of discount or factoring of
book debts or receivables;
 
       
 
  (iii)   taxes (including deferred taxes) of such Person;
 
       
 
  (iv)   trade accounts incurred and payable in the ordinary course of business
to trade creditors within ninety (90) days of the date they are incurred and
which are not more than thirty (30) days overdue (including letters of credit or
similar instruments issued for the account of such Person with respect to such
trade accounts);
 
       
 
  (v)   accrued expenses of such Person, including wages and other amounts due
to employees and other services providers;
 
       
 
  (vi)   the amount of all liabilities of such Person howsoever arising to
redeem any of its shares; and
 
       
 
  (vii)   to the extent (if any) not included in the definition of Financial
Debt, the amount of all liabilities of any Person to the extent

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- 19 -

         
 
      such Person guarantees them or otherwise obligates itself to pay them;
 
       
“Liabilities to Tangible
        Net Worth Ratio”   the result obtained by dividing Liabilities by
Tangible Net Worth; Ratio”
 
        “LIBOR”   the British Bankers’ Association (“BBA”) interbank offered
rates for deposits in the Loan Currency which appear on the relevant page of the
Telerate Service (currently page 3750) or, if not available, on the relevant
pages of any other service (such as Reuters Service or Bloomberg Financial
Markets Service) that displays such BBA rates; provided that if BBA for any
reason ceases (whether permanently or temporarily) to publish interbank offered
rates for deposits in the Loan Currency, “LIBOR” shall mean the rate determined
pursuant to Section 2.03 (d) (Interest);
 
        “Lien”   any mortgage, pledge, charge, assignment, hypothecation,
security interest, title retention, preferential right, trust arrangement, right
of set-off, counterclaim or banker’s lien, privilege or priority of any kind
having the effect of security, any designation of loss payees or beneficiaries
or any similar arrangement under or with respect to any insurance policy or any
preference of one creditor over another arising by operation of law;
 
       
“Life of Loan Coverage Ratio”
  as at any date of determination, the ratio obtained by dividing:
 
       
 
  (i)   the Loan-Life NPV calculated as of the most recent calculation date on
or prior to such date of determination; by
 
       
 
  (ii)   the aggregate amount of principal outstanding (excluding principal
outstanding under the Existing Convertible Senior Notes), and any

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- 20 -

     
 
 
overdue interest and other amounts owing on that date on or in respect of
Financial Debt;
 
   
“Loan Currency”
  Dollars;
 
   
“Loan-Life NPV”
  as of any calculation date, the present value, discounted at the Discount
Rate, of the projected Net Cash Flow of the Company on a Consolidated Basis
derived from the Proved Reserves of the Borrowing Base Assets, as certified in
the most recent Reserve Certification and calculated using the Proved Reserves
Criteria, the World Bank Group forecast oil prices, as updated from time to
time, and Gas Price(s), and other IFC Base Case Assumptions, for the period
commencing on the day immediately following such calculation date up to and
including the Final Maturity Date;
 
   
“Local Development Impact
   
Data Sheet”
  a report which details benefits of the Project to the local community,
including local employment generated by the Project;
 
   
“Long Term Contracts”
  any gas sales agreement, marketing agreement or any other agreement for a term
of not less than twelve (12) months, entered into by any of the Obligors for the
sale of oil and gas produced from the Borrowing Base Assets;
 
   
“Loans”
  together, the A Loan and the C Loan or, as the context requires, their
principal amount from time to time outstanding and “Loan” means either of them
or, as the context requires, its principal amount from time to time outstanding;
 
   
“Marketing Contract(s)”
  at any time, the agreement(s) entered into by any of Madison Oil and Toreador
France for the marketing and transportation of their share of the oil and gas
produced from the relevant Borrowing Base Assets;

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- 21 -

         
“Material Adverse Effect”
  a material adverse effect on:
 
       
 
  (i)   any of the Obligors’ respective businesses, operations, properties,
liabilities, condition (financial or otherwise) or the carrying on of any of the
Obligors’ respective businesses or operations;
 
       
 
  (ii)   the implementation of the Project or the Financial Plan; or
 
       
 
  (iii)   the ability of any Obligor to comply with its respective material
obligations under this Agreement or under any other Transaction Document to
which any of them is a party;
 
       
“Maximum Facility Amount”
  in respect of the A Loan:
 
       
 
  (i)   prior to the Phase II Effectiveness Date, twenty five million Dollars
($25,000,000); and
 
       
 
  (ii)   following the Phase II Effectiveness Date, forty million Dollars
($40,000,000);
 
        “NATIXIS Facility”   the US$15,000,000 reserve base revolving facility
agreement dated December 23, 2004 among Toreador France as the borrower, Madison
Oil as the guarantor, the Company and Toreador International as the obligors,
and NATIXIS as the lender, agent, arranger, and technical bank;
 
        “Net Cash Flow”   for any period of determination, the net cash flow
during such period determined on a Consolidated Basis, including the sum of:
 
       
 
  (i)   all proceeds received from the sale of the share of oil and gas
production from the Borrowing Base Assets; minus

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- 22 -

         
 
  (ii)   the share of operating costs, administrative costs, transportation
costs, cash fund contributions as required under any concessions or service
agreements relating to the Borrowing Base Assets, taxes, royalties, exploration
and capital expenditures paid for in the same period, but excluding, for the
purpose of this definition, any payments in respect of Financial Debt (whether
principal, interest or other fees and charges) for the same period, but
including for the purpose of this definition any interest on Existing
Convertible Senior Notes; plus
 
       
 
  (iii)   the net proceeds of Loans borrowed less the Loans repaid during such
period;
 
       
“Obligations”
  (i)   the outstanding principal of, and interest on, the Loans (including,
without limitation, interest accruing under Section 2.05 (Default Rate
Interest)); and
 
       
 
  (ii)   all other amounts owing or which may be owing by the Borrowers to IFC
as a result of the Borrowers’ obligations under the Financing Documents to which
it is a party, whether absolute or contingent, due or to become due, or now
existing or hereafter incurred, which arise under the Financing Documents to
which it is a party, delivered or given in connection herewith or therewith, in
each case whether on account of principal, interest, reimbursement obligations,
fees, indemnities, costs, charges, expenses (including legal and judicial fees
and expenses) or otherwise;
 
        “Official”   any officer of a political party or candidate for political
office in any country or any officer or employee (i) of any government
(including any legislative, judicial, executive or administrative

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- 23 -

     
 
  department, agency or instrumentality thereof) or (ii) of a public
international organization;
 
   
“Oil Equivalent Price”
  the oil equivalent price of gas is derived through the equation: one
(1) barrel of oil = six thousand (6,000) cubic feet of gas;
 
   
“Operator”
  with respect to any Borrowing Base Asset, the party designated as such
pursuant to the relevant operating agreement for such Borrowing Base Asset;
 
   
“Performance Standards”
  IFC’s Performance Standards on Social & Environmental Sustainability, dated
April 30, 2006, copies of which have been delivered to the Borrowers each of
whom hereby acknowledges receipt thereof;
 
   
“Permitted Lien”
  a Lien permitted in Section 6.02(g) (Permitted Liens);
 
   
“Person”
  any natural person, corporation, company, partnership, firm, voluntary
association, joint venture, trust, unincorporated organization, Authority or any
other entity whether acting in an individual, fiduciary or other capacity;
 
   
“Phase II Effectiveness Date”
  the date on which the Company shall have provided to IFC a new Reserve
Certification with augmented Proved Reserves and an updated IFC Base Case
satisfactory to IFC, reflecting a projected total Borrowing Base Amount which,
for each Calculation Period from such date until the Final Maturity Date,
exceeds fifty million Dollars ($50,000,000) for such Calculation Period;
 
   
“Policy on Disclosure of Information”
  IFC’s Policy on Disclosure of Information, dated April 30, 2006, copies of
which have been delivered

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- 24 -

     
 
  to and receipt of which has been acknowledged by the Company;
 
   
“Potential Event of Default”
  any event or circumstance which would, with notice, lapse of time, the making
of a determination or any combination thereof, become an Event of Default;
 
   
“Prohibited Activities”
  the activities specified in Annex D;
 
   
“Prohibited Payments”
  any offer, gift, payment, promise to pay or authorization of the payment of
any money or anything of value, directly or indirectly, to or for the use or
benefit of any Official (including to or for the use or benefit of any other
Person if any Obligor knows, or has reasonable grounds for believing, that the
other Person would use such offer, gift, payment, promise or authorization of
payment for the benefit of any such Official), for the purpose of influencing
any act or decision or omission of any Official in order to obtain, retain or
direct business to, or to secure any improper benefit or advantage for, any
Obligor, its Affiliates or any other Person; provided that any such offer, gift,
payment, promise or authorization of payment shall not be considered a
Prohibited Payment if, in IFC’s reasonable opinion, it (i) is lawful under
applicable written laws and regulations or (ii) is made for the purpose of
expediting or securing the performance of a routine governmental action (as such
term is construed under applicable law);
 
   
“Project”
  the financing of capital expenditure, working capital requirements, debt
repayments and other general corporate purposes for the Borrowers’ operations in
Turkey and Romania as further detailed in Annex A;
 
   
“Project Accounts”
  together, accounts to be created under the Accounts Agreements;

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- 25 -

          “Project Cost”   the total estimated cost of the Project, not less
than the equivalent of two hundred and three million Dollars ($203,000,000), as
set forth in Annex A (Project Cost and Financial Plan);
 
        “Project Documents”   each of the following:
 
       
 
  (i)   the Joint Operating Agreements;
 
       
 
  (ii)   the Gas Sales Agreements;
 
       
 
  (iii)   the Royalty Agreement; and
 
       
 
  (iv)   the Marketing Contracts.
 
        “Proved Reserves”   at any date, the estimated quantities of
hydrocarbons which geological and engineering data demonstrate with reasonable
certainty to be recoverable in future years from known reservoirs under existing
economic and operating conditions. Proved Reserves are limited to those
quantities of hydrocarbons which can be estimated, with reasonable certainty, to
be recoverable commercially at current prices and costs, under existing
regulatory practices and with existing conventional equipment and operating
methods (taking into account applicable laws and regulations to which the
relevant Obligor is subject);
 
        “Proved Reserves Criteria”   100% of the Proved Reserves as certified by
the Independent Reserve Engineer or such criteria as IFC may accept in its sole
discretion;
 
       
“Required Ratios”
  has the meaning assigned thereto in Section 6.01(m) (Affirmative Covenants);
 
        “Reserve Account”   the account established in the French Accounts
Agreement in which the Obligors shall ensure that such account is funded in
accordance with Section 6.01(r) (Accounts Agreement; Reserve Accounts) hereof;

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- 26 -

          “Reserve Tail Ratio”   for any calculation date, with respect to any
Borrowing Base Asset(s), the ratio obtained by dividing:
 
       
 
  (i)   the Proved Reserves from such Borrowing Base Asset(s), forecasted to be
extracted beyond the Final Maturity Date, as applicable, as certified in the
latest Reserves Certification prepared in respect of such Borrowing Base
Asset(s), as applicable; by
 
       
 
  (ii)   the Proved Reserves from such Borrowing Base Asset(s), as certified in
the Reserves Certification dated June 30, 2006 prepared in respect of such
Borrowing Base Asset(s), or as certified in the updated Reserves Certification
provided that the Proved Reserves in it are higher than the Reserves
Certification dated June 30, 2006;
 
        “Reserves Certification”   the certification of any or all of the
Borrowing Base Assets’ Proved Reserves prepared from time to time by the
Independent Reserve Engineer (subject to Section 6.03(l) (Reserve
Certification));
 
        “Restricted Payment”   with respect to any Person, the:
 
       
 
  (i)   declaration or payment of a dividend, distribution or return of any
equity capital to its stockholders, partners or members or authorization or
making of any other distribution, payment or delivery of property (other than
common stock of such Person) or cash to its stockholders, partners or members in
their capacity as such; or
 
       
 
  (ii)   redemption, retirement, purchase or other acquisition of, or permitting
of any Subsidiary to redeem, retire, purchase, or otherwise acquire, directly or
indirectly, any shares of any class of its capital stock

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- 27 -

         
 
      outstanding on or after the date of this Agreement (or any options or
warrants issued by such person with respect to its capital stock), or setting
aside of any funds for any of the foregoing purposes; or
 
       
 
  (iii)   making of any payment of any kind on or in respect of Financial Debt
held by any Affiliate or shareholder of such Person;
 
        “Rollover Loan”   a Loan made on an Interest Payment Date in the same
amount as all or a portion of an outstanding Loan or Loans maturing on such
Interest Payment Date, and which is applied solely in refinancing all or a
portion of such maturing Loan, all in accordance with Section 2.02(c) (Loan
Procedure and Rollover);
 
       
“Romanian Accounts Agreement”
  the agreement or agreements between Toreador Romania, IFC and an account bank
in Romania acceptable to IFC providing for the establishment of accounts in
Romania into which all of the revenues generated from the activities of the
Company and/or Toreador Romania in Romania will be deposited, and security over
such account in favour of IFC, which agreement shall be in a form and substance
satisfactory to IFC;
 
       
“Romania Gas Sales Agreement”
  the Gas Sales Agreement dated August 1, 2006 between Toreador Romania and
Petrom Gas SRL and any gas sales agreement entered into in the future by
Toreador Romania;
 
       
“Romanian Concession Transfer Date”
  the date when IFC receives evidence satisfactory to it that the Romanian
Concessions are legally transferred to Toreador Romania by the Company;

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- 28 -

          “Romanian Concessions”   the following concession agreements:
 
       
 
  (i)   the concession agreement for petroleum exploration, development, and
exploitation in the zone of E V-1 Moinesti between Agentia Nationala Pentru
Resurse Minerale (National Agency for Mineral Resources of Romania) and Toreador
Resources;
 
       
 
  (ii)   the concession agreement for petroleum exploration, development, and
production on the block E IV-2 Viperesti between the Agentia Nationala Pentru
Resurse Minerale and Toreador Resources; and
 
       
 
  (iii)   the concession agreement of the oil exploitation perimeter DEE V-11
Fauresti between Agentia Nationala Pentru Resurse Minerale and Toreador
Resources;
 
        “Royalty Agreement”   the Royalty Agreement dated November 30, 2001
between Madison (Turkey) Inc. and Aladdin Middle East with respect to the Zeynel
Field in Turkey;
 
       
“S&E Management System”
  the social and environmental management system of the Company and the
Borrowers enabling them to identify, assess and manage risks on an ongoing
basis;
 
       
“Security”
  (i)   a first ranking security interest in certain proceeds, receivables and
contract rights of the Obligors, relating to and from the sale of their share of
oil and gas production from the Borrowing Base Assets in France, Turkey and
Romania;
 
       
 
  (ii)   first ranking security interest in the funds (including any Authorized
Investments made with such funds) held from time to time in the Project
Accounts, upon execution of the relevant Accounts

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- 29 -

         
 
      Agreements in accordance with Section 6.01(r) (Accounts Agreements;
Reserves Accounts) hereof;
 
       
 
  (iii)   an assignment by way of security of all rights and claims to any
compensation or other special payments in respect of all the concessions other
than those arising in the normal course of operations which are payable to the
Borrowers’ by the governments of Turkey and Romania or any of its agencies or by
any other party and for whatever reason;
 
       
 
  (iv)   a first ranking pledge by Toreador International of all its shares in
the Borrowers;
 
       
 
  (v)   a first ranking pledge by Madison Oil of all its shares in Toreador
France; and
 
       
 
  (vi)   a first ranking pledge by the Company of all its shares in Toreador
International;
 
        “Security Documents”   the documents providing for the Security
consisting of:
 
       
 
  (i)   the Share Pledges;
 
       
 
  (ii)   the Contracts Assignments; and
 
       
 
  (iii)   the Accounts Agreements;
 
       
“Series A-1 Convertible
        Preferred Stock”   the 72,000 shares of the Company’s Series A-1
Convertible Preferred Stock outstanding as of June 30, 2006;
 
        “Share Pledges”   together, the instruments providing for a pledge in
favour of IFC of all of the issued and outstanding shares of Toreador
International, Toreador Turkey, Toreador Romania, Madison Oil and Toreador

--------------------------------------------------------------------------------

 

- 30 -

                      France, each in form and substance satisfactory to IFC,
together with, as applicable, original share certificates and instruments of
transfer in respect of all such shares executed in blank;
 
                “Subsidiary”   with respect to any Person, an Affiliate over
fifty per cent (50%) of whose capital is owned, directly or indirectly, by such
Person;
 
                “Tangible Net Worth”   the aggregate of:
 
                    (i)   (A)   the amount paid up or credited as paid up on the
share capital of any Person; and
 
                        (B)   the amount standing to the credit of the reserves
of such Person (including, without limitation, any share premium account,
capital redemption reserve funds and any credit balance on the accumulated
profit and loss account);
 
                        after deducting from the amounts in (A) and (B):
 
               
 
          (w)   any debit balance on the profit and loss account or impairment
of the issued share capital of such Person (except to the extent that deduction
with respect to that debit balance or impairment has already been made);
 
               
 
          (x)   amounts set aside for dividends to the extent not already
deducted from equity;
 
               
 
          (y)   amounts of deferred tax assets; and

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- 31 -

                 
 
          (z)   amounts attributable to capitalized items such as goodwill,
trademarks, deferred charges, licenses, patents and other intangible assets; and
 
                    (ii)   if applicable, that part of the net results of
operations and the net assets of any Subsidiary of such Person attributable to
interests that are not owned, directly or indirectly, by such Person;
 
                “Taxes”   any present or future taxes, withholding obligations,
duties and other charges of whatever nature levied by any Authority;
 
                “Texas Facility”   the US$25,000,000 credit agreement dated
December 30, 2004 between Toreador Exploration & Production Inc. and Toreador
Acquisition Corporation as the borrowers and Texas Capital Bank, N.A. as the
lender;
 
                “TPAO”   Turikye Petrolleri A.O., the national oil & natural gas
company of Turkey;
 
                “Transaction Documents”   together:
 
                    (i)   the Financing Documents; and
 
                    (ii)   the Project Documents;
 
                “Turkey”   the Republic of Turkey;
 
               
“Turkey Gas Sales Agreement”
  any gas sales agreement to be entered into by either TPAO or Toreador Turkey
for the sale of gas in Turkey;

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- 32 -

                 
“Turkish Accounts Agreement”
  the agreement or agreements between Toreador Turkey, IFC and an account bank
in Turkey acceptable to IFC providing for the establishment of accounts in
Turkey into which all of the revenues of Toreador Turkey will be deposited, and
security over such account in favour of IFC, which agreement shall be in a form
and substance satisfactory to IFC; and
 
                “World Bank”   the International Bank for Reconstruction and
Development, an international organization established by Articles of Agreement
among its member countries.

     Section 1.02. Financial Calculations. (a) All financial calculations to be
made under, or for the purposes of, this Agreement and any other Transaction
Document on a Consolidated Basis shall be made in accordance with the Accounting
Standards and, except as otherwise required to conform to any provision of this
Agreement, shall be calculated from the then most recently issued quarterly
financial statements which the Company is obligated to furnish to IFC under
Section 6.03(a) (Reporting Requirements).
     (b) Where quarterly financial statements from the last quarter of a
Financial Year are used for the purpose of making certain financial calculations
then, at IFC’s option, those calculations may instead be made from the audited
financial statements for such Financial Year.
     (c) If a financial calculation is to be made under or for the purposes of
this Agreement or any other Transaction Document on a Consolidated Basis, that
calculation shall be made by reference to the sum of all amounts of similar
nature reported in the relevant financial statements of each of the entities
whose accounts are to be consolidated (as stated in the definition of
Consolidated Basis plus or minus the consolidation adjustments customarily
applied to avoid double counting of transactions among any of those entities).
     Section 1.03. Interpretation. In this Agreement, unless the context
otherwise requires:
     (a) headings are for convenience only and do not affect the interpretation
of this Agreement;

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     (b) words importing the singular include the plural and vice versa;
     (c) a reference to an Annex, Article, party, Schedule or Section is a
reference to that Article or Section of, or that Annex, party or Schedule to,
this Agreement;
     (d) a reference to a document includes an amendment or supplement to, or
replacement or novation of, that document but disregarding any amendment,
supplement, replacement or novation made in breach of this Agreement; and
     (e) a reference to a party to any document includes that party’s successors
and permitted assigns.
     Section 1.04. Business Day Adjustment. (a) When an Interest Payment Date is
not a Business Day, then such Interest Payment Date shall be automatically
changed to the next Business Day in that calendar month (if there is one) or the
preceding Business Day (if there is not).
     (b) When the day on or by which a payment (other than a payment of
principal or interest) is due to be made is not a Business Day, that payment
shall be made on or by the next Business Day in that calendar month (if there is
one) or the preceding Business Day (if there is not).
ARTICLE II
The Facility
     Section 2.01. The Facility. (a) Subject to the provisions of this
Agreement, IFC agrees to make available to

  (i)   the Borrowers, the Facility consisting of the A Loan Facility in an
aggregate principal amount of up to the Maximum Facility Amount; and     (ii)  
Toreador Turkey Ltd and Toreador Romania Ltd, the C Loan Facility of ten million
Dollars ($10,000,000).

     (b) Each Loan under each Facility shall be used solely for the Project.

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     (c) The A Loan Facility is a revolving facility. Accordingly, any amount of
the A Loan which is prepaid or repaid may, subject to the provisions of this
Agreement, be reborrowed. For the avoidance of doubt, amounts:

  (i)   cancelled pursuant to Section 2.13 (Suspension or Cancellation by IFC)
or Section 2.14 (Cancellation by the Borrowers);     (ii)   repaid pursuant to
Section 2.06(b) (Repayment); or     (iii)   repaid following the issuance of a
notice pursuant to Section 7.01 (Acceleration after Default);

     may not be re-borrowed.
     (d) Any amount of the C Loan that is prepaid, repaid or canceled may not be
reborrowed; provided that for avoidance of doubt, the C Loan may not be prepaid
without the consent of IFC in accordance with Section 2.07(b) (Prepayment and
Mandatory Prepayment).
     Section 2.02. Facility Procedure and Rollover.
     (a) Subject to Section 2.01 (The Facility), any Borrower may request Loans
during the Availability Period by delivering to IFC, at least ten (10) Business
Days prior to the proposed date of a Loan, a Loan request substantially in the
form of Schedule 2. Such Borrower shall deliver to IFC within five (5) Business
Days of the disbursement of such Loan a receipt substantially in the form of
Schedule 3. No Loan shall exceed the Available Amount, and each Loan shall:

  (i)   with respect to the A Loan Facility, be in an amount of not less than
five million Dollars ($5,000,000); and     (ii)   with respect to the C Loan
Facility, be for the full amount of the C Loan.

     (b) Each Loan shall be made by IFC at a bank in New York, New York for
further credit to the relevant Borrower’s account at a bank in a place
reasonably acceptable to IFC, all as specified by the Borrower in the relevant
Loan request.

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     (c) Where any A Loan is outstanding on any Interest Payment Date, then, in
respect of that A Loan, the Borrowers, on a joint and several basis, will be
conclusively deemed to have requested, and IFC shall be deemed to make, a
Rollover Loan (of an aggregate amount equal to the outstanding amount of all A
Loans, including any Rollover Loan, which are scheduled to mature on that
Interest Payment Date) which will be applied in refinancing the outstanding A
Loan or A Loans in full unless:

  (i)   no later than thirty (30) days prior to such Interest Payment Date, the
relevant Borrower which borrowed such A Loan(s) or any other Obligor irrevocably
notifies IFC that it will pay all or part of the outstanding amount of the
relevant A Loan(s) on or prior to such Interest Payment Date;     (ii)   the
aggregate outstanding amount of all Loan(s) exceeds the Available Amount on the
such Interest Payment Date, in which case a Rollover Loan may only be deemed to
be requested and made under this Section 2.02(c) in an amount which would not
cause the Available Amount to be exceeded (and any amount of any A Loan(s) which
are not so refinanced by Rollover Loans shall be repaid by the Borrowers in
accordance with Section 2.06(a)(Repayment)); or     (iii)   an Event of Default
has occurred and is continuing.

     Section 2.03. Interest. Subject to the provisions of Section 2.05 (Default
Rate Interest), each of the Borrowers shall, on a joint and several basis, pay
interest on each Loan in accordance with this Section 2.03:
     (a) During each Interest Period, the Loans shall bear interest at the
applicable Interest Rate for that Interest Period.
     (b) Interest on each Loan shall accrue from day to day, be prorated on the
basis of a 360-day year for the actual number of days in the relevant Interest
Period and be payable in arrears on the Interest Payment Date immediately
following the end of that Interest Period; provided that with respect to any
Loan made less than fifteen (15) days before an Interest Payment Date, interest
on that Loan shall be payable on the second Interest Payment Date following the
date of that Loan.

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     (c) The Interest Rate for any Interest Period shall be the rate which is
the sum of:

  (i)   the Applicable Margin; and     (ii)   LIBOR on the Interest
Determination Date for that Interest Period for six (6) months (or, in the case
of the first Interest Period for any Loan, for one (1) month, two (2) months,
three (3) months or six (6) months, whichever period is closest to the duration
of the relevant Interest Period (or, if two periods are equally close, the
longer one)) rounded upward to the nearest three decimal places.

     (d) If, for any Interest Period, IFC cannot determine LIBOR by reference to
the Telerate Service or any other service that displays BBA rates, IFC shall
notify Borrowers and shall instead determine LIBOR:

  (i)   on the second Business Day before the beginning of the relevant Interest
Period by calculating the arithmetic mean (rounded upward to the nearest three
decimal places) of the offered rates advised to IFC on or around 11:00 a.m.,
London time, for deposits in the Loan Currency and otherwise in accordance with
Section 2.03 (c) (ii), by any four (4) major banks active in the Loan Currency
in the London interbank market, selected by IFC; provided that if less than four
quotations are received, IFC may rely on the quotations so received if not less
than two (2); or     (ii)   if less than two (2) quotations are received from
the banks in London in accordance with subsection (i) above, on the first day of
the relevant Interest Period, by calculating the arithmetic mean (rounded upward
to the nearest three decimal places) of the offered rates advised to IFC on or
around 11:00 a.m., New York time, for loans in the Loan Currency and otherwise
in accordance with Section 2.03(c)(ii), by a major bank or banks in New York,
New York selected by IFC.

     (e) On each Interest Determination Date for any Interest Period, IFC shall
determine the Interest Rate applicable to that Interest Period and promptly
notify the Borrowers of those rates.

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     (f) The determination by IFC, from time to time, of the applicable Interest
Rate shall be final and conclusive and bind the Borrowers (unless the Borrowers
show to IFC’s satisfaction that the determination involves manifest error).
     Section 2.04. Change in Interest Period. Without prejudice to the
provisions of Section 2.05 (Default Rate Interest), if at any time any of the
Borrowers fails to pay any amount of principal of, or interest on, any Loan when
due (whether at stated maturity or upon acceleration), and any part of that
amount remains unpaid on the third Business Day immediately preceding any
Interest Payment Date falling after that amount became due, then:
     (a) IFC may elect that the duration of the Interest Period commencing on
that Interest Payment Date and, subject to Section 2.04 (c), any subsequent
Interest Period shall be either three (3) months or one (1) month and shall
notify the Borrowers of that election in the notice referred to in Section 2.03
(e) (Interest);
     (b) the Interest Rates applicable to any Interest Period which is three
(3) months or one (1) month shall be determined in accordance with Section 2.03
(Interest) in all respects, except that any reference in Section 2.03 (c)
(ii) to six (6) months shall be deemed to be a reference to three (3) months or,
as the case may be, one (1) month; and
     (c) unless an Event of Default or Potential Event of Default has occurred
and is continuing, IFC shall reinstate Interest Periods of six (6) months as of
the first Interest Payment Date which is June 15 or December 15 falling at least
three (3) Business Days after the payment default is remedied in full and shall
inform the Borrowers of that reinstatement in the notice referred to in
Section 2.03 (e) (Interest).
     Section 2.05. Default Rate Interest. (a) Without limiting the remedies
available to IFC under this Agreement or otherwise (and to the maximum extent
permitted by applicable law), if the Borrowers fail to make any payment of
principal or interest (including interest payable pursuant to this Section) or
any other payment provided for in Section 2.08 (Fees) when due as specified in
this Agreement (whether at stated maturity or upon acceleration), the Borrowers
shall, on a joint and several basis, pay interest on the amount of that payment
due and unpaid at the rate which shall be the sum of two per cent (2%) per annum
and the Interest Rate in effect from time to time.

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     (b) Interest at the rate referred to in Section 2.05 (a) shall accrue from
the date on which payment of the relevant overdue amount became due until the
date of actual payment of that amount (as well after as before judgment), and
shall be payable on demand or, if not demanded, on each Interest Payment Date
falling after any such overdue amount became due.
     Section 2.06. Repayment.
     (a) Subject to Section 2.02(c) (Loan Procedure and Rollover) and to
Section 2.07 (Prepayment and Mandatory Prepayment), the Borrowers shall, on a
joint and several basis, repay each A Loan made under this Agreement in full on
the Interest Payment Date immediately following the date on which such A Loan is
made.
     (b) The Maximum Facility Amount shall be reduced to the following amounts
on the following Interest Payment Dates:

          Interest Payment Date   Maximum Facility Amount
December 15, 2011
  $ 35,000,000  
June 15, 2012
  $ 30,000,000  
December 15, 2012
  $ 25,000,000  
June 15, 2013
  $ 20,000,000  
December 15, 2013
  $ 15,000,000  
June 15, 2014
  $ 10,000,000  
December 15, 2014
  $ 0  

     (c) The Borrowers shall, on a joint and several basis, repay the C Loan on
the following dates and in the following amounts:

          Date Payment Due   Principal Amount Due
December 15, 2014
  $ 5,000,000  
June 15, 2015
  $ 5,000,000  
Total
  $ 10,000,000  

     Section 2.07. Prepayment and Mandatory Prepayment Without prejudice to
Section 6.04(c) (Insurance):

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     (a) any of the Borrowers may prepay all or any part of any A Loan, on not
less than thirty (30) days’ prior notice to IFC, but only if:

  (i)   such Borrower simultaneously pays all accrued interest and Increased
Costs (if any) on the amount of any A Loan to be prepaid, together with all
other amounts then due and payable under this Agreement, including the amount
payable under Section 2.12 (Unwinding Costs), if the prepayment is not made on
an Interest Payment Date;     (ii)   for a partial prepayment, that prepayment
is an amount not less than five million Dollars ($5,000,000); and     (iii)   if
requested by IFC, such Borrower delivers to IFC, prior to the date of
prepayment, evidence satisfactory to IFC that all necessary Authorizations with
respect to the prepayment have been obtained.

     (b) The Borrowers shall, on a joint and several basis, prepay all or part
of the A Loans and, but only if IFC so requests, the C Loan in the following
circumstances:

  (i)   upon receipt of the proceeds (net of Taxes, costs and expenses) of any
asset sales which are permitted under, and which are not being reinvested, in
each case in accordance with Section 6.02(o) (Negative Covenants) in excess of
one million Dollars ($1,000,000) in the aggregate (in any calendar year) by any
Obligor, in which case, an amount equal to one hundred percent (100%) of such
proceeds will be applied in such prepayment; and     (ii)   unless otherwise
agreed with IFC, upon receipt by any Obligor of property insurance proceeds
which are required to be applied in such prepayment in accordance with
Section 6.04(c) (Insurance) or the proceeds of compensation for any
expropriation, taking or condemnation of any asset of any Obligor the proceeds
of which are in aggregate of one million Dollars ($1,000,000) or more (in any
calendar year), in which case, an amount equal to one hundred percent (100%) of
such proceeds will be applied in such prepayment other than in respect of
insurance claims filed prior to the date hereof; and

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  (iii)   if on any Interest Payment Date (taking into account any A Loans
repaid on such Interest Payment Date) the aggregate outstanding amount of the
Loans are in excess of the Available Amount as at such Interest Payment Date,
then the Borrowers shall be required, on a joint and several basis, to prepay
the A Loans, and if IFC so requests, the C Loan, in an amount equal to such
excess;

and

  (A)   the Borrowers (or other Obligor, as the case may be) shall
simultaneously pay all accrued interest and Increased Costs (if any) on the
amount of any Loan to be prepaid, together with all other amounts then due and
payable under this Agreement, including the amount payable under Section 3.11
(Unwinding Costs), if the payment is not made on an Interest Payment Date; and  
  (B)   if requested by IFC, the Borrowers (or other Obligor, as the case may
be) shall deliver to IFC, prior to the date of payment, evidence satisfactory to
IFC that all necessary Authorizations with respect to the payment have been
obtained; and

     (c) Amounts of principal prepaid under this Section shall be applied by IFC
in reduction of the respective reduction installments of the Maximum Facility
Amount set out in Section 2.06(a)(Repayment) in inverse order.
     (d) Upon delivery of a notice in accordance with Section 2.07 (a), the
Borrowers, on a joint and several basis, shall make the prepayment in accordance
with the terms of that notice.
     (e) Any principal amount of any A Loan prepaid under Section 2.07(a) or
Section 2.07(b) may be re-borrowed.
     (f) The C Loan may not be prepaid except following a request by IFC in
accordance with Section 2.07(b). If, notwithstanding the provisions of this
Agreement, any Obligor prepays all or any part of the C Loan, then the Borrowers
shall, on a joint and several basis, also pay to IFC within thirty (30) days of
the date of such prepayment the present value, calculated using the Discount
Rate, of

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the Additional Compensation which would be payable if no prepayment of the C
Loan was made, for the period commencing on the day immediately following the
calculation date up to and including the Final Maturity Date.
     Section 2.08. Fees. (a) The Borrowers shall, on a joint and several basis,
pay to IFC a commitment fee:

  (i)   with respect to the A Loan Facility, at the rate(s) equal to:

  (A)   one percent (1%) of the Maximum Facility Amount that from time to time
has not been disbursed or canceled, beginning to accrue on the date of this
Agreement; and     (B)   a half percent (0.5%) of the Contingent Facility
Amount, beginning to accrue on the date of this Agreement and ceasing to accrue
on the Phase II Effectiveness Date;

  (ii)   with respect to the C Loan Facility, at the rate per annum equal to
fifty percent (50%) of the Applicable Margin specified in paragraph (ii)(x) of
the definition of “Applicable Margin”, on that part of the C Loan that from time
to time has not been disbursed or canceled, beginning to accrue on the date of
this Agreement;     (iii)   in each case, pro rated on the basis of a 360-day
year for the actual number of days elapsed; and     (iv)   payable
semi-annually, in arrears, on each Interest Payment Date, the first such payment
to be due on June 15, 2007.

     (b) The Borrowers shall also, on a joint and several basis, pay to IFC:

  (i)   a front-end fee on the A Loan Facility of six hundred thousand Dollars
($600,000), to be paid on the earlier of (x) the date which is thirty (30) days
after the date of this Agreement and (y) the date immediately preceding the date
of disbursement of the first A Loan;     (ii)   a front-end fee on the C Loan
Facility of one hundred and fifty thousand Dollars ($150,000), to be paid on the
earlier

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      of (x) the date which is thirty (30) days after the date of this Agreement
and (y) the date immediately preceding the date of disbursement of the C Loan;  
  (iii)   a portfolio supervision fee of fifteen thousand Dollars ($15,000) per
annum, payable on January 15 of each calendar year; and     (iv)   if the
Obligors and IFC agree to restructure all or part of the Loans, the Borrowers
and IFC shall negotiate in good faith an appropriate amount to compensate IFC
for the additional work of IFC staff required in connection with such
restructuring.

     (c) Following the disbursement of the C Loan and subject to
Section 2.07(f), the Borrowers, on a joint and several basis, shall pay the
Additional Compensation to IFC on April 30 of each year in respect of the
previous Financial Year up to and including the Final Maturity Date (pro rated
in respect of any partial Financial Year).
     Section 2.09. Currency and Place of Payments. (a) Each Obligor shall make
all payments of principal, interest, fees, and any other amount due to IFC under
this Agreement in the Loan Currency, in same day funds, to the account of IFC at
Northern Trust International Banking Corporation, New York, New York, U.S.A.,
ABA#026001122, for credit to IFC’s account number 10215220300, or at such other
bank or account in New York as IFC from time to time designates. Payments must
be received in IFC’s designated account no later than 1:00 p.m. New York time.
     (b) The tender or payment of any amount payable under this Agreement
(whether or not by recovery under a judgment) in any currency other than the
Loan Currency shall not novate, discharge or satisfy the obligation of the
Borrowers (or any other Obligor, as applicable) to pay in the Loan Currency all
amounts payable under this Agreement except to the extent that (and as of the
date when) IFC actually receives funds in the Loan Currency in the account
specified in, or pursuant to, Section 2.09 (a).
     (c) The Borrowers shall, on a joint and several basis, indemnify IFC
against any losses resulting from a payment being received or an order or
judgment being given under this Agreement in any currency other than the Loan
Currency or any place other than the account specified in, or pursuant to,
Section 2.09 (a). The Borrowers shall, as a separate obligation, and on a joint
and

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several basis, pay such additional amount as is necessary to enable IFC to
receive, after conversion to the Loan Currency at a market rate and transfer to
that account, the full amount due to IFC under this Agreement in the Loan
Currency and in the account specified in, or pursuant to, Section 2.09 (a).
     (d) Notwithstanding the provisions of Section 2.09 (a) and Section 2.09
(b), IFC may require the Borrowers, on a joint and several basis, to pay (or
reimburse IFC) for any Taxes, fees, costs, expenses and other amounts payable
under Section 2.15 (a) (Taxes) and Section 2.16 (Expenses) in the currency in
which they are payable, if other than the Loan Currency.
     Section 2.10. Allocation of Partial Payments. If at any time IFC receives
less than the full amount then due and payable to it under this Agreement, IFC
may allocate and apply the amount received in any way or manner and for such
purpose or purposes under this Agreement as IFC in its sole discretion
determines, notwithstanding any instruction that any Borrower may give to the
contrary.
     Section 2.11. Increased Costs. On each Interest Payment Date, the Borrowers
shall, on a joint and several basis, pay, in addition to interest, the amount
which IFC from time to time notifies to the Borrowers, on a joint and several
basis, in an Increased Costs Certificate as being the aggregate Increased Costs
of IFC accrued and unpaid prior to that Interest Payment Date.
     Section 2.12. Unwinding Costs. (a) If IFC incurs any cost, expense or loss
as a result of the Borrower:

  (i)   failing to borrow in accordance with a Loan request made pursuant to
Section 2.02 (Loan Procedure and Rollover);     (ii)   failing to prepay in
accordance with a notice of prepayment;     (iii)   prepaying all or any portion
of the Loans on a date other than an Interest Payment Date; or     (iv)   after
acceleration of any Loan, paying all or a portion of the Loans on a date other
than an Interest Payment Date;

then the Borrowers shall, on a joint and several basis, immediately pay to IFC
the amount that IFC from time to time notifies to the Borrowers as being the
amount of those costs, expenses or losses incurred; provided that such notice
sets forth in

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reasonable detail the basis on which such costs, expenses or losses were
calculated.
     (b) For the purposes of this Section, “costs, expenses or losses” include
any premium, penalty or expense incurred to liquidate or obtain third party
deposits, borrowings, hedges or swaps in order to make, maintain, fund or hedge
all or any part of any drawing or prepayment of any Loan, or any payment of all
or part of the Loans upon acceleration.
     Section 2.13. Suspension or Cancellation by IFC. (a) IFC may, by notice to
the Borrowers, suspend the right of the Borrowers to borrow Loans or cancel the
undisbursed portion of the Facility in whole or in part:

  (i)   if the first Loan has not been made by June 30, 2007, or such other date
as the parties agree;     (ii)   if any Event of Default has occurred and is
continuing or if the Event of Default specified in Section 7.02(f) (Events of
Default) is, in the reasonable opinion of IFC, imminent; or     (iii)   if any
event or condition has occurred which has or can be reasonably expected to have
a Material Adverse Effect.

     (b) Upon the giving of any such notice referred to in Section 2.13(a), the
right of each Borrower to draw the undisbursed portion of the Facility shall be
suspended or canceled, as the case may be. The exercise by IFC of its right of
suspension shall not preclude IFC from exercising its right of cancellation,
either for the same or any other reason specified in Section 2.13(a) and shall
not limit any other provision of this Agreement. Upon any cancellation the
Borrowers shall, on a joint and several basis, subject to paragraph (d) of this
Section 2.13, pay to IFC all fees and other amounts accrued (whether or not then
due and payable) under this Agreement up to the date of that cancellation.
     (c) Any portion of the Facility that is cancelled under this Section 2.13
may not be reborrowed.
     (d) In the case of partial cancellation of the Facility pursuant to
paragraph (a) of this Section 2.13, or Section 2.14(a) (Cancellation by the
Borrowers), interest on the amount then outstanding of the Loans remains payable
as provided in Section 2.03 (Interest).

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     Section 2.14. Cancellation by the Borrowers. (a) The Borrowers may, by
notice to IFC, irrevocably request IFC to cancel the undisbursed portion of the
Facility on the date specified in that notice (which shall be a date not earlier
than thirty (30) days after the date of that notice).
     (b) IFC shall, by notice to the Borrowers, cancel the undisbursed portion
of the Facility effective as of that specified date if, subject to
Section 2.13(e) (Suspension or Cancellation by IFC), IFC has received all fees
and other amounts accrued (whether or not then due and payable) under this
Agreement up to such specified date.
     (c) Any portion of the Facility that is cancelled under this Section 2.14
may not be reborrowed.
     Section 2.15. Taxes. (a) The Borrowers shall, on a joint and several basis,
pay or cause to be paid all Taxes (other than taxes, if any, payable on the
overall income of IFC) on or in connection with the payment of any and all
amounts due under this Agreement that are now or in the future levied or imposed
by any governmental Authority or any jurisdiction through or out of which a
payment is made.
     (b) All payments of principal, interest, fees and other amounts due under
this Agreement shall be made without deduction for or on account of any Taxes.
     (c) If any Borrower is prevented by operation of law or otherwise from
making or causing to be made those payments without deduction, the principal or
(as the case may be) interest, fees or other amounts due under this Agreement
shall be increased to such amount as may be necessary so that IFC receives the
full amount it would have received (taking into account any Taxes payable on
amounts payable by such Borrower under this subsection) had those payments been
made without that deduction.
     (d) If Section 2.15 (c) applies and IFC so requests, such Borrower shall
deliver to IFC official tax receipts evidencing payment (or certified copies of
them) within thirty (30) days of the date of that request.
     Section 2.16. Expenses. (a) The Borrowers shall, on a joint and several
basis, pay or, as the case may be, reimburse IFC or its assignees any amount
paid by them on account of, all taxes (including stamp taxes), duties, fees or
other charges payable on or in connection with the execution, issue, delivery,

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registration or notarization of the Transaction Documents and any other
documents related to this Agreement or any other Transaction Document.
     (b) The Borrowers shall, on a joint and several basis, pay to IFC or as IFC
may direct fees and expenses reasonably incurred by IFC in respect of:

  (i)   IFC’s technical and market consultants including the Independent Reserve
Engineer and the public accountants incurred in connection with the investment
by IFC provided for under this Agreement;     (ii)   IFC’s counsel in the Cayman
Islands, Delaware, England, France, Hungary, Turkey and Romania, incurred in
connection with:

  (A)   the preparation of the investment by IFC provided for under this
Agreement and any other Transaction Document;     (B)   the preparation and/or
review, execution and, where appropriate, translation and registration of the
Transaction Documents and any other documents related to them;     (C)   the
giving of any legal opinions required by IFC under this Agreement and any other
Transaction Document;     (D)   the administration by IFC of the investment
provided for in this Agreement or otherwise in connection with any amendment,
supplement or modification to, or waiver under, any of the Transaction
Documents;     (E)   the registration (where appropriate) and the delivery of
the evidences of indebtedness relating to the Loan and its disbursement;     (F)
  the occurrence of any Event of Default or Potential Event of Default; and

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  (G)   the release of the Security following repayment in full of the Loans;

  (iii)   the costs and expenses reasonably incurred by IFC in relation to the
supervision and administration of the Facility.     (iv)   the costs and
expenses incurred by IFC in relation to efforts to enforce or protect its rights
under any Transaction Document, or the exercise of its rights or powers
consequent upon or arising out of the occurrence of any Event of Default or
Potential Event of Default, including legal and other professional consultants’
fees on a full indemnity basis.

     Section 2.17. Limitation of Liability. Any amounts required to be paid by
either Toreador France or Madison Oil, as a result of its joint and several
liability as a Borrower, shall not exceed fifty million Dollars ($50,000,000) in
the aggregate; provided that, for the avoidance of doubt, this provision shall
not apply to any other Borrower.
ARTICLE III
Guarantee
     Section 3.01. Guarantee. In consideration of IFC making available the
Facility to the Borrowers, each of the Guarantors hereby irrevocably, absolutely
and unconditionally and on a joint and several basis (subject to Section 3.16
(Limitation of Liability):
     (a) guarantees to IFC the due and punctual payment of all of the Guaranteed
Obligations or any unpaid portion thereof whether at stated maturity, upon
acceleration or otherwise; and
     (b) undertakes that whenever the Borrowers do not pay any amount of the
Guaranteed Obligations when due, the Guarantors will immediately and in any
event, forthwith upon demand by IFC, pay that amount to IFC, in the Loan
Currency, and otherwise in the same manner in all respects as the Guaranteed
Obligations are required to be paid by the Borrowers under this Agreement.

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     Section 3.02. Indemnity. Each of the Guarantors hereby irrevocably,
absolutely and unconditionally and on a joint and several basis agrees, as a
primary obligation, to indemnify IFC from time to time on demand from and
against any loss incurred by IFC as a result of any of the Guaranteed
Obligations being or becoming void, voidable, unenforceable or ineffective for
any reason whatsoever, whether or not known to IFC, the amount of such loss
being the amount which IFC would otherwise have been entitled to recover from
the Borrowers.
     Section 3.03. Continuing Guarantee. (a) The guarantee and indemnity
contained in this Article 3 is each a continuing, separate and independent
obligation of each of the Guarantors, notwithstanding any settlement of account
or the occurrence of any other event or thing, and shall:

  (i)   remain in full force and effect until the Guaranteed Obligations have
been fully and irrevocably paid strictly in accordance with the provisions of
the Transaction Documents, regardless of any intermediate payment or discharge
in whole or in part; and     (ii)   survive the termination of the Transaction
Documents.

     (b) If for any reason the Guarantee ceases to be a continuing security, IFC
may either continue any then existing account(s) or open new account(s) for the
Borrowers, but in any case the Guarantors’ obligations under this Article 3
shall be unaffected by, and shall be calculated without regard to, any payment
into or out of any such account after the Guarantee has ceased to be a
continuing security.
     Section 3.04. No Set-off. All payments which each Guarantor is required to
make under this Article 3 shall be made without any set-off, counterclaim,
deduction or condition.
     Section 3.05. Taxes. (a) Each of the Guarantors shall pay or cause to be
paid all present and future taxes, duties, fees and other charges of whatsoever
nature, if any, now or in the future levied or imposed by any governmental
Authority or any jurisdiction through or out of which a payment is made on or in
connection with the payment of any and all amounts due under this Article 3.
     (b) All payments due under this Article 3 shall be made without deduction
for or on account of any such taxes, duties, fees or other charges.

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     (c) If any Guarantor is prevented by operation of law or otherwise from
making or causing to be made such payments without deduction, the amounts due
under this Article 3 shall be increased to such amount as may be necessary so
that IFC receives the full amount it would have received (taking into account
any such taxes, duties, fees or other charges payable on amounts payable by such
Guarantor under this subsection) had such payments been made without such
deduction.
     (d) If Section 3.05(c) above applies and IFC so requires, the relevant
Guarantor shall deliver to IFC an original receipt or a certified copy thereof
issued by the relevant Authority evidencing payment to that Authority of all
amounts required to be deducted in respect of payments due under the Guarantee.
     Section 3.06. Currency and Place of Payment.
     (a) Each Guarantor shall make all payments of any amount due to IFC under
this Article 3 in the Loan Currency, in same day funds, to the account of IFC
specified in Section 2.09 (Currency and Place of Payment).
     (b) The tender or payment of any amount payable under this Article 3
(whether or not by recovery under a judgment) in any currency other than the
Loan Currency shall not novate, discharge or satisfy the obligation of any
Guarantor to pay in the Loan Currency all amounts payable under the Guarantee
except to the extent that (and as of the date when) IFC actually receives funds
in the Loan Currency in the account specified in, or pursuant to,
Section 3.06(a).
     (c) Notwithstanding the provisions of Section 3.06(a) and Section 3.06(b),
IFC may require any Guarantor to pay (or reimburse IFC) for any Guaranteed
Obligations in the currency in which they are payable under this Agreement or
other Transaction Document, if other than the Loan Currency.
     (d) In no circumstances whatsoever will any Guarantor have the right to
make payments hereunder in any currency other than the Loan Currency in respect
of Guaranteed Obligations that have been re-denominated into a currency other
than the Loan Currency as a result of the application of any law, order, decree
or regulation in any jurisdiction other than the United States of America, and
in such circumstances the Guaranteed Obligations shall, for purposes of this
Agreement, be deemed to remain denominated and payable to IFC in the Loan
Currency. Each Guarantor hereby irrevocably and unconditionally waives any legal
or equitable defense it may have to the payment of any of the Guaranteed
Obligations in a currency other than the Loan Currency.

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     Section 3.07. Certificate Conclusive. A certificate of IFC stating:
     (a) any amount due and payable by any Guarantor under this Agreement; or
     (b) the amount of the Guaranteed Obligations, whether currently due and
payable or not,
shall be conclusive in the absence of manifest error.
     Section 3.08. Allocation. IFC may allocate and apply:
     (a) any amounts received by it or recovered under any security, and any
other document or agreement which is a security for any of the Guaranteed
Obligations; or
     (b) any amount received from or on behalf of any Guarantor under this
Agreement,
in each case, if such amount is less than the full amount then due and payable
to IFC under this Agreement, in any manner and for such purposes in respect of
this Agreement or any other Financing Document as IFC in its sole discretion
determines, notwithstanding any instruction that any Guarantor may give to the
contrary.
     Section 3.09. Waivers of Defenses (a) Each Guarantor’s obligations under
this Article III and IFC’s rights under this Agreement shall not be affected or
impaired or waived or precluded for additional or future exercise, by any act,
omission, circumstance, matter or thing (other than full and irrevocable payment
of the Guaranteed Obligations) which, but for this provision, would reduce,
release or prejudice any of its obligations under the Guarantee or which might
otherwise constitute a legal or equitable discharge or defense of a surety or a
guarantor, or otherwise discharge, impact or affect the obligations of any
Guarantor or the rights of IFC, including (whether or not known to such
Guarantor or to IFC):
     (i) any time, waiver, composition, forbearance or concession given to the
Borrowers or any other Person;
     (ii) any assertion of, or failure to assert, or delay in asserting, any
right, power or remedy against the Borrowers or any other Person, in respect of
any Security;

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     (iii) any amplification, amendment (however fundamental), variation or
replacement of the provisions of any Transaction Document or of any other
agreement or security between IFC and the Borrowers;
     (iv) any failure of the Borrowers or any Guarantor to comply with any
requirement of any law, regulation or order;
     (v) the dissolution, liquidation, reorganization or other alteration of the
legal status or structure of the Borrowers or any Guarantor;
     (vi) any purported or actual assignment of the Loans by IFC to any other
party;
     (vii) this Agreement or any other Transaction Document being in whole or in
part illegal, void, voidable, avoided, invalid, unenforceable or otherwise of
limited force and effect; or
     (viii) any failure by IFC to take, enforce, release, discharge, exchange or
substitute, or to realise the full value of, the security or any other security
taken in respect of the Guaranteed Obligations.
     Section 3.10. Immediate Recourse. Each Guarantor waives any right it may
have of first requiring IFC (or any trustee, agent or other person acting on its
behalf) to:
     (i) give any notice to, make a demand upon, or take any action against any
of the Borrowers;
     (ii) give any prior notice to any Guarantor with regard to any default by
the Borrowers; or
     (iii) proceed against, obtain a judgment, file a proof in a winding-up or
dissolution of any of the Borrowers, enforce any other rights or security or
make a demand or claim payment from any Person,
before making a claim against any Guarantor under this Agreement.
     Section 3.11. Non-Competition. If any amounts have become payable or have
been paid by any Guarantor under this Agreement, none of the Guarantors shall,
in respect of such monies, seek to enforce repayment, obtain the benefit of any
security, be indemnified or receive collateral from any of the Borrowers or a

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contribution from any other Person, or exercise any other rights or legal
remedies of any kind which may accrue to any Guarantor against any of the
Borrowers, including in any proceeding of the type referred to in Section 3.12,
and whether by way of subrogation, offset, counterclaim or otherwise, in respect
of the amount so payable or so paid (or in respect of any other monies for the
time being due to the Guarantor from the Borrowers) if and for so long as any
Guaranteed Obligations remain payable. Each Guarantor shall hold in trust for,
and forthwith pay or transfer to, IFC any payment or distribution or benefit of
security received by it contrary to this Section 3.11, including where
(notwithstanding Section 3.12) such payment, distribution or benefit was
received by IFC in any proceeding of the type referred to in Section 3.12.
     Section 3.12. Bankruptcy or Liquidation of Company. If any of the Borrowers
becomes bankrupt, enters into a composition or makes any arrangement with its
creditors, or is dissolved, liquidated or wound up, no Guarantor shall claim,
rank, prove or vote as a creditor of the relevant Borrower or its estate in
competition with IFC in respect of any amounts owing to such Guarantor by the
Borrowers on any account whatsoever, but instead shall give IFC the benefit of
any such proof and of all amounts to be received in respect of that proof until
all Guaranteed Obligations have been fully paid.
     Section 3.13. Appropriation of Monies. Until all of the Obligations have
been irrevocably paid in full, IFC (or any trustee, agent or other person acting
on its behalf) may:
     (a) refrain from applying or enforcing any other monies, security or rights
held or received by IFC (or such trustee, agent or other person) in respect of
the Guaranteed Obligations, or apply and enforce the same in such manner and
order as it sees fit (whether against the Guaranteed Obligations or otherwise)
and the Guarantor shall not be entitled to the benefit of the same; and
     (b) hold and keep for such time as it thinks prudent any monies received,
recovered or realized under the Guarantee, to the credit either of the
Guarantors or such other Person or Persons as it thinks fit or in a suspense
account.
     Section 3.14. Reinstatement. (a) Where any discharge (whether in respect of
the obligations of the Borrowers, any Guarantor or any security for those
obligations or otherwise) is made in whole or in part or any arrangement is made
on the faith of any payment, security or other disposition which is avoided or
must be restored on insolvency, liquidation or otherwise without limitation, the
liability of the Guarantors under this Agreement shall continue or shall be

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reinstated (as the case may be) as if such discharge or arrangement had not
occurred.
     (b) IFC (or any trustee, agent or other person acting on its behalf) may
concede or compromise any claim that any payment, security or other disposition
is liable to avoidance or restoration.
     Section 3.15. Additional Security. The Guarantee is in addition to, and is
not in any way prejudiced by, any collateral or other security now or hereafter
held by IFC, nor shall such collateral or other security held by IFC or the
liability of any Person for all or any part of the Guaranteed Obligations be in
any manner prejudiced or affected by the Guarantee.
     Section 3.16. Limitation of Liability. Any amounts required to be paid by
either Toreador France or Madison Oil, pursuant to this Article III, shall not
exceed fifty million Dollars ($50,000,000) in the aggregate; provided that, for
the avoidance of doubt, this provision shall not apply to any other Guarantor.
ARTICLE IV
Representations and Warranties
     Section 4.01. Representations and Warranties of Each Obligor. Each Obligor
represents and warrants that:
     (a) Organization and Authority. It is a company or corporation limited by
shares duly incorporated and validly existing under the laws of the jurisdiction
of its incorporation and has the corporate power and has obtained all required
Authorizations to own its assets, conduct its business as presently conducted
and to enter into, and comply with its obligations under, the Transaction
Documents to which it is a party or will, in the case of any Transaction
Document not executed as at the date of this Agreement, when that Transaction
Document is executed, have the corporate power to enter into, and comply with
its obligations under, that Transaction Document;
     (b) Validity. Each Transaction Document to which it is a party has been, or
will be, duly authorized and executed by it and constitutes, or will when
executed constitute, its valid and legally binding obligation, enforceable in
accordance with its terms and none of the Project Documents has been, or will
be, amended or modified except as permitted under this Agreement;

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     (c) No Conflict. Neither the making of any Transaction Document to which it
is a party nor (when all the Authorizations referred to in Section 5.01(d)
(Conditions of Disbursement) have been obtained) the compliance with its terms
will conflict with or result in a breach of any of the terms, conditions or
provisions of, or constitute a default or require any consent under, any
indenture, mortgage, agreement or other instrument or arrangement to which it is
a party or by which it is bound, or violate any of the terms or provisions of
its Charter or any Authorization, judgment, decree or order or any statute, rule
or regulation applicable to it;
     (d) Status of Authorizations. To the best of its knowledge, after due
inquiry, it has all of the Authorizations (other than Authorizations that are of
a routine nature and are obtained in the ordinary course of business and other
than, prior to the disbursement of the first A Loan, Authorizations necessary
with respect to the creation and perfection of the Security) needed by it to
conduct its business, carry out the Project and execute, and comply with its
obligations under, this Agreement and each of the other Transaction Documents to
which it is a party, and all such Authorizations have been obtained and are in
full force and effect and in respect of Authorizations not required to be
obtained for the purposes specified above at the time of making this
representation, it has no reason to believe that it will not obtain those
Authorizations in a timely manner.
     (e) No Amendments to Charter. Its Charter has not been amended since the
date, prior to the date of this Agreement, it provided such Charter to IFC;
     (f) No Immunity. Neither it nor any of its property enjoys any right of
immunity from set-off, suit or execution with respect to its assets or its
obligations under any Transaction Document;
     (g) Disclosure. All written information given by it to IFC relating to such
Obligor or the Project was and continues to be true and accurate (other than
projections and other forward-looking statements which it believes to be
reasonable) and does not contain any information which is misleading in any
material respect nor does it omit any information the omission of which makes
the information contained in it misleading in any material respect;
     (h) Financial Condition. Since December 31, 2005, it:

  (i)   has not suffered any change that has a Material Adverse Effect or
incurred any substantial loss or liability;

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  (ii)   has not undertaken or agreed to undertake any substantial obligation
other than in the ordinary course of business;

     (i) Financial Statements. Its financial statements for the period ending on
December 31, 2005:

  (i)   have been prepared in accordance with the Accounting Standards and give
a true and fair view of the financial condition of it as of the date as of which
they were prepared and the results of its operations during the period then
ended, subject to any adjustments to be made pursuant to the ongoing restatement
of such financial statements, provided that any such adjustment cannot
reasonably be expected to have a Material Adverse Effect;     (ii)   disclose
all of its liabilities (contingent or otherwise), and the reserves, if any, for
such liabilities and all unrealized or anticipated liabilities and losses
arising from commitments entered into by it (whether or not such commitments
have been disclosed in such financial statements);

     (j) Title to Assets and Permitted Liens.

  (i)   It has good and marketable title to all of the assets purported to be
owned by it and possesses a valid leasehold interest in all assets which it
purports to lease, in all cases free and clear of all Liens, other than
Permitted Liens and no contracts or arrangements, conditional or unconditional,
exist for the creation by it of any Lien, except for the Security;     (ii)  
the provisions of the Security Documents are effective to create, in favor of
IFC, legal, valid and enforceable Liens on or in all of the assets covered by
the Security; and     (iii)   all recordings and filings have been made in all
public offices, all necessary consents obtained and all other action has been
taken so that the Liens created by each Security Document constitute perfected
Liens on the Security with the priority specified in the Security Documents;

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provided that the representations in Sections 5.01(k)(ii) and (iii) shall not be
deemed made prior to the disbursement of the first A Loan;
     (k) Taxes. All of its tax returns and reports required by law to be filed
have been duly filed and all Taxes, obligations, fees and other governmental
charges upon it, or its properties, or its income or assets, which are due and
payable or to be withheld, have been paid or withheld, other than those:

  (i)   payable without penalty or interest; and     (ii)   being contested in
good faith by appropriate proceedings, and so long as such Obligor (A) has set
aside adequate reserves sufficient to promptly pay in full any amounts that such
Obligor may be ordered to pay on final determination of such proceedings and
(B) is diligently prosecuting such proceedings;

     (l) Litigation.

  (i)   It is not engaged in nor, to the best of its knowledge, after due
inquiry, threatened by, any litigation, arbitration or administrative
proceedings, the outcome of which could reasonably be expected to have a
Material Adverse Effect; and     (ii)   no judgment or order has been issued
which has or may reasonably be expected to have a Material Adverse Effect;

     (m) Compliance with Law. To the best of its knowledge and belief after due
inquiry, it is not in violation of any material statute or regulation of any
Authority;
     (n) Environmental Matters.

  (i)   to the best of its knowledge and belief, after due inquiry, there are no
material social or environmental risks or issues in relation to the Project;    
(ii)   it has not received nor is aware of either (A) any existing or threatened
complaint, order, directive, claim, citation or notice from any Authority or
(B) any material written

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      communication from any Person concerning the Project’s failure to comply
with any matter covered by the Performance Standards which failure has, or could
reasonably be expected to have, a Material Adverse Effect or a material adverse
impact on the implementation or operation of the Project in accordance with the
Performance Standards; and     (iii)   each of the Obligors are in compliance in
all material respects with applicable country and IFC environmental guidelines,
the Performance Standards, ESRS and the Corrective Action Plan.

     (o) Labor Matters. There are no ongoing or, to the best of its knowledge
after due inquiry, threatened, strikes, slowdowns or work stoppages by its
employees or any contractor with respect to the Project, to the extent that any
such threatened strikes, slowdowns or work stoppages may reasonably be expected
to have a Material Adverse Effect;
     (p) Prohibited Payments. Neither it nor any Affiliates, nor any Person
acting on its or their behalf, has made, with respect to the Project or any
transaction contemplated by this Agreement, any Prohibited Payment;
     (q) No Material Omissions. None of the representations and warranties in
this Section 4.01 omits any matter the omission of which makes any of such
representations and warranties misleading in any material respect;
     (r) Pension Plans. It is in compliance with its obligations with regards to
its pension and employee benefit plans, including its funding obligations with
regards to such pension and employee benefit plans; and
     (s) Capitalization. Schedule 8 (Group Ownership) sets forth a true and
accurate description of the Obligors’ capitalization and ownership structure.
     Section 4.02. Representatiions and Warranties of Madison Oil and Toreador
France. Each of Madison Oil and Toreador France represents and warrants that:
     (a) it has received valid consideration, in accordance with the
requirements of French law, for acting as Guarantor under the Guarantee [and
assuming joint and several liability as a Borrower]; and

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     (b) its incurrence of the liabilities under the Guarantee [and otherwise
under this Agreement] does not exceed its financial capacity as of the date of
this Agreement (as determined in accordance with French law).
     Section 4.03. IFC Reliance. Each Obligor acknowledges that it makes the
representations and warranties in Section 4.01 (Representations and Warranties
of Each Obligor) with the intention of inducing IFC to enter into this Agreement
on the basis of, and in full reliance on, each of such representations and
warranties.
ARTICLE V
Conditions of Disbursement
     Section 5.01. Conditions of First Disbursement. The obligation of IFC to
make the first Loan is subject to the fulfillment prior to or concurrently with
the making of that first Loan of the following conditions:
     (a) Transaction Documents. The Transaction Documents (other than the
Security Documents), each in form and substance satisfactory to IFC, have been
entered into by all parties to them and have become (or, as the case may be,
remain) unconditional and fully effective in accordance with their respective
terms (except for this Agreement having become unconditional and fully
effective, if that is a condition of any of those agreements), and IFC has
received a copy of each of those agreements to which it is not a party;
     (b) Charter Amendments. Each Obligor has delivered to IFC a certified copy
of its Charter (with all amendments thereto), and each such Charter is in a form
and substance reasonably satisfactory to IFC;
     (c) Authorizations. Each Obligor has obtained, and provided to IFC copies
of, all Authorizations listed in Annex B, and such other Authorizations not
listed in those Sections that may become necessary for such Obligor to have in
relation to:

  (i)   the Loans;     (ii)   the business of the relevant Obligor as it is
presently carried on and is contemplated to be carried on;     (iii)   the
Project and the implementation of the Financial Plan;

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  (iv)   the due execution, delivery, validity and enforceability of, and
performance by the relevant Obligor of their respective obligations under this
Agreement and the other Transaction Documents, the Project Documents and any
other documents necessary or desirable to the implementation of any of those
agreements or documents other than any Authorizations needed for the creation
and perfection of the Security; and     (v)   the remittance to IFC or its
assigns in the Loan Currency of all monies payable with respect to the
Transaction Documents;

and all those Authorizations are in full force and effect;
     (d) Legal Opinions. IFC has received legal opinions in a form satisfactory
to it from counsel for the Obligors and/or IFC in each of Delaware, France,
Cayman Islands, Turkey, Romania and Hungary and, if IFC so requests, from
counsel for IFC in France, covering such matters relating to the transactions
contemplated by this Agreement as IFC may reasonably request;
     (e) CFO’s Certificate. IFC has received a certification from the Company’s
chief financial officer confirming that, as at a date within sixty (60) days
prior to the date of the first Loan, the Company is in compliance with the
provisions of Section 6.01(m) (Affirmative Covenants), subject to any
adjustments to be made pursuant to the ongoing restatement of the Company’s
financial statements for the period ending on December 31, 2005, provided that
any such adjustment cannot reasonably be expected to have a Material Adverse
Effect;
     (f) Insurance. IFC has received copies of all insurance policies required
to be obtained pursuant to Section 6.04 (Insurance) and Annex C, and a
certification from the Company’s insurers or insurance agents confirming that
such policies are in full force and effect and all premiums then due and payable
under those policies have been paid;
     (g) Fees. IFC has received the fees which Section 2.08 (Fees) requires to
be paid before the date of the first Loan;
     (h) Legal Fees and Expenses. IFC has received the reimbursement of all
invoiced fees and expenses of IFC’s counsel as provided in Section 2.16 (b) (ii)

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or confirmation that those fees and expenses have been paid directly to that
counsel;
     (i) Authorization of Auditors. IFC has received a copy of the authorization
to the Auditors referred to in Section 6.01(e) (Affirmative Covenants);
     (j) Incumbency. IFC has received a Certificate of Incumbency and Authority
from each Borrower and the Company;
     (k) Appointment of Agent. Each Obligor has delivered to IFC evidence,
substantially in the form of Schedule 4, of appointment of an agent for service
of process pursuant to Section 8.05 (Applicable Law and Jurisdiction);
     (l) IFC has received evidence satisfactory to it confirming that:

  (i)   no more than six million Dollars ($6,000,000) is outstanding under the
Texas Facility; and     (ii)   no more than eleven million Dollars ($11,000,000)
is outstanding under the NATIXIS Facility; and

     (m) IFC has received:

  (i)   evidence satisfactory to it that that consideration referred to in
Section 4.02(a) (Representations and Warranties of Madison Oil and Toreador
France) has been paid (or, if in the form of an annual fee, the fee for the
remainder of 2006 and the whole of 2007 has been paid) and shall have received a
certificate from the chief financial officer of the Company certifying the
payment terms of such consideration; and     (ii)   the board resolutions of
Madison Oil and Toreador France in form and substance satisfactory to IFC.

     Section 5.02. Conditions of All Disbursements. The obligation of IFC to
make any Loan, including the first Loan, is also subject to the conditions that:
     (a) No Default. No Event of Default and, solely in respect of a Loan other
than a Rollover Loan, no Potential Event of Default has occurred and is
continuing;

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     (b) Use of Proceeds. The proceeds of that Loan:

  (i)   are, at the date of the relevant request, needed by the relevant
Borrower for the purpose of the Project, or will be needed for that purpose
within three (3) months of that date; and     (ii)   are not in reimbursement
of, or to be used for, expenditures in the territories of any country that is
not a member of the World Bank or for goods produced in or services supplied
from any such country;

     (c) No Material Adverse Effect. Since the date of this Agreement nothing
has occurred which has or can reasonably be expected to have a Material Adverse
Effect;
     (d) No Material Loss or Liability. Since the date of this Agreement none of
the Obligors has incurred any material loss or liability except in the normal
course of business (except such liabilities as may be incurred in accordance
with Section 6.02 (Negative Covenants));
     (e) Representations and Warranties. The representations and warranties made
in Article IV are true and correct in all material respects on and as of the
date of that Loan with the same effect as if those representations and
warranties had been made on and as of the date of that Loan (but in the case of
Section 4.01(c) (Representations and Warranties of Each Obligor), without the
words in parentheses);
     (f) Legal Opinions. IFC has received (if it so requires) legal opinions in
a form satisfactory to it from counsel for the Obligors in each of Delaware,
France, Cayman Islands, Turkey, Romania and Hungary, with respect to any matters
relating to that Loan;
     (g) No Violations. Following the making of the relevant Loan, no Obligor
will be in violation of:

  (i)   its Charter;     (ii)   any provision contained in any document to which
it is a party (including this Agreement) or by which it is bound; or

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  (iii)   any law, rule, regulation, Authorization or agreement or other
document binding on it directly or indirectly limiting or otherwise restricting
its borrowing power or authority or its ability to borrow;

     (h) Borrower. If the relevant Borrower delivering the Loan request pursuant
to Section 2.02(a) (Facility Procedure and Rollover) is Toreador Romania, then
the Romanian Concession Transfer Date shall have occurred;
     (i) Available Amount and Required Ratios. Following the making of any Loan,
including any Rollover Loan under Section 2.02(c) (Loan Procedure and Rollover):

  (i)   the aggregate outstanding amount of all Loans under the Facility shall
not exceed the Available Amount; and     (ii)   the Company shall be in
compliance with the Required Ratios; and

     (j) Updated IFC Base Case. If IFC so requires in connection with the
disbursement of any Loan (including any Rollover Loan), the Borrower shall
provide to IFC an updated IFC Base Case confirming compliance with the
requirements of Section 5.02(i).
     (k) French Borrowers. If the relevant Borrower delivering the Loan request
pursuant to Section 2.02(a) (Facility Procedure and Rollover) is Madison Oil
France or Toreador Energy France S.C.S.:

  (i)   an account shall be opened by such Borrower in Turkey and/or Romania;  
  (ii)   the proceeds of the relevant Loan shall be deposited into such
account(s); and     (iii)   the proceeds of the relevant Loan shall be used for
the purposes of financing the capital expenditure and the working capital needs
of such Borrower in Turkey and Romania.

For the avoidance of doubt, the proceeds of the relevant loan will not be made
available in France.

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     Section 5.03. Additional Conditions of the first A Loan. The obligation of
IFC to make the first A Loan is subject to the fulfillment prior to or
concurrently with the making of that A Loan of the following additional
conditions:
     (a) C Loan. The C Loan has been fully disbursed;
     (b) Security. Each Obligor has obtained, and provided to IFC, copies of all
Authorizations that are necessary for such Obligor to create and perfect the
Security, and the Security Documents, each in form and substance satisfactory to
IFC, have been entered into by all parties to them and have become (or, as the
case may be, remain) unconditional and fully effective in accordance with their
respective terms, and the Security has been duly created and perfected as first
ranking security interests in all assets and rights subject to the Security
Documents;
     (c) Legal Opinions. IFC has received legal opinions in a form satisfactory
to it from the Obligors’ and/or IFC’s counsel in each of Delaware, France,
Cayman Islands, Hungary, England, and at the option of IFC, Turkey and Romania,
covering such matters relating to the transactions contemplated by this
Agreement as IFC may reasonably request, including, without limitation
confirmation that the Security Documents have been executed and have become
fully effective;
     (d) NATIXIS Facility and Texas Facility. Each of the NATIXIS Facility and
the Texas Facility has been repaid in full, all further commitments in respect
thereof have been cancelled, and the security interests granted in relation
thereto have been terminated;
     (e) Annual Monitoring Report. The Company and IFC have agreed on the form
of the Annual Monitoring Report;
     (f) Auditor’s Certificate. IFC has received a certification from the
Auditors confirming that the Company is in compliance with the provisions of
Section 6.01(m) (Affirmative Covenants) and that adequate accounting, management
and cost control systems are in place; and
     (g) Obligors’ Liability. IFC has received evidence as it deems reasonably
necessary confirming that each Obligor remains fully liable for all of its
obligations under this Agreement.

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     Section 5.04. Certification. (a) The relevant Borrower shall deliver to IFC
with respect to each Loan request:

  (i)   certifications, in the form included in Schedule 2, relating to the
conditions specified in Section 5.02 (Conditions of All Disbursements) (other
than the condition in Section 5.02(f)) expressed to be effective as of the date
of that Loan, and in the case of Section 5.02(d), also certified by the Auditors
if IFC so requires; and     (ii)   such evidence as IFC may reasonably request
of the proposed utilization of the proceeds of that Loan or the utilization of
the proceeds of any prior Loan.

     (b) In the case of any Rollover Loan, except where any Borrower makes a
specific representation or where certifications or evidence is requested by IFC
pursuant to Section 5.04(a) above, each Borrower shall be deemed to have
provided such certifications as of the date of such Rollover Loan.
     Section 5.05 Conditions for IFC Benefit. The conditions in Section 5.01
through Section 5.03 are for the benefit of IFC and may be waived only by IFC in
its sole discretion.
ARTICLE VI
Particular Covenants
     Section 6.01. Affirmative Covenants. Unless IFC otherwise agrees:
     (a) Corporate Existence; Conduct of Business. Each Obligor shall maintain
its corporate existence and comply with its Charter; and shall implement the
Project and conduct its business with due diligence and efficiency and in
accordance with sound international oil, financial and business practices;
     (b) Use of Proceeds. Each Borrower shall cause the financing specified in
the Financial Plan to be applied exclusively to the Project;

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     (c) Compliance with Laws; Taxes: Each Obligor shall:

  (i)   conduct its business in compliance, in all material respects, with all
applicable requirements of law; and     (ii)   file by the date due all returns,
reports and filings in respect of Taxes required to be filed by it and pay, when
due, all Taxes due and payable by it;

     (d) Accounting and Financial Management. Each Obligor shall promptly
install, if not yet installed, and maintain an accounting and control system,
management information system and books of account and other records, which
together adequately give a fair and true view of the financial condition of such
Obligor and the results of its operations in conformity with the Accounting
Standards;
     (e) Auditors.

  (i)   Each Obligor shall appoint and maintain at all times a firm of
internationally recognized independent public accountants acceptable to IFC as
auditors of such Obligor; and     (ii)   the Company shall irrevocably
authorize, in the form of Schedule 6, the Auditors (whose fees and expenses
shall be for the account of the Company) to communicate directly with IFC at any
time regarding the Company’s financial statements (both audited and unaudited),
accounts and operations, and provide to IFC a copy of that authorization;
provided that, prior to any communications with the Auditors, IFC shall provide
prior written notice to the Company and, provided that, no Potential Event of
Default or Event of Default has occurred, allow the Company a reasonable
opportunity to participate in such discussions; and     (iii)   the Company
shall, no later than thirty (30) days after any change in Auditors, issue a
similar authorization to the new Auditors and provide a copy thereof to IFC;

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     (f) Access. Upon IFC’s request, and with reasonable prior written notice,
each Obligor shall permit representatives of IFC and the CAO, during normal
office hours, to:

  (i)   visit any of the sites and premises where the business of such Obligor
is conducted;     (ii)   inspect any of the sites, facilities, plants and
equipment of such Obligor;     (iii)   have access to the books of account and
all records of such Obligor; and     (iv)   have access to those employees,
agents, contractors and subcontractors of such Obligor who have or may have
knowledge of matters with respect to which IFC seeks information;

provided that (i) no such reasonable prior notice shall be necessary if an Event
of Default or Potential Event of Default is continuing or if special
circumstances so require and (ii) in the case of the CAO, such access shall be
for the purpose of carrying out the CAO’s Role;
     (g) Environmental Matters. Through its employees, agents, contractors and
subcontractors, each Obligor shall ensure:

  (i)   that the design, construction, operation, maintenance, management and
monitoring of the Project’s sites, plants, equipment, operations and facilities
are undertaken in compliance with (A) the Corrective Action Plan, and (B) the
applicable requirements of the Performance Standards; and     (ii)   that it
otherwise complies with the Environmental, Health and Safety Guidelines, the
Performance Standards, all applicable environmental laws, and the environmental
assessment reports, including the ESRS.

     (h) Review of Annual Monitoring Report. The Company shall periodically
review the form of the Annual Monitoring Report and advise IFC as to whether
revision of the form is necessary or appropriate in light of changes to any
Obligor’s business or operations, or in light of environmental or social risks

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identified by any Obligor’s S&E Management System; and revise the form as agreed
with IFC;
     (i) S&E Management System. The Company, Toreador Turkey and Toreador
Romania shall use all reasonable efforts to ensure the continuing implementation
and operation of the S&E Management System to assess and manage social and
environmental issues in a manner consistent with the Performance Standards and
the Corrective Action Plan;
     (j) Authorizations. Each Obligor shall:

  (i)   obtain and maintain in force (and where appropriate, renew in a timely
manner) all Authorizations, including without limitation the Authorizations
specified in Annex B, which are necessary for the implementation of the Project,
the carrying out of its business and operations generally and the compliance by
it with all its obligations under the Transaction Documents; and     (ii)  
comply with all the conditions and restrictions contained in, or imposed on it
by, those Authorizations;

     (k) Security; Further Assurances. The Obligors shall execute (or cause to
be executed as the case may be) all of the Security Documents, and ensure the
Security referred to therein is perfected and in full force and effect on or
before February 28, 2006. From time to time, each Obligor shall execute,
acknowledge and deliver or cause to be executed, acknowledged and delivered such
further instruments as may reasonably be requested by IFC for perfecting or
maintaining in full force and effect the Security or for re-registering the
Security or otherwise and, if necessary, create and perfect additional Security,
to enable it to comply with its obligations under the Transaction Documents;
     (l) Royalties. Each Obligor shall pay all royalties and all license and
other fees, which are properly assessed against it, not later than the due date
therefor;
     (m) Required Ratios. The Company shall maintain at all times, the following
ratios (the “Required Ratios”) on a Consolidated Basis at the following levels:

  (i)   Life of Loan Coverage Ratio of not less than:

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  (A)   1.2:1.0 in 2006 and 2007;     (B)   1.3:1.0 in 2008; and     (C)  
1.4:1.0 in 2009 and each subsequent year thereafter;

  (ii)   Reserve Tail Ratio of not less than twenty five percent (25%);    
(iii)   Adjusted Financial Debt to EBITDA ratio of not more than 3.0:1.0;    
(iv)   Liabilities to Tangible Net Worth Ratio of not more than 60:40; and    
(v)   Interest Coverage Ratio of not less than 3.0:1.0;

     (n) Maintenance of Operating Records. Each Obligor shall ensure adequate
segregation of costs including financing thereof incurred in connection with the
Project and any other activity in its books of account and other financial
records in conformity with applicable law, the applicable Project Document, and
any other relevant agreement binding on it and in accordance with the Accounting
Principles;
     (o) Public Disclosure. The Company shall publicly disclose, annually its
share (and any share of any Subsidiary of the Company) of all payments made to
local, regional or central governmental Authorities in Turkey and Romania,
unless such disclosure has already been made by the respective Authorities;
     (p) Pension and Employee Benefits. Each Obligor shall comply with all
requirements relating to its pension and employee benefit plans;
     (q) Environmental and Social Manager. The Company, Toreador Turkey and
Toreador Romania shall appoint, and maintain at all times the appointment of,
the Environmental and Social Manager;
     (r) Accounts Agreements; Reserve Account.

  (i)   On or prior to the date of the first A Loan, the Obligors shall
establish and maintain the accounts provided for in the French Accounts
Agreement (including the Reserve Account) and enter into the French Accounts
Agreement.

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  (ii)   The Obligors shall ensure that a minimum amount shall be maintained in
the Reserve Account as follows:

  (1)   On or prior to the Phase II Effectiveness Date:

  (i)   from and after January 1, 2009 until June 30, 2009, US$10,000,000;    
(ii)   from and after July 1, 2009 until December 31, 2009, US$ 20,000,000;    
(iii)   from and after January 1, 2010 until June 30, 2010, US$30,000,000; and  
  (iv)   from and after July 1, 2010, US$35,000,000; and

  (2)   from and after the occurrence of the Phase II Effectiveness Date:

  (i)   from and after January 1, 2009 until June 30, 2009, US$15,000,000;    
(ii)   from and after July 1, 2009 until December 31, 2009, US$ 25,000,000;    
(iii)   from and after January 1, 2010 until June 30, 2010, US$40,000,000; and  
  (iv)   from and after July 1, 2010, US$50,000,000;

  (iii)   on or prior to the date of the first A Loan, the Obligors shall
establish and maintain the accounts provided for in the Turkish Accounts
Agreement and enter into the Turkish Accounts Agreement and ensure, through
arrangements reasonably acceptable to IFC, that all revenues of Toreador Turkey
from the sale of oil and gas in Turkey be deposited into such accounts;     (iv)
  on or prior to the date of the first A Loan, the Obligors shall establish and
maintain the accounts provided for in

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      the Romanian Accounts Agreement and enter into the Romanian Accounts
Agreement and ensure, through arrangements reasonably acceptable to IFC, that
all revenues of Toreador Romania from the sale of oil and gas in Romania be
deposited into such accounts; and     (v)   Madison Oil France and/or Toreador
Energy France S.C.S., shall open an account in Turkey and/or Romania prior to
delivering the Loan request pursuant to Section 2.02(a) (Facility Procedure and
Rollover) for the purposes of paying the capital expenditure and working capital
requirements in Turkey and Romania.

     (s) Sales Contracts. Each Obligor shall enter into and maintain in effect
at all times sales contracts for the sale of all production from its Borrowing
Base Assets and shall promptly, after execution thereof, deliver to IFC a signed
copy of each such agreement; and
     (t) Payments to Madison Oil and Toreador France. Each Obligor (other than
Madison Oil and Toreador France) shall ensure that, to the extent that the
consideration referred to in Section 4.02(a) (Representations and Warranties of
Madison Oil and Toreador France) is to be paid other than in the form of a
single up front payment, such consideration is paid to Madison Oil and Toreador
France in accordance with the terms agreed by Madison Oil and Toreador France.
     Section 6.02. Negative Covenants. Unless IFC otherwise agrees:
     (a) Distributions. No Obligor shall make any Restricted Payment except for:

  (i)   payment of dividends required under applicable law;     (ii)   payment
of dividends on the Series A-1 Convertible Preferred Stock, provided that:

  (A)   prior to and after paying such payment, no Event of Default or Potential
Event of Default shall have occurred and be continuing; and     (B)   such
payment is out of retained earnings; provided further that the retained earnings
out of which such

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      payments may be made should in no event include any amount resulting from
the revaluation of assets;

  (iii)   payment of interest and principal on Financial Debt owed to another
Obligor, provided that prior to and after paying such payment, no Event of
Default or Potential Event of Default shall have occurred and be continuing; and
    (iv)   cash dividends paid to another Obligor, provided that prior to and
after paying such dividend:

  (A)   no Event of Default or Potential Event of Default shall have occurred
and be continuing; and     (B)   such payment or distribution is out of retained
earnings in the immediately preceding Financial Year; provided further that the
retained earnings out of which such payments or distributions may be made should
in no event include any amount resulting from the revaluation of assets;

     (b) Capital Expenditures. No Obligor shall incur expenditures or
commitments for expenditures for fixed or other non-current assets, other than
in accordance with the annual capital expenditure budget of the Company
(including any proposed acquisition of oil and gas assets) which has been
approved by IFC; provided that no such prior IFC approval shall be required if:

  (i)   such expenditures or commitments of all Obligors do not exceed an
aggregate amount equivalent to five million Dollars ($5,000,000) in any
Financial Year; and     (ii)   after giving effect to such expenditures or
commitments the Company (on a Consolidated Basis) would be in compliance with
Section 6.01(m) (Affirmative Covenants);

     (c) Permitted Financial Debt. No Obligor shall incur, assume or permit to
exist any Financial Debt except:

  (i)   the Loans;     (ii)   the Existing Convertible Senior Notes;

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  (iii)   other debt to any other Obligor;     (iv)   on or prior to the earlier
of (i) February 28, 2007, and (ii) the date of the making of the first A Loan,
Financial Debt under the Texas Facility which does not exceed, in the aggregate,
six million Dollars ($6,000,000);     (v)   on or prior to the earlier of
(i) February 28, 2007, and (ii) the date of the making of the first A Loan,
Financial Debt under the NATIXIS Facility which does not exceed, in the
aggregate, eleven million Dollars ($11,000,000);     (vi)   short-term unsecured
Financial Debt incurred in the ordinary course of business in an aggregate
amount which does not exceed two million Dollars ($2,000,000); and     (vii)  
non-speculative hedging programs permitted under Section 6.02(e).

     (d) Leases. No Obligor shall enter into any agreement or arrangement to
lease any property or equipment of any kind, except:

  (i)   Financial Leases, and then only to the extent permitted under the other
provisions of this Section 6.02; and     (ii)   otherwise only to the extent the
aggregate payments under all such agreements or arrangements do not exceed the
equivalent of one million Dollars ($1,000,000) in any Financial Year;

     (e) Derivative Transactions. No Obligor shall enter into any Derivative
Transaction or assume the obligations of any party to any Derivative Transaction
except pursuant to non-speculative hedging programs entered into in the ordinary
course of business;
     (f) Guarantees and Other Obligations. No Obligor shall enter into any
agreement or arrangement to guarantee or, in any way or under any condition,
assume or become obligated for all or any part of any financial or other
obligation of another Person except as provided in this agreement or guarantees
that are entered into in the ordinary course of business which, in the
aggregate, do not create liabilities in excess of exceed one million Dollars
($1,000,000) at any time.

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     (g) Permitted Liens. No Obligor shall create or permit to exist any Lien on
any of its property, revenues or other assets, present or future, or on any
property, revenues or other assets, present or future, of any of its
Subsidiaries except for:

  (i)   the Security;     (ii)   the naming of IFC or any Obligor as loss payee
under its insurance policies;     (iii)   any Lien arising from any tax,
assessment or other governmental charge or other Lien arising by operation of
law, in each case if the obligation underlying any such Lien is not yet due or,
if due, is being contested in good faith by appropriate proceedings so long as:

  (A)   those proceedings do not involve any substantial danger of the sale,
forfeiture or loss of any part of the Project, title thereto or any interest
therein, nor interfere in any material respect with the use or disposition
thereof or the implementation of the Project or the carrying on of its business;
and     (B)   such Obligor has set aside adequate reserves sufficient to
promptly pay in full any amounts that it may be ordered to pay on final
determination of any such proceedings;

  (iv)   prior to the earlier of February 28, 2007 and the making of the first A
Loan, Liens in effect on the date of this Agreement which were created to secure
the NATIXIS Facility; and     (v)   prior to the earlier of February 28, 2007
and the making of the first A Loan, Liens in effect on the date of this
Agreement which were created to secure the Texas Facility;

     (h) Arm’s Length Transactions. No Obligor shall enter into any transaction
except in the ordinary course of business on the basis of arm’s-length
arrangements (including, without limitation, transactions whereby such Obligor
might pay more than the ordinary commercial price for any purchase or might

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receive less than the full ex-works commercial price (subject to normal trade
discounts) for its products) except for any such lawful arrangement with another
Obligor;
     (i) Purchasing or Sales Agency. No Obligor shall establish any sole and
exclusive purchasing or sales agency for a material portion of its purchases or
sales;
     (j) Profit Sharing Arrangements. No Obligor shall enter into any
partnership, profit-sharing or royalty agreement or other similar arrangement
whereby its income or profits are, or might be, shared with any other Person
other than as contemplated by the Project Documents or any other agreement,
concession or license in the ordinary course of the oil and gas business;
     (k) Management Contracts. No Obligor shall enter into any management
contract or similar arrangement whereby its business or operations are managed
by any other Person, except for, in respect of Toreador Romania, management
arrangements with Lotus Petrol S.R.L. which are acceptable to IFC;
     (l) Subsidiaries. No Obligor shall form or have any Subsidiary except for
the Subsidiaries described in Schedule 8 (Group Ownership);
     (m) Permitted Investments. No Obligor shall make or permit to exist loans
or advances to, or deposits (except commercial bank deposits in the ordinary
course of business) with, other Persons or investments in any Person or
enterprise, other than:

  (i)   short-term investment grade marketable securities acquired solely to
give temporary employment to its idle funds;     (ii)   loans or advances to
another Obligor;     (iii)   investments in the Borrowing Base Assets; and    
(iv)   in respect of investments to purchase or acquire assets, to the extent
permitted under Section 6.02(u);

     (n) Fundamental Changes. No Obligor shall change:

  (i)   its Charter in any manner which would be inconsistent with the
provisions of any Transaction Document;

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  (ii)   its Financial Year;     (iii)   the Financial Plan; or     (iv)   the
nature or scope of the Project or change the nature of its present business or
operations or engage in any Prohibited Activities;

     (o) Asset Sales. No Obligor shall sell, transfer, lease or otherwise
dispose of all or a material part of its Borrowing Base Assets, other than
inventory, whether in a single transaction or in a series of transactions,
related or otherwise, other than assets that have been worn out or are obsolete
and are replaced or upgraded within one hundred and eighty (180) days on a basis
that is acceptable to IFC or that are no longer required for the purposes of
that Obligor’s business in each case in the ordinary course of business and in a
manner consistent with the Transaction Documents; provided that, the proceeds of
any sale, transfer, lease or disposal of any Borrowing Base Assets permitted
under this Section 6.02(o) shall be applied in accordance with Section 2.07(b)
(Prepayment and Mandatory Prepayment);
     (p) Merger, Consolidation, Etc. No Obligor shall undertake or permit any
merger, spin-off, consolidation or reorganization; provided that:

  (i)   any Subsidiary of a Guarantor (other than a Borrower) may merge or
consolidate with such Guarantor or a wholly-owned Subsidiary of such Guarantor;
provided further that the surviving entity remains a Guarantor; and     (ii)  
any Obligor may merge or consolidate with another Obligor; provided further that
if any such Obligor is a Borrower, then the surviving entity shall be such
Borrower;

     (q) Amendments and Waivers of Material Agreements. No Obligor shall
terminate, amend or grant any waiver with respect to any provision of:

  (i)   any Project Document; or     (ii)   the Existing Convertible Senior
Notes

          if any such action could reasonably be expected to have a Material
Adverse Effect;

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     (r) Use of Proceeds. No Borrower shall use or permit the use of the
proceeds of any Loan in the territories of any country that is not a member of
the World Bank or for reimbursements of expenditures in those territories or for
goods produced in or services supplied from any such country;
     (s) Amendment of Corrective Action Plan. The Company shall not amend the
Corrective Action Plan in any material respect without the prior written consent
of IFC;
     (t) Prohibited Payments. No Obligor shall make (and shall not authorize or
permit any Affiliate or any other Person acting on its behalf to make) with
respect to the Project or any transaction contemplated by this Agreement, any
Prohibited Payment. Each Obligor further covenants that should IFC notify it of
its concerns that there has been a violation of the provisions of this Section
or of Section 4.01(p) of this Agreement, it shall cooperate in good faith with
IFC and its representatives in determining whether such a violation has
occurred, and shall respond promptly and in reasonable detail to any notice from
IFC, and shall furnish documentary support for such response upon IFC’s request;
     (u) Inventory and Additional Property. No Obligor shall purchase or
otherwise acquire property other than:

  (i)   purchases of inventory, materials and equipment in the ordinary course
of business;     (ii)   expenditures to the extent permitted under Section
6.02(b); and

     provided that, with respect to acquisitions of oil and gas assets, IFC
shall not unreasonably withhold or delay its consent;
     (v) Sale-Leaseback Transaction. No Obligor shall enter into any
sale-leaseback transaction, unless:

  (i)   the asset(s) subject to such transaction are not subject to the
Security;     (ii)   after giving effect thereto, the Company is in compliance
with Section 6.01(m) (Affirmative Covenants) on a Consolidated Basis; and

 

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  (iii)   such Obligor receives fair market value and one hundred percent (100%)
cash consideration for such sale-leaseback transaction, paid at the time of
closing thereof; and

     (w) Land Acquisitions. No Obligor shall acquire any land, except where such
acquisition is in accordance with the Performance Standards, specifically,
Performance Standard No. 5 (Land Acquisition and Resettlement Framework).
     Section 6.03. Reporting Requirements. Unless IFC otherwise agrees:
     (a) Quarterly Financial Statements and Reports. As soon as available but in
any event within forty-five (45) days after the end of each quarter of its
Financial Year:

  (i)   each Obligor shall deliver to IFC, two (2) copies of such Obligor’s
complete unaudited financial statements for such quarter and for the Financial
Year to date. Such financial statements shall be prepared on an unconsolidated
basis and, with respect to the Company, on a Consolidated Basis, in each case,
in accordance with the Accounting Standards and certified by the Company’s chief
financial officer;     (ii)   the Company shall deliver to IFC, a report on the
consolidated operations of the Company and its Subsidiaries during that quarter
and for the Financial Year to date, in the form of, and addressing the topics
listed in, Schedule 7; provided that the operations of each Borrowing Base
Asset, shall be described in individual sections of the report;     (iii)   the
Company shall deliver to IFC, a report (in the form pre-agreed by IFC), signed
by its chief financial officer, concerning compliance with Section 6.01(m)
(Affirmative Covenants) (including a clear description of the methodology used
in the respective calculations);

     (b) Annual Financial Statements and Reports. As soon as available but in
any event within ninety (90) days after the end of its Financial Year, the
Company shall deliver to IFC:

 

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  (i)   two (2) copies of its complete and audited financial statements for that
Financial Year (which are in agreement with its books of account) prepared, on
an unconsolidated basis and Consolidated Basis, in accordance with the
Accounting Standards, together with the Auditors’ audit report on them, all in
form satisfactory to IFC;     (ii)   a management letter and any other
communication from its Auditors commenting, with respect to that Financial Year,
on, among other things, the adequacy of the Company’s financial control
procedures, accounting systems and management information system;     (iii)   a
report (in the form pre-agreed by IFC), signed by its chief financial officer
and reviewed by its Auditors, concerning compliance with Section 6.01(m)
(Affirmative Covenants) (including a clear description of the methodology used
in the respective calculations) and the calculation of the Additional
Compensation;     (iv)   a statement by the Company of all transactions between
the Company and each of its Affiliates during that Financial Year, and a
certification by the Company’s chief financial officer that those transactions
were on the basis of arm’s-length arrangements;     (v)   a capital and
operating budget, for the Company and its Subsidiaries, for the next Financial
Year, in form and substance satisfactory to IFC;     (vi)   a report which
details revenues paid and attributed to any Authorities in Turkey and Romania in
that Financial Year, presented in separate sections with respect to each
country; and     (vii)   an updated Local Development Impact Data Sheet.

     (c) Management Letters. Each Obligor shall deliver to IFC, promptly
following receipt, a copy of any management letter or other communication sent
by the Auditors (or any other accountants retained by such Obligor) to any
Obligor or its management in relation to such Obligor’s financial, accounting
and

 

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other systems, management or accounts, if not provided pursuant to Section 6.03
(b) (ii);
     (d) Annual Monitoring Report. Within ninety (90) days after the end of its
Financial Year, the Company shall deliver to IFC the corresponding Annual
Monitoring Report confirming compliance with the Corrective Action Plan, the
social and environmental covenants set forth in Sections 6.01 (Affirmative
Covenants) and 6.02 (Negative Covenants) or, as the case may be, identifying any
non-compliance or failure, and the actions being taken to remedy it;
     (e) Notice of Accidents, Etc. Within three (3) days after its occurrence,
the Company shall notify IFC of any social, labor, health and safety, security
or environmental incident, accident or circumstance having, or which could
reasonably be expected to have, a Material Adverse Effect or material adverse
impact on the implementation or operation of the Project in accordance with the
Performance Standards, specifying in each case the nature of the incident,
accident, or circumstance and any effect resulting or likely to result
therefrom, and promptly thereafter, a report on the measures the Company is
taking or plans to take to address them and to prevent any future similar event;
and keep IFC informed of the on-going implementation of those measures and
plans.
     (f) Shareholder Matters. The Company shall give notice to IFC, concurrently
with the Company’s notification to its shareholders, of any meeting of its
shareholders, such notice to include the agenda of the meeting; and, as soon as
available, deliver to IFC two (2) copies of:

  (i)   all notices, reports and other communications of such Obligor to its
shareholders, whether any such communication has been made on an individual
basis or by way of publication in a newspaper or other communication medium; and
    (ii)   the minutes of all shareholders’ meetings;

     (g) Changes to Project; Material Adverse Effect. The Company shall promptly
notify IFC of any proposed change in the nature or scope of the Project or the
business or operations of the Company or its Subsidiaries and of any event or
condition that has or may reasonably be expected to have a Material Adverse
Effect;

 

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     (h) Litigation. Promptly upon becoming aware of any litigation or
administrative proceedings before any Authority or arbitral body which has or
may reasonably be expected to have a Material Adverse Effect, each Obligor shall
notify IFC by facsimile of that event specifying the nature of that litigation
or those proceedings and the steps the relevant Obligor is taking or proposes to
take with respect thereto;
     (i) Default. Promptly upon the occurrence of an Event of Default or
Potential Event of Default, any Obligor with notice of such Event of Default or
Potential Event of Default shall notify IFC (unless such Obligor is aware that
IFC has already been notified by another Obligor) by facsimile specifying the
nature of that Event of Default or Potential Event of Default and any steps
being taken to remedy it;
     (j) Other Information. Each Obligor shall promptly provide to IFC such
other information as IFC from time to time requests about the any Obligor, its
assets and the Project; and
     (k) IFC Base Case. Within ninety (90) days of the end of each Financial
Year, the Company shall provide IFC with a copy of the IFC Base Case in
accordance with Section 6.05 (IFC Base Case).
     (l) Reserves Certification. The Company shall promptly provide to IFC a
Reserve Certification, prepared at the Company’s expense, within sixty (60) days
of the end of each Financial Year and, from time to time but no more than two
(2) times per Financial Year, as otherwise reasonably requested by IFC.
     Section 6.04 . Insurance.
     (a) Insurance Requirements and Undertakings. Unless IFC otherwise agrees,
the Company and/or each Obligor shall:

  (i)   insure and keep insured, with financially sound and reputable insurers
and reinsurers, all its assets and business against all insurable losses,
including the insurances specified in Annex C and any insurance required by law;
    (ii)   punctually pay any premium, commission and any other amounts
necessary for effecting and maintaining in force each insurance policy;

 

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  (iii)   promptly notify the relevant insurer of any claim by the Company
and/or Obligor under any policy written by that insurer and diligently pursue
that claim;     (iv)   comply with all warranties under each policy of
insurance;     (v)   not do or omit to do, or permit to be done or not done,
anything which might prejudice the Company’s or such Obligor’s, or, where IFC is
a loss payee or an additional named insured, IFC’s right to claim or recover
under any insurance policy; and     (vi)   not vary, rescind, terminate, cancel
or cause a material change to any insurance policy;

provided always that if at any time and for any reason any insurance required to
be maintained under this Agreement shall not be in full force and effect, then
IFC shall thereupon or at any time while the same is continuing be entitled (but
have no obligation) on its own behalf to procure that insurance at the expense
of the Company and/or Obligor and to take all such steps to minimize hazard as
IFC may consider expedient or necessary.
     (b) Policy Provisions. Each insurance policy required to be obtained
pursuant to this Section shall be on terms and conditions acceptable to IFC, and
shall contain provisions to the effect that:

  (i)   no policy can expire nor can it be canceled or suspended by neither the
Company, any Obligor nor the insurer for any reason (including failure to renew
the policy or to pay the premium or any other amount) unless IFC and, in the
case of expiration or if cancellation or suspension is initiated by the insurer,
the Company or relevant Obligor receives at least forty-five (45) days’ notice
(or such lesser period as IFC may agree with respect to cancellation, suspension
or termination in the event of war and kindred peril) prior to the effective
date of termination, cancellation or suspension;     (ii)   IFC is named as
additional named insured on all liability policies;

 

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  (iii)   where relevant, all its provisions (except those relating to limits of
liability) shall operate as if they were a separate policy covering each insured
party; and     (iv)   on every insurance policy on each of the Company’s and/or
Obligor’s assets which are the subject of the Security and for business
interruption or delayed start-up, IFC is named as loss payee for any claim, or
any series of claims arising with respect to the same event, whose aggregate
amount is the equivalent of one million Dollars ($1,000,000) or more, other than
in respect of insurance claims filed prior to the date hereof.

     (c) Application of Proceeds.

  (i)   At its discretion, IFC may remit the proceeds of any insurance paid to
it to the Borrowers to repair or replace the relevant damaged assets or may
apply those proceeds towards any amount payable to IFC under this Agreement,
including to repay or prepay all or any part of the Loans in accordance with
Section 2.07 (Prepayment and Mandatory Prepayment); provided that there shall be
no minimum amount or notice period for any such prepayment.     (ii)   The
Company and/or each Obligor shall use any insurance proceeds it receives
(whether from IFC or directly from the insurers) for loss of or damage to any
asset solely to replace or repair that asset.

     (d) Reporting Requirements. Unless IFC otherwise agrees, the Company and/or
each Obligor shall provide to IFC the following:

  (i)   as soon as possible after its occurrence, notice of any event which
entitles the Company and/or such Obligor to claim for an aggregate amount
exceeding the equivalent of five hundred thousand Dollars ($500,000) under any
one or more insurance policies;     (ii)   within thirty (30) days after any
insurance policy is issued to the Company and/or such Obligor, a copy of that
policy incorporating any loss payee/additional named insured provisions required
under Section 6.04 (b) (iv) (unless that

 

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policy has already been provided to IFC pursuant to Section 5.01(i) (Conditions
of First Disbursement));

  (iii)   not less than ten (10) days prior to the expiry date of any insurance
policy (or, for insurance with multiple renewal dates, not less than ten
(10) days prior to the expiry date of the policy on the principal asset), a
certificate of renewal from the insurer, insurance broker or agent confirming
the renewal of that policy and the renewal period, the premium, the amounts
insured for each asset or item and any changes in terms or conditions from the
policy’s issue date or last renewal, and confirmation from the insurer that
provisions naming IFC as loss payee or additional named insured, as applicable,
remain in effect;     (iv)   such evidence of premium payment as IFC may from
time to time request; and     (v)   any other information or documents on each
insurance policy as IFC requests from time to time.

     Section 6.05. IFC Base Case. The IFC Base Case shall be prepared in a
manner acceptable to IFC, and the Net Cash Flow and the Relevant Figures
determined as of and from the most recent calculation date, in accordance with
the IFC Base Case Assumptions, the latest Reserve Certification and other
relevant information, and submitted by the Company to IFC within ninety days
(90) days of the end of each Fiscal Year, subject to the provisions of Section
6.03(m)(Required Ratios), and at any time requested by IFC, including, without
limitation on or prior to any Interest Payment Date.
ARTICLE VII
Events of Default
     Section 7.01. Acceleration after Default. If any Event of Default occurs
and is continuing (whether it is voluntary or involuntary, or results from
operation of law or otherwise), IFC may, by notice to the Borrowers, require
that all or any of the Borrowers to repay the Loans or such part of the Loans as
is specified in that notice. On receipt of any such notice, the Borrowers shall
immediately repay the Loans (or that part of the Loans specified in that notice)
and pay all interest accrued on it and any other amounts then payable under this
Agreement. Each of

 

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the Borrowers waives any right it might have to further notice, presentment,
demand or protest with respect to that demand for immediate payment.
     Section 7.02 . Events of Default. It shall be an Event of Default if:
     (a) Failure to Pay Principal or Interest. The Borrowers fail to pay when
due any part of the principal of, or interest on, the Loans and such failure
continues for a period of five (5) days;
     (b) Failure to Pay Other IFC Loans. Any Obligor fails to pay when due any
part of the principal of, or interest on, or any other amount owing in respect
of any loan from IFC to any Obligor other than the Loans and any such failure
continues for the relevant grace period allowed for in the agreement providing
for that loan;
     (c) Failure to Comply with Obligations. Any Obligor fails to comply with
any of its obligations under this Agreement or any other Transaction Document or
any other agreement between any Obligor and IFC (other than for the payment of
the principal of, or interest on, the Loans or any other loan from IFC to any
Obligor), and except to the extent such failure is a failure to comply with
Section 6.01(f) (Payments to Madison Oil and Toreador France) any such failure
continues for a period of thirty (30) days after the date on which IFC notifies
the relevant Obligor of that failure, or such Obligor otherwise becomes aware of
such failure;
     (d) Failure by Other Parties to Comply with Obligations. Any party to a
Transaction Document (other than IFC or the Obligors) fails to observe or
perform any of its obligations under that Transaction Document, and any such
failure continues for a period of thirty (30) days after the date on which IFC
notifies any of the Obligors of that failure or any Obligor otherwise becomes
aware of that failure;
     (e) Misrepresentation. Any representation or warranty made in Article IV or
in connection with the execution of, or any request (including a request for
Loan) under, this Agreement or any other Transaction Document is found to be
incorrect in any material respect;
     (f) Expropriation, Nationalization, Etc. Any Authority condemns,
nationalizes, seizes, or otherwise expropriates all or any substantial part of
the property or other assets of any Obligor or of the Obligors’ respective share
capital, or assumes custody or control of that property or other assets or of
the business or operations of any Obligor or of the Obligors’ respective share
capital, or takes any

 

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action for the dissolution or disestablishment of any Obligor or any action that
would prevent any Obligor or their respective officers from carrying on all or a
substantial part of its business or operations;
     (g) Voluntary Proceedings. Any Obligor:

  (i)   takes any step (including petition, giving notice to convene or
convening a meeting) for the purpose of making, or proposes or enters into, any
arrangement, assignment or composition with or for the benefit of its creditors;
    (ii)   ceases or threatens to cease to carry on its business or any
substantial part of its business; or     (iii)   is unable, or admits in writing
its inability to pay its Liabilities as they fall due or otherwise becomes
insolvent;

     (h) Involuntary Proceedings. An order is made or an effective resolution
passed or analogous proceedings taken for any Obligor’s winding up, bankruptcy
or dissolution or a petition is presented or analogous proceedings taken for the
winding up or dissolution of any Obligor and is not discharged within sixty
(60) days;
     (i) Appointment of Liquidator; Attachment. Any encumbrancer lawfully takes
possession of, or a liquidator, judicial custodian, receiver, administrative
receiver or trustee or any analogous officer is appointed in respect of the
whole or any material part of the undertaking or assets of any Obligor; or an
attachment, sequestration, distress or execution (or analogous process) is
levied or enforced upon or issued against any of the assets or property of any
Obligor and is not discharged within sixty (60) days; or
     (j) Analogous Events to Bankruptcy. Any other event occurs which under any
applicable law would have an effect analogous to any of those events listed in
Section 7.02 (g), Section 7.02 (h) or Section 7.02 (i);
     (k) Cross-Default. Any Obligor fails to make any payment in respect of any
of its Liabilities (other than the Loans or any other loan from IFC to such
Obligor) with an aggregate outstanding amount of five hundred thousand Dollars
($500,000) or more or to perform any of its obligations under any agreement
pursuant to which there is outstanding any Liability (other than any such
failure occurring soley as the result of the failure to file or deliver timely
financial statements for the quarter ended September 30, 2006), and any such
failure

 

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continues for more than any applicable period of grace or any such Liability
becomes prematurely due and payable or is placed on demand;
     (l) Failure to Maintain Authorizations. Any Authorization necessary for any
Obligor to perform and observe its obligations under any Transaction Document,
or to carry out the Project, is not obtained when required or is rescinded,
terminated, lapses or otherwise ceases to be in full force and effect, including
with respect to the remittance to IFC or its assignees, in the Loan Currency, of
any amounts payable under any Transaction Document, and is not restored or
reinstated within sixty (60) days of notice by IFC to such Obligor requiring
that restoration or reinstatement;
     (m) Revocation, Etc., of Security Documents. Any Security Document or any
of its material provisions:

  (i)   is revoked, terminated or ceases to be in full force and effect or
ceases to provide the security intended, without, in each case, the prior
consent of IFC;     (ii)   becomes unlawful or is declared void; or     (iii)  
is repudiated or its validity or enforceability is challenged by any Person and
any such repudiation or challenge continues for a period of sixty (60) days
during which period such repudiation or challenge has no effect;

     (n) Revocation, Etc., of Transaction Documents. Any Transaction Document
(other than a Security Document) or any of its material provisions:

  (i)   is revoked, terminated or ceases to be in full force and effect without,
in each case, the prior consent of IFC, and that event, if capable of being
remedied, is not remedied to the satisfaction of IFC within thirty (30) days of
IFC’s notice to the Borrowers (except for Marketing Contracts or Gas Sales
Agreements which expire in accordance with their respective terms and are
replaced with equivalent contracts satisfactory to IFC); or     (ii)   becomes
unlawful or is declared void; or     (iii)   is repudiated or the validity or
enforceability of any of its provisions at any time is challenged by any Person
and

 

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such repudiation or challenge is not withdrawn within thirty (30) days of IFC’s
notice to the Borrowers requiring that withdrawal; provided that no such notice
shall be required or, as the case may be, the notice period shall terminate if
and when such repudiation or challenge becomes effective;
     (o) Non-Performance of Project Documents. Any Project Document:

  (i)   is breached by any party to it and such breach has or could reasonably
be expected to have a Material Adverse Effect; or     (ii)   is revoked,
terminated or ceases to be in full force and effect without the prior consent of
IFC, or performance of any of the material obligations under any such agreement
becomes unlawful or any such agreement is declared to be void or is repudiated
or its validity or enforceability at any time is challenged by any party to it.

     (p) Change of Control. A Change of Control occurs.
     Section 7.03. Bankruptcy. If any Borrower is liquidated or declared
bankrupt, the Loans, all interest accrued on them and any other amounts payable
under this Agreement will become immediately due and payable without any
presentment, demand, protest or notice of any kind, all of which the Borrowers
waive.
ARTICLE VIII
Miscellaneous
     Section 8.01. Saving of Rights. (a) The rights and remedies of IFC in
relation to any misrepresentation or breach of warranty on the part of any
Obligor shall not be prejudiced by any investigation by or on behalf of IFC into
the affairs of such Obligor, by the execution or the performance of this
Agreement or by any other act or thing which may be done by or on behalf of IFC
in connection with this Agreement and which might, apart from this Section,
prejudice such rights or remedies.

 

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     (b) No course of dealing or waiver by IFC in connection with any condition
of disbursement of the Loans under this Agreement shall impair any right, power
or remedy of IFC with respect to any other condition of disbursement, or be
construed to be a waiver thereof; nor shall the action of IFC with respect to
any disbursement affect or impair any right, power or remedy of IFC with respect
to any other disbursement.
     (c) Unless otherwise notified to the Borrowers by IFC and without prejudice
to the generality of Section 8.01 (b), the right of IFC to require compliance
with any condition under this Agreement that may be waived by IFC with respect
to any disbursement is expressly preserved for the purposes of any subsequent
disbursement.
     (d) No course of dealing and no failure or delay by IFC in exercising, in
whole or in part, any power, remedy, discretion, authority or other right under
this Agreement or any other agreement shall waive or impair, or be construed to
be a waiver of, such or any other power, remedy, discretion, authority or right
under this Agreement, or in any manner preclude its additional or future
exercise; nor shall the action of IFC with respect to any default, or any
acquiescence by it therein, affect or impair any right, power or remedy of IFC
with respect to any other default.
     Section 8.02 . Notices. Any notice, request or other communication to be
given or made under this Agreement shall be in writing. Subject to Section 6.03
(h) and (i) (Reporting Requirements) and Section 7.05 (Enforcement), any such
communication may be delivered by hand, airmail, facsimile or established
courier service to the party’s address specified below or at such other address
as such party notifies to the other party from time to time, and will be
effective upon receipt.
     For each Obligor:
4809 Cole Avenue
Suite 108
Dallas, Texas 75205
Facsimile: (214) 559 3933
Attention: Douglas W. Weir
                  Senior Vice President and Chief Fianncial Officer

 

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    With a copy to:   Haynes and Boone, LLP
 
      901 Main Street, Suite 3100
 
      Dallas, Texas 75202
 
      Attention: Paul H. Amiel
 
      Facsimile : (214) 200-0555

     For IFC:
International Finance Corporation
2121 Pennsylvania Avenue, N.W.
Washington, D.C. 20433
United States of America
Facsimile: (202) 974-4322
Attention: Director, Oil, Gas, Mining and Chemicals Department
With a copy (in the case of communications relating to payments) sent to the
attention of the Director, Department of Financial Operations, at:
Facsimile: 202-522-7419.
     Section 8.03. English Language. (a) All documents to be provided or
communications to be given or made under this Agreement shall be in the English
language.
     (b) To the extent that the original version of any document to be provided,
or communication to be given or made, to IFC under this Agreement or any other
Transaction Document is in a language other than English, that document or
communication shall be accompanied by an English translation certified by an
Authorized Representative to be a true and correct translation of the original.
IFC may, if it so requires, obtain an English translation of any document or
communication received in a language other than English at the cost and expense
of the Borrower. IFC may deem any such English translation to be the governing
version between the Borrower and IFC.
     Section 8.04. Term of Agreement. This Agreement shall continue in force
until all monies payable under it have been fully paid in accordance with its
provisions.

 

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     Section 8.05. Applicable Law and Jurisdiction. (a) This Agreement is
governed by and shall be construed in accordance with the laws of England.
     (b) For the exclusive benefit of IFC, each Obligor irrevocably agrees that
any legal action, suit or proceeding arising out of or relating to this
Agreement or any other Transaction Document to which such Obligor is a party may
be brought in the courts of England. By the execution of this Agreement, each
Obligor irrevocably submits to the non-exclusive jurisdiction of such courts in
any such action, suit or proceeding. Final judgment against any Obligor in any
such action, suit or proceeding shall be conclusive and may be enforced in any
other jurisdiction by suit on the judgment, a certified or exemplified copy of
which shall be conclusive evidence of the judgment, or in any other manner
provided by law.
     (c) Nothing in this Agreement shall affect the right of IFC to commence
legal proceedings or otherwise sue any Obligor in any other appropriate
jurisdiction, or concurrently in more than one jurisdiction, or to serve
process, pleadings and other papers upon any Obligor in any manner authorized by
the laws of any such jurisdiction.
     (d) Each Obligor hereby irrevocably designates, appoints and empowers HTD
Services Ltd, with offices currently located at Irongate House, Duke’s Place,
London, EC3A 7HX, as its authorized agent solely to receive for and on its
behalf service of the writ of summons or other legal process in any action, suit
or proceeding arising out of or relating to this Agreement or any Transaction
Document which IFC may bring in the courts of England.
     (e) As long as this Agreement or any other Transaction Document to which an
Obligor is a party remains in force, such Obligor shall maintain a duly
appointed and authorized agent to receive for and on its behalf service of the
writ of summons or other legal process in any action, suit or proceeding brought
by IFC in the courts of England with respect to this Agreement or such other
Transaction Documents. Such Obligor shall keep IFC advised of the identity and
location of such agent.
     (f) Each Obligor irrevocably waives:

  (i)   any objection which it may have now or in the future to the laying of
the venue of any action, suit or proceeding in any court referred to in this
Section; and

 

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  (ii)   any claim that any such action, suit or proceeding has been brought in
an inconvenient forum.

     (g) To the extent that any Obligor may be entitled in any jurisdiction to
claim for itself or its assets immunity with respect to its obligations under
this Agreement or any other Transaction Document to which it is a party from any
suit, execution, attachment (whether provisional or final, in aid of execution,
before judgment or otherwise) or other legal process or to the extent that in
any jurisdiction that immunity (whether or not claimed), may be attributed to it
or its assets, such Obligor irrevocably agrees not to claim and irrevocably
waives such immunity to the fullest extent now or in the future permitted by the
laws of such jurisdiction.
     (h) Each Obligor also consents generally with respect to any proceedings
arising out of or in connection with this Agreement or any other Transaction
Document to which it is a party to the giving of any relief or the issue of any
process in connection with such proceedings including, without limitation, the
making, enforcement or execution against any property whatsoever (irrespective
of its use or intended use) of any order or judgment which may be made or given
in such proceedings.
     (i) To the extent that the any Obligor may, in any suit, action or
proceeding brought in any of the courts referred to in Section 8.05 (b) or a
court elsewhere arising out of or in connection with this Agreement or any other
Transaction Document to which such Obligor is a party, be entitled to the
benefit of any provision of law requiring IFC in such suit, action or proceeding
to post security for the costs of such Obligor, or to post a bond or to take
similar action, such Obligor hereby irrevocably waives such benefit, in each
case to the fullest extent now or in the future permitted under the laws of the
jurisdiction in which such court is located.
     (j) Each Obligor also irrevocably consents, if for any reason such
Obligor’s authorized agent for service of process of summons, complaint and
other legal process in any action, suit or proceeding is not present in England,
to service of such papers being made out of those courts by mailing copies of
the papers by registered air mail, postage prepaid, to such Obligor at its
address specified pursuant to Section 8.02 (Notices). In such a case, IFC shall
also send by facsimile, or have sent by facsimile, a copy of the papers to such
Obligor.
     Section 8.06. Disclosure of Information. (a) IFC may disclose any documents
or records of, or information about, this Agreement or any other Transaction
Document, or the assets, business or affairs of the Obligors to:

 

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  (i)   its outside counsel, auditors and rating agencies,     (ii)   any Person
who intends to purchase a participation in a portion of the Loans, and     (iii)
  any other Person as IFC may deem appropriate in connection with any proposed
sale, transfer, assignment or other disposition of IFC’s rights under this
Agreement or any Transaction Document or otherwise for the purpose of exercising
any power, remedy, right, authority, or discretion relevant to this Agreement or
any other Transaction Document.

     (b) Each Obligor acknowledges and agrees that, notwithstanding the terms of
any other agreement between such Obligor and IFC, a disclosure of information by
IFC in the circumstances contemplated by Section 8.06 (a) does not violate any
duty owed to such Obligor under this Agreement or under any such other
agreement.
     Section 8.07. Indemnification. To the fullest extent permitted by
applicable law, each of the Borrowers agree, on a joint and several basis, to
indemnify and hold harmless IFC and its officers, directors, employees, agents
and advisors (each, an “Indemnified Party”) from and against any and all claims,
damages, losses, liabilities (including without limitation liabilities under
applicable securities laws) and expenses (including, without limitation,
reasonable fees and expenses of counsel) that may be incurred by or asserted or
awarded against any Indemnified Party, in each case arising out of or in
connection with or by reason of, or in connection with the preparation for a
defense of, any investigation, litigation or proceeding arising out of, related
to or in connection with this Agreement or any other Financing Document, any of
the transactions contemplated herein or the actual or proposed use of the
proceeds of the Loans, in each case whether or not such investigation,
litigation or proceeding is brought by a Borrower, its directors, shareholders
or creditors or an Indemnified Party or any Indemnified Party is otherwise a
party thereto and whether or not the transactions contemplated hereby are
consummated, except to the extent such claim, damage, loss, liability or expense
is found in a final, non-appealable judgment by a court of competent
jurisdiction to have resulted from such Indemnified Party’s gross negligence or
willful misconduct.
     Section 8.08. Successors and Assignees. This Agreement binds and benefits
the respective successors and assignees of the parties. However, no

 

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Obligor may assign or delegate any of its rights or obligations under this
Agreement without the prior consent of IFC.
     Section 8.09. Amendments, Waivers and Consents. Any amendment or waiver of,
or any consent given under, any provision of this Agreement shall be in writing
and, in the case of an amendment, signed by the parties.
     Section 8.10. Counterparts. This Agreement may be executed in several
counterparts, each of which is an original, but all of which together constitute
one and the same agreement.
     IN WITNESS WHEREOF, the parties have caused this Agreement to be signed in
their respective names as of the date first above written.

                  TOREADOR RESOURCES CORPORATION
 
           
 
           
 
  By :   /s/ Douglas W. Weir    
 
           
 
           
 
  Name:   Douglas W. Weir    
 
           
 
  Title :   Senior Vice President and CFO    
 
                TOREADOR TURKEY LTD.
 
           
 
  By :   /s/ Douglas W. Weir    
 
           
 
           
 
  Name:   Douglas W. Weir    
 
           
 
  Title :   Director and Officer    
 
                TOREADOR ROMANIA LTD.
 
           
 
  By :   /s/ Douglas W. Weir    
 
           
 
           
 
  Name:   Douglas W. Weir    
 
           
 
  Title :   Director and Officer    

 

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                  MADISON OIL FRANCE SAS
 
           
 
  By :   /s/ E. Rousset    
 
           
 
           
 
  Name:   E. Rousset    
 
           
 
  Title :   President    
 
                TOREADOR ENERGY FRANCE S.C.S.
 
           
 
  By :   /s/ E. Rousset    
 
           
 
           
 
  Name:   E. Rousset    
 
           
 
  Title :   General Manager    
 
                TOREADOR INTERNATIONAL HOLDING L.L.C.
 
           
 
  By :   /s/ Douglas W. Weir    
 
           
 
           
 
  Name:   Douglas W. Weir    
 
           
 
  Title:   Director and Officer    
 
                INTERNATIONAL FINANCE CORPORATION
 
           
 
  By:   /s/ Rashad Kaldany    
 
           
 
           
 
  Name:   Rashad Kaldany    
 
           
 
  Title :        
 
           

 

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ANNEX A
Page 1 of 1
PROJECT COST AND FINANCIAL PLAN
TRANSACTION COST AND FINANCIAL PLAN (2006 to 2010)

                                  Transaction Cost US$ MM   Phase 1     Phase 2
    Total     %    
Turkey and Romania CAPEX
    107       29       136       67 %
Other CAPEX
    44       23       67       33 %
Total CAPEX
    151       52       203       100 %  

                                  Financial Plan US$ MM   Phase 1     Phase 2  
  Total     %    
IFC A
    25       15       40       20 %
IFC C
    10       —       10       5 %
Convertible Bond
    86       —       86       42 %
Internal Cash Generation
    30       37       67       33 %
Total Financing
    151       52       203       100 %  

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ANNEX B
Page 1 of 2
KEY AUTHORIZATIONS
(See Sections 3.01 (d) and 4.01 (e) of the Loan and Guarantee Agreement)
COMPANY AUTHORIZATIONS

1.   Board Resolution dated December 14, 2006 for Toreador Turkey Ltd.   2.  
Board Resolution dated December 14, 2006 for Toreador Romania Ltd.   3.   Board
Resolution dated December 14, 2006 for Madison Oil France SAS.   4.   Board
Resolution dated December 14, 2006 for Toreador Energy France S.C.S.   5.  
Board Resolution dated December 14, 2006 for Toreador International Holding
L.L.C.   6.   Board Resolution dated December 14, 2006 for Toreador Resources
Corporation   7.   Board Resolution of Madison Oil France SAS expressly
authorizing the Guarantee and the assumption of joint and several liability
under the Loan and Guarantee Agreement as a Borrower   8.   Board Resolution of
Toreador Energy France S.C.S. expressly authorizing the Guarantee and the
assumption of joint and several liability under the Loan and Guarantee Agreement
as a Borrower.

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ANNEX B
Page 2 of 2
EXPLORATION/EXPLOITATION AUTHORIZATION

              Country   Block   # Authorizations   Entity
TURKEY
  W. Black Sea
T. Black Sea
C. Black Sea
E. Black Sea
SE. Turkey
Van
Buyukbey   8
7
2
3
1
9
1   TTL
TTL
TTL
TTL
TTL
TTL
TTL                   31                   Cendere
Zeynel   2
1   TTL
MTI               Total   3
34                   Romania   Fauresti
Moinesti
Viperesti   1
1
1   TRL
TRL
TRL               Total   3
3                   France   Courtenay
Aufferville
Nemour   1
1
1   TEF
TEF
TEF                   3                   Charmottes
Neocomian   1
2   TEF
TEF               Total   3
6                   Hungary   Szolnok   1   THL   Tompa   1   THL              
Total   2
2                   International Total   45    

     
TTL – Toreador Turkey Ltd.
  MTI – Madison Turkey Inc.
TRL – Toreador Romania Ltd.
  TEF – Toreador Energy France
THL – Toreador Hungary Ltd.
   

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ANNEX C
Page 1 of 4
INSURANCE REQUIREMENTS
(See Section 6.04 (a) of the Loan and Guarantee Agreement)
The Company shall effect and maintain the following insurance covers, at all
times during the period of the Loan and Guarantee Agreement, under forms of
policies and with insurers and reinsurers acceptable to IFC, in the following
terms:
1. Operational Insurances – Energy Package
     A. COVERAGE

  Section A:   All Risks (including Sabotage & Terrorism) of Physical Loss or
Damage to property forming part of the Borrowers’ operations and/or other
property in the care, custody or control of the insured including Removal of
Debris and/or Wreck and for Sue & Labor.     Section B:   Operator’s Extra
Expense including Control of Well, Extended and Restoration Limited Cost
Redrill, Seepage and Pollution and Clean Up and Containment, Underground
Blowout, Making Wells Safe, Removal of Debris/Wreck, Evacuation Expenses,
Deliberate Well Firing. To include extension for Care, Custody and Control.    
Section C:   Comprehensive General Liabilities arising out of or incidental to
the Borrowers’ operations.     Section D:   Loss of Production Income following
an event covered under Section A or Section B, to include contingent Loss of
Production Income; provided that such insurance shall only be required prior to
disbursement of the

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      first A Loan under the A Loan Facility          Section E:   Builder’s
risk, where construction value exceeds US$5,000,000.

     B. SUM INSURED/LIMIT OF LIABILITY

       Section A:   An amount sufficient to reinstate the property    
     Section B:   US$10,000,000 for any one occurrence Onshore

  (i)   Prior to disbursement of the first A Loan under the A Loan Facility,
US$20,000,000, for any one occurrence Offshore; and     (ii)   After
disbursement of the first A Loan under the A Loan Facility, (x) US$25,000,000 in
respect of jack-up rigs, and (y) US$50,000,000 in respect of semisubmersible or
other rigs, in each case, for any one occurrence Offshore.

       Section C:   US$10,000,000 for any one occurrence.          Section D:  
Fixed expenses including debt service during an indemnity period of 12 months.  
       Section E:   An amount equivalent to the construction project value.

     C. DEDUCTIBLES AND/OR EXCESS

       Section A:   US$250,000          Section B:   US$250,000 any one
occurrence Onshore
US$750,000 any one occurrence Offshore

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  Section C:   US$100,000 any one occurrence     Section D:   Maximum 30 days
Section E: US$250,000     Section E:   US$250,000

2. Miscellaneous
     Other insurance which,

  a)   is customary or necessary to comply with local or other requirements,
such as contractual insuring responsibility, Workers’ Compensation and
Employers’ Liability insurances in relation to all workmen employed at the sites
or in connection with its operation; motor vehicle liability insurance for all
vehicles owned, hired, leased, used or borrowed for use in the countries of
operation;     b)   is considered by the Borrowers to be desirable or prudent,
or required by IFC; or     c)   are required by local legislation and the
Concession Agreements.

3. General

  a)   The Borrowers shall procure that each policy effected pursuant to this
schedule shall provide:

  i)   that the protection which is granted to IFC under the policies is not to
be invalidated by any act or failure to act on the part of the Borrowers, their
contractors or subcontractors;     ii)   that IFC is not responsible to the
insurers or reinsurers for the payment of insurance premiums or any other
obligations of the Borrowers.

  b)   Each policy effected pursuant to this Annex C:

  i)   shall be in such form and substance as is consistent with the obligations
of the Borrowers under this Annex C, as may be approved by IFC.

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ANNEX D
Page 1 of 2
PROHIBITED ACTIVITIES

1.   Production or activities involving harmful or exploitative forms of forced
labor/harmful child labor.   2.   Production or trade in any product or activity
deemed illegal under host country laws or regulations or international
conventions and agreements.   3.   Production or trade in weapons and munitions.
  4.   Production or trade in alcoholic beverages (excluding beer and wine).  
5.   Production or trade in tobacco   6.   Gambling, casinos and equivalent
enterprises.   7.   Trade in wildlife or wildlife products regulated under
Convention on International Trade in Endangered Species of Wild Fauna and Flora.
  8.   Production or trade in radioactive materials.   9.   Production or trade
in or use of unbonded asbestos fibers.   10.   Commercial logging operations or
the purchase of logging equipment for use in primary tropical moist forest
(prohibited by the Forestry policy).   11.   Production or trade in products
containing PCBs.   12.   Production or trade in pharmaceuticals subject to
international phase outs or bans.   13.   Production or trade in
pesticides/herbicides subject to international phase out.   14.   Production or
trade in ozone depleting substances subject to international phase out.   15.  
Drift net fishing in the marine environment using nets in excess of 2.5 km in
length.

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16.   Knowingly provide or permit to be provided any product or services (or any
text, pictures, graphics, sound, video, or other data in connection with any
services) that:

  (a)   infringe on any third party’s copyright, patent, trademark, trade secret
or other proprietary rights or rights or publicity of privacy;     (b)   violate
any law, statute, ordinance or regulation (including, without limitation, the
laws and regulations governing export control);     (c)   are defamatory, trade
libelous, unlawfully threatening or harassing;     (d)   are obscene or
pornographic or contain child pornography;     (e)   violate any laws regarding
competition, privacy, anti-discrimination or false advertising; or     (f)  
contain any viruses, Trojan horses, worms, time-bombs, cancel bots or other
computer routines that are intended to damage, detrimentally interfere with,
surreptitiously intercept or expropriate any system, data or personal
information.

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SCHEDULE 1
Page 1 of 2
FORM OF CERTIFICATE OF INCUMBENCY AND AUTHORITY
(See Section 1.01 (Definitions) and Section 5.01(j) (Conditions of First
Disbursement) of the Loan and Guarantee Agreement)
[Company’s/Borrower’s Letterhead]
[Date]
International Finance Corporation
2121 Pennsylvania Avenue, N.W.
Washington, D.C. 20433
United States of America
Attention: Director, Oil, Gas, Mining and Chemicals Department
Ladies and Gentlemen:
Certificate of Incumbency and Authority
     With reference to the Loan and Guarantee Agreement among Toreador Turkey
Ltd., Toreador Romania Ltd., Toreador Resources Corporation, Toreador
International Holding L.L.C., Madison Oil France SAS, Toreador Energy France
S.C.S and International Finance Corporation, dated December ___, 2006 (the “Loan
Agreement”), I, the undersigned [Chairman/Director] of [Name of Obligor], (the
“Obligor”), duly authorized to do so, hereby certify that the following are the
names, offices and true specimen signatures of the persons [each] [any two] of
whom are, and will continue to be, authorized:
     (a) to sign on behalf of the Obligor the requests for Loans provided for in
Section 2.02 (Facility Procedure and Rollover) of the Loan Agreement;
     (b) to sign the certifications provided for in Section 5.04 (Certification)
of the Loan Agreement; and

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- 104 -

SCHEDULE 1
Page 2 of 2
     (c) to take any other action required or permitted to be taken, done,
signed or executed under the Loan Agreement or any other agreement to which IFC
and the Obligor may be parties.

                  Name   Office     Specimen Signature  
 
               
 
           
 
               
 
           

     You may assume that any such person continues to be so authorized until you
receive written notice from an Authorized Representative of the Obligor that
they, or any of them, is no longer so authorized.

                  Yours truly,    
 
                [NAME OF OBLIGOR]    
 
           
 
  By        
 
           
 
      [Chairman/Director]    

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SCHEDULE 2
Page 1 of 3
FORM OF REQUEST FOR LOANS
(See Section 2.02 (Facility Procedure and Rollover) and Section 5.04
(Certification) of the Loan and Guarantee Agreement)
[Borrower’s Letterhead]
[Date]
International Finance Corporation
2121 Pennsylvania Avenue, N.W.
Washington, D.C. 20433
United States of America
Attention: Director, Oil, Gas, Mining and Chemicals Department
Ladies and Gentlemen:
Project No. 25485
Request for Loan No. [      ]
1. Please refer to the Loan and Guarantee Agreement (the “Loan Agreement”) dated
December ___, 2006, among Toreador Turkey Ltd., Toreador Romania Ltd., Toreador
Resources Corporation, Toreador International Holding L.L.C., Madison Oil France
SAS, Toreador Energy France S.C.S and International Finance Corporation (“IFC”).
Terms defined in the Loan Agreement have their defined meanings whenever used in
this request.
2. The Borrower irrevocably requests the disbursement on ___, ___ (or as soon as
practicable thereafter) of the amount of ___(___) under the [A Loan Facility] [C
Loan Facility] (the “Loan”) in accordance with the provisions of Section 2.02 of
the Loan Agreement. You are requested to pay such amount to the account in [New
York] of [Name of Borrower] [Name of correspondent Bank], Account No. ___ at
[Name and Address of Bank] for further credit to the Borrower’s Account No. ___
at [Name and address of Bank] in [city and country].

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3. For the purpose of Section 5.04 (Certification) of the Loan Agreement, the
Borrower certifies as follows:
     (a) no Event of Default and no Potential Event of Default has occurred and
is continuing;
     (b) the proceeds of the Loan:

  (i)   are at the date of this request needed by the Borrower for the purpose
of the Project, or will be needed for such purpose within three (3) months of
such date; and     (ii)   are not in reimbursement of, or to be used for,
expenditures in the territories of any country that is not a member of the World
Bank or for goods produced in or services supplied from any such country;

     (c) since the date of the Loan Agreement nothing has occurred which has or
could reasonably be expected to have a Material Adverse Effect;
     (d) since the date of the Loan Agreement none of the Obligors have incurred
any material loss or liability other than in the normal course of business and
except such liabilities as may be incurred in accordance with Section 6.02
(Negative Covenants) of the Loan Agreement;
     (e) the representations and warranties made in Article IV of the Loan
Agreement are true on the date of this request and will be true on the date of
the Loan with the same effect as if such representations and warranties had been
made on and as of each such date (but in the case of Section 4.01(c), without
the words in parenthesis);
     (f) after making the Loan, no Obligor will be in violation of:

  (i)   its Charters;     (ii)   any provision contained in any document to
which it is a party (including the Loan Agreement) or by which it is bound; or

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  (iii)   any law, rule, regulation, Authorization or agreement or other
document binding on it directly or indirectly, limiting or otherwise restricting
its borrowing power or authority or its ability to borrow; and

     (g) following the making of the Loan, including any Rollover Loan under
Section 2.02(c) (Loan Procedure and Rollover) of the Loan Agreement:

  (i)   the aggregate outstanding amount of all Loans under the Facility shall
not exceed the Available Amount; and     (ii)   the Company shall be in
compliance with the Required Ratios.

     The above certifications are effective as of the date of this Loan Request
and shall continue to be effective as of the date of the Loan. If any of these
certifications is no longer valid as of or prior to the date of the requested
Loan, the Borrower undertakes to immediately notify IFC.

                  Yours truly,    
 
                [NAME OF BORROWER]    
 
           
 
  By        
 
           
 
      Authorized Representative    

     
Copy to: 
  Director, Department of Financial Operations
 
  International Finance Corporation

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- 108 -

SCHEDULE 3
Page 1 of 1
FORM OF LOAN RECEIPT
(See Section 2.02 (Facility Procedure and Rollover) of the Loan and Guarantee
Agreement)
[Borrower’s Letterhead]
International Finance Corporation
2121 Pennsylvania Avenue, N.W.
Washington, D.C. 20433
United States of America
Attention: Director, Department of Financial Operations
Ladies and Gentlemen:
Project No. 25485
Loan Receipt No. [          ]
     We, [Name of Borrower], hereby acknowledge receipt on the date hereof, of
the sum of ___(___) disbursed to us by International Finance Corporation (“IFC”)
under the Loan of ___(___) provided for in the Loan and Guarantee Agreement
dated December ___, 2006 among Toreador Turkey Ltd., Toreador Romania Ltd.,
Toreador Resources Corporation, Toreador International Holding L.L.C., Madison
Oil France SAS, Toreador Energy France S.C.S and International Finance
Corporation.

                  Yours truly,    
 
                [NAME OF BORROWER]    
 
           
 
  By        
 
           
 
      Authorized Representative    

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- 109 -

SCHEDULE 4
Page 1 of 2
FORM OF SERVICE OF PROCESS LETTER
[Letterhead of Agent for Service of Process]
(See Section 5.01(k) (Conditions of First Disbursement) of the Loan and
Guarantee Agreement)
[Date]
International Finance Corporation
2121 Pennsylvania Avenue, N.W.
Washington, D.C. 20433
Attention: Director, Oil, Gas, Mining and Chemicals Department
Re: Toreador Group
Dear Sirs:
     Reference is made to Section 5.01(k) of the Loan and Guarantee Agreement
dated December ___, 2006 (the “Loan Agreement”) among Toreador Turkey Ltd.,
Toreador Romania Ltd., Toreador Resources Corporation, Toreador International
Holding L.L.C., Madison Oil France SAS, Toreador Energy France S.C.S and
International Finance Corporation. Unless otherwise defined herein, capitalized
terms used herein shall have the meaning specified in the Loan Agreement.
     Pursuant to Section 8.05(d) (Applicable Law and Jurisdiction) of the Loan
Agreement, each Obligor has irrevocably designated and appointed the
undersigned, HTD Services Ltd, with offices currently located at Irongate House,
Duke’s Place, London, EC3A 7HX, as its authorized agent to receive for and on
its behalf service of process in any legal action or proceeding with respect to
the Loan Agreement and the other Financing Documents to which it is a party in
the courts of England.
     The undersigned hereby informs you that it has irrevocably accepted that
appointment as process agent as set forth in Section 8.05(d) (Applicable Law and
Jurisdiction) of the Loan Agreement from the date hereof until September 15,

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- 110 -

2015, and agrees with you that the undersigned (i) shall inform IFC promptly in
writing of any change of its address, (ii) shall perform its obligations as such
process agent in accordance with the relevant provisions of Section 8.05
(Applicable Law and Jurisdiction) of the Loan Agreement, and (iii) shall forward
promptly to each Obligor any legal process received by the undersigned in its
capacity as process agent.
     As process agent, the undersigned and its successor or successors agree to
discharge the above-mentioned obligations and will not refuse fulfillment of
such obligations as provided under Section 8.05 (Applicable Law and
Jurisdiction) of the Loan Agreement.

                  Very truly yours,    
 
                [                    ]    
 
           
 
  By        
 
           
 
      Title:    

cc: [Obligors]

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- 111 -

SCHEDULE 5
Page 1 of 3
IFC BASE CASE ASSUMPTIONS
For the avoidance of doubt, all assumptions and estimates made by the Company in
the preparation of the IFC Base Case are subject to IFC’s review and approval.

1.   Production Profile: Based on the production profile corresponding to the
Proved Reserves Criteria updated from the most recent Reserve Certification, net
of all production royalties, or as otherwise agreed by IFC.   2.   Crude Oil
Prices: Based on the World Bank Group oil price forecast, adjusted for the
corresponding discount applicable to each field. For fields with historical
sales, apply historical discounts, otherwise use best estimates based on fields
with comparable oil quality.   3.   Gas Prices: As defined in “Gas Prices” in
General Definitions, or otherwise agreed by IFC.   4.   Capital Expenditures
(CAPEX): Based on the Company’s annual capital budget, as submitted each year
and agreed by IFC.   5.   Lease Operating Expense (“LOE”): Based on historical
and budgeted costs.   6.   General & Administrative Expense (“G&A”): Based on
historical and budgeted costs.   7.   Expensed Exploration Costs: Assume no
expensed exploration costs and write-offs for dry holes (i.e. all CAPEX is
capitalized and amortized).   8.   Depletion, Depreciation, & Amortization:
Based on the unit-of-production method of depreciation, done on a per-country
basis.   9.   Interest Income: No interest income assumed on cash on the balance
sheet.   10.   Interest Expense: Based on interest rates and additional
compensation (for the C Loan) in the loan agreement. Six-month US Dollar Libor
projections will be based on the six-month US Dollar forward curve according to
Bloomberg function FWCV [GO], as of the date of calculation.

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- 112 -

11.   Income Taxes: As per the applicable income tax rates for income earned in
each jurisdiction. Apply applicable net operating loss carry forwards as
permitted in each jurisdiction.   12.   Preferred Stock and Preferred Dividends:
Assume no more than the existing 72,000 Series A-1 Convertible Preferred Stock
(“Preferred Shares”) outstanding, which earn a US$2.25 preferred dividend per
share, will earn dividends only until converted at the end of 2007, after which
they are assumed to be converted into common shares at a price of US$4.00 per
common share.   13.   Accounts Receivable: Initially assume at 30 days’ sales,
based on the French sales arrangements. Contractual terms for gas sales in
Turkey and Romania are to be determined once contracts are entered into, after
which assumptions for Accounts Receivable should be updated to reflect the new
contracts.   14.   Income Taxes Receivable: Updated as per latest consolidated
quarterly statement of the Company and assumed to remain constant throughout the
projection period, unless recent events provide reason to for current and future
changes in the account.   15.   Other Current Assets: Updated as per latest
consolidated quarterly statement of the Company and assumed to remain constant
throughout the projection period, unless recent events provide reason to for
current and future changes in the account.   16.   PP&E: PP&E beginning balance
is updated as per the latest consolidated quarterly balance sheet of the
Company.   17.   Investments in Unconsolidated Entities: Updated as per latest
consolidated quarterly statement of the Company and assumed to remain constant
throughout the projection period, unless recent events provide reason to for
current and future changes in the account.   18.   Goodwill: No impairments
projected. Updated as per latest consolidated quarterly statement of the Company
and assumed to remain constant throughout the projection period, unless recent
events provide reason to for current and future changes in the account.   19.  
Other LT assets: Updated as per latest consolidated quarterly statement of the
Company and assumed to remain constant throughout the projection

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- 113 -

    period, unless recent events provide reason to for current and future
changes in the account.   20.   Accounts Payable: Assume that any existing
balances are paid down immediately. Subsequently, no Accounts Payable is
assumed. Assume that future purchases are immediately paid for.   21.   Income
Taxes Payable: Assume that any existing balances are paid down immediately,
after the account will remain at zero throughout the rest of the projection
period.   22.   Deferred Income Tax Liability: Assume to remain constant
throughout the projection period based on the latest consolidated quarterly
statement of the Company.   23.   Long Term Accrued Liability: Assume to remain
constant throughout the projection period based on the latest consolidated
quarterly statement of the Company.   24.   Production Taxes: Based on the
latest applicable tax rules and regulations.   25.   Royalties: Based on the
latest applicable royalty laws and agreements.   26.   Dividends: No dividends
assumed as per dividend restrictions in this Loan Agreement and as per the
Company’s policy. Excess cash is kept on the balance sheet for projection
purposes.   27.   Projected Disbursements of the IFC A Loan and C Loan: As
projected by the Company and agreed by IFC.   28.   Projected Shareholders’
Capital Increases: Assume no capital increases unless otherwise projected by the
Company and agreed by IFC.   29.   Other assumptions: As projected by the
Company and agreed by IFC.

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SCHEDULE 6
Page 1 of 2
FORM OF LETTER TO COMPANY’S AUDITORS
(See Section 5.03(f) (Additional Conditions of First A Loan) and Section 6.01(e)
(Affirmative Covenants) of the Loan and Guarantee Agreement)
[Company’s Letterhead]
[Date]
[NAME OF AUDITORS]
[ADDRESS]
Ladies and Gentlemen:
     We hereby authorize and request you to give to International Finance
Corporation of 2121 Pennsylvania Avenue, N.W., Washington, D.C. 20433, United
States of America (“IFC”), all such information as IFC may reasonably request
with regard to the financial statements (both audited and unaudited), accounts
and operations of the undersigned company. We have agreed to supply that
information and those statements under the terms of a Loan and Guarantee
Agreement between the undersigned company and IFC (amongst others) dated
December ___, 2006 (the “Loan Agreement”). For your information we enclose a
copy of the Loan Agreement.
     We authorize and request you to send two copies of the audited accounts of
the undersigned company to IFC to enable us to satisfy our obligation to IFC
under Section 6.03 (b) (i) of the Loan Agreement. When submitting the same to
IFC, please also send, at the same time, a copy of your full report on such
accounts in a form reasonably acceptable to IFC.
     Please note that under Section 6.03 (b) (ii) and (iii) and Section 6.03
(c) of the Loan Agreement, we are obliged to provide IFC with:

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     (a) a copy of the annual and any other management letter or other
communication from you to the undersigned company or its management commenting
on, among other things, the adequacy of the undersigned company’s financial
control procedures and accounting and management information system; and
     (b) a report (in form pre-agreed by IFC), signed by the Company’s chief
financial officer and reviewed by the Auditors, concerning the Company’s
compliance with the covenants in Section 6.01(m) (Affirmative Covenants)
(including a clear methodology used in the respective calculations) and a
calculation of the Additional Compensation.
     Please also submit each such communication and report to IFC with the
audited accounts.
     For our records, please ensure that you send to us a copy of every letter
that you receive from IFC immediately upon receipt and a copy of each reply made
by you immediately upon the issue of that reply.

                  Yours truly,    
 
                TOREADOR RESOURCES CORPORATION    
 
           
 
  By        
 
           
 
      Authorized Representative    

Enclosure

     
cc:
  Director
 
  Director, Oil, Gas, Mining and Chemicals Department
 
  International Finance Corporation
 
  2121 Pennsylvania Avenue, N.W.
 
  Washington, D.C. 20433
 
  United States of America

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SCHEDULE 7
Page 1 of 6
INFORMATION TO BE INCLUDED IN
QUARTERLY AND ANNUAL REVIEW OF OPERATIONS
(See Sections 6.03 (a) (ii) and (b) (iv) of the Loan and Guarantee Agreement)
Reporting on a Per Country and a Per Field Basis
Country:                                         
Field:                                         

                              Current             YTD       Quarter     YTD    
Budget  
Production
                       
Gross oil production (MGbl)
                       
Gross gas production (MMCF)
                       
Gross condensate production (MBbl)
                       
Gross water production (MBbl)
                       
Gross water injection (MBbl)
                       
 
                       
Average realized oil, gas and condensate prices
                       
Oil (US$/bbl)
                       
Gross Price
                       
Quality Discount, if any
                       
Production Taxes, if any
                       
Transportation Cost, if any
                       
Fiscal Royalties, if any
                       
Net Price
                       
 
                       
Gas (US$/mcf)
                       
Gross Price
                       
Quality Discount, if any
                       
Production Taxes, if any
                       
Transportation Cost, if any
                       
Fiscal Royalties, if any
                       

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                              Current             YTD       Quarter     YTD    
Budget  
Net Price
                       
 
                       
Condensate (US$/bbl)
                       
Gross Price
                       
Quality Discount, if any
                       
Production Taxes, if any
                       
Transportation Cost, if any
                       
Fiscal Royalties, if any
                       
Net Price
                       
 
                       
Sales of oil, gas and condensate (US$MM)
                       
Oil
                       
Gas
                       
Condensate
                       
 
                       
Operating Expenses1
                       
Opex (US$MM)
                       
 
                       
General and Administrative Expenses 2
                       
In-Country G&A (US$MM)
                       
Corporate G&A allocated to Country (US$MM)
                       
Total G&A (In-Country + Corporate Allocation) (US$MM)
                       
% of Corporate G&A Allocated
                       
 
                       
Capital Expenditures 3
                       
Capex (US$MM)
                       
# of Wells drilled
                       

 

1   Provide breakdown by major line items (lifting, transportation, workovers,
personnel, etc.).   2   Provide breakdown by major line items. G&A need not be
broken down by field if G&A is allocated by country only.   3   Provide
breakdown by major line items.

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- 118 -

Reporting on a per Country Basis4
Country:                                         

                              Current             YTD       Quarter     YTD    
Budget  
Payments to Government (US$MM)
                       
Production Taxes
                       
To National Government
                       
To Regional Government
                       
To Local Government
                       
Total Payments to Government
                       
 
                       
Income Taxes
                       
To National Government
                       
To Regional Government
                       
To Local Government
                       
Total Payments to Government
                       
 
                       
Royalties
                       
To National Government
                       
To Regional Government
                       
To Local Government
                       
Total Payments to Government
                       
 
                       
All Other Taxes / Payments / Contributions to Government5
                       
To National Government
                       
To Regional Government
                       
To Local Government
                       
Total Payments to Government
                       
 
                       
Personnel Data
                       
# of Direct Employees
                       
# of Indirect Employees (e.g. through an agent or contractor)
                       
Total # of Direct and Indirect Employees
                       

 

4   This section needs to be provided only for Turkey and Romania.   5   Specify
what type of payment and for what purpose

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- 119 -

                              Current             YTD       Quarter     YTD    
Budget  
# of Direct Employees from the Local Community
                       
# of Indirect Employees from the Local Community
                       
# of Direct Employees who are Nationals of the Country of Operation
                       
# of Indirect Employees who are Nationals of the Country of Operation
                       
# of New Direct Employment Created since Beginning of the Year
                       
# of New Indirect Employment Created since Beginning of the Year
                       
# of Employees in Top Management Team of the Country of Operation
                       
% of Top Management Team of the Country of Operation who are Nationals
                       
Salary rates compared to alternative (% premium over comparable employment in
the country)
                       
# of Employees Receiving Training
                       
Amount Spent on Training (US$MM)
                       
Amount Spent on Training per Employee (US$MM)
                       
Salaries (US$MM)
                       
Pension Benefits (US$MM)
                       
Tax Related Benefits (US$MM)
                       
Other Benefits (US$MM)6
                       

 

6   Specify what type of benefit

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                              Current             YTD       Quarter     YTD    
Budget  
Trading Partners/Markets for Goods and Services
                       
National Suppliers for Construction / Drilling
                       
Total Purchases (US$MM)
                       
- National Purchases (US$MM)
                       
- Community Purchases (US$MM)
                       
- Imports and foreign suppliers purchases/services (US$MM)
                       
Number of community suppliers (#)
                       
Number of national suppliers (#)
                       
 
                       
National Suppliers for Operations
                       
Total Purchases (US$MM)
                       
- National Purchases (US$MM)
                       
- Community Purchases (US$MM)
                       
- Imports and foreign suppliers purchases/services (US$MM)
                       
Number of community suppliers (#)
                       
Number of national suppliers (#)
                       
 
                       
Domestic Sales (US$MM)
                       
Exports (US$MM)
                       
 
                       
Other Impacts of Operations7
                       
Greater Competition?
                       
Lower Prices?
                       
New Industries?
                       
Demonstration Impact?
                       
 
                       
Contributions to Local Community 8
                       
Item 1 (US$)
                       
Item 2 (US$)
                       

 

7   Provide explanation of impact, if any   8   Itemize any
contributions/donations/support to the local community and provide US$ value

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- 121 -

Supplemental Annual Operating Information9
1. Macroeconomic Conditions. Brief description of any material changes that
affect the Company. For example, changes in corporate taxation, import duties,
foreign exchange availability, price controls, other areas of regulation.
2. Markets. Brief description of changes in the Company’s market conditions,
with emphasis on changes in sales contracts/agreements, market prices,
competitive landscape.
3. Management and Organizational Structure. Summary of significant changes in
the Company’s senior management or organizational structure.
4. Corporate Strategy. Description of any changes to the Company’s corporate or
operational strategy.
5. Operating Performance. Discussion of major factors affecting the year’s
results, including key operating indicators (e.g.: sales — by volume, value and
market, operating costs, margins, capacity utilization).
6. Others. Disclosure and discussion of all events that have caused or may cause
a material adverse effect on the Company’s operations
 

9   Reported on a per country basis or on a Company-wide basis as relevant.

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- 122 -

SCHEDULE 8
Page 1 of 3
GROUP OWNERSHIP
1. CAPITALIZATION
Consolidated Capitalization in thousands as of 09/30/2006

         
Stockholders’ equity:
       
Preferred stock, Series A & A-1, $1.00 par value, 4,000,000 shares authorized;
liquidation preference of $3,850,000; 72,000 and 154,000 issued
    72  
 
       
Common stock, $0.15625 par value, 30,000,000 shares authorized; 16,362,041
    2,602  
 
       
Capital in excess of par value
    117,295  
 
       
Retained earnings
    39,770  
 
       
Accumulated other comprehensive income
    (16 )
 
     
 
       
 
    159,723  
 
       
Deferred compensation
    (6,141 )
 
       
Treasury stock at cost, 721,027 shares
    (2,534 )
 
     
 
       
Total stockholders’ equity
    151,048  
 
     

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- 123 -

2. CURRENT OWNERSHIP STRUCTURE and FUTURE OWNERSHIP STRUCTURE
[See Attached]